Sophie is back!

What a big year in tax and businesses it has been, with the 2019/20 tax year just around the corner.

Over the past year our firm has completed and lodged a record number of tax documents on behalf of our forever growing client base this year – over 1,000 lodgments to the ATO in the last year alone. All this was done too with our Director Sophie Wade on maternity leave since December 2019 when she gave birth to her second child Adeline on Christmas Eve.

The exciting news (especially for the team here at Lidgerwoods) is that Sophie is now back on deck and ready to assist our clients once again in the new tax year ahead.

Lots of changes are upon us this year, most notably for the employers in our client base with the new Single Touch Payroll (STP) system starting next week for most of our clients. The ATO is also looking very closely at rental properties again, and businesses now have different ‘time based threshold amounts’ for immediate write-off claims.

The biggest tax change applicable to 2019 tax returns is the new personal low and middle income tax rebates available to most individual clients, and our team at Lidgerwoods will personally advise you all on this when preparing your tax returns this year.

See you at the THE KITCHEN BENCH…

 

The Team at Lidgerwoods – Sophie, Marc, Louise, David & Kylie

 sophie

Single Touch Payroll Update

jun2019-1Employers with 19 or fewer employees are required to start reporting through Single Touch Payroll (‘STP’) from 1 July 2019.

The ATO will be working with employers to support them as they transition to STP, including allowing small employers to start reporting any time from 1 July to 30 September (and the ATO will also be "generous" in granting deferrals to small employers who need more time to start STP reporting).

Note also that employers with 19 or less employees do not need to report 'closely held payees' in 2019/20 and can report closely held payees information quarterly from 1 July 2020.

Employees and payment summaries

The ATO has also reminded employees that how they get their end of financial year information from their employer, showing their earnings for the year, depends on how their employer reports their income, tax and super information to the ATO. 

Specifically:

  • Employers that are not yet reporting through STP will continue to provide employees with a payment summary by 14 July.
  • Employers that report through STP are no longer required to give employees a payment summary;
  • instead this information will be provided in an 'income statement', available via the employee's myGov account by 31 July (i.e., when the employer marks it as 'Tax Ready').

Editor: We will be able to access employee clients' payment summaries or income statement information through our connections with the ATO (this has not changed).

Please contact our office if you have any queries about STP (whether as an employer or employee).

 

 Tax office to double audits of 'dodgy' rental deductions

jun2019-2Rental property owners are being warned to ensure their claims are correct this tax time, as the ATO has announced it will double the number of audits scrutinising rental deductions, with a specific focus on:

  • over-claimed interest;
  • capital works claimed as repairs;
  • incorrect apportionment of expenses for holiday homes let out to others; and
  • omitted income from accommodation sharing – eg. Airbnb

Assistant Commissioner Gavin Siebert said:
“A random sample of returns with rental deductions found that nine out of 10 contained an error. We are concerned about the extent of non-compliance in this area and will be looking very closely at claims this year.”

“We use a range of third party information including data from financial institutions, property transactions and rental bonds from all states and territories, and online accommodation booking platforms, in combination with sophisticated analytics to scrutinise every tax return,” Mr Siebert said.

“Once our auditors begin, they may search through even more data including utilities, tolls, social media and other online content to determine whether the taxpayer was entitled to claims they’ve made".

The number one cause of the ATO disallowing a claim is taxpayers being unable to produce receipts or other documents to support a claim. 

Furnishing fraudulent or doctored records will attract higher penalties and may also result in prosecution.

The ATO has also reminded taxpayers that, since 1 July 2017, they can no longer claim travel expenses related to inspecting, maintaining or collecting rent for a residential rental property, unless they are an "excluded entity".

 

New rules for immediate write-offs

jun2019-3Small business entity ('SBE') taxpayers who choose to depreciate their assets under the simplified depreciation rules are entitled to an immediate deduction with respect to low-cost assets in the year they are first used or installed ready for use for a taxable purpose.

Thanks to recent changes, SBE taxpayers may be entitled to an immediate deduction in the 2019 income year for acquiring certain depreciating assets as follows (net of entitlement to GST input tax credits):

  • 1 July 2018 - 28 January 2019: less than $20,000
  • 29 January 2019 - before 7:30pm (AEDT) on 2 April 2019: less than $25,000
  • From 7:30pm (AEDT) on 2 April 2019 - 30 June 2019: less than $30,000

Editor: While helpful, these changes have complicated matters for the 2019 year, so please contact us if you need any help. The timing of the asset acquisition is critical to ensure the correct claim is made in the 2018/19 tax year.

Scammers impersonate ATO phone numbers


jun2019-4The ATO is warning that scammers have adopted ‘Robocall’ technology to target taxpayers across the country.

Assistant Commissioner Gavin Siebert said: “Scammers are sending pre-recorded messages in record numbers and are manipulating caller identification so that your phone displays a legitimate ATO phone number despite coming from an overseas scammer”.

“If the scammers do make contact, they will request payment of a tax debt – usually through unusual methods like bitcoin, gift cards and vouchers. Legitimate ways to pay your tax debt are listed on our website. The scammers will threaten you with immediate arrest, attempt to keep you on the line until payment is made and may become rude or aggressive.”

The technique of displaying misleading phone numbers is known as “spoofing” and is commonly used by scammers in an attempt to make their interactions with taxpayers appear legitimate.

Editor: Please be very careful with any correspondence involving the ATO – if any doubt call the team here at Lidgerwoods before providing any information at all. As your tax agent, we can cross verify that this information or contact is correct and legitimate.

Claims for home office expenses increased

jun2019-5The ATO has updated the hourly rate taxpayers can use to determine deductions for home office expenses from 45 cents to 52 cents per hour for individual taxpayers, effective 1 July 2018 (i.e., from the 2019 income year).

According to the ATO’s recently updated PS LA 2001/6, individual taxpayers who claim deductions for either work or business-related home office running expenses may either:

  • claim a deduction for the actual expenses incurred; or
  • calculate the running expenses at the rate of 52 cents per hour.
  • Taxpayers who use the rate per hour method to claim a deduction for home office running expenses only need to keep a record to show how many hours they work from home.

This reduced substantiation requirement can be recorded either:

  • during the course of the income year; or alternatively
  • they can keep a representative four-week diary (where their work from home hours are regular and constant). 


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?),
we’d appreciate your feedback either way.

'The Team' at Lidgerwoods Accountants