Tax time 2022 is fast approaching, and this financial year, the ATO will again be focusing on a few key areas to ensure that individuals are doing the right thing and paying the right amount of tax. These key areas are considered by the ATO to be problem areas where individuals make the most mistakes.
The ATO has recently updated its Law Administration Practice Statement on debt relief, waivers and non-pursuit of debt. Specifically, the Practice Statement provides guidance on the Commissioner’s discretion to not pursue the recovery of tax debts, and ATO’s ability to release individual taxpayers from their obligation to pay certain tax-related liabilities.
Due to COVID-19, trustees of an SMSF, or a related party of the fund, may provide or accept certain types of relief, which may give rise to contraventions of the super laws. You may also have been stranded overseas because of travel bans, which can affect your fund's residency status. In recognition of these issues, the ATO is offering support and relief to SMSF trustees for the 2019–20, 2020–21 and 2021–22 income years.
The temporary 50% reduction in minimum annual payment amounts for superannuation pensions and annuities has been extended by a further year to 30 June 2023. This temporary measure was first introduced by the government in response to the COVID-19 pandemic causing significant losses in financial markets, which negatively impacted account balances of super and pension/annuity of many retirees.
The whistleblower protection regime was introduced in 2019, and required large proprietary companies, public companies as well as corporate trustees of registrable super entities to have specific policies that outline the legislated protections for whistleblowers under the Corporations Act and how misconduct can be reported.
To help those nearing retirement boost their super balances, those aged 65 and over are able to make downsizer contribution of up to $300,000 from the proceeds of the sale of their home. This measure was originally envisaged as a way to encourage older people get into more suitable homes as well as increase the level of housing stock in a bid to reduce soaring house prices.
Low-income employees should rejoice that the minimum threshold at which an employer has to pay super under the super guarantee scheme will no longer apply from 1 July 2022. Under the current scheme all employers must pay a minimum level of super contributions on behalf of their employees, but only if each individual employee makes more than $450 per month. This is the minimum threshold
The work test will be scrapped for non-concessional and salary sacrificed contributions made by individuals aged between 67 and 75 from 1 July 2022. Currently, those individuals need to either pass the work test or satisfy the work test exemption criteria for each financial year that they make contributions in order for their super funds to accept these contributions. This change was designed to provide older Australians with more flexibility to contribute to their super and add to their retirement.
The ATO could soon have the power to issue a direction to complete an approved-record keeping course in instances where it believes an entity has failed to comply with tax-related record-keeping obligations in lieu of financial penalties. Legislation has been introduced into Parliament, but not yet passed.
With most of Australia and the world still in the grips of the COVID-19 pandemic, many businesses, both public and private, are offering rewards and incentives for their employees to get vaccinated and/or get the booster dose. Depending on the type of reward or incentive offered, and whether it is exclusive to employees or the general public, there may be tax consequences for the business.
If you’re a retiree and the current rise in cost of living and inflationary pressures are starting to bite, don’t turn to high interest loans, if you meet certain eligibility criteria, you may be able to access the Home Equity Access Scheme (previously known as the Pension Loans Scheme) run through Services Australia.