Financial Support to Help Businesses with Recent Weather Events

Various businesses may have been affected by recent weather events with some getting financial support or government grants to help them in recovery. While the tax treatment of financial support might not be an instant priority of affected businesses, the ATO is sending reminders to taxpayers to take it into consideration when it’s time to lodge tax returns. Government grants are taxable.

The main exception is if the specific government grant has been made tax-free and certain other conditions are satisfied. While this is based on the grant type received by the business, the ATO has released a fact sheet ‘Disaster Support Grants and Deductions for Business’ with a list of common non-taxable natural disaster government grants that are helpful.

If a business gets a tax-free grant, then it won’t be possible to claim deductions for the expenses that relate to getting that tax-free grant. However, getting a tax-free grant shouldn’t have an impact on the deductions available for other business costs that have been incurred such as rent, wages, or utilities.

Warning for Super Funds Claiming GST Credits on Personal Advice Fees

The ATO is warning super funds and investor-directed portfolio service investment platforms of certain arrangements that lead to claiming reduced GST credits on personal advice. The primary focus is on arrangements that engage an investor or member involving an adviser to get personal advice regarding their interest in the fund. Those services are offered under a contract between that person and the adviser. While the person allows the fund to pay the adviser fees by deducting the fee from their interest in the fund or platforms’ assets, they are liable if the fund doesn’t pay.

According to the ATO, this is an administrative payment arrangement. The fund is not the recipient of the advice and is not liable to claim reduced GST credits. Identifying that private binding rulings released by the ATO in the past may have contributed to the reduction in the GST credit claims, the compliance approach of the ATO is largely prospective. In short, the ATO will not devote compliance resources to review reduced GST credits claimed under these arrangements before 1 April 2024. Platforms and funds involved in these types of arrangements can still review their entitlement to claim reduced GST credits and if unsure, get help from the ATO.

Data Matching on the Sharing Economy

The reminders are being sent to electronic platforms running in the sharing economy of their obligations to report transactions made through their platform to the ATO under the sharing economy reporting regime. The reporting obligations for various sharing economy platforms have been updated. For most ride-sourcing and short-term accommodation platforms, the first report is due at the end of January 2024 and reporting obligations apply to transactions from 1 July 2023 onwards.

For other sharing economy platforms like asset sharing, food delivery, etc., they will be required to report transactions from 1 July 2024 onwards. It is important to remind clients engaged in the sharing economy that the Australian Taxation Office (ATO) is collecting data from electronic platforms. The ATO will match this data with disclosures made in their tax returns and activity statements.