Unless you work from home, you must be incurring expenses on your travels between home and workplace. In this article, we are going to discuss how and to what extent you can claim these as well as other travel expenses in your tax return. 

Expenses for travel between home and workplace 

The expenses that you incur for commuting between your home and workplace are generally considered as personal expenses. However, there are some situations wherein you can claim a deduction for travel expenses for travel between home and workplace and between two workplaces. 

Travel expenses include those incurred on driving your car, ride-sharing, flight tickets, taxis, etc. Further, if the expenses are incurred partly for personal expenses, then you must claim only that portion of expenses that relates to work duties. 

Claiming Car Expenses on your Tax Return

These expenses can be claimed by you when you are using your own care for performing work-related duties. There are two methods as follows to determine the amount of deduction: 

Cents per kilometer method 

Here is how the method works: 

• You may claim a deduction of 72 cents per kilometer.
• Maximum of 5,000 work-related kilometers can be claimed however they must be legitimately work related. 
• No other car expenses other than the 72 c/km may be claimed if using this method. 
• Records evidencing work-related kilometers is to be maintained. 

Logbook method  

The logbook method functions in the below manner: 

• Work-related percentage of the car expenses is calculated 
• The percentage is applied to the car expenses to arrive at the deduction 
• Expenses that can be claimed includes the decline in value and running costs 
• Records such as logbook and odometer readings shall be maintained 

Other travel expenses 

If you incur any other travel expense in relation to your work then you may claim the same as a deduction. These expenses may include toll charges, car parking, accommodation expenses when staying in another state for work purposes, fuel expenses on a bike, and so on. Make sure while claiming a deduction that you reduce the portion of expenses relating to personal expenses. 

Accommodation expenses 

If you are required by your employer to travel for business reasons to the other states then you might be receiving accommodation allowance. This is an income which you shall disclose in your tax return. Only if you show the allowance as an income, you can claim the accommodation expenses. There are some other conditions as well which are needed to be fulfilled to claim accommodation expenses. 

What Travel Expenses can’t you Claim on your Tax Return? 

Relocation expenses  

You might incur expenses when you take a transfer in your existing job or when you switch to a new job. These expenses relating to your relocation or removal can’t be claimed as a deduction. 

Fines 

Fines such as overspeeding fine can not be claimed as an expense deduction. 

For example- overspeeding 

Normal trip expenses 

The cost that you incur on your travel between your home and workplace is a private expense that can’t be claimed. 

If there is anything for which you need clarity you may reach out to our team at Auditax. 

As the COVID-19 pandemic has hit the country, we have seen how there has been a paradigm shift in the work styles and work from home has become a common phenomenon. If you are also working from home, you may want to know what all expenses you can claim as a deduction while finalizing your tax return and how you can calculate these expenses.

Here is a glimpse of what all you can find in the article.

1. Conditions for claiming a deduction.
2. Which expenses can be claimed as a deduction?
3. Calculating additional running expenses using the shortcut method.

Let’s get started!

Conditions for Claiming a Deduction

Let us have a look at what all conditions will have to be fulfilled to claim a deduction for work from home expenses.

• You must incur the expense by way of spending money. This would mean that you can’t claim a deduction for those items or facilities that are provided to you by your employer.

• The expenses that you claim shall have a direct nexus with your work and income.
• You must have records that can substantiate the expenses incurred by you.

Make sure all these conditions are met so that you can claim the deduction.

Which Expenses Can be Claimed as a Deduction?

If you are temporarily working from home then you can claim a deduction for additional running expenses that you incur in connection with your work such as:

• Electricity expenses including the expenses incurred on lightening, cooling and heating as well as electric items that you use for your work;
• Cleaning costs related to your dedicated work area;
• Phone and internet expenses;
• Home office equipment such as laptops, printers, telephones, furniture, etc. You can either claim the full cost of such items that cost up to $300; if the cost of items exceeds $300 then you can claim a deduction for decline in the value of such items.
• Other running costs such as computer consumables and stationery.

However, you must note that you can’t claim a deduction for occupancy expenses such as property rent, rates and taxes, interest on property loans, etc.

