Taxwise Business News

• Work-relatedcarexpenses,thirdpartyreporting andothermeasures–amendmentsnowlaw

• FBTupdates

• GST

• SupportingsmallbusinessestoimplementSuperStream

• Reviewingtaxablepaymentsannualreports

• Claimingwebsitedevelopmentcosts

• NationalInnovationandScienceAgenda-taxchangesannounced

• SingleTouchPayrollreporting

• Datamatchingprograms

InthisIssue...

Depending on the sort of entertainment youprovide to your employees, there may bedifferentFBTimplications.

2) FBT exemptions for work-related electronic devices

From 1 April 2016, small business employers(with turnover of less than $2 million) will beable to provide your employees with multipleelectronic devices to use for work withoutincurring a fringe benefits tax (FBT) liability.

Youcanprovide:

• mobilephones

• tablets

• laptops

• calculators

• GPSnavigationreceivers.

If you are looking to provide multiple devicesto your employees, you are able to purchasethese at any time, but you can’t give them toyouremployeesuntil1April2016ortheywillbesubjecttoFBT.

Note that providing these devices may be abenefitinadditiontoorpartofyouremployee’ssalaryorwagespackage.

Work-related car expenses,thirdpartyreportingandothermeasures–amendmentsnowlawInpreviouseditionsofTaxWise,wenotedchangesthatweregoingtooccurinthefollowingareas:

•work-relatedcarexpenses;

• ZoneTaxOffset;

• FBT concessions on salary packagedentertainmentbenefits;and

• thirdpartyreporting.

Thechangeshavenowbecomelaw.SeeearliereditionsofTaxWisefordetailsofthechanges.

FBTupdates1) FBT implications over the festive season

The ATO reminded employers over the festiveseasonthatemployerswhoprovideentertainmenttotheiremployeesduringthefestiveseason(oratanyothertimeoftheyear)shouldremembertothinkaboutthefollowing:

•whenprovidingfood,drinkorrecreationmaybeconsidered‘entertainment’;

•whethertheentertainmentissubjecttofringebenefitstax(FBT);and

• themethodsavailableforvaluingentertainmentfringebenefits.

Todo!Talktoyourtaxadviserabouttheentertainmentyouprovidedtoyouremployeesoverthefestiveseason(didyouhaveaChristmasparty?Didyougiveyouremployeesanygifts?)

GSTSimplified GST accounting methods for food retailers

Ifyouareasmallfoodretailer,youmostprobablybuyandsellproductsthataresubjecttoGSTaswell asproducts thatareGST-free.Othersbuyproducts that are subject toGST and areGST-free and sell only products that are subject toGST.Assuch,itcanbecomequitecomplicatedtoaccuratelyrecordyoursalesthataresubjecttoGSTandothersthatarenot,makingaccountingforGSTcomplicated.

The ATO introduced the simplified accountingmethod for GST purposes (SAM) to make iteasier for business owners to account forGST.These methods help business owners to workouttheamountofGSTtheyareliableforineachtaxperiod.

Todo!Ifyouareplanningonprovidingmultipledevicestoyouremployees,talktoyourtaxadviserfirsttoensureyouproperlycomplywiththeFBTrules.

There are five methods to choose from, soyouneed todecidewhichone isbest for yourbusiness. Though pricesmust be set accordingto the Australian Competition and ConsumerCommission’s(ACCC’s)guidelines.

It would be best to speak to your tax adviserto ensure you have the right systems in placefor tracking, and meeting, your business’ GSTobligations.

Supporting small businessestoimplementSuperStreamSuperStream is continuing to be rolled out forsmall businesses. As such, the ATO has beenlookingforwaystoassistsmallbusinesseswhichmay need support or assistance to implementSuperStream.

The ATO recently launched an intensivecommunicationprogram,deliveringpracticalhelpandinformationviaemailandSMStoregisteredbusinessesacross22 industries.Theyhavealsocontacted the relevant industry associations,publishingeditorialandsocialmediaandhostingdedicated SuperStream online informationsessions(webinars).

Someofthesegmentsforwhichthereisspecificinformationare:

• Pharmacyandcosmetics

• GeneralPractitioners,DentistsandSpecialists

• CafesandRestaurants,Catering&Take-away

• Fruit,Veg&Floristry

• Farming(livestockandcrops)

• HairdressingandBeautyServices

• Trades

• Automotive&Repair

• Engineering&TechnicalServices

• Bus&Taxi

• RoadFreight

• Consulting(Management&IT)

• Banking&Finance/Insurance&Super

• Accommodation,Pubs&Clubs

• Food&Grocery

•Manufacturing–general

• Building&EmploymentServices

•Metals&Engineering

•Otherspecialist&boutique

• Accounting&Legal

• Hospitals,Clinics,AgedCare,Accommodation&Allied

• Education&Training

If you are unsure about these changes, pleasetalktous.

