Newsletter - July 2021
Cents & Sensibility | Tax News | Views | Clues
The Surprise Tax and the Impact of Data Matching – Genevieve Rajakulendran
The ATO now has more information about taxpayers than ever, due to digital data and a sharing economy.
Consequently, the ATO has recently increased its data matching activity using it as a powerful administrative and law enforcement tool. More amended assessments are being issued and you may receive an unexpected tax bill.
As you are aware, the ATO currently uses the pre-fill service which gathers information about the taxpayer from various third-party sources, such as employers, online selling platforms, share registers, Australian Transaction Reports and Analysis Centre (AUSTRAC) and state and territory motor vehicle registering bodies.
The data from the pre-fill information forms part of the compliance program to ensure the information you have submitted in your tax return matches the information already gathered about you. Amended assessments are issued if information is omitted or variances arise.
What can you do to ensure you do not receive an amended assessment?
- Try not to lodge too early, wait till the ATO has released its pre-fill information
- Review the ATO pre-fill information
- Ensure your details such as your tax-file number (TFN) and addresses are current and accurate with providers such as financial institutions, private health funds and brokers
- Regularly review your details with your providers
What should you do if you receive an amended assessment?
- Review to check if the amended assessment is correct
- If it is incorrect, contact us and we can advise the ATO on the reason for the
Do not panic, the ATO is merely looking for an explanation of the amount omitted. It is best to submit appropriate documentation to support your claim and the ATO will then reverse its adjustment.
Cryptocurrency – What You Need to Know
Cryptocurrency (CC) has become increasingly popular with investors intrigued with its potential since its inception in 2009. Many investors mistakenly believe CCs fall outside the tax system. However, increased regulation and technological enhancements have enabled the ATO and most overseas counterparts to incorporate data-matching protocols. This identifies users and ensures they report trades correctly.
Accurate management of transactions
At knp, we specialise in the crucial need to manage your transactions and how to do it. Accurate records should be kept whether you are using CCs for an investment, business, or personal use. Record keeping is essential as it will increase the efficiency of calculating your tax obligations.
How to manage your transactions
There are services that can track your CC transactions, simplifying the record-keeping and capital gains calculations. Cointracking, Koinly and Sublime IP are some of the applications available. Each application links your crypto exchange accounts to help calculate capital gains or income.
If you would like further help managing your tax obligations resulting from CC transactions, please do not hesitate to get in contact with your knp adviser.
Super Guarantee rate rising from 1 July 2021
The super guarantee rate will rise from 9.5% to 10% on 1 July 2021, so businesses with employees will need to ensure their payroll and accounting systems are updated to incorporate the increase to the super rate.
ATO warns on ‘copy/pasting’ claims
The ATO is alerting taxpayers that its sights are set on work-related expenses like car and travel claims that are predicted to decrease in this year’s tax returns.
Assistant Commissioner Tim Loh noted that COVID-19 has changed people’s work habits, so the ATO expects their work-related expenses will reflect this.
“We know many people started working from home during COVID-19, so a jump in these claims is expected,” Mr Loh said.
“But, if you are working at home, we would not expect to see claims for travelling between worksites, laundering uniforms or business trips.”
The ATO will also look closely at anyone with significant working from home expenses, that maintains or increases their claims for things like car, travel or clothing expenses:
“You can’t simply copy and paste previous year’s claims without evidence.”
“But we know some of these unusual claims may be legitimate. So, if you explain your claim with evidence, you have nothing to fear.”
Family assistance payments
The ATO has reminded individuals receiving Child Care Subsidy and Family Tax Benefit payments from Services Australia that they and their partners must lodge their 2019/20 Individual tax returns by 30 June 2021. Lodgement deferrals with the ATO do not alter this requirement.
Services Australia needs such individuals' income details to balance payments for Child Care Subsidy and Family Tax Benefit.
If tax return lodgement is not made by 30 June 2021:
- Clients receiving Child Care Subsidy may lose their ongoing entitlement and/or receive a debt from Services Australia and have to repay the amount received in the 2019/20 financial year; and
- Clients receiving Family Tax Benefit may miss out on additional payments, may also receive a debt from Services Australia and/or may have their fortnightly payments stopped.
Do you use the Small Business Superannuation Clearing House?
The ATO has advised employers intending to claim a tax deduction for super payments that they make for employees in the 2020/21 income year that any such payments must be accepted by the Small Business Superannuation Clearing House ('SBSCH') on or before 23 June 2021.
This allows processing time for the payments to be received by their employees' super funds before the end of the 2020/21 income year.
Car parking threshold for 2022 FBT year
The car parking threshold for the FBT year commencing on 1 April 2021 is $9.25.
This replaces the amount of $9.15 that applied in the previous FBT year commencing 1 April 2020.
Luxury car tax thresholds
The ATO has updated the luxury car tax ('LCT') thresholds for the 2021/22 financial year.
The LCT threshold for fuel efficient vehicles in 2021/22 is $79,659 (up from $77,565 in 2020/21) and the LCT threshold for other vehicles in 2021/22 is $69,152 (up from $68,740 in 2020/21).
Editor: Note that these thresholds determine whether LCT is payable, and are different from the luxury car depreciation limit of $60,733 for 2021/22.
New ATO data-matching programs involving property
The ATO has advised that it will engage in two new data matching programs dealing with property transactions, as outlined below:
- The ATO will acquire property management data from property management software providers for the 2018/19 through to 2022/23 financial years (relating to approximately 1.6 million individuals); and
- The ATO will acquire rental bond data relating to approximately 350,000 individuals from state and territory rental bond regulators bi-annually through to 30 June 2023.
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.