|
1.
|
Rental bond data-matching has landlords in the ATO's sights again
The ATO will be collecting data from State rental bond agencies for the 2024 - 2026 financial years to ensure that landlords are complying with their tax obligations.
The data that will be collected includes:
- full details of the landlord, including name, address, and bank account/s;
- full details of the real estate agent, including business name, address and unique identifier of the agent;
- full details of the property, the lease and the bond, including number of bedrooms, rent payable, duration and expiry date of the lease, amount of the bond, and the amount of the bond refunded (if any).
The data will enable the ATO to carry out reviews and audits of clients who fail to disclose or incorrectly disclose rental income and deductions, and capital gains.
|
The ATO's notice of data collection
|
|
2.
|
Myths about Division 7A debunked
The ATO's focus on Division 7A will continue into 2025 with the release of new guidance. Compliance and education programs show that clients and their advisors are still not applying Division 7A correctly.
Here are just some of the myths the ATO is debunking.
- "If I own a company, I can use the company money any way I like."
- "Division 7A only applies to the shareholders of my private company."
- "I don't need to keep records when my private company makes payments, loans, or provides other benefits to other entities."
- "I can record a dividend in a journal entry, after an income year has ended, and use that to effectively offset my minimum yearly repayment obligation for that income year."
- "I can avoid Division 7A by making payments or loans to shareholders and their associates through other entities."
- "The interest rate I use to calculate my minimum yearly repayment on my complying Division 7A loan is the same every year."
- "The Commissioner will exercise the section 109RB discretion in my favour because I relied on advice from a tax professional."
- "I can avoid Division 7A by temporarily repaying my loan before the private company’s lodgment day."
We recommend that Division 7A loans are regularly monitored, and certainly more than once per year when it’s time to lodge your clients' tax returns. In particular, the use of journal entries by accountants to satisfy Division 7A requirements has been a real problem for some time.
|
Division 7A Myths debunked | Australian Taxation Office
|
|
3.
|
Foreign resident capital gains tax withholding on Australian property
The threshold and withholding rate for foreign resident capital gains tax withholding changed on 1 January 2025.
All contracts for the sale of Australian property will be subject to withholding unless a clearance certificate is obtained from the ATO. If a certificate is not obtained, then the rate of withholding will be 15%. Previously, the threshold was $750,000 and the rate of withholding was 12.5%.
|
Foreign resident capital gains withholding overview | Australian Taxation Office
|
|
4.
|
Better late than never: more guidance and support for tax practitioners
Following extensive stakeholder consultation and feedback, the Tax Practitioners Board (TPB) released its guidance materials about the new Code items in final prior to the Christmas break.
One of the areas that concerns us is the level of over-regulation and additional compliance costs that firms will face in response to the new rules. Particularly smaller firms. For example, the TPB recommends that firms establish a supervisory plan, and also that almost all communications with clients are ultimately documented in writing.
We'll have more to say on these publications in future.
|
TPB guidance to support tax practitioners | Tax Practitioners Board
|
|
5.
|
Lodgment dates for self-managed superannuation fund (SMSF) annual returns
If your SMSF had assets, such as super contributions or other investments as of 30 June 2024, it will need to lodge a SMSF annual return for the 2023–24 financial year.
Newly registered SMSFs and SMSFs with overdue SARs for prior financial years (excluding deferrals) should have lodged by 31 October 2024. Further, all other self-preparing SMSFs need to lodge their SAR by 28 February 2025.
Noting these dates, there could be an influx of requests from clients prior to the 28 February deadline. Of course, for tax agents, the ordinary due date for lodgment of the SAR will still be during May or June 2025 for the 2024 financial year.
|
Know when your SMSF annual return is due | Australian Taxation Office
|
|
6.
|
Private Wealth Deputy Commissioner sets out her priorities for 2025 and beyond
Deputy Commissioner Louise Clarke has set out the ATO's priorities for 2025 and beyond for private groups.
The priorities are:
- reducing the ATO's debt-book where private groups and high net worth clients have debts owing to the ATO,
- targeting transactions / restructures / schemes that are being used for estate and succession planning. This applies where the steps being planned or taken are causing late lodgments. The ATO has found that the steps usually involve Division 7A risks, settling loans, moving assets and amending trust deeds,
- determining what 'tax governance' looks like for groups of difference sizes. What is suitable for a billion-dollar client will obviously be unsuitable and unnecessary for clients in the $5 - $20 million range,
- family trust distribution tax. The ATO are seeing that family trust elections and interposed entity elections are not being used correctly, or are misunderstood, leading to substantial additional tax liabilities for clients.
|
Spotlight on… Deputy Commissioner Louise Clarke | Australian Taxation Office
|
|
7.
|
The Coalition proposes that small business will be able to claim the costs of business meal and entertainment expenses as a tax deduction
The next election is looming.
The Coalition has published one of its proposed policies. Small businesses will be eligible for a capped tax deduction of $20,000 for business-related meal and entertainment expenses. Small businesses with a turnover of up to $10 million will be eligible and alcohol will be excluded from the policy. The measure will run for an initial two years and be exempt from Fringe Benefits Tax.
It's still early days and accordingly, we do not know how the new rules will interact with the GST.
There will be more to come out on this proposal.
|
Tax Deduction to Deliver Red Tape Relief for Small Business - Liberal Party of Australia
|
