Practice Update
March 2024
🔶 FBT SEASON DRAWS NEAR 🔶
FBT season is fast approaching, so it's important to keep updated of your fringe benefits tax (FBT) responsibilities as an employer.
As FBT time draws near, staying organized is key.
Here's what you need to address during this FBT period:
Assess whether you owe FBT for any fringe benefits provided to your employees or their associates between April 1, 2023, and March 31, 2024.
If you do have an FBT liability, file an FBT return and settle the amount owed by May 21.
If you're registered for FBT but have no need to lodge, inform the Australian Taxation Office (ATO) or notify your Lynden Group accountant to prevent future return requests.
Remember, with the start of the new FBT year on April 1, you have the option to use existing records instead of travel diaries and declarations for certain fringe benefits.
New Guidelines:
ATO has introduced a new guideline outlining a shortcut method to calculate the cost of charging electric vehicles (EVs) at your employees' homes for FBT purposes. Eligible employers can opt for either the EV home charging rate of 4.2 cents per kilometer or the actual cost.
Make sure you know your FBT obligations and the necessary records to avoid any FBT liabilities.
🔶 ENSURING COMPLIANCE WITH R&D TAX OFFSET CLAIMS 🔶
Have you taken advantage of the Research & Development tax offset? Be sure to explore our latest guidance on Research and Development tax incentive schemes.
If you've utilized the Research & Development (R&D) tax offset, we urge you to review the recent Taxpayer Alert TA 2023/4 regarding Research and development activities facilitated by associated entities.
This alert has been issued to caution businesses that may be incorrectly claiming the R&D tax offset.
We're observing these arrangements being utilized to:
- Claim the R&D tax offset in situations where it wouldn't typically be accessible (either unavailable entirely or not within the claimed income year).
- Artificially inflate the amount of the R&D tax offset claimed.
If you voluntarily disclose any discrepancies, your penalties could be significantly reduced, especially if you amend your R&D tax incentive claim prior to a tax review.
What you should do:
Review the alert and assess if you need to make a voluntary disclosure.
To provide information about such an arrangement or a promoter involved in such activities, you can reach out to the Lynden Group.
🔶 REMINDER: ACT NOW TO AVOID PENALTIES FOR OVERDUE TPARs 🔶
Penalties for overdue TPARs take effect on March 22nd.
Clients are urged to submit overdue TPARs before penalties kick in.
Starting March 22, 2024, failure-to-lodge penalties will be imposed on individuals who:
- Have received three reminder letters regarding their overdue Taxable Payments Annual Report (TPAR).
- Have not lodged their TPAR for the year 2023 or any prior years.
Last year, over $18 million in penalties were issued to more than 11,000 businesses.
To determine if you need to file a TPAR, you can utilize the Reported Transactions service in Online Services for Agents, which provides a record of payments made to contractors.
If you have overdue TPARs, it's essential to submit them.
Even if you are not required to submit a TPAR, a Non-Lodgment Advice (NLA) form must be filed to prevent unnecessary communication from ATO. If you no longer engage contractors, this form can also be used to indicate that you do not need to submit a TPAR in the future.
TPARs and NLAs are due by August 28th each year.
🔶 DEVELOPER RECEIVES 10-YEAR SENTENCE FOR
$15 MILLION TAX FRAUD SCHEME 🔶
Li Zhang, a developer implicated in a significant tax fraud case, has been sentenced to 10 years in jail, with a non-parole period of 6 years and 8 months. Zhang was convicted for his involvement in a fraudulent scheme aimed at obtaining GST refunds through inflated construction costs.
Operating within the framework of the “Hightrade Group,” which specialized in property development, Zhang orchestrated a complex web of deceit involving multiple companies. His fraudulent activities, which included falsifying business activity statements (BAS) and fabricating purchase records, were aimed at securing substantial financial gains. The scheme intended to defraud the Commonwealth of more than $15 million. His sentencing marks the end of a case under Operation 4.
Jade Hawkins, Assistant Commissioner highlighted the deliberate nature of Zhang's actions, which not only undermined legitimate businesses but also deprived suppliers, creditors, and employees of their rightful entitlements. Hawkins also underscored the effects of tax evasion on the community due to reduced revenue availability.
The Australian Taxation Office (ATO) remains committed to combating tax fraud and encourages individuals with information to come forward confidentially.
🔶 FINALIZED: FAMILY LAW SUPER PAYMENTS INSTRUMENT 🔶
In preparation for the expiration of the Taxation Administration (Meaning of End Benefit) Instrument 2013 on April 1, 2024, the Taxation Administration (Meaning of End Benefit) Instrument 2024 has been officially completed. This instrument ensures that family law superannuation payments do not fall under the category of end benefits as outlined in section 133-130 of Schedule 1 of the Taxation Administration Act 1953. Consequently, such payments do not trigger an individual's obligation to pay Division 293 tax, which is deferred to a debt account.
Division 293 tax is applicable to specific superannuation contributions made by individuals whose income exceeds $300,000. The instrument came into effect on February 2, 2024.
🔶 FINALIZED RULING ON TAX DEPRECIATION AND COMPOSITE ASSETS 🔶
The Australian Taxation Office (ATO) has completed its ruling regarding the treatment of composite items for tax depreciation purposes, outlined in Taxation Ruling TR 2024/1. A ‘composite item’ refers to an object comprised of multiple components, each capable of independent existence.
Subsection 40-30(4) of the Income Tax Assessment Act 1997 mandates an objective assessment to determine whether a composite item qualifies as a depreciating asset on its own or if its components should be considered separate depreciating assets. This determination focuses on the specific circumstances of each case.
Taxation Ruling TR 2024/1 offers guiding principles and illustrative examples to assist taxpayers in applying a "functionality test" to determine whether a composite item should be treated as a single depreciating asset or if its components warrant separate consideration.