Calculating Additional Running Expenses Using the Shortcut Method

In this method, you can claim 80 cents for every work hour for additional running expenses provided you are carrying out employment duties and not just occasional emails or calls. You should note the following points when you use this method.

• You can claim the deduction even if you don’t have a dedicated work area.
• All the deductible running expenses discussed above that you have incurred additionally due to working from home can be claimed as a deduction.
• If you adopt this method then you can’t further claim a deduction for the same expenses anywhere again.
• To arrive at the deduction amount, you must maintain records of the number of hours that you have devoted to work, such as timesheets.
• While filing your 2020-21 return make sure you quote the “COVID hourly rate” in the return.

As the Fringe Benefits Tax (FBT) year has concluded on 31st March, 2021, it is high time that you review what all fringe benefits you have provided to your employees during the year and calculate the FBT liability thereon. With the compliance clock ticking, you might need to hurry up as the return has to be lodged by 21st May, 2021. Your due date will although be different if you choose to lodge the FBT return through a tax agent. 

What all is included in fringe benefits? 

Here are some of the examples of fringe benefits that employers usually provide to their employees: 

• Entertainment benefits 

• Personal use of work car 
• Reimbursement of personal expenses 
• Payments against salary sacrifice arrangements 

However, these are some benefits that are excluded from the ambit of FBT. These include: 

• Emergency medical care 

• Equipment given as aid in work from home such as laptop 
• Emergency accommodation, food and transport facility 
• Minor benefits provided up to $300 

Frequency of FBT payments 

You are required to pay FBT due by 21st May, 2021 for the year ended 31st March, 2021. Regarding the interval of FBP payments, consider the following scenarios: 

• If you are paying FBT for the first time or your FBT payment was less than $3,000 last year: You have to pay single payment for the year. 
• If your FBT payment was $3,000 or more last year: In this scenario, you need to pay FBT in quarterly installments through activity statements. If there is any balancing payment to be made, the due for the same is 21st May. 

You might need to note that if in a year you have paid FBT installments and you don't have any FBT liability for that year, then also you need to lodge the FBT return. By doing so, you will be able to claim refund of FBT paid during the year. 

When not to lodge FBT return?  

If during the year you don't have any FBT liability and also you have not paid any FBT installment, then you need not lodge FBT return for that year. Instead, you need to fill in FBT-notice of non-lodgement as per the due date of your FBT return lodgement. 

Ways to lodge FBT return 

You have the following options to lodge your FBT return: 

• Online through Standard Business Reporting (SBR) enabled software 
• By sending physically through post to the ATO 
• Through a registered tax agent 

You can download the FBT forms for year 2021 and get started with the return lodgement process. 

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. 

It is very important that your SMSF meets the residency test because the consequences of non-compliant status can be harsh. If your SMSF fails the residency test requirements, you as an SMSF trustee will have to pay the tax at the rate of 45% on the entire amount of SMSF asset less non-concessional contributions in the non-compliant year (the tax rate was increased to 47% during temporary budget repair levy financial years of 2014-2015, 2015-2016 and 2016-2017). The non-compliant status of the fund strips it essentially from all the tax concessions it had for years.

But you can take preventive actions to avoid this by following the handy SMSF guide below which provides information and strategies to trustees and advisors to help them meet the residency test for their SMSF.

Three conditions that an SMSF needs to satisfy for qualifying as an Australian Superannuation Fund

• The Self-Managed Superannuation Fund should have been established in Australia.
• The central management and control of the SMSF should lie in Australia.
• The fund should either have no active members or, have active members who are Australian residents and hold at least 50% of the total market value of SMSF asset or the amounts that would be payable to the active members if they voluntarily leave the superannuation fund.

Active Member of an SMSF

An active member of the SMSF is a person who is contributing to the fund at the time or contributions are being made to the fund on behalf of that person.

The ATO always keep matching active member data by applying various techniques:

• The ATO can match the list of Active members of the fund by personal and SMSF tax returns.
• The AT O can also apply other filters on data like entries to and exits from Australia.

SMSF trustees need to be proactive about SMSF residency laws especially in today’s time when family members are living across countries and the world is becoming a global village because SMSF can easily lose compliant status if family member living overseas takes over the trustee position by succession.

