June 2021 – Practice Update

June 10, 2021

Cryptocurrency under the microscope this tax time

The ATO is concerned that many taxpayers believe their cryptocurrency gains are tax-free, or only taxable when the holdings are cashed back into Australian dollars.

ATO data analysis shows a dramatic increase in trading since the beginning of 2020, and has estimated that there are over 600,000 taxpayers that have invested in crypto-assets in recent years.

This year, the ATO will be writing to around 100,000 taxpayers with cryptocurrency assets explaining their tax obligations and urging them to review their previously lodged returns.  The ATO also expects to prompt almost 300,000 taxpayers as they lodge their 2021 tax return to report their cryptocurrency capital gains or losses.

Gains from cryptocurrency are similar to gains from other investments, such as shares.  CGT also applies to the disposal of non-fungible tokens (‘NFTs’).

The ATO matches data from cryptocurrency designated service providers to individuals’ tax returns, helping it to ensure investors are paying the right amount of tax.

“The best tip to nail your cryptocurrency gains and losses is to keep accurate records including dates of transactions, the value in Australian dollars at the time of the transactions, what the transactions were for, and who the other party was, even if it’s just their wallet address,” Assistant Commissioner Tim Loh said.

Businesses or sole traders that are paid cryptocurrency for goods or services will have these payments taxed as income based on the value of the cryptocurrency in Australian dollars.

Holding a cryptocurrency for at least 12 months as an investment may mean the holder is entitled to a CGT discount if they have made a capital gain.

Temporary reduction in pension minimum drawdown rates extended

The Government has announced an extension of the temporary reduction in superannuation minimum drawdown rates for a further year to 30 June 2022.

As part of the response to the coronavirus pandemic (and the negative effect on the account balance of superannuation pensions), the Government reduced the superannuation minimum drawdown rates by 50% for the 2019/20 and 2020/21 income years.

This 50% reduction will now be extended to the 2021/22 income year.

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).

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.

 Single Touch Payroll (STP) – Closely held (related) payees

From 1 July 2021, amounts paid to closely held payees will need to be reported through STP. If you’re a small employer (Less than 19 employees) you can report these amounts on or before each payday, or you can choose to report this information quarterly.

More information on STP and Closely held payees and your requirements can be found at https://www.ato.gov.au/business/single-touch-payroll/concessional-reporting/closely-held-payees/ or by calling your HOC tax professional

To report through STP, you have four options available to you:

• Report through existing payroll or accounting software
• Choose STP Enabled payroll software
• Choose a no-cost or low cost solution
• Ask a third party to report for you.

More information on the above options can be found at https://www.ato.gov.au/Business/Single-Touch-Payroll/How-to-report/ or by calling your HOC tax professional.

Victorian Government Circuit Breaker Business Support Package

The Victorian Government has launched the $250 million Circuit Breaker Business Support Package to assist small to medium businesses and sole traders.

The package will support businesses unable to operate due to these necessary public health measures, including targeted support for the events industry.

With safety nets such as JobKeeper no longer available, this package provides vital support to businesses doing their part to help keep Victorians safe throughout the circuit breaker action.

The package includes:

• a $190.01 million second round of the Business Costs Assistance Program
• a $40.7 million new round of the Licensed Hospitality Venue Fund
• $20 million in targeted support for the events industry.

Please contact your HOC tax professional for more information and advice as required. Our in-depth News Alert sent out exclusively to our clients on 4^th June 2021 contains more information.

SMSF Auditor Independence from 1 July 2021

Hughes O’Dea Corredig has been reviewing its existing arrangement against the mandatory SMSF Auditor Independence Code and Guidance.  In order to continue to exceed best practice in the SMSF space, Hughes O’Dea Corredig will be engaging another SMSF audit firm to conduct the audits for our SMSF clients. As an award winning SMSF firm, we will ensure you continue to meet your important role and responsibilities as members of an SMSF. The reason behind this was mentioned in the May newsletter that can be accessed here.

Due to the number of SMSF’s listed on our tax agent number, (Hughes O’Dea Corredig is in the top 5% nationally), and our in-house SMSF specialisation, SMSF auditors are keen to work with us. Further updates will be sent to SMSF members directly this month so stay tuned!

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

 

Tags: ATO, Coronavirus, COVID-19, GST, JobKeeper, JobKeeper Payment, JobKeeper Payment Extension, self-managed super, superannuaction, superannuation guarantee amnesty

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