Month: March 2019

In an address to the Financial Services Council BT Political Series on 29 March 2019, Shadow Treasurer Chris Bowen announced that Labor’s reforms to negative gearing and the CGT discount [ie halving it] would commence from 1 January 2020. “This of course means that any investment undertaken prior to 1 January 2020 will be fully protected by our grandfathering arrangements. That is, all investments made before the 1 January 2020 will continue to enjoy the current negative gearing and capital gains tax concession arrangements. This gives investors adequate time to plan and invest this year before the new rules come into force.” Mr Bowen said the negative gearing changes “will buttress some of this weakness by targeting tax concessions at new residential construction”. Mr Bowen said a 1 January 2020 start date allows for around 7 months, “a less but we think sufficient amount of time to get the legislation in place before the changes are due to come into effect”. He said Labor announced its reforms to negative gearing over 3 years ago and has “withstood the shrill scare campaigns and the apocalyptic warnings”. Build to rent There are currently around 2.7 million renters in Australia. Labor announced last year that an incoming Labor Government would introduce a 10-year national plan to build 250,000 houses – “Australia’s biggest ever investment in affordable housing”. But Mr Bowen made further announcements on 29 March. He said Labor would reform the tax treatment for “Build to Rent” “to ensure it’s a viable part of the housing market in Australia, just as it is in several comparable countries”. This would be done by ensuring Build to Rent housing can be included within a Managed Investment Trust when they meet requirements that are currently in place for commercial property assets, basically where they are a passive investment held primarily for the purpose of deriving rent. This means that eligible Build to Rent investments would pay a 15% tax rate, not the 30% rate proposed by the Government, which would be double the rate for investments in shopping centres and office buildings. Mr Bowen said the central benefits of build to rent is “it provides more stable long term tenancies and more housing in desired locations close to public transport and close to employment opportunities”. Superannuation Labor will ensure women get paid the superannuation guarantee on Paid Parental Leave and Dad and Partner Pay payments and it will also gradually abolish the $450 a month SG threshold. Labor will also change the law to include a right to superannuation within the National Employment Standards, which will give all employees the power to pursue their unpaid superannuation through the Fair Work Commission or Federal Court.

On 24 May last year, the government announced a superannuation guarantee (SG) amnesty which would give employers an opportunity to rectify past SG non-compliance without penalty.

The SG amnesty measure was originally intended to apply from 24 May 2018 till 23 May 2019, but has yet to be legislated, with just two sitting days left before a federal election is called.

The Tax Office has now confirmed it has waived the Part 7 penalty in full for those who have made a voluntary disclosure.

Employers will still have to pay the SG they owe to their employee, the interest amount, and the $20 administration component per employee per quarter.

“Consistent with our existing approaches in other instances where people come forward voluntarily, when we receive these SG notifications, the fact that they have come forward to the ATO is a strong consideration in the level of discretional penalty applied,” an ATO spokesperson told Accountants Daily.

“In relation to SG, the ATO only has the discretion to remit the Part 7 penalty. With regard to those taxpayers who made a voluntary disclosure in anticipation of the proposed amnesty, we will remit the Part 7 penalty in full.”

The benefits of the proposed amnesty was set to include a waiver of the administration component, Part 7 penalty, and allowing all catch-up payments during the 12-month amnesty period to become tax-deductible.

Accountants Daily had earlier reported that several accounting firms had noticed examples of the ATO granting the amnesty, despite the agency clarifying that it would be applying the existing law before the law was enacted.

The Institute of Public Accountants (IPA) general manager of technical policy, Tony Greco earlier told Accountants Daily that accountants should consider advising clients to make a voluntary disclosure despite the hold up.

“At the end of the day, if you have an SG obligation and you get caught up in audit activity, you’re going to face the full penalty regime so that is the issue if you wait,” said Mr Greco.

Since 1 July 2018, the ATO have completed 17,917 compliance cases around SG payments, raising raising liabilities of $451 million.

Tax Commissioner Chris Jordan delivered his 7th address as Tax Commissioner to The Tax Institute’s 34th National Convention in Hobart on 14 March 2019. He has been Tax Commissioner for 6 years now and said he is roughly halfway through his tenure at the head of the ATO.

Mr Jordan reminded the audience of measures that have been put in place to support small businesses eg:

• The ATO has introduced or enhanced a range of services aimed at earlier and fair resolution of disputes for small business, including In-house Facilitation, Dispute Assist, ATO Test Case Litigation and Fast Intensive Triage.
• The Government’s expansion of the Tax Clinics program. The tax clinics are independent from the ATO and will assist unrepresented taxpayers to understand and comply with their tax and super obligations. The Commissioner said the new tax clinics will soon enter pilot phase in 10 universities across the country and are set up to fill a niche gap in the market for unrepresented individuals and small businesses.
• From 1 March 2019, there is a new small business division at the AAT, offering a low-cost avenue for small businesses who dispute the ATO’s assessment of their tax position. Generally, these hearings will be without lawyers, but if lawyers are required, the ATO will cover the cost of equivalent legal representation for the small business. Applicants will also have a case manager to support them, pay a reduced application fee and, after the hearing process is concluded, decisions will be finalised within 28 days.