Past Rulings

As per the decision of Bywater Investments Limited & Ors v. Commissioner of Taxation; Hua Wang Bank Berhad v. Commissioner of Taxation [2016] HCA 45; 2016 ATC 20-589 (‘Bywater’), it is clear that risk pertaining to this area is increasing.

ATO comments in TR 2018/9 , clearly depict that, only figurehead directors for your SMSF fund to establish the Australian central management and control would not be sufficient. In the Bywater case, it was found that the Director controller residing in Sydney was holding control of numerous overseas companies. Therefore, it is recommended to appoint a resident director in place of the overseas member for avoiding the risk of non-compliance status.

 

Do you plan to become a SMSF trustee sometime in future? If yes, then you must make sure that they don't incur disqualification from being an SMSF trustee or director. There are some circumstances which may make a person disqualified even if such person landed in such circumstance unknowingly. Let us discuss this in detail. 

What constitutes "dishonest offence"? 

A person can become disqualified from becoming an SMSF trustee or director if they are convicted of any offence. This holds true irrespective of the fact whether the offence is committed in Australia or outside Australia. Another important fact to note is that the disqualification applies irrespective of the age at which the person is convicted. This means that even if a youth is committed of an offence before attaining the age of 18, such youth becomes disqualified from becoming the member forever. 

There is no guideline in the SMSF laws as to what constitutes "dishonest offence". However, ATO has stated some examples for which convictions counts as dishonest offence, such as: 

• Theft 
• Fraud 
• Illegal activities 
• Illegal dealings 

Even if some convictions are not recorded by the court on the grounds of a person's age or the non-availability of conviction publicly, then also disqualification can arise. 

The seriousness of the disqualification can be understood from an example found in the Explanatory Memorandum of the legislation. A minor aging less than 18 years convicted of shoplifting 20 years back was declared to be involved in an offence including dishonesty and thus disqualified to be an SMSF trustee/ director. 

Are there any exceptions to disqualification?  

As a general rule, a person convicted of a dishonest offence is disqualified for the entire life. However, there are some exceptions to this rule in those situations where "serious dishonest conduct" is not committed. Serious dishonest conduct refers to those offence where the penalty involves an imprisonment term of more than two years or a fine of more than 120 penalty units ($25,200 for year 2019). 

If you are convicted of an offence not being serious dishonest conduct, then you can make an application to the ATO and request for the waiver of disqualification. Further, the application has to made within 14 days of the conviction. If there is any good reason for the delay made in making application, then the ATO might consider such delayed application. 

What happens when disqualification is attracted? 

When an SMSF trustee incurs disqualification, then the same shall be notified by the trustee to the ATO immediately. If the SMSF trustee continues to be the trustee, then it will be counted as a serious offence for the trustee that can bring along significant criminal and civil penalties.  

Another important thing to note is that even a person's legal representative is restricted from becoming a replacement trustee or director. The disqualified person is ceased to be an SMSF member for entire life within a period of 6 months of the conviction. An SMSF is required to restructure the fund to make good the trustee/member rules within this grace period of 6 months. The result is that the member who is convicted of a dishonest offence has to immediately cease being the SMSF trustee/ director, however, the SMSF gets a grace period of 6 months to comply with trustee/member rules. 

What to do when ATO doesn't provide waiver to an SMSF member? 

There are few things that a member can do if you have incurred disqualification and the ATO disapproves your application for disqualification waiver: 

• The account balance of the disqualified member can be rolled over to a large (Australian Prudential Regulation Authority i.e., APRA) superannuation fund. 

• The SMSF can be converted to a small APRA fund. For this, an APRA approved trustee has to be appointed. 
• Those disqualified persons who have either retired, attained the age of 65, or fulfilled some other condition of release along with a nil cashing restriction are allowed to withdraw all the benefits lying with the SMSF fund.  

The disqualified person needs to make sure that these corrective actions are taken within a period of six months from disqualification. 

Conclusion 

Considering the serious consequences of disqualifications, it is important that the SMSF trustees and the auditors frequently monitor whether the conditions of disqualification are attracted for any member or not. The SMSF advisors should also consider whether the children of SMSF members can be disqualified and establish succession plans accordingly. 

