The Government recently passed changes to the Stage 3 tax cuts applying from 1 July 2024.  These changes provide a tax break to low and middle-income earners by:

• reducing the 19% tax rate to 16%;
• reducing the 32.5% tax rate to 30% for incomes between $45,000 and a new $135,000 threshold;
• increasing the threshold at which the 37% tax rate applies from $120,000 to $135,000; and
• increasing the threshold at which the 45% tax rate applies from $180,000 to $190,000.

The Medicare levy low-income thresholds for the 2024 income year will also be increased.

Businesses that pay contractors to provide certain services may need to lodge a Taxable Payments Annual Report (TPAR) by 28 August each year.

From 22 March, the ATO will apply penalties to businesses that:

• have not lodged their TPAR from 2023 or previous income years;
• have received three reminder letters about their overdue TPAR.

Taxpayers that do not need to lodge a TPAR and taxpayers that no longer pay contractors can submit a ‘non-lodgment advice form’.  Please contact our office if you require further assistance with overdue TPARs.

A class action on behalf of retail business owners impacted by the second-wave lockdowns has been filed with the Supreme Court of Victoria.  Retail business owners can meet the criteria to join the action providing:

• As at 1 July 2020, they operated a business that supplied goods or services to the public from physical premises located in Victoria; and
• members of the public acquired those goods and services by attending the physical premises; and
• as a result of the restrictions between July and October 2020, the business was required to shut or operate at a reduced capacity and/or members of the public were in some way restricted or prohibited from visiting the retail premises which caused the business to suffer financial losses.

Eligible business owners can register as a member of the Business Losses Class Action by registering before July 8, 2024.  Further information regarding eligibility and the registration process is available at:  Class Action.

If you believe that you may be eligible or have any questions about this action, please contact our office.

The ATO is remitting failure to lodge penalties for eligible small businesses.  Businesses which have not yet taken advantage of the ATO’s lodgement penalty amnesty only have until 31 December 2023 to do so.

Businesses must meet the following criteria in order to be eligible for the amnesty:

• had an annual turnover under $10 million when the original lodgement was due;
• have overdue income tax returns, business activity statements or FBT returns that were due between 1 December 2019 and 28 February 2022; and
• lodge between 1 June and 31 December 2023.

Importantly, when taxpayers lodge their eligible income tax returns, business activity statements and FBT returns, failure to lodge penalties will be remitted without the need to apply.

The amnesty does not apply to privately owned groups or individuals controlling over $5 million of net wealth.

Directors who bring their company lodgements up to date can also have penalties remitted and, if they are reliant on company lodgements to finalise their own tax affairs, any failure to lodge penalties will be remitted.  This also applies to eligible lodgements made between 1 June and 31 December 2023.

Employers should ensure they declare and estimate their annual remuneration as requested on the WorkCover annual Rateable Remuneration Submission.

Each financial year, employers receive both a Workcover Insurance Premium and a Rateable Remuneration Submission. In paying the premium, employers can often overlook the requirement to complete the annual Rateable Remuneration Submission.

The annual Rateable Remuneration Submission requires the employer to certify the actual rateable remuneration and estimate the following year’s remuneration.  A failure to do so, can result in interest and penalties being applied.   To assist clients with this process, we will include the relevant dates in our lodgement obligations section of the relevant newsletter.

In addition, employers are reminded of the need to revise the estimate of rateable remuneration if it exceeds or is likely to exceed the most recent estimate of remuneration by 20%.  WorkSafe should also be notified of any changes to your workplace or business activity, a change in your legal business, a change of address or the contact person for your insurance changes.

If you require any further assistance or clarification regarding your WorkCover obligations please contact our office.

Employers are reminded that, in relation to their SG obligations for the quarter ending 31 December 2023, the due date is 28 January 2024.

If the correct amount of SG is not paid by an employer on time, they will be liable to pay the SG charge, which includes a penalty and interest component.

The SG rate is 11% for the 2024 income year.

Businesses that have employees, or hire eligible contractors, will need to ensure that their payroll and accounting systems are updated to reflect the new super guarantee rate of 11% for payments of salary and wages that are made from 1 July 2023.

Businesses need to calculate super contributions at 11% for their eligible workers for payments of salary and wages they make from this date.

Super contributions for the quarter ending 30 June (due by 28 July 2023) were calculated at the 10.5% rate for payments of salary and wages made prior to
1 July.

All clients should be aware of the increasing prevalence of invoice scams, with scammers targeting businesses by posing as suppliers or vendors.  These scams commonly involve the sending of invoices that appear to be from legitimate sources, but the bank details have been altered.

