The stories are always similar. Your friends mother, who’s either elderly, or doesn’t speak English as her first language, get’s a call around 7pm. The caller advises they are from the Australian Tax Office (ATO), and that she owes a large amount of tax debt.

They are very demanding and hostile. They say they will call the police if she doesn’t pay her debts now. She is worried – she doesn’t want to go prison. She asks how she can pay her debts back. They advise her she can pay it off using gift cards. She drives to the nearest supermarket and purchases several gift cards – JB Hi-Fi, Google Play, even cards for Woolworths and Coles, amounting to the $4000 she owed.

She then receives text messages – The ATO wants photos of the gift cards, showing the validity codes. She sends them and thinks it’s finally over.

The next day they call her again – They request more money, and more cards. She realizes she is being scammed.

It’s probably happened to someone you know. They contact you or someone you love via email, or phone or mail demanding money, and threaten you if you do not meet their request. When the demands are met, the consequences are devastating.

Types of Tax Scams

Now that tax time is here, criminals may attempt to access individuals’ and businesses’ money and information. It’s so prevalent during tax time, in fact, that in 2021, the ATO received over 50,000 reports of scams, with $800,000 reportedly lost!

Here are three main types of scams that involve criminals impersonating the ATO.

Tax refund scams

Scammers contact you, usually via text, or e-mail, claiming that you’re owed a tax refund. They require you to click a link that takes you to a website that mirrors MyGov or the ATO. From here, you are advised to input your personal details, and then pay a processing fee to release your funds.

The scammer uses this information to siphon funds from the bank account and personal information provided on the fake page. They further use your ‘processing fee’ as a bargain point to either harass you to pay any more ‘hidden fees.’ They also threaten you against calling the police by arguing the processing fee was consensual upon you realizing this was a scam.

In worst case scenarios, the scammer will use your personal information for identity theft.

Tax owed scams

These scammers contact you pretending to be the ATO and claim that you have a tax debt. They then demand that you pay the debt immediately to avoid being arrested. They may ask you to pay by credit card, money transfer, or ask you to pay it back using gift cards.

These scammers are often demanding and very hostile. While the ATO does from time-to-time contact people who are owing debt, they will never –

• Call you with a pre-recorded message
• Threaten you with immediate arrest or use profanity
• Demand payment through gift cards or to personal bank accounts
• Insist you stay on the line until a payment is made

• Call with Caller ID.

It can sometimes be useful to familiarize yourself with what a fake call from the ATO will sounds like. You will find many recordings of them on YouTube, such as this one from 2018.

Tax File Number (TFN) and Australian Business Number (ABN) scams

These scams are often found on social media, promising to set up a TFN and ABN for a fee.  Instead, they steal your money and personal information.

Applying for a TFN or setting up an ABN is free. If you are applying through a tax agent, however, you may be charged a fee. You should always check if they are registered with the Tax Practitioners Board.

How To Sniff a Scammer

Don’t get caught up in a scam. Below are some tips to stay safe and wary of scammers around tax time.

Email or Text Scams

If you receive an email or text message from a number claiming to be the ATO, and they ask for personal or financial information – do not respond. Additionally, avoid clicking any links, or downloading attachments from suspicious text messages.

Phone Scams

If you receive an unexpected call from someone claiming they’re from the ATO, threatening you with arrest, asking for money to pay back a refund or debt, or asking for personal information – hang up. It worth noting also that the ATO will call from a private number – not from Caller ID.

Ask the ATO

If you’re concerned about the authenticity of a call or text from claiming the ATO, hang up and call the ATO on 1800 008 540. You will also find detailed information about various scams on their website.

Remember, that the ATO will never –

• Ask you to pay your debt into a non-ATO bank account, via gift cards, or with cryptocurrencies
• Threaten you
• Ask you to pay a fee in order to receive a refund
• Ask you for personal information via email or SMS
• Ask you to download, or open attachments, from the Internet

Record-keeping is a must for every business. No matter how much tricky it gets, you must keep the records for all business transactions whenever you start, run, sell or change your business. As part of record-keeping, you should keep: 

• All the documents relating to the business's income and expenses. 
• Documents should comprise of election, choice, estimation, determination, and calculation that you have made for tax and superannuation affairs for your business. The document should also mention that how these estimations and calculations have been made. 

You can take help from a registered tax agent or your BAS agent for any help to avoid legal and financial consequences due to non-compliance. 