 

While setting up an SMSF, one of the decisions to be taken is regarding the selection of trustees. You need to decide whether individual trustees should be appointed or corporate trustees. While you might have heard that corporate trustees are beneficial against individual trustees, you might wonder, why? Apart from answering this question, this article also considers why the constitution of a corporate trustee is important and what should be included in an SMSF constitution. 

Why opt corporate trustee over individual trustee?  

There are many reasons why a corporate trustee is preferable to individual trustees for an SMSF. 

Here are some benefits that a corporate trustee has over individuals: 

• Succession planning becomes more convenient when corporate trustee is there. Further, the SMSF is able to meet the trustee/member rules easily; 
• Fund has to deal with less administration and paperwork in case there is a change in members of the fund. The corporate trustee continues to be the trustee even if a new member comes in or leaves the fund; 
• There is more degree of asset protection. If any fine is imposed to the SMSF, then the corporate trustee will bear the same. Also, since a company has limited liability, the directors don't become personally liable in case company's asset fall short; 
• In a case where there are members oversees, it becomes easier to manage such overseas members and deal with SMSF residency issues; and 

• You SMSF attracts comparatively lower administrative penalties under SMSF laws. 

Another important aspect of a corporate trustee is that the company should be a sole purpose company. This means that it should act in that role only as the trustee of an SMSF. 

Why is a constitution important? 

The constitution is the key foundation document for any company. This document regulates the activities of the trustee company along with the following: 

• who has the power to appoint and remove directors; 

• who can be appointed or removed as a director; 
• Manner in which decisions are made by the company including how meetings are conducted or resolutions are passed; and 
• what powers the shareholders and directors have. 

Where an SMSF has individual trustees, most of such issues are dealt as per the governing rules of the fund. However, where a corporate trustee is there, the constitution of the company regulates these issues. 

While a company has an indefinite lifespan, there can be many developments that might make a constitution outdated. You should review each constitution at least every ten years. However, some legal or other changes might make it necessary to review the constitution more frequently. 

 

In case you are curious to understand how constitution should be prepared, here are some key points to consider that should be covered in the constitution of a corporate trustee. 

Nomination of successor director 

A well drafted constitution can ensure that the right person is in control of the company at the right time. When a director dies or loses capacity, they no longer remain the director of the company. In such events, it becomes difficult to appoint a replacement director. That's why proper pre-planning is required to manage such issues to ensure that the trustee/member rules are satisfied and that any formalities regarding death benefits are met. 

Some people believe that a person's legal representative or an executor can take up the role of director of a corporate trustee upon their death or loss of capacity. However, this is not true! Without any clause in constitution, the decision to appoint a replacement director requires the shareholders' approval. 

To tackle such situations, constitution should contain a clause to allow a director to appoint a person to act as a director in the event of such nominating director's death or loss of capacity. Doing so allows the successor director to take up the responsibility of directorship immediately when the nominating directors dies or lose capacity. This provides greater certainty regarding the ongoing control and management of the superfund. 

Issue of guardian share 

Issue of guardian share in the company can be useful for an SMSF to ensure that a person can exercise ultimate control of a company and resolve disputed issues. For example, a constitution can mention that a 'Guardian Shareholder' must agree to any decision taken by both directors and shareholders before any resolution is passed. 

Flexible constitution for lower ASIC fees 

A company that solely acts as an SMSF trustee gets to pay reduced annual ASIC fee. It is important that a constitution has flexible wording that allows the company to take on another role also without letting go the reduced fee entitlement. Example, a constitution might allow the company to become the trustee of a family discretionary trust, without requiring any change to the constitution. Some constitutions are strictly written and a variation is to be made if the company takes some another role. In contrast, others have flexible wording that allows other roles to be taken on without any need to amend the constitution. 

Use of company in SMSF investment structures 

Another benefit of a corporate trustee is that a company can be used as part of an investment structure or entity that an SMSF invests in.  

Consider a situation where a company acts as the trustee of a unit trust whose units an SMSF acquires. When the constitution of the corporate trustee of the unit trust and the deed of the unit trust are properly drafted, then it is possible for an SMSF to become a 50% investor in a unit trust along with an 'unrelated' party. Doing so doesn't attract any in-house assets issues. It should also be made sure that the constitution does not allow any one party to 'sufficiently influence' or 'control' the company/trust. 

