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New accountability measures proposed for ABN holders

Originally announced in the 2018–19 Federal Budget, and now set out in draft legislation, are newly introduced accountability measures for ABN holders.

Once in effect, this will mean you will have to:

• lodge outstanding income tax returns, and
• confirm the accuracy of your entity’s details on the Australian Business Registrar annually.

Currently, there are no registration penalties for ABN holders when it comes to lodging tax returns. That is, you can continue to quote an ABN regardless of whether you have lodged outstanding returns.

The regulator will now have the ability to cancel your ABN if you have 2 or more outstanding income tax returns for income years commencing on or after 1 July 2022. Also, the regulator will be able to cancel your ABN if you do not confirm the accuracy of your ABN details in an annual form on or after 1 July 2024.

If your ABN gets cancelled by one of these measures, the registrar must reinstate your ABN once the outstanding items have been resolved.

We are closely monitoring the progression of this draft legislation and once further information is provided by the Treasury, we will inform you of the specifics surrounding the legislation.

If you wish to discuss the contents of the draft legislation further, please do not hesitate to contact us.

The NSW property tax has arrived

From 16 January 2023, the first home buyer property tax option will enable first home buyers to choose between paying:

• an upfront stamp duty, or
• an annual property tax.

Annual property tax option

First home buyer owner–occupiers who opt into the property tax will be charged at a rate made up of a fixed amount of $400 plus 0.3% of the unimproved land value of the property. These rates remain in place for each year the first home buyer remains an owner–occupier.

This tax rate remains in place for first home buyers until 1 July 2024 when both fixed and variable components will be used to calculate an annual property tax each year.

In the years following a first home purchase, the property tax will be indexed in line with average incomes across New South Wales. If you choose the annual property tax option, you will be issued a property tax assessment each year. This assessment will show the change in the property tax in line with the indexing.

Property criteria

The property tax option will be available to first home buyers on purchases of up to $1.5 million or $800,000 in the case of vacant land.

Unlike the current stamp duty concessions for first home buyers, there is no requirement that the property is part of a new build.

Primary production land is also eligible, but business premises and holiday homes are not.

Personal criteria

The first home buyers must be individuals. Companies and trusts are ineligible for the annual property tax. For you to be eligible, you must:

• be 18 years or older
• not have previously owned residential property in Australia or received a first home buyer grant and duty concession (including your spouse or co-purchaser)
• be an Australian citizen or permanent resident. If there are 2 owners, at least 1 person must satisfy this requirement, and
• live in the property as your principal place of residence for a continuous period of at least 6 months, commencing within 12 months of buying.

What if I moved out of my fist home?

If you opt-in to the annual property tax, the first home you purchase does not need to remain your principal place of residence forever. As long as you satisfy the initial residence requirement, you can choose to change the status of your property from owner-occupier to investor at a later point in time.

As an investor, your tax rate changes for the annual property tax to $1,500 plus 1.1% of the property’s unimproved value. The increase in annual property tax will include NSW land tax, that is generally payable by owners of investment properties.

What if I choose to pay stamp duty?

First home buyers who choose to pay stamp duty upfront can still get access to the other stamp duty concessions available in NSW.

Under the current scheme, NSW stamp duty is exempt for:

• purchase of new homes valued less than $600,000, and
• comprehensive home building contracts (or owner builders) where the house and land is valued less than $750,000.

Transitional arrangements

If you bought your first home and you executed the contract between 11 November 2022 and 15 January 2023, you have the option to retrospectively opt-in for the annual property tax. If you choose to opt-in, you will need to do this before 30 June 2023. If you opt-in to the annual property tax, you will obtain a refund of the stamp duty already paid after your application is approved.

Please let us know if you would like more information about the NSW annual property tax for first home buyers. We would be delighted to help you by providing further advice, including detailed calculations if you need them.

