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  • Tax Practitioner Stewardship Group key messages 16 August 2019

    ATO corporate plan

    The ATO corporate plan 2019–20 outlines priorities for the year ahead in the ATO’s journey towards 2024.

    There are two overarching aspirations that guide this 2024 journey:

    • becoming more streamlined, integrated and data-driven
    • building trust and confidence.

    The ATO is committed to working in partnership with the tax profession to deliver improved services. The ATO will focus on the delivery of major projects, improvements to technology systems, and enhancing the client experience and integrity in the system.

    This year, clients and staff will experience more of these shifts. We will integrate our back-end systems, move towards real-time transactions and lay the foundations for future data and digital transformations.

    Two strategic initiatives with a specific focus on intermediaries:

    • intermediaries engagement and assurance – support intermediaries to ensure clients do the right thing, and increase internal transparency around the risks in their professional practices
    • improved digital services for agents – supporting the ongoing transition to contemporary digital services for agents and make portal services accessible to digital service providers.

    Other initiatives that may need some input from tax professionals are:

    • superannuation guarantee assurance
    • payment and debt management
    • online services for business
    • digital identity
    • single client accounting system
    • dispute resolution
    • Single Touch Payroll
    • enhancing the digital ecosystem
    • individuals tax gap and substantiation
    • black economy program
    • Tax Avoidance Taskforce
    • Australian Business Register
    • Tax Practitioner Board and Tax Agent Services Act 2009 reviews

    Superannuation

    Superannuation Guarantee amnesty

    On 10 May 2019, the ATO wrote to around 7,000 employers who had been identified as eligible for the proposed Superannuation Guarantee amnesty if it was legislated. The letter advised the employers:

    • the proposed amnesty had not been enacted
    • they would shortly receive an updated statement of account with the updated amount owing which would need to be paid
    • they would need to amend their tax return if they had already claimed the catch up payments as a tax deduction in anticipation of the amnesty.

    With the exception of 60 employers, all updated statements of account were issued by 30 June 2019.

    Superannuation Guarantee enforcement tools

    The ATO has issued one Education Direction in July 2019, with more to be issued during August 2019. The ATO will monitor the response prior to expanding the process.

    Since 1 April 2019, the ATO has issued 1,310 Director Penalty Notices to directors of 928 companies to a value of $72.7 million.

    Since 1 April 2019, one security bond demand was issued in July 2019 with a compliance date in August 2019. A further six cases have been commenced and are subject to further negotiation.

    Self-managed superannuation fund update

    In August 2019 the ATO will be writing to all self-managed superannuation funds that have more than 90% of their assets in a single asset class to alert them to their potential exposure to concentration risk and regulatory breaches. The letter will remind the 17,700 self-managed superannuation funds in this category that they need to have an investment strategy that considers the level of risk for the fund and its members where there is inadequate diversification, sometimes referred to as concentration risk.

    Update topics

    • Policy and advice update
    • Legislation before Parliament
    • Government announcements
    • ATO public advice and guidance products
    • Litigation cases handed down

    Tax Time 2019 and Single Touch Payroll

    • employer’s experience
    • employee’s experience this tax time

    Self-managed superannuation funds

    • SMSF rollovers in SuperStream and release authorises
    • SMSF approved auditor actions
    • Changes to the 2019 SMSF annual return
    • Death benefit income streams – meeting minimum pension requirements
    • Other SMSF updates

    Employers

    • Superannuation Guarantee
    • Superannuation Guarantee amnesty
    • Superannuation Guarantee enforcement action
    • Superannuation Guarantee enforcement tools
    • Single Touch Payroll
    • Phase 2 Single Touch Payroll
    • Small Business Superannuation Clearing House
    • Fringe Benefits Tax
    • Workers classification

    Individuals

    • First Home Super Saver Scheme
    • ATO Online
    • Protecting your superannuation package

    Detailed information on any of the superannuation topics listed above are available on request from the TPSG secretariat.

    Single Touch Payroll

    Employers

    By the due date of 31 July 2019, 10.4 million (96%) of all income statements were prefilled by Single Touch Payroll reporters with finalised data and displayed in myGov as ’tax ready’.

    The ATO will start nudging employers who have not finalised their employee statement from 14 August 2019 (the due date to lodge Payment Summaries Annual Report).

    Employees

    Around 9.8 million individuals or their agents can now see their income statements and employer reported superannuation information online. Income statement information has been used to prefill for individuals and agents.

    If an employee’s income statement information isn't marked as 'tax ready' by their employer, they will see a red box in ATO online services with the word 'required' next to the employer’s name. They will need to speak to their employer to find out when they will finalise the statement.

    If an employee chooses to lodge their tax return before the income statement is finalised they will need to review any information that has been pre-filled and confirm it is correct and acknowledge that:

    • the employer may finalise the income statement with different amounts
    • they may need to amend their tax return and additional tax may be payable.

