The Government has committed to modernising certain laws so that they are ‘technology neutral’, to enable easier communication between businesses, individuals and regulators.
The first phase of legislative reform will focus on key areas raised by stakeholders which are implementation-ready (ideally by the end of 2021), including:
Subsequent phases will consider reforms in additional areas that could benefit from greater technology neutrality, including communication with regulators, and product disclosure and recordkeeping requirements.
The ATO is using its compliance resources to maintain the integrity of the JobKeeper measure.
While most businesses and employees have done the right thing, the ATO has identified concerning and fraudulent behaviour as well as claims by a small number of organisations and employees, and will actively pursue these claims.
Some of the concerning behaviours the ATO is currently examining include:
1. businesses that have:
– made claims for employees without a nomination notice, or have not paid their employees the correct JobKeeper amount (before tax);
– made claims for employees where there is no history of an employment relationship;
– amended their prior business activity statements to increase sales in order to meet the turnover test; or
– recorded an unexplained decline in turnover, followed by a significant increase; and
2. individuals who have knowingly:
– made multiple claims for themselves as employees or as ‘eligible business participants’; or
– made claims both as an employee and an ‘eligible business participant’.
The ATO encourages all JobKeeper applicants to review their applications and contact the ATO if they have made mistakes (and the ATO may not pursue repayment of an overpayment in certain circumstances, such as for honest mistakes).
If anyone is concerned that someone is doing the wrong thing in relation to the JobKeeper payment, they are encouraged to tell the ATO about it. The ATO will be examining JobKeeper Tip-Offs and contacting businesses where it has concerns and needs more information.
Following a successful multi-year pilot, the ATO’s small business independent review service will be offered permanently as a dispute resolution option for eligible small businesses.
ATO Deputy Commissioner Jeremy Geale said the service is all about ensuring small businesses are given the opportunity to achieve an independent, fast, free, and fair resolution when they disagree with the ATO’s audit position:
“Independence is critical when handling a dispute, so we ensure each and every independent review is done by an officer from a different part of the ATO who was not involved in the original audit”.
The ATO’s small business independent review service is available to eligible small businesses with an annual turnover of less than $10 million in relation to disputes about income tax, GST, excise, luxury car tax, wine equalisation tax, and fuel tax credits, and is in addition to other dispute options.
Disputes about employer obligations like superannuation and FBT are not eligible for the independent review service.
More information about the ATO’s independent review service, including how to request a review and eligibility criteria, is available on the ATO’s website.
The ATO has advised that, if a business hasn’t used its ABN for a while, the ATO may contact them about cancelling their ABN.
The ATO may also contact them about their ABN if their business situation has changed.
To ensure businesses don’t miss out on Government support, including during unfortunate events, it’s essential that they regularly review their ABN details and keep them up to date (or cancel their ABN if the business is no longer operating, so that Government agencies can tailor their support to those that need it).
It’s also important to check that the business has listed the physical address of the business, as otherwise it can be difficult for emergency services and Government agencies to make contact.
A business’ mailing address and physical location address can be listed separately on its ABN data, and these (and other ABN details) can be checked and updated online at any time.
The ATO will access data from the Department of Home Affairs on passenger movements during the 2016/17 to 2022/23 financial years, and match it with certain sections of ATO data holdings to identify taxpayers that can be provided with tailored information to help them meet their tax and superannuation obligations, or to ensure compliance with taxation and superannuation laws.
Data items include names, dates of birth, arrival and departure dates, passport Information, and status types (visa status, residency, lawful, Australian citizen).
The ATO estimates that records relating to approximately 670,000 individuals will be obtained each financial year.
The ATO has confirmed that, from 1 July 2021, all firms will need to comply with the Code of Ethics for Professional Accountants APES 110 as it relates to the annual audit of an SMSF. As such, Hughes O’Dea Corredig Audit will no longer audit our clients SMSF’s in order to exceed best practice in the new legislative environment. Hughes O’Dea Corredig will be sourcing the best SMSF audit firm to continue our award winning SMSF service to our clients and will update you all shortly.
It started in May 2020 with the updated Independence Guide in its Fifth Edition published by the Accounting Professional and Ethical Standards Board (APESB), a collaboration between Chartered Accountants Australia and New Zealand (CAANZ), CPA Australia and the Institute of Public Accountants (IPA). The Guide restructures APES 110 Code of Ethics to include SMSF auditors. This Code will make it mandatory for all SMSF auditors to comply with auditor independence requirements on all audits completed from 1 July 2021. Given it’s a legal requirement for all SMSF’s to have their SMSF audited annually, its important that SMSF members understand the consequences of the professional relationships they hold. With that in mind, let’s review the main concept of auditor independence that the Code mandates against a common industry arrangement.
The Guidance and Code considers that where an SMSF auditor audits an SMSF that the same firm prepares the SMSF financials, this arrangement will be deemed to compromise the independence of the auditor. It’s common that a firm such as Hughes O’Dea Corredig prepares the financial statements and tax return, and then passing the audit engagement to the audit arm of their firm. The ATO issued QC63994 on 14th October 2020, an extension of QC 63029 issued on 24 June 2020, and discusses the three hurdles that need to be overcome in the above scenario with the Independence Guidance.
Firstly, the firm cannot exercise or assume management responsibilities or exercise professional judgement in the preparation of the financial statements. At Hughes O’Dea Corredig, every SMSF has a quality review undertaken prior to financial statements being finalised and invoiced. As such, this hurdle will be very difficult to overcome, not only for our firm, but the majority of firms in Australia.
Secondly, unless the non-audit services are ‘routine or mechanical’, then the audit engagement can not be accepted. The term ‘routine and mechanical’ in the context of preparing the financial statements for a SMSF is that the client prepares their own financial statements or the trustee/s approve the financials. Irrespective of how simple the SMSF’s investments may be, whether the accountant has data feeds active is running the SMSF in a “live state”, or there are few transactions for the year, the non-audit service is assumed to have management responsibilities for the SMSF and does not meet the definition of routine or mechanical.
Lastly, the third hurdle is that even when the first two hurdles are met, the auditor and firm must address any threats that are not acceptable as they relate to the SMSF auditors independence. Threats include self-interest, self-review, intimidation, and familiarity. The reasoning behind this is to ensure that the auditor’s opinion isn’t compromised due to the mentioned risks. To mitigate these risks to an acceptable level, safeguards need to be implemented, circumstances changed, and if this isn’t possible, decline or end the audit engagement. Therefore, a firm could potentially fail all three hurdles that the ATO has interpreted from the Guidance.
Over the last couple of months, Hughes O’Dea Corredig has been reviewing its existing arrangement against the mandatory 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.
Further information can be found at: https://www.ato.gov.au/Super/Sup/ATO-guidance-on-independence-standards-now-available-for-SMSF-auditors/
The ATO has confirmed that, from 1 July 2021, the superannuation concessional and non-concessional contribution caps will be indexed.
The new caps for the 2021/22 year will be:
The total superannuation balance limit that determines if an individual has a non-concessional contributions cap of nil will also increase from $1.6 to $1.7 million, effective from 1 July 2021.
The Hughes O’Dea Corredig currently has serviced offices and desks available for let that would suit sole practitioners. To arrange a tour or to find out more information contact our wonderful general manager Trevor Baxter or call the office on 03 9375 4286.
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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