What are the records of a business transaction? 

A record or business record is nothing but a document explaining tax and super–affairs related transactions that happened as a part of your business activity. It should generally comprise of the following information: 

• Date, amount, character, GST information for the transaction. 
• Purpose or the relevance of the transaction to the business. 

• Relevant relationship between parties to the transactions. 

Top record-keeping rules that to follow as a business owner! 

Here are the top five record-keeping rules that you need to follow as per the law and ATO' view:  

1. The record-keeping document should include all the transactions related to starting, running, changing, selling, or closing of the business as the incidents are relevant to your taxation and super affairs.  

1. You should ensure that the relevant information in your transaction records is not changed anyway while it passes through the record-keeping system. Also, it must be stored in a way that information is properly protected since ATO can ask what safeguards you have in place. You should be able to reconstruct the original data if your record-keeping system has changed over time. 
2. You need to ensure that all the records are kept for at least five years. There are some records that you may need to keep for more than five years including the period of review for an assessment. 
3. If ATO asks you to show your business records, you should be able to do the same.  
4. The record documents for your business should be in plain English or easily convertible to English. 

Why record keeping is important? 

Accurate and proper record keeping can help you in reaping out following benefits: 

1. You can easily keep an eye on the financial soundness of your business. 
2. You can base your business decisions on these records which is the most logical way to do so. 
3. You can monitor your cash flow; avoid non-compliant penalties. 
4. You can present your financial position prepared based on records to different stakeholders. 
5. You can easily file your tax returns to meet your super and employer obligations etc. 
6. You can easily meet the Audit requirement laid down by ATO. 

These were some rules that you can follow to ensure efficient record keeping. 

As the tax filing season is approaching, you must be knowing that some changes have been introduced in March'21 in the company tax rate for the upcoming financial year. Your company might be eligible for a lower company tax rate even though the full company tax rate is 30%. We will understand in this article whether your company would be eligible for a lower company tax rate. But before that, first, we should know to whom the company tax rate applies. Well, the company tax rate applies to the following: 

1. Company 2.
2. Corporate unit trusts 3.
3. Public trading trusts 

Eligibility for a lower company tax rate 

If your company is a 'Base rate entity' then you may be eligible for a lower company tax rate which is as follows: 

1. Tax rate of 27.5% from 2017-2018 to 2019-2020 income years. 2.
2. Company tax rate of 26% for 2020-2021 income years. 3.
3. And company tax rate of 25% from 2021-2022 income years onwards. 

You are also eligible for a lower tax rate if your company was a 'small business entity' for the income years 2015-2016 and 2016-2017. 

Eligibility criteria for a company to become a 'Base rate entity' 

Your company needs to fulfil the following criteria to become a 'Base rate entity': 

Your company should have an aggregate turnover of less than $25 million for the year 2017-2018 income year or $50 million from the 2018-2019 income year onwards. 

In case your company has passive income, then that income should not exceed 80% of the assessable income of your company for tax purposes, this can have the following components: 

1. Corporate distribution and franking credits on these distributions, royalties, rent, interest income. 

     2.Gains on qualifying securities, a net capital gain, etc. 

You should be aware that there are different tax rules for income years 2015-2016 and 2016-2017. 

 

Eligibility criteria for a company to become a 'small business entity' 

 

The income year 2016-2017: For a company to be eligible as a 'small business entity' and get a lower tax rate of 27.5% the company should have an aggregated turnover of less than $10 million and carrying on a business for all or a part of the year. 

The income year 2015-2016: If your company's aggregated turnover was less than $2 million and carrying on business for all or a part of the year then you are eligible for a lower company tax rate of 28.5%. 

The income year 2017-2018 and onwards: From the income year 2017-2018, your company needs to be a 'Base rate entity' for becoming eligible for a lower company tax rate. 

What about Not-for-profit companies? 

A not-for-profit company doesn't pay tax on the first $416 of their taxable income. After that, the tax is shaded in at a rate of 55% of the excess over $416 until the tax on the company's taxable income becomes equal to the company tax rate. After that, the not-for-profit is taxed on the company tax rate. 

For 2016-2017 to 2019-2020, when a lower tax rate of 27.5% was there, the shade in limit for the not-for-profit companies has reduced to $831 if they are 'Base rate entity' or 'small business entity' in relevant years. 