Lesser formalities and usage of technology 

Sometimes some constitutions are such old or poorly drafted that it takes few formalities to be complied with even for performing basic functions. For example, a constitution might require that any written notice should be sent by post only. A constitution should be flexible enough to allow the use of technology and should place less formalities.  

Conclusions 

A well drafted company constitution gives opportunity for proper succession planning in an SMSF by providing greater certainty in the event of the death or loss of capacity of a key person. In contrast, poorly drafted constitutions can create a path for many risks and other consequences including costly legal disputes. 

 

Background 

You planned your retirement in advance by investing in super, but due to some financial crisis you need to withdraw funds early? If the answer is yes, then you would be happy to know that there are many methods through which you as a fund member can access your superannuation before retirement without defeating law. With the ongoing effects of COVID-19 pandemic, businesses all over the world have been impacted and employees have suffered salary cuts leading to financial stress for all. During these difficult times, you might have come across one or the other scammer luring people to set up an SMSF and unlawfully access superannuation benefits before even meeting the condition of release. ATO has advised to stay away from such scammers. 

 When can you access your superannuation funds? 

 It's true that SMSFs allow its members to access funds. However, this liberty to withdraw superannuation benefit comes only upon the fulfillment of the condition of release. The responsibility to ensure that this condition is satisfied lies in the hands of the SMSF trustees. The most comm 

The most common conditions of release include retirement or attaining the age of 65. However, there are some other situations where members can access their superannuation benefits before the specified time.  

 What happens when you don't meet condition of release? 

When superannuation benefits are withdrawn by the SMSF members without meeting the condition of release or following the applicable cashing restrictions, it can cause serious compliance and tax consequences for fund trustees as well as the members. For example, ATO may consider the payment made to the member as a loan or even illegal access to superannuation benefits. If the evidences indicate that the member is obligated to pay back the superannuation benefit to the SMSF, then it is considered that the SMSF trustee has given a loan to its member or relative. Due to such non-compliance of SMSF laws, the ATO might impose administrative penalties. Alternatively, the ATO might treat the payment as illegal access to superannuation benefits, since no repayment obligation exists. The tax implication would be that the superannuation benefit would be included in the member's assessable income. 

 What happens in case of temporary incapacity? 

A member can be said to have temporary incapacity in the case of physical or mental illness that has made the member unemployed but doesn't count as permanent incapacity. For example, suppose a member who works as a farm assistant for its employer had to stop working for 4 months due to an injury. 

Condition of release in case of temporary incapacity 

In order to compensate a member for the lost income due to temporary incapacity, an SMSF member who meets the condition of temporary incapacity is allowed to access the superannuation benefits. This helps the members to get relief for the income that they lost due their illness or injury.  

However, there are some restrictions (known as "cashing restriction" with respect to form, amount, and period for which such benefits can be received on the grounds of temporary incapacity. 

The cashing restriction includes the following areas: 

Form: A member may receive an amount that reflects the reward that such member was getting before becoming ill or injured. Further, the amount is to be paid as a non-commutable income stream (NCIS) I.e., it is to be paid in instalments. The payouts can be made only from those contributions that is greater than the superannuation guarantee threshold, insurance or from reserves lying with the fund. It can't be made from the amounts related to the member's member-financed or mandated employer-financed benefits and the growth earned on such amounts. 

Amount: As we stated earlier, the amount that members are allowed to access can't exceed the maximum reward that members were receiving from the employment before becoming ill or injured. In case of income protection insurance policies certain portion of the pre-injury income stream is paid by the insurer (say 75%). Moreover, such policies might include a clause that decreases the portion of insurer's obligation to the extent the insured members gain other income. Let us take a case where an insured member has a 70% monthly income protection insurance plan in addition to superannuation, then such insurance payout would be reduced by the monthly amount that is paid by the SMSF. 

 Time: The period for which the member can receive the amounts starts when the employment income of the member ceases due to the event of temporary incapacity and stops when the members take back the employment that was held by the member prior to illness or injury. 

 Is illness from COVID-19 covered? 