    The ATO has issued a social media statement to support employees whose employers haven’t finalised their income statement.

    Agent assurance and engagement

    The tax agent early intervention strategy is helping us to understand the drivers behind agent behaviour with a view to protecting our tax and superannuation systems.

    Tax agents and advisors play an important role in helping their clients to get their tax and super right. Tax agents who do not meet professional standards may be gaining an unfair advantage over others who do the right thing, leaving their clients with significant consequences and liabilities.

    The ATO is developing a risk-based, enterprise-wide approach called the Intermediary Assurance Strategy which aims to identify, prioritise and treat intermediary risk to ensure our interactions (focusing initially on tax agents) are tailored, holistic, integrated and transparent. The ATO is harnessing intelligence to inform conversations with agents around the risks we see and what can be done to address them. This may involve a visit to the practice and an in-person discussion as part of the early intervention strategy, specially funded under the Black Economy program.

    The tax agent early intervention strategy will continue to be developed in consultation with the Tax Practitioners Board and tax professional associations to drive behavioural change and ultimately create a level playing field for all. It will take into account the holistic risk factors associated with agent behaviour, business practices and personal tax affairs. Our proactive support and guidance aims to reduce the number of agents who are at risk of becoming a concern in the future. It plays a key role in addressing this agent population, where prevention and early action is critical.

    Digital ID

    The way you access our online services is changing as AUSkey is due to be retired in March 2020. myGovID and Relationship Authorisation Manager are set to offer an easy, secure and more flexible way to prove who you are when you access selected government services online.

    myGovID is a secure proof of identity app. Set it up once and use it to prove who you are when accessing government online services. Use your myGovID for both personal and business matters.

    Relationship Authorisation Manager allows you to link your myGovID to an Australian Business Number (ABN). It lets you manage who can act on behalf of your organisation online.

    Together, myGovID and Relationship Authorisation Manager will replace AUSkey (including Manage ABN Connections and Device AUSkey). You can continue to use AUSkey while you make the move to myGovID and Relationship Authorisation Manager.

    In preparation for this change, check that your:

    Some eligible users can already opt to move to myGovID and RAM. See if you are eligible to try a new way to access government online services.

    GST at settlement

    Since 1 July 2018, most purchasers of either new residential premises or land that could be used to build new residential property (‘potential residential land’) are required to withhold an amount from the contract price at the date of settlement. This is paid directly to the ATO rather than to the property supplier.

    During 2018–19, the ATO saw nearly 50,000 property transactions where there was a withholding at settlement.

    For these property transactions the ATO receives information (via the two online forms submitted by the purchaser or their representative) that are used in the GST at settlement risk model to compare against BAS lodgments.

    Common issues

    Our risk and compliance areas using the risk model and client engagement have been able to identify common issues, including:

    • not lodging the BAS
    • lodging the BAS but not reporting the property transaction
    • incorrectly reporting the property transaction (eg incorrectly using the margin scheme)
    • incorrectly including the withholding amount on the BAS.

    Broadly speaking these issues relate to some confusion on how the measure works and some general lack of knowledge on property transactions. Through client engagement some common themes were identified, including:

    • some suppliers and their representatives don’t think they need to report the transaction on their BAS as the purchaser withheld at settlement
    • the sale of land or property is not part of an entity’s core business and they have not advised their BAS preparer
    • confusion on eligibility to use the margin scheme and how it is calculated.

    Correct GST BAS reporting

    The supplier liable for the GST of the property transaction must still report on their BAS:

    • all property sales at label G1
    • the actual GST on sales at label 1A

    Correctly calculate and report GST at label 1A when the margin scheme applies.

    Do not report the GST property credit on the BAS.

    The credit allocated to the supplier’s GST property credits account will be transferred into the supplier’s activity statement account when the relevant BAS is lodged and processed.

    The property credits withholding account is viewable via ATO online services for individuals and sole traders, online services for agents and the Business Portal.

    If an error on a BAS is identified, including incorrectly reporting or omitting property sale information, the supplier must amend it to avoid potential penalties.

    If you are unsure of the correct GST treatment of the property transaction, seek advice from the ATO or your tax professional to avoid unintended consequences.

    For more information, refer to:

    Treasury consultation

    In the 2018–19 budget, the Government announced it would introduce an economy-wide cash payment limit of $10,000 for payments made or accepted by businesses for goods and services. Transactions equal to, or in excess of this amount would need to be made using the electronic payment system or by cheque. The Black Economy Taskforce recommended this action to tackle tax evasion and other criminal activities.

    The Government released exposure draft legislation and accompanying explanatory material for public consultationExternal Link. Submissions to the consultation closed on Monday 12 August 2019.

    More information

    Tax practitioners can obtain more information on these topics from the professional association representatives. Tax practitioners should contact their representative to contribute items for future discussions.

      Last modified: 13 Sep 2019QC 60112