The NSW government has released its 2020-21 Budget amid the COVID-19 pandemic. According to the Treasurer, Dominic Perrottet, a deficit of $16bn is forecast for the 2020-21 financial year, due to an increase in spending in relation to various temporary stimulus to help the economy recover and lower revenues. With these measures in place, the NSW government expects shrinking deficits over the next 4 years, with a return to surplus forecast in 2024-25.

Individuals

• “out and about” measure will provide $100 digital vouchers to each NSW adult resident to stimulate spending in restaurants, visitor sites and cultural attractions.
• government will seek feedback from the public on a possible transition away from the current transfer (stamp) duty and land tax system, in order to reduce barriers to home ownership and boost long-term economic growth.
• grants of up to $5,000 to help women return to the workforce to be used for training and support. The $10m in total grants will target specifically women who have lost jobs due to the pandemic or have been out of the workforce for an extended period to return to work.

 Businesses

• permanent increase in the payroll tax-free threshold from $1m to $1.2m.
• cut in the payroll tax rate from 5.45% to 4.85% will also apply from 1 July 2020 for 2 years.
• small to medium business will be able to apply for a digital voucher (up to the value of $1,500) to cover the cost of any government fees and charges. The voucher will be accessible through the MyService NSW portal and operate as a rebate, where a claim can be made after the fees and charges have been paid. It will be available for use from April 2021 to 30 June 2022.
• Job Plus Program which will provide companies that move their head offices to NSW between 15 December 2020 and 30 June 2022 certain benefits such as payroll tax relief, fast-tracked planning approval pathways, and subsidised training programs among other things.
• $57.4m to create Trades Skills Pathway Centre over 4 years to address skills shortages in the NSW economy and support employment for women through the creation of new trades pathways and improving skilled employment opportunities.
• $39.3m business connect program extension to assist more businesses navigate the challenges of COVID-19.
• $80m in support for apprenticeships and cadetships in the community housing and construction sectors.
• $15m to help revitalise the Sydney CBD including through promoting outdoor entertainment and al fresco dining.

In order to support the economy, the government has decided to extend the temporary JobSeeker COVID supplement for a further 3 months until the 31 March 2021, although at a further reduced rate. The temporary supplement was due to end on 31 December 2020, however, with the continued closure of internal State borders, and the lagging economy, the extension will continue the temporary safety net for many individuals.

The supplement was originally introduced in April 2020 at a rate of $550 per fortnight which effectively doubled the rate of certain social security payments (eg JobSeeker, Youth Allowance, and Austudy). Individuals eligible for these payments received the full amount of the $550 coronavirus supplement on top of their payment each fortnight, lifting the total payment to $1,100 for most people.

This initial supplement was legislated to end on 24 September 2020 and was subsequently extended by the government until 31 December 2020 albeit at a reduced rate $250 per fortnight. While the current extension may be welcome news for those unfortunately unemployed or underemployed Australians, the supplement will be further reduced to $150 per fortnight from 1 January 2021 (until 31 March 2021).

The new maximum fortnightly payment from 1 January 2021 to 31 March 2021 for support recipients in the following situations are:

• Single, no children – $715.70;
• Single, with dependent child or children – $762.00;
• Single, 60 or older, after 9 continuous months on payment – $762.00;
• Partnered – $660.80; and
• Single principal carer granted exemption from mutual obligations requirements for certain categories – $942.10.

Previous arrangements that increased the income free area of the JobSeeker payment to $300 per fortnight will continue from 1 January 2021 to 31 March 2021, meaning that recipients of various payments can earn income of up to $300 per fortnight and still receive the maximum payment rate. In addition, the partner income test cut-out will be retained at an increased rate of $3,086.11 per fortnight ($80,238.89 per year) allowing recipients to continue accessing various payments. 

Those on various support payments need to also be aware of the return of mutual obligation requirements which apply to recipients in all states and territories except Victoria (at this stage). This includes performing tasks and activities in your Job Plan, attending to tasks in online employment services, and/or attending all appointments with your employment provider either over the phone, online or in person. Failure to fulfil these mutual obligations could lead to suspensions of payment and penalties.

If you’re a former-employee, sole-trader or self-employed individual thinking of applying for the JobSeeker payment, in addition to the above, you should be aware that the assets test now applies as well as the Liquid Assets Waiting Period. The liquid assets waiting period could see those with savings equal to or more than $5,500 (single with no dependants), or $11,000 (partnered or single with dependants) wait between 1 and 13 weeks to receive any payments. 

