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Practice Update
July 2024
🔶 IMPORTANT INFORMATION FOR TAXPAYERS:
AVOID LODGING YOUR TAX RETURN TOO EARLY 🔶
The Australian Taxation Office (ATO) cautions taxpayers against lodging their tax returns at the start of July. According to ATO Assistant Commissioner Rob Thomson, filing early increases the likelihood of errors in your return.
Key Points to Consider:
- Higher Risk of Mistakes: Filing your tax return in early July doubles the chance of errors, especially if you have income from multiple sources.
- Common Errors: Many early filers forget to include important information such as bank interest, dividend income, government payments, and private health insurance details.
By late July, most relevant information from employers, banks, government agencies, and health funds will be automatically populated in your tax return. This applies whether you use a registered tax agent or lodge your return yourself.
To ensure a smooth tax return process, waiting a few weeks can ensure accuracy. In the meantime, Lynden Group will provide the tax return checklist so you can gather necessary records, update your details, and review occupation guides on the ATO website to ensure you’re claiming everything you’re entitled to. Also ensure your contact details, address, and bank information are updated to avoid delays after lodging.
🔶 DO YOU STILL NEED YOUR ABN?🔶
ATO may cancel your ABN if you no longer use it.
To keep your business running smoothly, it's essential to maintain or cancel your Australian Business Number (ABN) as needed. ATO regularly reviews and sometimes cancels inactive ABNs.
ATO may check your ABN if you haven't reported business activity in your tax return or if there are no signs of business activity in other reports.
If ATO suspects you're no longer using your ABN, they will reach out via email, letter, or SMS. If you are:
- Still running a business: We will guide you on how to keep your ABN.
- No longer in business: No action needed—ATO will cancel your ABN.
If you believe you still need your ABN after cancellation, you'll need to reapply. You can reapply for the same ABN if your business structure hasn't changed, such as restarting as a sole trader. If your business structure changes, like moving from a sole trader to a company, you will need a new ABN.
Ensure you inform us of any changes to your business details within 28 days, including when your business stops operating. Accurate ABN details are crucial for emergency services and government agencies to provide support and financial aid during disasters. Make sure your main business address on the Australian Business Register is a physical street address.
🔶 ATO LAUNCHES CRACKDOWN ON FALSE MEDICARE LEVY CLAIMS 🔶
The ATO is launching a Medicare levy data-matching program to target false exemption claims. Using data from Services Australia, the program will review records of 180,000 individuals from 2024 to 2026.
To claim a full exemption from being charged for Medicare, taxpayers must have a Medicare Entitlement statement (MES) from Services Australia, showing they were not entitled to Medicare benefits as temporary residents or had no dependents during that period.
The ATO will verify claims against the required Medicare Entitlement Statement (MES), ensuring all dependents are also exempt. Claims will be denied if individuals lack a valid MES or if reported exemption days differ from the MES.
The initiative aims to improve compliance, speed up tax return processing, and provide accurate refunds. It follows similar programs targeting rental bond income and employer non-compliance.
By excluding genuine claims from compliance actions, the ATO seeks to prevent unnecessary contact with compliant taxpayers.
🔶 CGT SMALL BUSINESS CONCESSIONS: TRUST WINS IN AAT🔶
The Administrative Appeals Tribunal (AAT) recently ruled that a family trust could apply the CGT small business concessions to reduce its capital gain to nil.
In March 2015, the trust sold its shares in a company for $3.5 million. The trust's income and the capital gain were distributed equally among four beneficiaries. The ATO challenged this, valuing the shares at $10.64 million, which disqualified the trust from the CGT concessions based on the maximum net asset value (MNAV) test.
The AAT sided with the trust's valuers, who assessed the net value of the CGT assets below $6 million, meeting the MNAV test. Thus, the trust was entitled to the CGT small business concessions, and the amended assessments were overturned.
🔶 SINGLE TOUCH PAYROLL (STP) FINALISATION 🔶
Single Touch Payroll (STP) finalisation must be completed by 14 July 2024. This crucial process ensures that employees' payroll information for the financial year is accurately reported to the Australian Taxation Office (ATO). Once the STP finalisation is submitted, employees' tax information will be updated in their myGov accounts, marked as 'tax ready' for the preparation of their income tax returns. Timely finalisation helps both employers and employees streamline their end-of-year tax obligations efficiently.
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