JULY 2022 NEWSLETTER

As the 2023 Financial Year begins, there are a number of important items to note.

CHANGES TO SUPER GUARANTEE
From the 1st July 2022, there were two significant super guarantee changes that came into effect, being:

Employers are required to pay 10.5% super guarantee contributions for all employees.
The $450 per month eligibility threshold for when super guarantee is paid has been removed.

What employers need to do

Make sure that your software is updated to correctly calculate your employees' super guarantee entitlement from 1 July 2022.
With the removal of the $450 threshold, if you will be paying super guarantee for one or more employees for the first time, you'll need to give them a Standard Choice Form to complete.

DIRECTOR IDENTIFICATION NUMBER (DIN)
Any individual who became a Director or Alternate Director prior to 31/10/2021 have until 30/11/2022 to obtain their DIN.
Once you have received your Director ID Number, please forward this to samantha@milaneseco.com.au to add into our Corporate Secretarial software.

IMPORTANT: Please note that the ABRS may impose large penalties on directors who have not applied for their DIN within the required timeframe.

If you are unable to apply for a DIN by the date you need to, you can complete an Application for an extension of time to apply for a director ID (access the application form here).
If you have any questions regarding the Director Identification Number, please contact our office to discuss.

SINGLE TOUCH PAYROLL PHASE 2
Single Touch Payroll Phase 2 is technically already in place, however many software providers received deferrals. MYOB and XERO have obtained a deferral from the ATO which means you have until 1 January 2023 to move to STP Phase 2.

Under STP Phase 2 you'll report additional information to the ATO to clarify the payments you make to your employees.
STP Phase 2 has been designed to:

reduce your reporting burden if you currently report to multiple government agencies, and
support the administration of Services Australia.

If you need any assistance setting up STP 2 in your software, please contact our office.

KEEPING RECEIPTS
Traditionally, everyone keeps paper records to support their claims, however the ATO permits electronic copies to be kept. Paper receipts are often easily lost and often fade over time. Keeping electronic copies can be more efficient. It's important to ensure that electronic records are regularly backed up to a safe storage space. There are apps such as Australian Taxation Office app on the market which allow you to securely store copies of records.
Important Reminder: You need to keep records for 5 years (in most cases) from the date you lodge your tax return.

RAT TESTS
If you were required to test in order to attend or remain at work, you can claim a deduction in 2021–22 for costs you incurred. To claim the deduction, you must have records to verify that:

You incurred the cost (a receipt); and
You were required to test for work purposes.

Please note: you can only claim the work-related portion ie. If you purchase a multipack and used some for private purposes, then you can only claim the portion that was used for work-related purposes.

CONCESSIONAL SUPER CONTRIBUTIONS
Concessional contributions are contributions made into your super fund from your income that has not yet been taxed.
From 1 July 2021, the concessional contributions cap was increased to $27,500. The increase was a result of indexation to be in line with average weekly ordinary time earnings.

It's important to note that if you have more than one superfund, all contributions are added up and go towards the cap. Should you exceed these caps, you may need to pay extra tax.

DEPRECIATION RULES FROM 1ST JULY 2022
The availability of temporary full expensing of depreciating assets for business has been extended for another year. Small Businesses with a turnover of less than $5 billion are entitled to an immediate tax deduction for depreciating assets purchased and installed for use by 30th June 2023.

Please be aware that there are special rules in relation to motor vehicles, they are subject to cost limits for GST and depreciation deductibility is limited to the business portion of the car limit.
If you are wanting to take advantage this this extension, please don’t hesitate to contact our office to discuss with your accountant to ensure the assets you plan to purchase are eligible.

SECTION 100A
It has been 43 years since the introduction of Section 100A. The ATO has recently taken aim at family trusts and provided new guidance on the section as well as the application of Division 7A to unpaid present entitlements.

For several years, the common practise for those using a Family Trust (also known as discretionary trust) has been to spread the income of the trust across family member beneficiaries. The ATO believes that “parents who make trust distributions to their adult children and then arrange for their children to give the distribution back to them are only doing this purely to reduce tax”. The ATO will now overturn the distribution and tax the trustee of the trust at the high marginal rate of 47%. You are still able to distribute trust income to family members, however you will need supporting evidence that the transfer/payment has occurred to that person.

The ATO have identified risk categories being white zone, green zone, blue zone and red zone. It has stated that they may investigate red zone risks and some blue zone risks, whilst the white and green zones are unlikely be investigated. The risk zones can be viewed below:

ATO: Link to guideline https://www.ato.gov.au/law/view/document?docid=TPA/TA20221/NAT/ATO/00001

In summary, the law hasn’t changed, but instead the ATO’s interpretation of the law has. The ATO has made it clear that it’s looking to crack down on trust distributions. We will also change our internal processes to ensure that our clients aren't scrutinised.

The best way to avoid being targeted by the ATO is to ensure all trust distributions to beneficiaries are physically made and don't loan them back.

As always, if you have any questions about any of the above, please don't hesitate to contact our office to discuss.

Regards,
Milanese & Co Accountants

Milanese & Co AccountantsJuly 15, 2022