Due to the COVID-19 pandemic and closed borders, many seasonal workers who were a part of the seasonal work program (SWP) have been stuck in Australia since their visa ended. With uncertainty of tax consequences stemming from their visa status, many workers as well as employers are rightly confused as to the tax obligations they have. 

In short, the seasonal workers program allowed employers in the agriculture sector and selected locations to access a pool of reliable returning workforce when there is not enough local Labour to meet seasonal demand. Originally, workers under the SWP were considered to be non-residents of Australia for tax purposes, unless they stay in Australia after they finish working on the program. This is where the confusion comes in, as these workers have now been made to stay in Australia involuntarily due to closed borders and difficulty getting flights home.

To clear up the confusion, the ATO has issued a clarification for these workers. If you are a worker that has been participating in the SWP and continue to do so, and were previously on a Temporary Work (International Relations) subclass 403 visa and are now on a different temporary visa, the ATO is currently attempting to make arrangements to ensure that previous taxation arrangements remain. This includes those workers who were previously on a subclass 403 visa and have subsequently moved to either a Bridging visa E, Temporary Activity (subclass 408), or AGEE – COVID-19 Pandemic event visa (subclass 408 visa).

According to the ATO, you will not need to lodge a tax return if:

• you’re a foreign resident;
• the only income you earn in Australia is from SWP (including salary, wages, commission, bonuses or allowances), or bank interest from an Australian bank; and
• your SWP approved employers withheld 15% tax on your behalf.

The ATO further notes that those workers in Australian on a subclass 403 visa, a subclass 408 visa or a Bridging visa E to participate in the SWP are unlikely to a resident of Australia for tax purposes and that a change of visa from one class to a different temporary visa will not of itself change the residency status of the worker.

For qualifying workers that have already lodged their 2019-20 tax return, the ATO says they will not need to do anything as arrangements are being made to ensure that the tax obligations remain the same for SWP workers that have moved to new temporary visas.

For those workers that have recently lodged their 2019-20 tax return, the ATO will issue a notice of assessment once they’ve completed the arrangements. If you’re one of those workers that lodged early and have already received a notice of assessment, the ATO will contact you once the arrangements are complete.

There are a lot more of us working from than ever before. So, can you claim all or some of the additional costs off your tax? There are 3 options for claiming working from home expenses. The question of whether it’s all or some depends on the method chosen.

Shortcut Method

First, employees working from home can calculate the deduction by using a fixed rate. This is set at 80 cents for each hour worked at home – the ATO calls this the “shortcut method”. It was introduced as a result of the large number of people working from home due to COVID-19.

Fixed Rate Method

Second, prior to the shortcut method being announced, the fixed rate was 52 cents for each hour worked at home. This can still be used.

Actual Cost Method

The third option is where all the actual costs are recorded and apportioned on the basis of the work-related proportion. It for largely used by people who have a home office, eg a doctor’s consulting rooms within a private residence – so we won’t focus on it now. However, please contact us if you think it may apply to you.

Comparison

The 80-cent rate is simple and easy. To qualify, a taxpayer must be working from home and must incur additional running expenses. For example, if a home computer had only ever been used for private purposes and is now being used to fulfil employment duties or in running a business, it would be an additional running expense. The ATO states that minimal tasks such as occasionally checking email or taking calls while at home will not qualify as working from home. The work must be “substantive “.

The 80-cent rate covers all additional running expenses, including electricity and gas, cleaning, phone and internet. If this method is used, no other work from home expenses can be claimed.

Taxpayers do not need to have a dedicated area to use the 80-cent rate. So, you can put the computer on the kitchen table, work away and claim the deduction.

However, taxpayers will need to keep a record of the hours they have worked at home, which can be in the form of a diary (or timesheets, rosters etc).

The 52-cent rate method also applies to what the ATO terms “running costs”. It is 52 cents for each hour worked at home and is intended to cover the expenses such as electricity and gas, and the cost of repairs to home office equipment, furniture and furnishings.

However, it is more important to know what the 52-cent rate does not cover. It excludes things like phone and internet, computer consumables and stationery and depreciation for items like phones, computers and laptops.

If you want to claim for these expenses (like a new laptop), then you need to calculate their work-related use separately. This requires diaries, receipts, detailed phone accounts etc, but can give you a bigger deduction. To use the 52-cent rate, taxpayers must have a “dedicated work area”, such as a home office.

