“I want my tax refund…!”

Where will you spend your tax refund this year? Government statistics show that the average Australian has saved around 3% of their money in the last year (the biggest amount on record), but now with the cost of living and inflation going through the roof maybe we won’t see the same.

Luckily most taxpayers will again receive the government handout this year by increasing their tax refund with the last ever Low Middle Income Tax Offset – better known as LMITO or as we like to call it the “Scomo Refund” (now could be termed your Albo refund). This is as much as $1,500 per person if your taxable income resides between $48,000 and $90,000.

With the COVID rules somewhat relaxed (for now) we return to seeing a steady stream of clients visiting our office, and we look forward to finally seeing many of you face to face once again (after almost two years of hibernating).

Internally we have a new addition to our work family, after Jacob and his wife Jenny welcomed their first child Winston in March 2022

As usual, we’ve attached some brief articles and taxation updates that we recommend you take a few moments to read, and we all look forward to catching up with you during the upcoming tax season.

See you at the Kitchen Bench (finally!!)

The Team at Lidgerwoods

SOPHIE, MARC, SHARON, LOUISE, DAVID, JACOB, DARCY & KYLIE

Penalties for overdue TPAR “Subcontractor Reports”

The Taxable payments annual report (‘TPAR’) must be lodged by 28 August each year. Taxpayers who operate in certain industries and that make payments to contractors may need to report these payments in a TPAR.

Affected industries where taxpayers may have an obligation to lodge a TPAR are:

• Cleaning services;
• Building and construction services;
• Road freight;
• Courier services;
• Information technology services;
• Security, investigation or surveillance services.

The ATO will begin to apply failure to lodge penalties to those who:

• did not lodge their 2021 or prior year TPAR;
• have already been sent three non-lodgment letters about their overdue TPAR;
• do not respond to an ATO follow-up phone call about their overdue TPAR.

Editor: If your business is involved in the above industries and you are not aware of your annual TPAR obligations, we implore you to get in touch with our office to go over your situation. Remember also that if you are in one of the above industries and you did not pay any subcontractors you still need to submit a Nil report by the due date of 28th August each year.

Disclosure of business tax debts

The ATO is in the process of writing to taxpayers that may be eligible to have their tax debts disclosed to credit reporting bureaus (‘CRBs’).

The ATO can potentially report outstanding tax debts to a CRB where the following criteria are satisfied:

• The taxpayer has an Australian business number and is not an excluded entity;
• The taxpayer has one or more tax debts and at least $100,000 is overdue by more than 90 days;
• The taxpayer is not engaging with the ATO to manage their tax debt; and
• The taxpayer does not have an active complaint with the Inspector-General of Taxation about the ATO’s intent to report its tax debt information.

Excluded entities are a deductible gift recipient, a complying superannuation fund, a registered charity and a government entity.

The purpose of this letter from the ATO is to raise awareness of the actions that the ATO can now take under the Disclosure of Business Tax Debts measure.

The letter will be sent to all taxpayers with business tax debts that currently meet the criteria (discussed above) for disclosure.

This letter from the ATO provides business taxpayers with information on how to effectively engage with the ATO to manage their tax debt.

Taxpayers can avoid disclosure to a CRB by making payment in full or negotiating a payment plan.

If an eligible taxpayer does not take steps to actively manage their debt, they will remain eligible for disclosure.

Before the ATO takes any final action to disclose a tax debt, it will issue the taxpayer with a formal Intent to Disclose Notice.

If a taxpayer receives an Intent Notice, asking them to 'Act now or your tax debt will be reported to credit reporting bureaus', the taxpayer or their tax agent must contact the ATO within 28 days of receiving the notice to avoid the debt being reported.

It is crucial for taxpayers to engage with the ATO early before their debts become unmanageable.

Editor: If the ATO reports a taxpayer that has an outstanding debt to a CRB, this can have a negative impact on the client’s credit rating.

This in turn may affect the client’s ability to borrow from banks and other financial institutions.

ATO priorities this tax time

The ATO has announced four key areas that it will be focusing on for Tax Time 2022:

• Record-keeping.
• Work-related expenses.
• Rental property income and deductions.
• Capital gains from crypto assets, property, and shares.

Before claiming income tax deductions for their expenses, taxpayers must ensure:

• they spent the money themselves and were not reimbursed;
• if an expense is for both income-producing and private use, only the portion relating to producing income is claimed; and
• they have a record to prove it.

Clients who have undertaken investments in crypto assets are under the microscope of the ATO, and the ATO already has access to client data from the many of the platforms that individuals use to undertake these investments.

Editor: If you have undertaken crypto transactions during the last year, please advise our office well before you intend to prepare your 2022 income tax return to ensure you are able to report this correctly in your personal tax return. Most will be shown as capital gains or capital losses in tax returns.

Avoid double dipping on your deductions

Taxpayers are reminded not to make the mistake of ‘double dipping’ on deductions (that is, claiming expenses twice) in their tax return this year.

Some of the ‘double dipping’ mistakes commonly made relate to the following deductions:

• Working from home expenses
  A common mistake involves using the 'shortcut method' to claim working from home expenses and then claiming additional amounts for expenses such as mobile phone and internet bills, as well as the decline in value of equipment and furniture.
  The working from home shortcut method is all-inclusive.
  There are three methods available to claim a deduction for working from home expenses depending on individual circumstances; namely, the shortcut, fixed rate and actual cost methods.
  The method that gives the best outcome can be used, as long as the eligibility and record-keeping requirements for the chosen method are observed.
• Car expenses
  A common mistake involves using the 'cents per kilometre' method to claim car expenses, and then double dipping by separately claiming expenses such as fuel, car insurance, and registration.
  The cents per kilometre rate is all-inclusive and already covers decline in value, registration, insurance, maintenance, repairs, and fuel costs.
• Reimbursed expenses
  Taxpayers cannot claim expenses that have already been reimbursed by their employer.

Editor: Any outlay cannot be claimed twice or by both the employer and the employee – period!
We have seen some audit activity recently that confirmed this with one of our clients so please be aware of this before making your claims this year.

Annually in October each year we send out a service offering called Accountancy Insurance which covers our clients for our professional fees to defend or assist in such audits or tax reviews. Feel free to contact our office at any time if you’d like to know more about this service.

ATO warns about GST & Fuel Tax Credits fraud

Taxpayers are being warned to be on the lookout for dodgy online ads, often on social media platforms, promising easy GST/fuel tax credits (FTC) refunds.

The ATO recently issued a media release about large-scale GST/FTC fraud attempts exceeding $850 million, that involve customers setting up an ABN without operating a business, and then submitting fictitious BAS statements to get a GST/FTC refund.

The ATO said it has already successfully stopped $770 million in attempted fraud before payment.

“The people who are involved in these activities aren’t accidentally ticking a box on an online form. They’re signing to say that they’ve set up an ABN for a business that doesn’t exist, then lodging a BAS with false information on it, to receive GST/FTC refunds that they are not entitled to,” the ATO said.

Taxpayers who think they’ve been involved in this arrangement are urged to let the ATO know (before the ATO contacts them) by calling 1300 130 017.

Confidential reports of suspected tax evasion or crime can be made online (visit ato.gov.au/tipoff) or by calling the ATO’s Tax Integrity Centre on 1800 060 062.

Editor: The team here at Lidgerwoods always like to remind our clients to be vigilant and very careful if you suspect something is wrong or dodgy. The old saying “if it’s too good to be true, it probably is a scam….”.

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