PAYG withholding reporting cycles
Each year the ATO reviews PAYG withholding cycles for businesses based on their annual withholding amounts. The payment and reporting cycles are:
- $25,000 or less (small withholder status) – report and pay quarterly
- more than $25,000 and up to $1 million (medium withholder status) – report and pay monthly
- more than $1 million (large withholder status) – pay electronically within six to eight days of a withholding event taking place, such as when staff are paid. Large withholders are also issued with a unique payment reference number (PRN).
If the ATO makes a determination to upgrade the withholding cycle, it will issue the business with a written notice advising of the change and the date it will come into effect.
The most common change to the withholding cycle is where a business moves from a “small” to a “medium” withholder (i.e. where the total PAYG withholding for the financial year exceeds $25,000). This means that from 1 July 2024, many businesses will move from quarterly to monthly reporting and payment of PAYG withholding amounts.
To ensure a smooth transition to the new withholding reporting and payment cycle, it is recommended that businesses update their payroll software before 1st July. This will ensure alignment with the revised due dates and compliance with ATO requirements.
Year-end trustee income distribution resolutions
In the lead up to 30 June, accountants will be preparing end of year income distribution resolutions/minutes for family trust clients. It’s very important that accountants read the trust deed to ensure they are familiar with the concepts of distributable income, trust law income, the capital of the trust fund, and distributions of income and capital. These concepts will impact on the way that trust distribution resolutions should be drafted.
There are a number of other issues that accountants need to consider when preparing income distribution resolutions including:
- Make sure the income on the minute aligns with the deed;
- Don’t fall into the trap of copying and pasting last year’s minute;
- Be careful when using template minutes as this increases the chances that mistakes will be made;
- Ensure that income is not distributed to “excluded beneficiaries” under the deed (e.g. the settlor);
- Check if there is a family trust election in place as distributions should not be made to certain beneficiaries who are otherwise eligible beneficiaries.
The ATO have published a useful checklist for trustees/accountants when preparing end of year income distribution resolutions.
Uncertainity over the instant asset write-off threshold for 2023-24
There is so much confusion and uncertainty about the instant asset write-off (IAWO) threshold for the 2023-24 year. In last year’s Budget, the Treasurer announced an increase in the threshold to $20,000.
However, due to a disagreement between the House of Representatives and the Senate, the issue has reached a stalemate - the current threshold remains at $1,000.
The Bill to legislate a temporary increase in the IAWO for the 2023-24 year to $20,000 for businesses with an aggregated turnover of less $10 million is still before Parliament.
This is because the Senate has disagreed with this amendment and instead has proposed an increase in the threshold to $30,000 for the year ending 30 June 2024 and to extend the concession to businesses with an aggregated turnover of less than $50 million. This proposed amendment by the Senate was again blocked by the House of Representatives on 28 May 2024.
The Bill will now return to the Senate, but the Senate does not sit until Monday 24 June 2024. – just 6 days before 30 June.
This is a very disappointing outcome for SMEs and their advisors. Irrespective of the Senate response, SMEs will have no time to benefit from the IAWO measure as both are limited to eligible expenditure incurred by 30 June 2024.
If an agreement is not reached between both Houses of Parliament on 24 June on either a $20,000 or $30,000 threshold, the IAWO threshold for the 2024 year will remain at $1,000. This is despite the fact that many small businesses have already purchased assets this financial year on the expectation that the IAWO will be $20,000.
This is an example of the continued uncertainly arising from announced but unlegislated measures.
Important Note: If not agreed to on 24 June 2024, there is a possibility that an increase in the IAWO threshold to either $20,000 or $30,000 for 2023-24 could be legislated retrospectively by Parliament when it meets after 30 June 2024. But there is no guarantee that this will occur.
ATO announces data-matching of cryptocurrency
The ATO has announced a data-matching program that will collect information from cryptocurrency exchanges on crypto trades for the 2024 to 2026 income years.
According to the ATO, the innovative and complex nature of crypto can lead to a genuine lack of awareness of the tax obligations associated with these activities.
The data to be collected includes financial data on the cryptocurrency accounts, including linked bank accounts, transaction details, account balances, as well as personal information of account holders including their names, dates of birth, email addresses, social media accounts, and ABN.
The ATO says that the crypto asset data-matching program will help them to identify and address multiple tax risks including:
- Omitted or incorrect reporting of capital gains tax (CGT) – Where taxpayers acquire crypto assets as an investment, tax will have to be paid on any capital gain made on disposal of the crypto. Disposal occurs when:
- selling crypto assets for fiat currency
- exchanging one crypto asset for another
- gifting crypto assets
- trading crypto assets
- using crypto assets to pay for goods or services.
- Omitted or incorrect reporting of income – In some situations crypto transactions can also give rise to ordinary income. Taxpayers who trade crypto assets or businesses that accept crypto assets as payment have obligations to report the income generated in their tax returns.
- Omitted or incorrect reporting of goods and services tax (GST) – In some situations crypto transactions can give rise to GST. GST registered business who accept crypto assets as payment must account for GST on the supplies they make and declare these in their business activity statement. Certain crypto intermediaries make supplies that may be subject to GST and may be required to register for GST.
- Omitted or incorrect reporting of fringe benefits tax (FBT) – When employees receive crypto assets as remuneration under a salary sacrifice arrangement, the payment of the crypto asset is a fringe benefit.
Increasing the time period for retaining BAS refunds
As announced by the Treasurer in the 2024–25 Budget, the Government will strengthen the ATO’s ability to combat fraud by extending the time the ATO has to notify a taxpayer if it intends to retain a business activity statement (BAS) refund for further investigation. The ATO’s mandatory notification period for BAS refund retention will be increased from 14 days to 30 days to align with time limits for non-BAS refunds.
The change will apply from the first financial year after royal assent.