Sharing economy receipts now reportable directly to ATO

Recent amendments to legislation will require operators in the sharing economy to report income earned by sellers on their marketplace. This is based on the Australian Taxation Office’s (ATO) determination that income earned on these platforms is at a high-risk for non-compliance of tax obligations.

Operators who provide ride-sharing or short-term accommodation will be required to report first. From 1 July 2023, income you earn from these platforms will be reported directly to the ATO as assessable income to include in your tax return. It is also possible that the operators will be required to report every 6 months, ensuring you keep up to date on your GST obligations.

Transactions from all other types of sharing economy platforms will be reported to the ATO for income years commencing 1 July 2024.

Taxable Payments Annual Report

Prior to sharing economy digital operators being required to report transactions, the ATO usually allowed the affected industry participants to report annually. These annual reports included the following information:

• names
• addresses
• ABNs
• gross receipts, and
• GST charged on the gross receipts.

It is expected that the reports for ride-sharing and online accommodation will be very similar, except that it is likely that the operators will report your transactions every 6 months instead of each year.

Risk mitigation steps

If you are using these platforms, it is likely that your data will be included in reports, such as the ATO’s Pre-fill reports. This will make it very difficult for you to avoid tax compliance, and it is encouraged that you ensure all necessary information is sent to us before the ATO begins amending assessments.

If you would like to know more about these developments, please give us a call. We would be happy to help you through your necessary obligations.

Training your staff? You could get a 20% bonus deduction.

The Skills and Training Boost has been reignited, bringing a 20% bonus tax deduction for external training costs for staff. The bonus deduction is designed to assist you in training and upskilling your employees.

It is available for expenses you incur between 29 March 2022 and 30 June 2024. If you have incurred eligible staff training expenses before 30 June 2022, you will need to wait until your 2022-23 tax return to claim.

To qualify for the bonus deduction, you will need to engage an external training organisation that is registered in Australia to complete the training. The additional deduction is not available for on-the-job or in-house training costs.

Also, the bonus deduction is available for your employees only. If you are a sole trader or partner in a partnership, you will be able to make a tax deduction claim under self-education in your individual return. Your associates and independent contractors are specifically excluded from the bonus deduction.

Training a new employee who requires upskilling for their new role is eligible for the bonus deduction.

This measure was originally announced by the former government in the 2022 Federal Budget. It is expected that it will pass through the parliamentary process and become law.

If you have any questions, please contact our office. We would be delighted to assist you further.

Digital adoption can score you a 20% bonus deduction. Find out how.

A bonus deduction is available for your business for expenses you incur in becoming a digital business. As your business has an aggregated turnover of less than $50 million, you are eligible for the bonus deduction.

The bonus deduction will be 20% of the cost incurred for business expenses or depreciable assets that support a digital adoption, including but not limited to:

• Digital enabling items such as computer hardware and software, and systems and services that form and facilitate the use of a computer network
• Digital media and marketing such as audio and visual content that can be created, accessed, stored and viewed on digital services, and
• e-commerce items that support digital payment systems and online transactions.

An annual bonus deduction of $20,000 will apply in each qualifying income year so that expenditure up to $100,000 will be eligible for the bonus deduction. As the bonus deduction is available in 2 financial years, an overall maximum bonus deduciton of $40,000 is available.

Any eligible costs incurred from 7:30pm (AEDT) on 29 March 2022 to 30 June 2023 are included. However, expenditure incurred in the 2021-22 income year will only get the bonus deduction when you lodge your 2022-23 income tax return.

If you have purchased a depreciating asset for the digital adoption, this asset must be first used, or installed ready for use, before 1 July 2023 to qualify for the bonus deduction.

This measure was originally announced by the former government in the 2022 Federal Budget. It is expected that it will pass through the parliamentary process and become law.

If you have any questions, please contact our office. We would be delighted to assist you further.

