Updates from H&R Block Accounting & Advisory Group: February 2023 Edition

Superannuation payments for your staff

If you do not pay an employee's minimum superannuation guarantee amount on time and to the right fund, employers must pay a superannuation guarantee charge (SGC); which must be lodged with the Australian Tax office (ATO).

The SGC is more than the super you would have otherwise paid to the employee's fund and is not tax deductible.

The due date for payment of the SGC and lodging the statement is one calendar month after the super guarantee due date.

To avoid the super guarantee charge (SGC) payments must be received by the employee's fund on or before the quarterly super due dates. The due date for Super payment is 28 April for the quarter ended 31 March 2023. 

Fringe Benefits Tax (FBT)

The FBT year is about to end on 31 March 2023. We need your help to determine if you need to be registered to meet the reporting and payment obligations for the 2023 FBT year.

Should you be registered for FBT?

Generally, if you have employees (including directors) and you answer yes to one or more of the following questions then you are likely providing a fringe benefit and will need to register your business for FBT. These questions are:  At any time from 1 April 2022 to date, did you:

• Make vehicles owned or leased by the business, available to employees for private use?
• Provide loans at reduced interest rates to employees?
• Forgive or release any debts owed by employees?
• Pay for, or reimburse, any private expenses incurred by employees?
• Provide a house or unit of accommodation to employees?
• Provide employees with living-away-from-home (LAFH) allowances?
• Provide entertainment by way of food, drink or recreation to employees (including Christmas parties)?
• Provide any employees with a salary package (salary sacrifice) arrangement?
• Provide any employees with goods at a lower price than they are normally sold to the public?

If you answered ‘YES’ to one or more of the above questions, then we will need to calculate any potential FBT liability, or help to minimise it. Please contact our office for assistance. 

A further piece of information we will require, is if you paid FBT last year and have change your business address or contact details.

Tip: It is unlikely you have to worry about FBT if you're only providing items like mobile phones, laptops, tablets, portable printers, protective clothing, tools of trade etc., or minor and infrequent benefits that are less than $300 in value.
 
Non-deductible threshold removed for self-education expenses 

Self-education expenses are generally tax-deductible for individuals if there’s a sufficient connection with your income-producing activities. However, until new legislation was recently passed, the amount you could deduct was limited by section 82A of the Income Tax Assessment Act 1936, so that only the amount spent over a $250 threshold was deductible.

This threshold was an artefact from when the self-education deduction measure was first introduced more than 40 years ago, alongside a long-repealed concessional tax rebate of $250. The original intention of the deduction limit was to ensure that taxpayers didn’t receive both the tax rebate and a tax deduction for the same set of expenses.

With the non-deductible threshold removed, you will only need to ensure the following applies when you claim a self-education deduction:

• you incurred the expense in gaining or producing your assessable income;
• the expense isn’t private, domestic or capital in nature; and
• The deduction isn’t prevented by another provision of the tax law (eg such as some childcare and travel expenses that would previously have been useable to reduce the $250 threshold).

The change applies for tax assessments for the 2022–2023 income year and onwards.

Tip: This change doesn’t affect the types of self-education expenses that are deductible. The costs of textbooks, stationery and professional journals will still be deductible, while certain student contributions and payments to reduce HELP, financial supplement and other higher education debts stay non-deductible, as do expenses you incur before commencing an occupation or to help you obtain a new occupation.

Sharing economy reporting regime commences soon (1 Jul 2024)

Electronic platform operators will soon be required to regularly provide transaction information to the ATO through the Taxable Payments Reporting System (TPRS). The information obtained will be used in ATO data-matching to help identify entities that may not be meeting their tax obligations.

As a part of the Federal Government’s strategy to combat the tax compliance risks posed by the sharing economy, it has passed into law new requirements for operators of electronic distribution platforms to provide information to the ATO on transactions made through their platforms.

An “electronic distribution platform” is one that delivers services through electronic communication (i.e. over the internet, including through applications, websites or other software) and allows entities to make supplies available to end-user consumers through the platform. 

(Note: A service isn’t considered an electronic distribution platform if it only advertises or creates awareness of possible supplies online, or operates as a payment platform only or serves as a communication function.)

Examples of sharing economy electronic platform operators include Uber, Airbnb, Car Next Door, Menulog, Airtasker and Freelancer.

Tip: The new reporting regime applies to platform operators rather than to individuals who use their sites or apps, but if you are part of the sharing economy it’s still important to give the ATO the right information. If you rent out your home for short stay accommodation, work as a delivery driver or take on side jobs as a freelancer, we can help you keep your tax affairs in order.

