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This EOFY we want you to be well informed and to know exactly what was going on so that you can be prepared. If you have any questions regarding anything in this article, please feel free to contact your local Moore Stephens office.

Please note that this information is listed as correct at the time of publishing and may be subject to further legislative changes.

Unpaid Superannuation Amnesty Update

On 24 May the Treasurer announced an amnesty to employers for unpaid superannuation contributions covering the period 1 July 1992 to 31 March 2018. The amnesty provides a 12-month window to 23 May 2019 to catch up on underpaid superannuation contributions and provides for deductions to be allowed on those contributions, plus interest to be paid on their employee’s behalf. Administrative penalties for late payment will not be imposed during this period.
​The legislation to endorse the announcement has passed the House of Representatives and is now in the Senate for debate.

The legislation to endorse the announcement was referred to the Senate Economics Committee and they handed down their report on 18 June with a recommendation that the Bill be passed unchanged. Notwithstanding, the Labor Party is committed to oppose the Bill through both houses.

The Tax Office has issued worksheets to assist employers to calculate the interest on unpaid contributions, which should be paid to the employee’s superannuation fund with the superannuation contributions. These worksheets also need to be lodged with the Tax Office through the Business or Tax Agent Portals when payments are made.

Should employers wish to pay off the debt, then the Tax Office will enable lodgements for that purpose and General Interest Charges will be imposed. Please note that any balance of superannuation and interest outstanding after 23 May 2019 will not be deductible.

Until the legislation is passed, superannuation funds may not provide the documentation necessary to accept these arrears and avoid the possibility of excess contributions tax on employees close to the $25,000 cap. Please contact your Moore Stephens accountant for updates and worksheets.

Other Measures Currently Before Parliament

  • It is proposed that high income individuals with multiple employers will be able to “opt out” of superannuation guarantee with some of their employers so they do not exceed the $25,000 concessional cap.
  • Removal of the low income threshold of $450 per month before Super Guarantee begins. Superannuation contributions will therefore apply regardless of age, hours or wage rate.
  • Extend Single Touch Payroll to all employers effective 1 July 2019.
  • Introduce penalties, including criminal penalties where employers defy a Tax Office order to pay Superannuation Guarantee.

Queensland Budget

  • Land Tax Rate Increase – From the 2018-2019 financial year new rates of 2.25% for resident individuals and 2.5% for companies, trustees and absentees will apply to aggregated holdings over $10 million.
  • Payroll Tax Rebate of 50% for wages of apprentices and trainees extended for 12 months to 30 June 2019.
  • Additional Foreign Acquirer Duty. From 1 July 2018 additional duty of 7% will be imposed on foreign purchasers (individuals, companies or trustees) of residential property. Footnote: this treatment varies from NSW where Australian Based Developers that are foreign owned are now relieved from the 8% duty surcharge and 2% land tax surcharge).

New South Wales Budget

  • Payroll Tax Changes – From 1 July 2018, the tax-free threshold for payroll tax will increase from $750,000 to $850,000. It will continue to increase by $50,000 every year to reach $1 million in 2021/22. The threshold will be $850,000 in 2018/19, $900,000 in 2019/20, $950,000 in 2020/21 and $1m in 2021/22.

Tax Office Targeting Clothing & Laundry

The ATO will be closely examining claims for work-related clothing and laundry expenses. Assistant Commissioner Kath Anderson said, "last year around 6 million people claimed work-related clothing and laundry expenses, with total claims adding up to nearly $1.8 billion. While many of these claims will be legitimate, we don't think that half of all taxpayers would have been required to wear uniforms, protective clothing, or occupation-specific clothing." Clothing claims are up nearly 20% over the last 5 years and the ATO believes many taxpayers are making mistakes or deliberately over-claiming.

Clothing expenses should only relate to work uniforms, protective clothing (steel cap boots, high visibility pants or vests), occupation specific (chefs checked pants) or clothing carrying registered emblems or logos of their employer. Where your employer merely states you should wear a blue business shirt to work that does not constitute a deductible expense. Keep your receipts and don’t expect the $150 deduction automatically.

Tax Planning Tip for Small or Medium Companies

Here is a tip to top up your superannuation and gain an extra tax benefit:

Trading companies with a turnover under $25 million are now taxed at 27.5% however individual taxpayers in middle or high income bracket pay tax at marginal rates from 39% to 47% (including Medicare).

From 2018, employees for the first time are able to top up their superannuation personally and gain a personal tax deduction. Directors and family members employed by their companies may find it more tax effective to top up their superannuation personally before year end and may gain a tax refund from the payment.

Remember you are still limited to the $25,000 concessional cap between employer sponsored and your own contributions. Your super fund may have special forms for lodgement with the personal contribution and you may need to use a different EFT or BPAY code for payment.

Other Tips to Remember

  • There is an immediate deduction for equipment and vehicles used in your business under $20,000 net of GST.
  • Prepayment deductions are available for Small Businesses.
  • Pass Superannuation contributions before 29 June (last business day this year). If the Superannuation fund has not received it, it won’t be deductible. Plan ahead by 3 days.
  • Lodge farm management deposits prior to 29 June.

Changes from 1 July 2018

  • From 1 July 2018, purchasers of new potential residential land, residences or apartments are required to withhold GST from the seller and remit it to the Tax Office. Purchasers, including private individuals, will need to deduct 1/11th of the contract price, 7%, if the margin scheme has been applied, or 10% of the GST exclusive market value for transfers between associates. This relates to any contract executed after 1 July 2018 and certain contracts executed prior, but with settlement after 1 July 2020. Commercial property, residential property being the subject of substantial renovation, or fully GST taxable supplies between registered parties, are excluded.
  • Single Touch Payroll – Do you have 20 or more full or part time staff? If so, then your payroll software needs to be compliant to report wages and PAYG withholding under the new reporting regime. This means you will report wages and PAYG withholding in every pay cycle and employees will be able to access their information using their myGov account. Superannuation is currently excluded from this reporting system.