Author: Bowden Liberatore

WHAT?

The Australian Taxation Office (“ATO”) has recently issued draft guidance that sets out the ATO’s new compliance approach with respect to certain kinds of trust distributions and “reimbursement agreements”. The relevant legislation is Section 100A of the Income Tax Assessment Act 1936 (“100A”). Many commentators have noted that the ATO is applying this Section in a new way that was never intended by legislators when it was originally introduced over 40 years ago.

The ATO’s focus is on trust distributions made to beneficiaries in a manner that achieves certain tax advantages, and where the funds relating to the distributions are not paid out to a beneficiary or are in some way reimbursed by the beneficiary back to the trustee or other parties.  

WILL IT AFFECT ME?

The ATO’s new guidance is set to invalidate many commonly made trust distributions, including distributions to adult children, grandparents, and even bucket companies.  It will challenge some traditional family trust distribution strategies and will impact decisions that must be made in relation to trustee resolutions as early as 30 June 2022.

WILL THE USUAL TWO- OR FOUR-YEAR AMENDMENT PERIOD APPLY?

The guidance is set to have effect from distributions as far back as 30 June 2014 – which includes years that would normally be outside of the ATO’s amendment window. The issue is that 100A has an unlimited review period, and as such, the ATO is effectively allowed to amend returns as far back as they would like if this provision is found to be applicable to a taxpayer.

WHAT NEXT?

While this guidance is still in draft form, and subject to further consultation by accounting and legal industry bodies, this guidance has been under development by the ATO for many years. Thus, there is a risk that the guidance will not change much in any final version.

We will continue to watch how the guidance develops and keep you informed of further developments. Furthermore, we will discuss this matter with you before 30 June 2022 as part of our year end planning to ensure that you have sound distribution resolutions in light of this new guidance.

NEED HELP?

As always we are here to help!

Want more information?

If you require any assistance with the process or would like further clarification, please contact our team on (07) 3879 3303.

What?

From 1 November 2021, employers will need to change their onboarding and payroll processes to comply with the new ‘super stapling’ requirements.

What’s super stapling?

A stapled super fund is an existing super account linked, or ‘stapled’, to an individual employee so it follows them as they change jobs. This aims to reduce account fees, avoiding new super accounts being opened every time an employee starts a new job. If you don’t meet your choice of super fund obligations, additional penalties may apply.

What does that mean for employers?

When a new employee commences on or after 1 November 2021, and they do not exercise choice of fund, the employer will need to check if the employee has an existing stapled fund. This is done by logging into ATO online services and providing some basic information about the employee.  

Generally, if the employee does not exercise choice and has a stapled fund, the employer will be required to contribute to the employee’s stapled fund to meet their Superannuation Guarantee (SG) obligations.

Are the ATO being lenient?

Yes, in the first 12 months (1 November 2021 to 31 October 2022), the ATO will generally not penalise the employer if it is the employer’s first occasion of non-compliance with the stapled fund rules arising from a lack of knowledge of the new requirements.

Need help?

As always we are here to help!

Want more information?

If you require any assistance with the process or would like further clarification, please contact our team on (07) 3879 3303. 

Employee Payroll? More? Never before has the ATO wanted more…….”Single Touch Payroll (“STP”) Phase 2″  

Who?

This applies to all employers.

What?

Single Touch Payroll (STP)? Your software reports employee remuneration directly to the ATO (or rather, it should by now….).

What has changed?

You will need to provide more details of what, and how, you are paying your employees. 

When does STP Phase 2 start?

1 January 2022.

What do I need to do?

Update your employee information when you’re prompted (If you have STP compliant accounting software (e.g. Xero). If you’re not sure if your accounting software is “STP compliant,” you should double-check with them. 

STP is now “serious.”

Want more information?

More detailed information can be obtained on the ATO website. Please copy and paste this link in your browser: https://www.ato.gov.au/Business/Single-Touch-Payroll/Expanding-Single-Touch-Payroll-(Phase-2)/

If you would like more information in regard to STP Phase 2 or deferring, please feel free to contact Bowden Liberatore offices on 07 3879 3303.

Director Identification Number deadline set. Take action before the due date.  

Background

In June 2020, the Federal Government passed legislation to improve business registrations and create a registry. The Modernising Business Registers (MBR) follows the government’s Digital Business Plan.

The main takeaway from this legislation is the introduction for all Directors to have a unique Director Identification Number (DIN).

What is a Director Identification Number?

A Director Identification Number (DIN) is a unique identifier that a director will use to identify themselves. The aim of a DIN is to increase the director’s accountability and traceability. This is done by data matching between the ATO and other regulatory bodies. Once you have a DIN, you will have it for life.

Do I need to apply?

Yes, if you are a director or an acting director of an Australian corporation or registered foreign company under the Corporations Act 2001 (Cth). This included companies responsible for managed investment schemes and registered charities.  

Currently, unincorporated bodies, de facto, shadow Directors, or company secretaries are not required to apply for a DIN.

How do I apply?

From November 2021, you will be able to apply for a DIN through abrs.gov.au.

To log in to ABRS online you’ll need to use the myGovID app, set to a Standard or Strong identity strength. If you haven’t already, you can set up your myGovID now.

When do I need to apply?

You need to have applied for a DIN by 30 November 2022.

Penalties for Non-compliance

Civil and criminal penalties will apply to individuals who:

• Fail to apply for a DIN;
• Intentionally apply for more than one DIN;
• Provide a false DIN; or
• Are actively involved in the contravention of any of the above.

Can you apply on my behalf? 

As part of the process, you will need to apply for your own DIN. We are however able to assist you in understanding the process and guide you through the application.

Want more information?

If you require any assistance with the process or would like further clarification, please contact our team on (07) 3879 3303. 

What?

Am I Eligible?

• must employ staff (employees must be on your payroll and does not include any business owners)
• must have a Queensland headquarters
• must have an annual turnover of more than $75,000 and be registered for GST
• must have an annual payroll in Queensland of not more than $10 million
• must show or declare a reduction in turnover of 30% or more for a 1-week period that includes at least 1 full day of the:
  • South East Queensland lockdown commencing 31 July 2021;
  • The Cairns and Yarrabah lockdown commencing 8 August 2021; or
  • Any other lockdowns in Queensland in August 2021.

How do I apply? 

What evidence do I need?

• Business records to evidence your decline in turnover, employment status and payroll tax status; or
• A letter from us stating declaring the required information (Please let us know ASAP if you would like us to prepare a letter).

Need help?

What?

Aim I Eligible?

• a turnover of more than $75,000 per annum
• an annual payroll in Queensland of up to $10 million.

What do I need to do? 

Need help?