Avi Lipa

Up-to-date with new Director ID, Single Touch Payroll Phase 2, and Cryptocurrency Tax Treatment

What do your businesses need to prepare early?

Apply for your Director ID

A director identification number (director ID) is a unique identifier you will keep forever. It will help to prevent the use of false or fraudulent director identities. Applications for the unique identifier will open in November with Australian Business Registry Services (ABRS).

Who needs a director ID?

You must apply for your own director ID to verify your identity. No one can apply on your behalf.

Local and foreign directors of Australian companies can apply for a director ID from November 2021.
Advisers are not permitted to apply for a director ID on someone else’s behalf.
A director applies for the unique ID once and keeps it forever.

With a 30 November 2022 deadline, most existing company directors have 12 months to get their director ID in place. Existing directors of Indigenous or Torres Strait Islander corporations have until November 2023.

New directors, however, have to move faster. In a transition period from November 2021 until April 2022, any new director must apply for an ID within 28 days. From 5 April 2022, new directors need to have applied for their ID before being appointed.

Meeting your obligations

Your director ID obligations include:

applying for a director ID within the relevant timeframe for your situation
applying for a director ID when directed by the Registrar to do so
not applying for more than one director ID (unless directed by the Registrar to do so)
not misrepresenting your director ID to a Commonwealth body, company, registered Australian body, or Aboriginal and Torres Strait Islander corporation
not being involved in a breach of the above director ID obligations.

If you can’t apply by the date you need to, you can complete an Application for an extension of time to apply for a director ID. Visit ABRS website for more information and to apply for a director ID.

Source: ABRS website

Single Touch Payroll (STP) is the way you report your employee's tax and super information to the ATO. Most employers are now reporting through STP. You will need to start reporting if you have not transitioned yet unless you have an exemption and a deferral.

What's changing?

In the 2019–20 Budget, the Government announced that Single Touch Payroll (STP) would be expanded to include additional information, also known as STP Phase 2.

Including this additional information will:

reduce the reporting burden for employers who need to report information about their employees to multiple government agencies.
support the administration of the social security system.

The mandatory start date for STP Phase 2 reporting is 1 January 2022.

How STP works

STP works by sending tax and super information from your STP-enabled payroll or accounting solution to ATO as you run your payroll - this has not changed with Phase 2.

Your STP Phase 2 solution will send ATO a report with the information they need from you, such as:

details of the remuneration you pay
details of your pay as you go (PAYG) withholding
super liability information.

Get started early

The approach to STP Phase 2 will be flexible, reasonable, and pragmatic based on your business readiness/individual circumstances.

ATO is working with digital service providers (DSPs) that are updating their solution to support Phase 2 reporting. Your provider will let you know when your solution is ready.

Some DSPs, despite their best efforts, will need more time to get ready and transition their customers. They will advise if we have approved a deferral for you to start reporting later than the mandatory start date. If you can transition to STP Phase 2 reporting when your solution is ready then you do not need to request the deferral to ATO for more time, even after 1 January 2022.

We recommend you make a start preparing now - updating doesn't take long and will save you time later. There are some things you can do now to prepare, such as:

review the STP Phase 2 employer reporting guidelines
consider how some of the information you already report through STP is changing
find out what new information you'll need to report and consider where you capture and store some of this information now if it's not in your payroll system
review your business and payroll processes, and plan for how and when you'll need to do this.

Talk to our Lynden Group Melbourne today to see how we can assist you with STP and Bookkeeping.

Source: Australian Taxation Office

The term cryptocurrency is generally used to describe a digital asset in which encryption techniques are used to regulate the generation of additional units and verify transactions on a blockchain. If you are involved in acquiring or disposing of cryptocurrency, you need to be aware of the tax consequences.

Transacting with cryptocurrency

A capital gains tax (CGT) event occurs when you dispose of your cryptocurrency.

> Certain capital gains or losses from disposing of a cryptocurrency that is a personal use asset are disregarded.

> If the disposal is part of a business you carry on, the profits you make on disposal will be assessable as ordinary income and not as a capital gain.

> While a digital wallet can contain different types of cryptocurrencies, each cryptocurrency is a separate CGT asset.

Cryptocurrency as an investment

If you acquire cryptocurrency as an investment, you may have to pay tax on any capital gain you make on the disposal of the cryptocurrency.

You will make a capital gain if the capital proceeds from the disposal of the cryptocurrency are more than its cost base. Even if the market value of your cryptocurrency changes, you do not make a capital gain or loss until you dispose of it.

If you hold the cryptocurrency as an investment, you will not be entitled to the personal use asset exemption. However, if you hold your cryptocurrency as an investment for 12 months or more, you may be entitled to the CGT discount to reduce a capital gain you make when you dispose of it. If you have a net capital loss, you can use it to reduce a capital gain you make in a later year. You can't deduct a net capital loss from your other income.

You must keep records of each cryptocurrency transaction to work out whether you have made a capital gain or loss from each CGT event.

Record keeping for cryptocurrency

It is vital to keep good records for all your transactions with cryptocurrency, whether you are using cryptocurrency as an investment, for personal use, or in business.

Keeping good records will make it easier to calculate and meet your tax obligations, and if you are in business, they will assist you to manage your cash flow and see how your business is doing.

The sorts of records you should keep include:

receipts of purchase or transfer of cryptocurrency
exchange records
records of agent, accountant, and legal costs
digital wallet records and keys
software costs related to managing your tax affairs

You can use an accountant or third-party software to help meet your record-keeping obligations and work out your tax. Contact Lynden Group Melbourne to see how we can assist you with our professional services and help you comply with tax obligations.