In the aftermath of Budget 2020, the Labor leader has been given a customary opportunity to outline his party’s vision for Australia in its Budget reply speech. The one proposal that has been given the most attention is the childcare measure which Labor has indicated it will take to the next election, which could occur as early as late 2021.

Currently, under the childcare subsidy, families that earn up to $69,390 get up to 85% of the hourly fee (or hourly rate cap) as a subsidy for up to 100 hours of subsidised care per fortnight. The hourly fee or hourly rate cap is set by the government and is currently at $12.20 per hour for centre-based long daycare.

Those families that earn between $174,390 and below $253,680 get 50% of the hourly fee (or hourly rate cap) with the percentage of subsidy decreasing by 1% for every $3,000 earned. The subsidy decreases to 20% for families that earn between $343,680 and below $353,680, and becomes 0% for those families that earn $353,680 or more. However, there are a few quirks in the current system that mean that families may get less of a subsidy depending on how much their long daycare centre actually charges.

For example, based on the government’s hourly cap of $12.20 per hour, a 10-hour day at long daycare works out to be $122. Centres based in popular areas of Sydney routinely charge between $170 to $200 per day depending on the age of the children. Which means that even if your family fall into the income bracket that allows you to get a 50% subsidy, your family will only receive $61 (50% of $122), which works out to be between 30% to 35% of actual out of pocket costs.

This amount may be even lower in certain circumstances as Centrelink may withhold 5% of the subsidy to reduce the likelihood of families receiving an overpayment. In addition, families in long daycare centres offering 11-hour days (ie 7am-6pm), may find that they run out of maximum subsidised hours before the end of each fortnight.

For families that earn more than $183,390, there is a cap on the subsidy that they can receive. Meaning that each year, the government will only subsidise fees up to $10,560 per child, and families will most likely plan to maximise the subsidy without going over the cap, leading to less days in childcare for the child and less hours working for one of the parents.

According to Labor, one of its signature policies will be to remove the annual cap of $10,560 (per child) on the childcare subsidy from 1 July 2022 thereby eliminating the disincentive for parents to work more hours. It will also seek to increase the maximum childcare subsidy to 90% from 85% with a view to moving to a 90% subsidy for “every Australian family”. 

Centrelink and the ATO have commenced a new data matching program in relation to the use of Single Touch Payroll (STP) data. Broadly, the program will involve the exchange of STP data from the ATO to Centrelink (or Services Australia) in relation to individuals that have a client relationship with the agency. The data will then be matched against Centrelink held records and information.

For the purposes of this data matching program, clients of Centrelink include:

• An individual who is in receipt of or claiming a payment or service such as an income support payment, family assistance payments, low income card, and a child support paying parent.
• A related individual of the above, whose income may have an effect on the payability or ongoing entitlement to a payment of the individual above. This includes a partner/ex-partner, or a debtor (eg a non-current client who has an outstanding debt to Centrelink and where it is their responsibility to repay a debt).

The data matching program will apply for the 2019-20 and 2020-21 financial years and it is estimated that around 460m pay events related to STP will be exchanged in relation to approximately 10-12 million individuals. This figure may fluctuate depending on the economic impacts of COVID-19 and associated supports (ie JobSeeker).

Data exchanged in the program will consist of basic identifying information including name, date of birth, postal address, gender, and assigned CRN (or TFN for Child Support). Once an individual has been matched using the basic identifying information, a more detailed exchange of STP information will follow including employers’ ABN and contact information, year to date salary and wages (ie income, allowances, deductions, and employment termination payments), and pay period details (ie start and end dates, and payment dates). Note the employment commencement and cessation dates will be used to identify when the sharing of STP data is no longer necessary.

Centrelink notes that data quality mechanisms will be implemented in this data matching program meaning that ATO will only provide data for mutual clients where it has “high confidence” that they have identified the correct individual. If an individual cannot be confirmed as a mutual client of interest of both the ATO and Centrelink, no STP data will be exchanged. Safeguards will be present where key data elements fail validation or there is unexpected or out of order payroll processing of STP data. This consists of quarantining the data from use or flagging the data to minimise misinterpretation.

According to Centrelink, matching data is one of the key controls it uses to manage the risk of fraud and non-compliance. Specifically, in this case, this data matching program will:

• Deter behaviours so individuals adhere to their obligations;
• Support existing enforcement and recovery activities; and
• Enable Centrelink to provide early intervention to educate customers about what information needs to be provided to meet their income reporting obligations.