How to get the best from AI content writing tools like Chat GPT

The chances are that you’ve heard ChatGPT being mentioned heavily in your social feeds and in business articles in recent months. But what exactly is ChatGPT? In essence, it’s an artificial intelligence (AI) tool that promises to automate a lot of tasks, including write your content for you.

But do these AI content-writing tools live up to the hype? And what’s the best way to balance using a solution like ChatGPT with the core skills of good human-powered writing?

What does ChatGPT do?

ChatGPT is an AI chatbot model from OpenAI that can produce complex, well-written responses to any prompt you give it. It uses a huge database of sources to provide you with complete blog posts, articles, email – in fact, it will write whatever you ask it to.

Is AI content writing the answer to your business prayers?

If you believe what technologists and business leaders are saying, these AI tools have the potential to replace a lot of the human work involved in writing. This could mean writing your blog posts, sales emails, or even looking after your internal comms. (There will be a lot of other functions the tools will be applied to, but we are focussing on writing here)

But does a solution like ChatGPT live up to this promise? Yes and no. Here are a couple of things that you’ll want to bear in mind when you use these tools.

Creating content that stands out

ChatGPT can certainly provide you with business content – but it can be quite generic and bland. This generic nature of AI content may be a problem. You want your brand content to stand out and be unique – but this is more difficult when using the same AI tools as every other small business. As Tom Fishburne puts it, the issue is that ‘much of what is created is already a sea of sameness, written more to appease Google’s search algorithms than actual people.’

A human, like you and me, has opinions, personality and can deliver unique insights. AI cannot do this. It’s limited to the source data and models it’s been provided with. So, if you want your business content to stand out, you need an experienced human writer who writes for humans not just the bots.

Content writing is as much about having good ideas as it is about writing well. So, what you input as your prompt to the AI is just as important as the text that the software spits out.

Content accuracy

When Chat GPT’s rival, Bard was first launched it wrongly attributed the discovery of an exoplanet to a telescope that didn’t exist at the time of the discovery. The problem is that the internet has become increasingly cluttered with fake news, spam links and content that’s designed purely for SEO. So it’s no wonder that the AI will sometimes provide you with content that is inaccurate.

As a business owner you’ll want to make sure that a human is involved – to create a unique and original brief and then to review the output for accuracy and relevance for your brand and your audience.

What’s the best balance between AI and human writing?

AI tools are useful. But, at present, you still need a human in the equation. Someone to come up with the ideas, write intelligent prompts for the AI and edit the output so it sounds more human and personalised.

Working with both AI tools AND a content professional is the best way to ensure you’re getting the eye-catching content you deserve.

2022–23 income year changes for your WFH tax deductions

The Australian Taxation Office (ATO) has issued new guidelines to help you in making a claim for running expenses using the fixed cost method, while working from home from 1 July 2022.

Under this guidance, the ATO will allow you to make a claim of 67 cents per hour for time spent working from home. This claim is a simplified method which includes expenses for:

• energy expenses (electricity and/or gas) for lighting, heating/cooling and electronic items used while working from home
• internet expenses
• mobile and/or home telephone expenses, and
• stationery and computer consumables.

This amount is different from the previous couple of years where an amount of 80 cents per hour was available if you were required to work from home due to COVID-19.

However, under the revised fixed-rate method, a separate claim can be made for depreciation and repairs and maintenance on furniture and equipment.

In order to make this claim, you will need to keep a diary of the days you work from home. This can be backed up by evidence such as your timesheet or a roster.

If you require any more information about calculating this deduction, please let us know and we will be happy to assist you further.

Div 7A interposed company arrangements alerted by ATO

The ATO has issued Taxpayer Alert TA 2023/1 in relation to arrangements that involve the interposition of a holding company to access company profits tax-free. The ATO is concerned that individual taxpayers and private companies under their control may be entering into these arrangements with the dominant purpose of tax avoidance.

Arrangements of this nature involve a CGT rollover so that an interposed company that holds shares in the primary company will have no distributable surplus.

