The talk about the stage 3 tax cuts has reached a fever pitch in recent days. The changes were originally legislated by the previous government in 2019 with support of the then Labor opposition. During the election campaign and since coming into government, the Prime Minister had reassured voters on multiple occasions that the stage 3 tax cuts would remain. However, with the recent inflationary stressors, the government has been under increasing pressure to scrap the already legislated tax cuts in favor of cost-of-living relief for low to middle income earners, which would require the introduction of amending legislation.
As a new calendar year commences, the ATO’s priorities in the SMSF sector remain consistent. As with previous years, the greatest area of concern for the ATO continues to be taxpayers illegally accessing their super before meeting a condition of release. While it notes that the vast majority of SMSFs follow the rules, those that do not are having a significant impact on the system.
Businesses wanting to participate in tendering for Commonwealth government contracts need to be aware that contracts over a certain amount require a statement of tax record to be included with the tender submission, and the statement will need to be valid at the time of tender closing. The statement of tax record is a just statement that confirms the business’ engagement with the tax system is satisfactory and will apply to all contracts that have an estimated total value of over $4m including GST.
Each year the ATO releases a report containing the latest annual statistical results for employer super guarantee (SG) compliance and obligations, and this year is no exception. According to the 2022-23 report, the amount of employers complying with their SG obligations without intervention from the ATO remained the same as the 2021-22 year, at 94%. This is the case even though the number of employees and employers reporting through single touch payroll (STP) has increased; 915,000 employers reporting through STP for around 14.3m employees in 2022-23 compared with 819,000 employers reporting through STP for approximately 13.6m employees in 2021-22.
On Tuesday, 9 May 2023, Treasurer Jim Chalmers handed down the 2023–2024 Federal Budget, his second Budget, which follows the October 2022 Budget. The Treasurer announced a package of cost-of-living measures, including energy bill relief, expected to reduce power bills by up to $500 for five million households. These measures have been designed to provide relief without adding inflationary pressures.
The government has released a consultation paper on the application of the proposed reduction in super tax concessions for individuals with super balances over $3m, including those with SMSFs. Among other things, the consultation paper seeks views on whether the proposal would create any unintended consequences and whether modifications to the proposed portioning methods should be applied.
Recent results of sample audits across individuals conducted under the ATO random enquiry program appeared to show a net tax gap of $9bn for the 2020 income year, with the incorrect reporting of rental property income and expenses being a significant driver of the gap. Specifically, the estimated net tax gap for rental property expenses contributed around $1bn or 14% of the total individuals gap, with a common driver being the incorrect apportioning loan interest costs where the loan was refinanced or redrawn for private purposes.
The ATO has recently issued a Taxpayer Alert warning that it is reviewing arrangements where an individual taxpayer accesses the profits of a private company in tax-free form through the use of an interposed holding company. It notes that the Alert will apply to all arrangements when, viewed objectively, there is an indication that the dominant purpose of the arrangements is for the individual to avoid tax.
APRA has recently released its policy and supervision priorities for 2023. For the superannuation space, APRA is maintaining its focus on holding trustees to account to improve member outcomes. This includes rectifying sub-standard industry practices, eradicating unacceptable product performance, and influencing improved retirement outcomes. In 2023, APRA will also seek to finalise some guidance on investment governance, MySuper asset transfer requirements, and general audit related matters.
With 2023 in full swing, the ATO is looking to finalise a number of FBT-related issues currently under consultation. For businesses, the outcome of these consultations and subsequent issue of draft rulings or guidelines may affect the applicability of FBT in certain circumstances, as well as the calculation of FBT benefits.
Money never sleeps, as the old quote goes, but it could apply equally well to scammers. As most people have let their guard down and are still recovering from their holiday excesses, scammers are positioning themselves to strike at this particularly vulnerable time. Among the usual parade of swindles, the government has warned of a particularly insidious new ATO impersonation scam on social media.