Reviewing taxable paymentsannualreportsTheATOiscontactingbusinessesinthebuildingand construction industry about informationthatbusinesseshaveprovidedon theirTaxablePayments Annual Report. The ATO will becontactingbusinesseswhohave:

• providedareportwithmissingorinvalidABNs;

• included amounts paid for GST when thecontractorisn’tregisteredforGST;

• not lodged a report, when ATO recordsindicatetheyshould;

• advised the ATO they are not required toreport, but the ATO’s records indicate thebusinessshouldhavereported.

TheATOwilladvisebusinessesthatarereviewedwhatthereviewhasfoundandwillsuggestwaystomake it easier for the business to completetheirreportsmoreaccuratelyinthefuture,suchas using the ABN Lookup tool or ATO app tocheckacontractor’sABNoriftheyareregisteredforGST.

Claimingwebsitedevelopmentcosts

If you incur expenses creating or maintainingyourbusiness’website,youmaybeabletoclaimsomeof thesecostsasadeduction inyour taxreturn.

a) Capital expenditure

Youmightbeabletoclaimcostsincurredbeforeyoustartupyourbusinessovera5yearperiodafteryourbusinessstartsup(ieclaim20%ofthecostperyear).

b) Simplified depreciation rules

Ifyouhave startedyour smallbusinessalreadyandhavechosentousethesimplifieddepreciationrules,youmightbeabletodeducttheexpenseimmediately.

• If you incur the cost between12May2015and30June2017andthecostis:

-less than $20,000 – you may claim adeductionforthefullcostintheincomeyearyouincurredtheexpenditure;

-$20,000ormore–youmayallocatethecosttoageneralsmallbusinesspool.

• If you incurred the cost between 1 January2014and12May2015andthecostis:

-lessthan$1,000–youcanclaimadeductionforthefullcostintheincomeyearyouincurredtheexpenditure;

Todo!Seekprofessionaladvicefromyourtaxagentoradviserabouthowtoclaimwebsitedevelopmentcosts.

-$1,000ormore–youcanallocatethecosttoageneralsmallbusinesspool.

Differentrulesapplyifyouhaveelectedtoallocateexpenditureonin-housesoftwaretoasoftwaredevelopmentpool.From1 July2015, in-housesoftware expenditure incurred and allocated toasoftwaredevelopmentpoolisdeductibleoverfiveyears.

c) Non-capital expenditure

Youmayalsobeabletoclaimadeductionfortheongoing expenses of running and maintainingyourwebsite,suchasdomainnameregistrationandserver-hosting inthe incomeyearthatyouincurthiscost.

National Innovation andScienceAgenda-taxchangesannouncedOn7December 2015, a suite of new tax andbusiness incentive measures was announcedunder the Commonwealth government’sNationalInnovationandScienceAgenda(NISA):Prime Minister’s media release (7 December2015); Treasurer’s media release (7 December2015).

The intention is that thegovernment’s taxandbusinessincentivesundertheNISAwillencouragesmartideastoencourageinnovation,risktakingandbuildanentrepreneurialcultureinAustralia.

Taxandbusinessincentives

The following tax and business incentivemeasures havebeen announced as part of theagenda.Thegovernmentwill:

• providenewtaxbreaksforearlystageinvestorsininnovativestartups.Investorswillreceivea20%non-refundabletaxoffsetbasedontheamountoftheirinvestment,aswellasacapitalgains tax exemption. This scheme is basedon the successful SeedEnterprise InvestmentScheme in the United Kingdom, which hasresulted in over $500 million in funding toalmost2,900companiesinitsfirsttwoyears.The new arrangements will apply from thedate of Royal Assent and are expected tocommencefrom1July2016

• build on the recent momentum in venturecapital investment in Australia including byintroducinga10%non-refundabletaxoffsetforcapitalinvestedinnewEarlyStageVentureCapital Limited Partnerships (ESVCLPs), andincreasingthecaponcommittedcapitalfrom$100millionto$200millionfornewESVCLPs.The new arrangements will apply from thedate of Royal Assent and are expected tocommencefrom1July2016

• relax the “same business test” that denies

tax losses if a company changes its businessactivities, and introduce a more flexible“predominantlysimilarbusinesstest”.Thiswillallowa startup tobring in an equitypartnerandsecurenewbusinessopportunitieswithoutworrying about tax penalties. Legislation isexpected tobe introduced in thefirsthalfof2016. The “predominantly similar businesstest”willapplyto lossesmade inthecurrentandfutureincomeyears

• removerulesthatlimitdepreciationdeductionsfor some intangible assets (like patents) to astatutory life and instead allow them to bedepreciatedovertheireconomiclifeasoccursfor other assets. The new arrangements willapplytoassetsacquiredfrom1July2016.