The ATO has taken the stance that any loan from an interposed company to the shareholder must be on terms where ‘there is an express or implied obligation to repay the amount’. Without this obligation on the shareholder, the ATO can argue that the purported loan has the dominant intent of tax avoidance.

It is an arguable position that having no intention to repay a loan will, in fact, not meet the requirements to be called a loan and therefore be labelled a payment under Div 7A laws. If an amount is classified as a payment under Div 7A, the calculation of the interposed company’s distributable surplus changes, potentially triggering a deemed dividend.

Since your business structure is in line with the entities or taxpayers that normally form such an arrangement, we encourage you to assess your current business structure. It may be necessary to adjust your structure, which may change your final tax position.

If you are contemplating entering an interposed entity arrangement, please contact our office immediately. We may be able to guide you through the contents of this alert to ensure the best possible outcome for your structure.

We can also assist you in applying for a private ruling, make a voluntary disclosure and liaise with the ATO for this matter on your behalf if you need it.

If you have any other queries, please feel free to contact us.

Your December quarter superannuation guarantee contribution is due soon

Prepare now for your quarterly superannuation guarantee (SG) contribution lodgement and payment.

Things to review before finalising the quarterly superannuation lodgement:

• Have you allocated all payroll related bank transactions to the correct accounts?
• Have you checked for errors such as duplicate pay runs?
• Have you checked that all payroll categories used this quarter have had super correctly applied or excluded?
• Have you checked superannuation accrual reports for accuracy?
• Do you have any salary sacrifice amounts to include?
• Have you had to make any termination payments this quarter? If so, check which payroll categories should have super calculated or exempted.
• Do you have complete and up-to-date contact details and a super choice form for all employees?
• If new employees have not provided super choice details, have you checked with the ATO for stapled super fund details you can pay into?

Most superannuation clearing houses (including SuperStream compliant software companies) require payment by the 14th of the month in order to distribute the funds to the relevant super funds for each employee.

If you use the ATO Small business Clearing House (SBSCH) you have until the 28th to lodge and pay.

Checking the figures thoroughly each quarter ensures that you report and pay accurate amounts for each employee. You will also have a more accurate picture of your superannuation liability and be able to plan accordingly.

Penalties for late super can be severe. Superannuation calculations can be difficult if your payroll software is not set-up for correct accruals of superannuation guarantee.

We can help you review of your super set-up and the SG accounts used in your accounting software.

When Should International Businesses Register for Australian Goods and Services Tax?

Does your business make sales in Australia? You may need to register for Australian goods and services tax.

Like many countries, Australia charges a goods and services tax (GST) on most products and services sold within Australia. Australian GST is a tax of 10% added to the price of goods and services.

Any business that makes sales within Australia needs to consider whether it should be registered for GST and include GST in its prices.

If your business does need to register for GST, it will then need to submit a business activity statement (BAS) to the Australian Taxation Office (ATO) and pay the GST amount.

When should an international business register for GST?

If your business makes sales of AUD $75,000 or more per year (or $150,000 if it’s a non-profit organisation), you’ll need to register for GST with the ATO.

There are some exemptions to registration, and you’ll also need to assess your GST turnover. Not all income is included in the GST turnover threshold.

Some examples of goods and services that can incur GST include digital products such as ebooks or training courses, professional advisory or consulting services, and personal products such as clothes or jewellery.

Overseas businesses can choose from simplified or standard GST registration, although there are criteria for simplified registration.

Australian business owners can check the ABN Lookup website to see if an overseas supplier you interact with is registered for GST. Remember, you can only claim GST on expenses if it has been correctly charged by a GST-registered business. And if you provide your ABN to a GST-registered overseas business, they do not need to charge you GST for business purchases. So check you’re not claiming GST incorrectly by inspecting both the invoices provided by the supplier and the ABN Lookup.

If your business transacts in Australia, we can help work out if you should be registered for GST in Australia and let you know about the invoicing requirements and the BAS process.