Here comes 2022
Is anyone else well and truly just over the year of 2021? It really was again another tumultuous year for many of our clients and ourselves, trying to abide with so many differing restrictions and rules across our single cross-border economy. We all can’t wait for our lives to just get back to normal and it is starting to improve for most of us. But to sum it all up, it seems that most people are just tired and worn out and in dire need of a break – like our team here at Lidgerwoods.
December saw a change at our office. We can now finally see clients face to face within our office by appointment (but Mr.Andrews insists you must be double vaccinated), and we’ve now made this even more appealing to our clients by establishing a new meeting space in the back room.
Not only is this a great space to meet with our clients, it also serves as a great place for our team to chill and relax and to get away from our very busy desk space at the top of our stairs.
We’ve attached some articles that you may be interested in regarding new changes with employee superfunds, inactive ABNs, scam alerts (as usual), the new rules regarding Director Identification Numbers, PAYG Instalment variations and some common property investment errors.
The Team at Lidgerwoods
SOPHIE, MARC, SHARON, LOUISE, DAVID, JACOB, DARCY & KYLIE
Super is now following new employees
The ATO is reminding employers that, as of 1 November 2021, there is an extra step they may need to take to comply with the choice of super fund rules.
If a new employee does not choose a super fund, most employers will need to request the employee's 'stapled super fund' details from the ATO to avoid penalties.
A stapled super fund is an existing super account which is linked, or 'stapled', to an individual employee so that it follows them as they change jobs.
When a new employee starts, employers need to:
Editor: Businesses will be able to request stapled super fund details for new employees using ‘Online services for business’, or by asking their registered tax or BAS agent to do this for them.
Unused or Inactive ABN’s
The ATO is reviewing Australian business numbers ('ABNs') to identify potentially inactive ABNs for cancellation, and it has introduced a new automated process to allow taxpayers (or their tax agents) to confirm if their ABN is still required via a secure voice response system.
An ABN may be selected if the taxpayer has not reported business activity in their tax return, or there are no signs of business activity in other lodgments or third-party information.
The ATO reminds taxpayers that any income earned under an ABN needs to be reported in their tax return, regardless of the amount. By keeping their tax obligations up to date, the ATO can see they are actively undertaking a business (so, therefore, their ABN should not be cancelled).
Editor: It is very easy to later reinstate your ABN if the ATO cancels this on you and you are most likely to be reissued the same ABN again. But if you have not used your ABN for some time, we recommend you first use the online ABN Lookup link below to check that your ABN is still valid (before you begin any income earning activity). https://abr.business.gov.au/
Beware of scams (as usual)
Scamwatch is warning that scams cost Australian consumers, businesses and the economy hundreds of millions of dollars each year and cause serious emotional harm to victims and their families.
Cryptocurrency scams are the most 'popular' type of investment scams, representing over 50% of losses. Often the initial investment amount is low (between $250 and $500), but the scammers pressure the person to invest more over time before claiming the money is gone or ceasing communication and blocking access to the funds.
All age groups are losing money to investment scams, but the over-65s have lost the most, with $24 million lost this year.
Some simple steps individuals can take to protect themselves (and their businesses) are:
Editor: Feel free to contact our office if you need any help at any time with this and always be on guard.
Preparing for the new Director ID regime
As part of its Digital Business Plan, the Government announced the full implementation of the 'Modernising Business Registers' program.
This included recently enacted legislation introducing the new director identification number ('director ID') regime.
The director ID is a unique identifier that a director will need to apply for once and will keep forever.
The introduction of director IDs is intended to create a fairer business environment by helping prevent the use of false and fraudulent director identities, which "will go a long way to better identifying and eliminating director involvement in unlawful activity".
Editor: Note that all directors will need to apply for a director ID, including directors of corporate trustees of self-managed super funds ('SMSFs') and of family trusts.
Individuals will be able to apply for a director ID from 1 November 2021 on the new Australian Business Registry Services ('ABRS') website (at abrs.gov.au) and will need to log in using the myGovID app (set to a 'Standard' or 'Strong' identity strength).
When an individual must apply for a director ID depends on the date they became a director. For directors under the Corporations Act:
Individuals will need to apply for their director ID themselves to verify their identity (i.e., no one can apply for it on their behalf, including agents).
Editor: our office has recently advised all Directors via email or letter regarding this, and if you have not received this notification please contact Kylie at our office.
Varying PAYG instalments due to COVID-19
Taxpayers can vary their pay as you go ('PAYG') instalments throughout the year if they think they will pay too much, compared with their estimated tax for the year.
To assist taxpayers who continue to be affected by COVID-19, the ATO has stated that it will not apply penalties or interest on varied instalments for the 2021/22 income year for excessive variations when the taxpayer has taken reasonable care to estimate its end of year tax.
The ATO says this means making a reasonable and genuine attempt to determine the tax liability. When considering if a genuine attempt has been made, the ATO takes into account what a reasonable person would have done in the same circumstances.
Note that variations do not carry over into the new income year.
Therefore, if a taxpayer made variations in the 2020/21 income year, they may need to vary again in 2021/22. The varied amount or rate will apply for all of the remaining instalments for the income year, or until the taxpayer makes another variation.
The ATO encourages taxpayers to review their tax position regularly and vary their PAYG instalments as their situation changes.
If a taxpayer realises they have made a mistake working out their PAYG instalment, they can correct it by lodging a revised activity statement or varying a subsequent instalment.
If a taxpayer is unable to pay an instalment amount, they should still lodge their instalment notice and discuss a payment arrangement with the ATO to ensure they will not have a debt at the end of the year.
Editor: The biggest error made with variations is that you must do these BEFORE the due date – otherwise they are invalid and the original tax amount is still due and payable. Please feel free to contact our office if you need help with any PAYG Instalment Variations (before they are due for payment).
ATO warns property investors about common tax traps
In 2019/20, over 1.8 million Australians owned rental properties and claimed $38 billion in deductions, so the ATO is reminding property investors to beware of common tax traps that can delay refunds or lead to an audit costing taxpayers time and money.
The most common mistake rental property and holiday homeowners make is neglecting to declare all their income, including failing to declare any capital gains from selling an investment property.
Assistant Commissioner Tim Loh said: “To put it simply, you should expect tax consequences for any property that you earn income from that isn’t your main residence.”
“We are expanding the rental income data we receive directly from third-party sources such as sharing economy platforms, rental bond authorities, and property managers. We will contact taxpayers about income they’ve received but haven’t included in their tax return. This will mean they need to repay some of their refund,” Mr Loh said.
So far, the ATO has adjusted more than 70% of the 2019/20 returns selected for a review of rental information.
“Most people we contact about their rental deductions are able to justify their claims. However, there are instances where we have to knock back claims where taxpayers didn’t keep receipts, claimed for personal use, or claimed for ineligible deductions,” Mr Loh said.
Editor: We can help make sure you get your rental income and deductions right, including where rental income has been affected by COVID-19.
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
Lastly we welcome your feedback. If you found this E-Newsletter very useful (or not?),
'The Team' at Lidgerwoods Accountants