Smallbusinessesandstartups

Thegovernmentwill:

• supportincubatorswhichplayacrucialroleinthe innovation ecosystem to ensure startupshaveaccesstotheresources,knowledgeandnetworks necessary to transform their ideasintogloballyscalablenewbusinesses;and

•make existing employee share scheme(ESS) rules more user friendly. The newruleswill allow companies to offer shares totheir employees without having to revealcommercially sensitive information to theircompetitors.Thesechangesbuildontherecentreforms toESS,which includeddeferring thetaxing point for employees and introducing

anadditionalconcessionforthoseworkinginstartup companies. Legislation is expected tobeintroducedinthefirsthalfof2016.

The full text of the National Innovation andScienceAgendaisavailableontheNISAwebsite.

SingleTouchPayrollreportingIn the 2015-16 MYEFO statement, releasedon 15 December 2015 by the Treasurer, theHon Scott Morrison MP, and the Minister forFinance,SenatortheHonMathiasCormann,thegovernmentannounced that itwill simplify thereportingbyemployersoftheirPAYGwithholdingobligationsandsuperannuationcontributionsbyprogressivelyimplementingSingleTouchPayroll(STP).

Under STP, employerswill automatically reportindividual employee payroll information tothe ATO using their business managementsoftware. STP will also introduce reporting ofsuperannuationcontributionsinformationtotheATOwhenpaymentsaremadetosuperfunds.EmployerswillhavetheoptiontopaytheirPAYGwithholdingatthesametimetheypaytheirstaff.

The government will introduce streamlinedprocesses for individuals commencingemployment.IndividualswillhavetheoptionofcompletingtheirTaxFileNumberdeclarationandSuperannuation Standard Choice forms using

myGov or through their employer’s businessmanagementsoftware.

Thismeasurewillbephasedinasfollows:

• fromJanuary2017,therewillbeavoluntarypilot of STP. The pilot will focus on, but isnot limited to, targeted Small and MediumEnterprises

• fromJuly2017,allbusinessesmaycommenceSTP reporting, with the option to makevoluntarypayments.Inaddition,theATOwillcommencetransitioningemployerswith20ormoreemployeestoSTP,and

• from1July2018,employerswith20ormoreemployeeswillberequiredtouseSTPenabledsoftwareforreportingtotheATO.

To assist small business that wish to takeadvantageofthebenefitsofSTP,thegovernmentwill provide businesseswith a turnover of lessthan $2 million with a $100 non-refundabletaxoffsetforexpenditureonStandardBusinessReportingenabledsoftware.

Thisoffsetwillapplyfrom1July2017,andwillbeavailableforsoftwarepurchasesorsubscriptionsmadeinthe2017-18financialyearonly.

Datamatchingprograms1) Real property transactions - Data matching program

TheATOhasannouncedthatitwillacquiredetailsof real property transactions for the period 20September1985to30June2017fromStateandTerritoryrevenueandlandtitlesdepartmentsandofficesandrentalbondauthoritiesineveryStateandTerritoryinAustralia:AustralianGovernmentGazetteNoC2015G02019(8December2015).

Theobjectivesofthisdatamatchingprogramareto:

• obtain intelligence about the acquisition anddisposalofrealpropertyandidentifyrisksandtrendsof non-compliance across thebroadercomplianceprogram;

• identify a range of compliance activitiesappropriatetoaddressriskswithrealpropertytransactionsbytaxpayers;

•work with real property intermediaries toobtainanunderstandingoftherisksandissues,aswellastrendsofnon-compliance;

• gain support and input into compliancestrategiestominimisefuturerisktorevenue;

• promotevoluntarycomplianceandstrengthencommunityconfidence in the integrityof thetaxsystembypublicisingtheoutcomesofthedatamatchingprogram;and

• ensurecompliancewithregistration,lodgment,correctreportingandpaymentoftaxationandsuperannuationobligations.

2) Data matching on insurance asset classes

The ATO is currently working with insuranceproviders to identifypolicyownerson awiderrangeofassetclasses.Theseassetclassesinclude:

•Marine;

• Aviation;

• enthusiastmotorvehicles;

• fineart;and

• thoroughbredhorses.

The purpose of the ATO obtaining thisinformationistogainabetterunderstandingofcertaintaxpayers’wealthandtohelptheATOtoprovidetailoredservicestotaxpayerstoensuretheymeettheirtaxobligations.

DuringJanuaryandFebruary,theATOwillissueformal notices to insurers to provide the ATOwiththesepolicydetails.TheATOanticipatesitwillreceive100,000recordswherethedifferentassetclassesmeetcertainthresholdamounts.

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