Don’t get caught out by the ATO.

Don’t get caught out by the ATO.

ATO’s data matching technology shining light on undeclared income. Here’s what you need to know.

The progression of technology has seen many changes, both good and bad. This progression in technology is now assisting the ATO to ensure that people and businesses comply with their tax and super obligations and is also assisting in detecting fraud.

Data is first collected from;

  • Your employers
  • Bank and financial institutions (including overseas banks)
  • Health insurance funds
  • BAS statements
  • Superannuation accounts
  • Property information from the state

Armed with this data, comparisons are made to the information provided in your tax return. The intention of this technology implementation is to identify taxpayers with any omission of income or fraudulent deductions.  The ATO can reassess previous year’s tax returns with the power to issue fines and penalties, even interest in some cases for non-compliance.

The technology is especially advantageous in ensuring all income from secondary jobs such as rent from Airbnb, Uber and Cryptocurrency are declared. As written about last month, the gig economy is taking on the economy.

Further, “Crypto transactions, in particular, will undergo greater scrutiny than ever before, with the ATO estimating that records relating to between 500,000 and 1 million individuals, who have or may be engaged in buying, selling or transferring cryptocurrency, will be analysed by the ATO this tax time.” Mark Chapman explains.

Similarly, tradespeople and sole traders who may have been working ‘off the books’ are now at risk with the ATO checking bank accounts and cross referencing to any ABNs.

Remember that data matching is here to stay and it’s not too late to rectify with the ATO offering “voluntary disclosures”.

For further information call your Prime Accountant today on 9415 1511 or email reception@primeadvisory.com.au.

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How the ‘gig economy’ has changed work and the economy.

How the ‘gig economy’ has changed work and the economy.

Firstly, you’re probably wondering what this whole “gig economy” means.  It’s actually a buzz phrase, first coined at the height of the financial crisis when a number of workers started ‘gigging’ and working many casual jobs to stay afloat financially. Today, it is more recognised with people freelancing who are seeking more flexible and diversified work and working hours especially within the rapidly growing digital platforms.   These platforms allow freelancers to directly connect with potential employers to find employment.  Hence the term ‘gig workers”.  Great examples of these digital platforms are companies such as Uber, Airtasker and Deliveroo who are changing  traditional markets.

With this growing trend legislation also needs to be updated to reflect these abovementioned changes and it has, but it has been slow. Internationally, we have seen disagreement over gig workers classifications as either ‘employees’ or ‘independent contractors’. The most recent ruling by Australia’s Fair Work Ombudsman in June 2019 found Uber drivers to be independent contractors because there is not “an obligation for an employee to perform work when it is demanded by the employer”, as reported by Stuart Ridley.

A survey commissioned by the Victorian government published in June 2019, found 7.1% of Australians reportedly used a digital platform such as Airtasker (34.8%), Uber (22.7%), Freelancer (11.8%), Uber Eats (10.8%), Deliveroo (8.2%) for work. This report further found 64.8% of gig economy workers to access work via one platform opposed to 35.2% who accessed work through more than one platform and 11.4% who are registered on four or more platforms.

This however has forced changed to be made in the definition of work reviewing the definition of ‘casual’ work to ensure legislation applies to capture gig workers under workplace health and safety, improve superannuation rights and ensure protection under Australia’s industrial relations system. Simona Scattagalia Cartago says, “Getting a real measure of this global phenomenon is not easy, especially when some may underestimate its true size by considering only gig work as a primary source of income. In the US, more than 35% of the workforce seems to be participating in the gig economy, and that number is expected to jump to 43% by 2020.”

This however is also causing issues regarding superannuation. The Association of Superannuation Funds of Australia (ASFA) noted almost a quarter of self-employed people to have no super and less likely to meet the $450 per month earning threshold with any one employer as recorded in February 2018. It has been suggested a new ‘dependant contractor’ category to be made, ditching the earning threshold.

Further taxation issues have arisen from this new gig economy with the Australian Tax Office (ATO) updating guidelines for people earning income via digital platforms to also include ride sharing, short-term property or room rentals or skills on demand, as changed in June 2019. The ATO warn they will be matching data earnings from such above-mentioned platforms.

If you want to know more about how to navigate through these gig economy changes, please get in touch with the team via email or phone us 02 9415 1511. Speak soon!

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Important changes to land tax and stamp duty surcharges.

Important changes to land tax and stamp duty surcharges.

The NSW Government has recently proposed new laws to target discretionary trusts that currently own or intend to own NSW property, either directly or indirectly via other entities (i.e. unit trusts, companies and partnerships, subject to some exclusions).  The new laws will mean that discretionary trusts may be treated as ‘foreign persons’ with the following consequences:

  • A land tax surcharge of 2% (in addition to the normal land tax); and
  • A stamp duty surcharge of 8% (in addition to the normal stamp payable on NSW property acquisitions).

To prevent this from happening, your trust deed must be amended so that it includes provisions that specifically exclude foreign persons as trust beneficiaries.  If your trust already holds NSW property and has paid either of the above surcharges, then you only have until 31 December 2019 to amend the trust deed to obtain a refund on surcharges paid.

Please contact our office to discuss the matter further.

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Don’t let your Christmas generosity cause unwanted tax for your business

Don’t let your Christmas generosity cause unwanted tax for your business

When celebrating Christmas with your staff in the form of Christmas parties or gifts, be sure to keep accurate record as certain scenarios may attract Fringe Benefit Tax (FBT). Since 1986, the FBT system has existed in order to tax on things on the fringe, as the name suggests or outside of your salary package.

There is no separate FBT for the Festive Season however you may encounter several different circumstances when providing these events to your staff. This could also include fringe benefits provided by you to past and future employees and their associates (spouses and children), an associate or those under an arrangement with a third part to any current employees.

Implications for taxpaying body

If you are not a tax-exempt organisation and do not use the 50-50 split method for meal entertainment, the following scenarios may help you determine whether there are FBT implications arising from a Christmas party;

Implications for tax-exempt body

If you are a tax-exempted organisation the following situations may be relevant in determining the possible FBT implications arising from a Christmas party.

Understanding the Fringe Benefits Tax implications can be confusing and for a merrier Christmas your awareness of FBT and having accurate record keeping is important. Before planning your Christmas party, staff and client gifts please call us for advice.

If you any questions and what to know more please get in touch 02 9515 1511 or email us reception@primeadvisory.com.au.

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An Easy Way To Work Out What Tax Cuts You Can Expect

An Easy Way To Work Out What Tax Cuts You Can Expect

As widely reported, the Australian Parliament recently passed a bill to cut taxes which will apply to the tax return you are about to file or just have for the 2018/19 financial year. Depending on what your taxable income is for the year just gone, with the tax cuts you can expect a refund of up to $1,080.  If you’ve already submitted your tax return, fear not, you’ll still get the promised tax refund based on your earnings.

You can reference a detailed yet easy to understand explanation (including a handy calculator) in a recent article by The Guardian Australia which details how much you will receive now based on your individual income. Even more importantly, it also calculates what you can expect over the coming years.

Work out what your tax cut looks like for you.

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