Newsletter - November Edition

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Cents & Sensibility | Tax News | Views | Clues 

 

09 November

Recent ATO Announcements
By Snehal Shah

 

Deferral of Single Touch Payroll (STP) Phase 2


Employers have been required to report their payroll details to the ATO on a real-time basis through the STP system since 2018.

 

STP Phase 2 was to be implemented from 1 July 2021, requiring employers to provide more granular detail, including:

  • Nature of employment (full-time, part-time, casual, working holiday maker)
  • Type of payment (salary, allowance, paid leave, directors fee)
  • Working of PAYG Withholding
  • Superannuation liability

 

Implementation of STP Phase 2 was initially deferred to 1 January 2022. The ATO has recently announced that employers who commence reporting by 1 March 2022 will be considered to have met the 1 January deadline.

 

Your payroll software provider will have to update its systems to allow for the additional reporting obligations by the deferred due date. Depending on your software provider, you may be required to update the information on your employees in the system.

 

This deferral does not impact payments by employers to closely held payees (for example, by a company to its directors or shareholders), who are still required to commence reporting through STP for payments commencing 1 July 2021.

 

Allocation of professional firm profits

 

Earlier this year, the ATO released draft guidelines outlining its compliance approach to the allocation of profits by professional firms.

 

The ATO has always been concerned about the use of companies, trusts and other structures whereby professional income is diverted so that the professional receives significantly lower profits than would otherwise be the case.

 

Once finalised, the guidelines will apply to any professional firm, including those engaged in accounting, architectural, engineering, financial services, legal and medical professions.

 

The draft guidelines specify a prescriptive risk assessment framework which assigns a score for three factors. The lower the score, the lower the risk of the ATO applying the general anti-avoidance provisions to attack the manner in which the profits have been allocated.‚Äč

Introduction to director identification numbers (Director ID’s)

 

By Declan West

 

The introduction of director ID’s is part of a new regime by the Federal Government to modernise multiple business registries.

 

The Australian Business Registry Services (ABRS) is a new service that will bring together the Australian Business Register (ABR) and the Australian Securities and Investments Commission (ASIC).

 

As part of this new service, the Federal Government is introducing the requirement for all directors to have a director ID.

 

What is a director ID and why do you need it?

 

The director ID is a unique 15-digit number allocated to you. You will keep that unique identifier permanently, even if you cease to be director.

 

The aim of having only one Director ID is to provide traceability of director relationships across companies. This enables better tracking of directors of failed companies, preventing the use of fictious identities. It will assist regulators and external administrators to investigate directors’ involvement in illegal activity.

 

Who needs a director ID?

 

If you are currently or are planning to be a director, or are an alternate director acting in that capacity for one of the following, you will need a director ID: 

  • A company
  • A registered Australian body
  • Registered foreign company
  • An Aboriginal and Torres Strait Islander corporation

 

How to apply for a director ID
 

There will be three options for how to apply for a director ID: 

  1. Online (you will need myGov ID to apply)
  2. Over the phone
  3. A paper form

 

The information required to complete the application is:

 

  • Your tax file number (TFN)
  • Your residential address as held by the ATO 
  • Information from two documents to verify your identity (e.g. bank account details, dividend statement, PAYG payment summary, ATO notice of assessment)

 

NOTE:

 

You will need to apply for your director ID yourself so that your ID can be verified. Your tax agent is not authorised to apply for your director ID on your behalf.

 


When to apply for a director ID

 

Applications for your director ID will open on 31 October 2021, but you will have a period of time to apply, depending on your individual circumstances.

 


For all existing directors, there is a grace period until 30 November 2022 to apply.

 


Similarly, during the first year of the scheme, from 1 November 2021 to 4 April 2022, new directors will have 28 days from appointment to apply.

 

After this grace period, from 5 April 2022 onwards directors will need to apply for a director ID prior to appointment.


If you would like some further information or some assistance applying for your director ID when applications open, please contact us to discuss. 

 

Extra super step when hiring new employees

 

Employers may soon need to do something extra when a new employee starts to work for them.

 

Currently, if a new employee does not choose their own fund, their employer can pay contributions for them to a default fund.

 

From 1 November 2021, if a new employee does not choose a specific fund, their employer may need to request the employee’s ‘stapled super fund’ details from the ATO.

 

A stapled super fund is an existing account which is linked (or 'stapled') to an individual employee, so it follows them as they change jobs.

 

Businesses will be able to request stapled super fund details for new employees using ‘Online services for business’, or by asking their registered tax or BAS agent to do this for them. 

Reminder for first-time share investors to declare income

 

With the growth of micro-investment platforms helping new investors enter the market, the ATO has issued a reminder for first-time share and Exchange Traded Funds (‘ETF’) investors.

 

The ATO is concerned that first-time investors often do not understand their tax obligations in relation to reporting capital gains from the sale of shares and income in the form of dividends and distributions.

 

This could result in errors when they lodge their tax return and delay tax refunds.

 

While the ATO pre-fills data from third parties into individual tax returns, investors are urged to check that all relevant data has been included, or make sure their registered tax agent has all the necessary information before lodging.

Investors should also keep good records. 

knpeople – knp Mo-Lutions 2021

 

It’s that time of the year again! Our team is continuing our efforts to raise awareness and understanding surrounding men's mental health with our contribution to ‘The Movember Foundation’.

 

The Movember Foundation is saving and improving men's lives through projects focused on prostate cancer, testicular cancer, mental health and suicide prevention. It's a fantastic initiative that tackles men's health on a global scale.

 

This year our wonderful team has come together again to contribute to this great foundation. Whether its growing a Mo or choosing to walk/run 60km over the month our team are joining in to raise funds.

 

Keep an eye out for our team's progress throughout the month. If you would like to a make a donation, please follow the link below! 

 

Movember - Team