SMSF changes and reminders for 2023

If you’re thinking of starting a self-managed superannuation fund (an SMSF) in 2023, you need to be aware of the recent changes made by the ATO on fund registration and the application of the Director ID regime to funds with corporate trustees.

Previously, after an SMSF was established and trustees were appointed, the trustees had 60 days to register the SMSF with the ATO, by applying for an Australian Business Number through the Australian Business Register. That application included a section where bank account details of the SMSF could be added, along with other information such as the fund’s Tax File Number.

Due to the recent explosion in fraudulent schemes targeting SMSFs, this feature has been removed in a bid to protect the retirement savings of Australians. New SMSFs will now need to provide the ATO with their bank account details after the SMSF registration process, using the online portal for businesses, via phone, or through a registered tax agent.

If you’re contemplating starting an SMSF with a corporate trustee, you’ll also need to ensure the directors of the corporate trustee apply for Director IDs before their appointment is made through Australian Business Registry Services (ABRS). The Director ID is a unique 15-digit identifier that will follow each individual through their business life and was introduced as a part of a suite of measures to combat phoenixing and other illegal activities. 

Tip: Applying for a Directors id free. The process of applying simple and can be completed online and only requires individuals to confirm their identity. Every individual must apply for their own Director ID; no one else can apply on their behalf.

Tax debts and relationship breakdowns: a warning

The ability of the Family Court to divide the assets owned personally by a couple – including superannuation – on a relationship breakdown is largely without question. A recent case has now shed further light on the ability of the Family Court to allocate responsibility for payment of the tax debts of either spouse.

A High Court decision in 2018, Commissioner of Taxation v Tomaras, confirmed that tax debts can be apportioned by the courts where a couple’s relationship has broken down. In that case, the wife had failed to pay her tax debts and was out of time to challenge the debt assessments. The husband had been declared bankrupt. As part of the property settlement proceedings, the wife asked the court to order that the husband should become the debtor who would have to pay the ATO.

The court found that one spouse could indeed be substituted for the other in relation to a tax debt like this, but it also confirmed this isn’t always appropriate. Given that the husband was bankrupt and there was no time left to challenge the debt assessments, the court did not exercise its powers to make him liable for the tax debts that had been assessed to the wife.

Tip: The ATO can and will intervene in family law disputes to protect the revenue due to the Commonwealth. The courts will actively ensure the rights of the ATO are protected and enforced.
 
Interest rates are set to keep rising in 2023

If you have been following the news around the world you would be aware of recent increases in costs to food, fuel and supplies; due to higher inflation. In the December quarter, the Australian inflation figures also showed solid price rises in the services sector of our economy; with last year reported as the largest annual increase in inflation since 1990.  

In an attempt to keep inflation under control, between the acceptable 2% to 3%, in the Reserve Bank of Australia’s first meeting of 2023 (held on Tuesday February 7th) they announced a further 0.25% interest rate hike; the 9th time interest rates have increased over the last year. This recent increase now takes the official cash rate to 3.35 per cent. 

The RBA’s rationale is that higher rates will take more spending out of the economy, as more money is required to pay mortgages, while also suppressing house prices from the reduction of amount of money borrowers can afford to repay. 

However, added to the RBA’s interest rate increases, many lenders increase their interest rates more than the RBA’s increases. For many borrowers, this has meant that their interest rates have now increased by more than 3.00% since June 2022. And more increases are expected in 2023, which will put a lot of pressure on those who already struggling meet the repayments on their homes and further impacting their quality of life.

If you are one of the smart ones who fixed their interest rates, then you may feel very happy with yourself. However, you may be currently reviewing what impact the current and new interest rates may have on your lifestyle, working out what the extra costs are going to be with your loan on much higher interest rates than before.  

Tip: This is time to act! You can book in a free “Lending Review” with H&R Block’s financial services partner here.

This complementary service can deliver for you:-

1. Savings on existing repayments - renegotiating a better rate for your home loan.
2. A review of your lending, to reduce your interest and loan repayments; through better interest rates.
3. Peace of mind you are on track.

Book in your fee free 1 on 1 consultation now and stop paying your bank more than you should. 

Have you lodged your previous year’s tax return?  

We know that the last few years have been very difficult for a number of our small businesses. For this reason, we realise that many clients see that lodging their previous year’s tax return is a low priority. However we do not want to see you hit by additional fees, or interest or penalties by the ATO for lodging your tax return late.   

So if you have not lodged your 2022 or 2021 tax return, or tax returns before then, call us now so that we can help you with your tax compliance obligations and get you up-to-date.  

If we can assist you in anyway, please call H&R Block Business Services on 13 40 42.