Tax Alert March 2018

Electronic payroll reporting to commence

As of 1 April 2018, employers with 20 or more employees will be required to electronically report payments such as salaries and wages, pay-as-you-go (PAYG) withholding and super information to the ATO.

Under the new Single Touch Payroll (STP) reporting regime, employers will report directly from their payroll solution at the same time they pay employees.

As a ‘substantial employer’, these businesses will be required to report through STP from 1 July 2018. Employers with 19 or less employees, however, will not be required to begin reporting until 1 July 2019 (subject to legislation being passed).

Employee numbers are based on headcount, not full-time equivalents.

The phased introduction of STP means some employers will no longer provide a Payment Summary. Instead, employees will access their tax and super information through the myGov portal.

GST withholding for residential purchases

The Government has released exposure draft (ED) legislation to introduce a GST withholding regime for purchasers of newly-constructed residential premises or lots in new residential subdivisions.

From 1 July 2018, purchasers will be required to pay 1/11th of the purchase price directly to the ATO at or before settlement.

The new rules are designed to stop tax avoidance by property developers who collect GST when a property settlement occurs but dissolve the business before lodging their BAS to avoid remitting GST.

The ED provides a two-year transition period, with contracts entered into before 1 July 2018 unaffected, provided the transaction settles before 1 July 2020.

Tax measures now law

Legislation to implement the First Home Super Saver (FHSS) Scheme and Downsizing Super Contribution have now become law and will come into effect from 1 July 2018.

Under the FHSS, first home buyers will be able to save up to $30,000 of voluntary contributions (with an annual limit of $15,000) within their super account to buy or build their first home while benefiting from the lower tax paid on super savings.

Individuals aged 65 and over will also be able to make a ‘downsizing’ contribution of up to $300,000 into their super using proceeds from the sale of a family home owned for at least 10 years.

SMSF guidance on transfer balance reporting

Following the announcement in November 2017 that event-based reporting will be limited to SMSFs where members have total superannuation account balances of $1 million or more, the ATO has released guidance on the new reporting requirements.

From 1 July 2018, affected SMSFs will need to report events influencing members’ transfer balance accounts. Reports must be submitted within 28 days after the end of a quarter where an event occurs to allow the ATO to monitor their $1.6 million pension cap.

SMSFs where all members have balances under $1 million are not required to report until the fund lodges its annual return to the ATO.

ATO gets tough on SMSFs

The tax man is also taking a stricter stance on SMSFs that have overdue annual returns, particularly those with two or more returns overdue.

The ATO has cancelled the ABNs of around 9,000 SMSFs that show no evidence of operating, visited tax agents to obtain feedback on why returns are overdue, and written to SMSF trustees in pension phase to remind them they still have a lodgement obligation. The regulator has also started compliance and audit action with selected SMSFs.

All figures in the article are sourced from www.ato.gov.au