The ATO has warned that it will increase its scrutiny of rental-related deductions this year. It says some people are still claiming travel to residential rental properties, but from 1 July 2017 taxpayers (aside from excluded entities) have no longer been permitted to claim tax deductions for travel expenses related to inspecting, maintaining or collecting rent for a residential rental property.

The ATO expects to more than double the number of its in-depth audits this year to 4,500, with a specific focus on over-claimed interest, capital works claimed as repairs, incorrect apportionment of expenses for holiday homes let out to others and omitted income from accommodation sharing.

Changes to the instant asset write-off rules have now become law, including measures recently announced in the government’s Federal Budget.

The write-off has been extended to medium sized businesses (with aggregated annual turnover of $10 million or more, but less than $50 million), where it previously only applied to small business entities (with aggregated annual turnover of less than $10 million).

The second important change is that the instant asset write-off threshold increases to $30,000, where it was previously $25,000.

The changes apply from 2 April 2019 to 30 June 2020, and the write-off works on a per-asset basis, so eligible businesses can instantly write off multiple assets.

The ATO will be enforcing stricter penalties for employers who fail to meet their superannuation guarantee (SG) obligations.

Penalties have been introduced to hold employers who are unable or unwilling to meet their SG obligations accountable. This includes non-payment, underpayment, or late payment of super contributions to an eligible employee’s complying super fund. The ATO provides tools that enable employers to understand and meet their SG obligations.

Paying super contributions

Employers are required to pay 9.5% of an employee’s ordinary time earnings to superannuation. These contributions must be paid to a complying fund by the quarterly due dates, which are 28 days after the end of each quarter.

Penalties

Employers who do not meet their SG obligations may be liable for a range of penalties or charges. If the correct amount of contributions to a worker’s super fund has not been made by the due date, employers will be required by law to lodge a superannuation guarantee charge (SGC) statement. In addition to the SGC, other penalties that may be imposed include:

• A Part 7 penalty which is applied if an employer lodges their SGC late, or fails to provide a statement or information when requested.

• A general interest charge (GIC) that is applied when an SGC is not paid by the due date. The GIC is calculated on a daily compounding basis and is tax deductible in the year it is incurred.

• An administrative penalty if an employer makes false or misleading statements in order to pay less SGC than they should.

• A choice liability, imposed when an employer does not give an eligible employee a choice of super fund.

In some cases, legal action may be taken by the ATO to recover outstanding tax and superannuation debts. SG audits may also be undertaken in the ATO’s tough approach on compliance. For more information and to ensure that you are meeting all SG obligations as an employer, you should consult your financial advisor.

Single Touch Payroll (STP) is changing the way employers report their workers’ tax and super information to the ATO.

Employers are expected to report information on a variety of areas through software that offers STP reporting or third-party service providers. Withholding amounts, superannuation liability information, ordinary times earnings, salaries, wages, allowances and deductions should all be included in reports.

Parliament has passed legislation to extend STP to now include businesses of any size. There are separate guidelines and due dates in place for different sized businesses.

Businesses with 20 or more employees

As STP for businesses with 20 or more employees started on 1 July 2018, relevant businesses should already be reporting through STP or have applied for a deferral. If you are unsure if your current software has STP reporting, the ATO recommends talking to your software provider or tax professional.

Businesses with 5-19 employees

Reporting can start anytime from 1 July to 30 September 2019. If you already use payroll software which offers STP, you can update your product and start reporting early. Online forms will be available from April 2019 for those who need to defer reporting or meet exemption criteria.

Businesses with 1-4 employees

Micro employers with four or less employees who don’t currently use payroll software can report STP information in other ways. The ATO has listed software developers who offer no-cost and low-cost STP solutions to make the transition smoother. There is also an option for your registered tax or BAS agent to report your STP information quarterly rather than each time you run payroll. This will be available until 30 June 2021.

To help with ease of transition for everyone involved, the ATO offers no penalties for mistakes, missed or late reports for the first year. Exemptions from STP reporting can also be provided for employers experiencing hardship, or in areas with intermittent or no internet connection.