Changes to the tax legislation by regulators have been mentioned in this blog. Take a look at the following sections to get updates on newly announced tax changes.
Penalties on Taxpayers for Overdue TPAR
According to the ATO, from 22 March 2023, penalties will be imposed on taxpayers for not lodging a taxable payments annual report (TPAR) for 2022 or previous years and they’ve got three non-lodgment letters.
The taxable payments annual report (TPAR) is due each year on 28 August and includes payment details made to contractors working in certain industries such as construction and building, cleaning and IT. The penalty will be based on the size of the entity and the duration of the lodgment is overdue. The maximum penalty is 5 penalty units. For small entities (assessable income or existing GST turnover of below $1 million) the limit will be $1,375. For medium entities (assessable income or present GST turnover is up to $20 million) the limit will be $2,750.
Paying Indian Residents for Technical Services
The ATO has released some assistance regarding Indian residents getting paid by Australian customers for services offered from India. The changes in the law mean that if a taxpayer is an Indian resident for tax purposes they will not be liable to Australian tax for certain credits or payments received from Australian customers for technical services that have been remotely offered.
The Lodgment Deferral Process
The ATO has released assistance in relation to changes to the way for making lodgment deferral requests. If a customer, or you as a tax agent, are in a situation impacting the ability to meet a lodgment obligation, then a tax agent can lodge a deferral request. To be eligible, the following conditions need to be met:
- the request need to be for an existing client
- for this obligation, it is the first deferral request
- it must not exceed 3 business days after the original lodgment due date
- you or your client don’t need more than the default timeframes
Only specific lodgment obligations, such as certain income tax returns, annual GST returns, FBT returns, and some activity statements, will have the availability of this. The deferral period is fixed at 28 days for annual lodgments and 21 days for quarterly lodgments. Payment dates are also extended automatically to the deferred lodgment due date, excluding FBT returns.
Apart from this, the ATO has also offered some assistance in making requests for an ATO-assessed deferral that can be available where:
- the agent assessed deferral criteria mentioned are not met
- the request surpasses the agent-assessed deferral timeframes
- after the lodgment due date, the application is being submitted
- this is a second-time deferral request
- the client has had a lodgment prosecution that leads to a revised lodgment date
- there are exceptional situations that are not in your or your client’s control and need a full explanation
The ATO has reiterated again this year that during the lodgment period, which is at its peak, then it may take up to 28 days to finalise requests submitted using online services for agents and that deferral requests need to be lodged as soon as possible.
General Anti-Avoidance Rules Panel
On the panel, the ATO has issued some information that suggests the ATO on the application of general anti-avoidance rules. The ATO acknowledges that general anti-avoidance rules must be applied after considering all the facts.
The panel gives advice and doesn’t decide on whether a general anti-avoidance rule will apply. The advice from the panel is taken into account by ATO staff when deciding whether the rules need to be applied.
NSW Assistance Scheme for Taxi Licence Owners
According to the fact sheet released by the ATO, there are tax implications for NSW taxi licence owners who get paid under the ‘NSW Point to Point Financial Assistance Scheme’ from 2022. These payments relate to taxi licence cancellation. The payments are not liable for GST.
Releasing Funds from Superannuation to Pay Division 293 Tax
The ATO has released assistance on the process included for individuals who are liable to Division 293 tax and wish to release funds from superannuation to pay the tax. After receiving a Division 293 notice from the ATO, individuals will have 60 days to choose to release funds from super to pay the debt. It won’t impact the due date for payment. There are two methods needed for an SMSF to release funds:
- the individual member should choose to release the amount from their super, and
- the SMSF should have received a release authority from the ATO.
The released amounts are given directly to the ATO that will apply them to pay the tax. Any left amount will be offset against other debts of the taxpayer before it is paid to the individual member.
Tips from the ATO to Reduce Study Loan Balances
In the current scenario of increasing interest rates, the ATO has given a few tips on reducing the impact of indexation on study and training loans. It includes:
- Suggesting an employer if the individual has a study loan or has started the study.
- Rechecking the amounts being withheld from wages and salary to make sure this is enough to cover the expected compulsory repayment. If required, the withholding amount can vary.
- Taking into account voluntary repayment. On 1 June, indexation on these loans is applied, and repayments before that date will minimise the balance on which indexation is applied.
Deductible Gift Recipient Status Removal
The ATO has announced that it will begin revoking the DGR endorsement of organisations that are no longer eligible for DGR status, as per a recent change in legislation. This change requires DGRs to be registered charities to maintain their endorsement. Consequently, taxpayers who donate to these entities will no longer be able to claim deductions for their donations under Division 30 ITAA 1997. The entity can re-apply for endorsement once it meets its eligibility needs if an entity has its deductible gift recipient status revoked.
Residency for State Tax Purposes
While accountants can’t advise clients on state tax issues, Revenue NSW has released assistance in relation to non-resident overcharges for purchaser duty and land tax. In late 2021, the Addy case verdict was announced by the High Court, stating that Australia’s working holiday tax rates were not in line with the non-discrimination clause of the DTA between Australia and the UK. Comparable provisions can be found in various other Double Tax Agreements.
It seems like those non-discrimination clauses may have implications in relation to other tax provisions. Revenue NSW has indicated that the NSW surcharge land tax and surcharge purchaser duty provisions are also inconsistent with the clauses in these DTAs. Effective immediately, citizens of certain nations such as New Zealand, Finland, Germany, and South Africa will no longer be required to pay surcharge transfer duty and surcharge land tax. This change may also have an impact on entities involving these individuals, such as companies, trusts, or partnerships. Refunds may be available for those who have paid the surcharge purchaser duty or surcharge land tax on or after July 1st, 2021. Revenue NSW will be reaching out to affected individuals, but those who believe they may be eligible can also contact Revenue NSW to discuss their situation.
Regrettably, the SRO in Victoria has stated that they will not be implementing the same strategy as Revenue NSW at this point. There has been no response from other State revenue offices thus far. Additionally, it remains uncertain whether the modification may affect individuals from India, Japan, Switzerland, and Norway, as these countries have double taxation agreements with comparable non-discrimination provisions.