Businesses are encouraged to review their procedures for validating invoices and consider including written procedures for validating any changes to vendor/client/customer contact details and also bank account details.  Oral confirmation of the changes should also occur between the business representative and the vendor/client/customer.

Importantly, staff should treat any request to change payment details with extreme caution.  Checking that an invoice is genuine before action is taken, particularly in the instance when there is a request for payment is highly recommended.  By fostering awareness of invoice scams and adhering to written procedures as outlined above, businesses can improve their resilience against invoice scams and minimize the risk of financial loss.

Finalisation Declaration through Single Touch Payroll (STP)

A reminder to employers reporting through STP (which should be all employers unless an exemption or deferral applies), you need to finalise payroll information for the 2022/23 financial year by lodging a STP Finalisation Declaration with the ATO by 14 July 2023. The finalisation declaration can be completed once the STP information for all employees is confirmed as correct.

Employers that finalise through STP are not required to provide payment summaries to employees or lodge a payment summary annual report to the ATO.  Employees can access their payroll information for their 2023 tax return through a registered tax agent or their myGov account.

We will be in touch shortly with our payroll clients in relation to completing their finalisation declaration.  Should you require any further assistance please contact our office.

Single Touch Payroll (STP) Phase 2

Most digital service providers (DSPs) including QuickBooks and Xero have now transitioned to STP Phase 2 reporting. The expansion requires employers to report extra information to the ATO each time they file their payroll and includes changes to payroll categories, allowances, salary sacrifice reporting and income types.

Employers that have not already started Phase 2 reporting should ensure they are aware of the changes required and ask their DSP when their product will be ready if they don’t already know.

Closely Held Payees

The ATO is reminding employers that amounts paid to ‘closely held payees’ should now also be reported through STP. A ‘closely held payee’ is an individual directly related to the entity they receive payments from. For example, family members of a family business, directors or shareholders of a company and beneficiaries of a trust.

The due date of STP finalisation declarations for closely held payees is 30 September 2023.

There are concessional reporting options for closely held payees which include:

• Reporting actual payments on or before the date of payment (along with arm’s length employees)
• Reporting actual payments quarterly
• Reporting a reasonable estimate quarterly.

If you have any questions or require assistance with any of the topics raised in this update, please contact our office.

Reminder of Superannuation Guarantee (SG) Rate Increase

Employers are reminded that the SG obligation for the 1 April 2023 to 30 June 2023 quarter is due by 28 July 2023.

If the correct amount of SG is not paid by an employer on time, they will be liable to pay the SG charge, which includes a penalty and interest component.

As a reminder, from 1 July 2022, the compulsory SG rate increased to 10.5% (previously 10%).  The compulsory SG rate will increase again to 11% for the period 1 July 2023 to 30 June 2024.  Please ensure your payroll systems are updated by the start of the next income year for the increased SG rate.

Individual clients should also be aware of the changes to the work from home deduction for the 2022/23 financial year.  During the COVID pandemic, the ATO introduced a temporary shortcut method of claiming home office expenses.  This shortcut method allowed individuals to claim 80 cents for each hour worked from home.  This method ceased on the 30 June 2022, and a revised fixed rate method introduced.

To be eligible to claim a deduction for working from home expenses, clients must:

• Incur additional running expenses due to working from home
• Be fulfilling employment duties while working from home
• Keep records to prove the cost incurred

For the 2022/23 financial year, office workers who work from home can claim 67 cents an hour under the revised rate method, or alternatively use the actual cost method.  Under the revised fixed rate method, there are two important time periods requiring different documentation to record the hours worked from home:

• Prior to March 1, clients must have diary entries or some proof covering a four-week period between 1 July 2022 to 28 February 2023
• From March 1, 2023, clients must keep a complete record of all the hours they work from home for the period to June 30, 2023. This can be in the form of timesheets, rosters or a diary.

In addition to the record of hours worked, evidence of payment of home office expenses is required.  A copy of at least one bill for each type of working-from-home-expense, such as electricity, phone, computer consumables, stationery should also be provided.

Under this approach a separate deduction can be claimed for the decline in the value of assets used while working from home, for such items as computers and office furniture.  The repairs and maintenance of these items can also be claimed, along with the cleaning expense of a dedicated home office.   To make a claim for the decline in the value of assets you will need to have records to support the purchase of the item, when it was used, percentage of work-related use and the effective life of the asset.

Should you require any further information regarding the working from home deduction please refer to the following link: Working from Home Deductions

Please note these changes necessitate more detailed record keeping by individual clients in order to substantiate the working from home claim.

Our individual tax data organiser will assist in identifying the required information to make a working from home claim for this financial year.  The organiser includes an electronic ‘Work from Home Diary’ which, if applicable to you, will be a time saving tool!

If you require any further information please contact our office.