Australians who get ill from COVID-19 or get exposed to any other illness or injury, may claim income support from their SMSF on account of temporary incapacity. However, it is important that a member keeps in mind the cashing restrictions. Availability of non-minimum benefits such as income replacement insurance, reserves or excess employer contributions are some factors that may affect the amount of NCIS.  Further, the start and end period for the NCIS might be difficult to find out where the employment arranged of the member has changed after the incapacity occurs, instead of ceasing such as reduced working hours. 

Conclusions 

Here are some conditions that you have to consider to determine whether a member has met the condition of release in the event of temporary incapacity: 

• Whether the physical or mental illness caused a member to stop work temporarily. 

• The amount of the NCIS that can be paid and whether the payout can be funded out of the member's superannuation benefits. 
• The expected time period after which the member is likely to return to the employment. 

If the SMSF trustees are not sure about these facts, then it's better that they seek legal advice. Otherwise, the consequences can be serious for the SMSF trustee as well as the members. 

More super changes are on the way with the release of draft legislation to implement super reforms announced in the 2020-21 Budget including single default account, best financial interests duty, and tackling fund under-performance. The reforms are designed to ensure that the super system deliver better outcomes for members.

Under the proposed rules:

• employers will be required to make contributions on behalf of employees to the employee’s existing “stapled” fund in certain circumstances, including where the employee has not chosen a fund. It will apply to employees who started their employment on or after 1 July 2021;
• trustees of registrable super entities, directors of the corporate trustee of a registrable super entity, and trustees of SMSFs must perform their duties and exercise their powers in the best financial interests of the beneficiaries, which reverses the evidential burden of proof. It may also prohibit certain payments, or prohibit certain payments unless certain conditions are met, regardless of whether the payment is considered to be in the best financial interests of beneficiaries;
• APRA will conduct an annual performance test for MySuper products, and other products specified in regulations. Trustees of the super entities will be required to give notice to members when a product fails the test. In addition, where a product has failed the performance test in 2 consecutive years, the trustee will be prohibited from accepting new beneficiaries into that product. It is envisaged that APRA may be able to lift the prohibition if circumstances specified in the regulations are satisfied. To allow taxpayers to make more informed decisions and increase transparency, APRA will also be able to rank various super products according to specified metrics including fee levels and investment returns. The results of which will be published on an interactive website by the ATO. These reforms will ensure underperforming super products are held to account.

Contact us today if you would like to find out more about how these upcoming super changes will affect you. Remember, these and many other tax and super changes are coming in 2021 and beyond, we can help you stay one step ahead.

Online sellers beware, the ATO has extended its current data-matching program for another 4 years to ensure that businesses and individuals are correctly meeting their registration, lodgment and tax obligations. The current program will affect most sellers on eBay Australia and New Zealand as well as Amazon. It is expected that around 20,000 to 30,000 account records will be obtained each financial year and matched with ATO data holdings to identify compliance issues. Compliance outcomes including taxpayer audits and voluntary disclosures are expected.

Previously, the online selling data-matching program obtained its data from eBay Australia and New Zealand Pty Ltd and Amazon Commercial Services Pty Ltd and it is expected that the current program will obtain data from the same providers.

The ATO estimates that details of around 20,000 to 30,000 account records will be obtained each financial year and that around half of that number will relate to individual sellers. Records obtained each year will be electronically matched with ATO data holdings to identify and address a number of taxation risks including:

According to the ATO, insights obtained from the program will be used to inform treatment strategies to improve voluntary compliance through education on taxation obligations. It will also be used to increase understanding of the behaviours and compliance profile of individuals and businesses that sell goods or services via online selling platforms. While the data will not be used to directly initiate automated compliance activity, where high risk activity or compliance issues are identified, the ATO will commence compliance action. 

In previous years, the ATO used the online selling data-matching program to identify discrepancies between online sales and information declared in the sellers’ tax returns. It was then used to deliver compliance outcomes for income tax and GST using taxpayer audits, voluntary disclosures and lodgments. It is envisaged that the current program will work in a similar way.

If you are an online seller and are not sure whether you’ve crossed the threshold from a hobby to a business, we can help. We can also ensure that you have proper records to support your tax positions should the ATO come knocking. Contact us today for expert help.