Quality Advice Rewards Results

MONDAY

IFPA submission on the extra 15% tax for super balances over $3m
On 17 April 2023, the Institute of Financial Professionals Australia (IFPA) provided its submission on the proposed extra 15% tax on total superannuation balances above $3m. We do not believe that the government’s extra 15% tax proposal is the correct way to make the superannuation system fair and equitable for all Australians. If the tax settings must change for larger balances, we believe there are other options that can deliver a fairer superannuation system for all Australians. The obvious approach is for the extra 15% tax to be applied to actual taxable income (not unrealised gains). However, if the government retains its proposed measure, we strongly recommend changes are made to make the proposal equitable and fair.

To read the full submission, please click here.

ATO PAYGW prefill is coming to activity statements
Employers report their pay as you go (PAYG) withholding information to the ATO each time they pay their employees using Single Touch Payroll (STP).
From July, the ATO will prefill the PAYG withholding amounts in the activity statements in ATO online.
ATO PAYG withholding prefill will be available for small and medium employers from the:

• July activity statement for monthly PAYG withholders
• September activity statement for quarterly PAYG withholders.

• Label W1: Total salary, wages and other payments
• Label W2: Amount withheld from payments shown at W1.

• an outstanding activity statement, and
• reported PAYG withholding in STP for the period.

• cybercrime (technology enabled crime) affecting the tax and superannuation systems
• offshore tax evasion
• illegal phoenix activity
• serious financial crime affecting the ATO-administered measures of the Commonwealth Coronavirus Economic Response Package.

• Australian Tax Office (ATO)
• Australian Federal Police (AFP)
• Australian Criminal Intelligence Commission (ACIC)
• Attorney-General’s Department (AGD)
• Australian Transaction Reports and Analysis Centre (AUSTRAC)
• Australian Securities and Investments Commission (ASIC)
• Commonwealth Director of Public Prosecutions (CDPP)
• Department of Home Affairs (Home Affairs), incorporating its operational arm, the Australian Border Force (ABF)
• Services Australia.

Read more about it here.

TUESDAY

Treasurer reiterates intention to restrict tax reform this Budget to “modest” changes
Following on from comments made in his weekend interview with The Telegraph, the Treasurer Dr Jim Chalmers held a press conference in Canberra yesterday in which he all but ruled out major tax reform in the upcoming May budget. Dr Chalmers view is that budget repair does not all rest on tax changes and that where they can, the government will make “sensible, methodical” changes to the tax system (with their recent announcement in relation to super balances over $3m falling within this – you can read IFPA’s submission here). In a separate interview, Assistant Treasurer Stephen Jones provided further support for no major tax reform in the upcoming Budget stating the government has “announced what we‘ll do on the area of revenue or taxation increases”. We note the Treasurer has left it open for potential changes to be made to the PRRT.

NSW Budget to be handed down in September 
Treasurer Daniel Mookhey announced the NSW Government will hand down the 2023-24 Budget in September, the first full budget of the new NSW Labor government. In place of the June budget, it will provide an Economic Statement to the Parliament.

To inform the budget a Comprehensive Expenditure Review will be led by Minister for Finance Courtney Houssos with a report due by June. A separate Strategic Infrastructure Review is being led by Independent Planning Commissioner, Ken Kanofski.

Appeal news – High Court has dismissed the taxpayer application for special leave in employment agency case
The High Court has dismissed the taxpayer’s application for special leave in Chief Commissioner of State Revenue v E Group Security Pty Ltd (No 2) [2022] NSWCA 259. The NSW Court of Appeal found for the Chief Commissioner holding the taxpayer (the main operating entity) liable for payroll tax on wages paid to security guards by 3 related group companies. The security guards were sourced by the related group companies from unrelated third parties for the taxpayer to provide to its end-user customers. The Court of Appeal concluded the group entities procured the guards for the taxpayer’s business. As such the payments were made in connection with an “employment agency contract” and the taxpayer was liable to payroll tax on those payments (under the grouping provisions). This decision now stands and should be considered when structuring labour entities within corporates groups.

WEDNESDAY

Release of Economic Inclusion Advisory Committee report
The Albanese Government yesterday released the first report of the interim Economic Inclusion Advisory Committee which is intending to help inform the Government’s considerations ahead of the Budget to be delivered on 9 May.

In a joint media release with The Hon Amanda Rishworth MP, Minister for Social Services, it was noted that the May Budget intends to build on the work the Government has commenced in its first 11 months such as making it easier for pensioners to work more hours without losing their pension; improving employment services to better support people with disability to find employment; and by investing in Paid Parental Leave to give more families access to the payment and provide parents greater flexibility in how they take leave.

The Economic Inclusion Advisory Committee was established in December last year to provide advice in the lead-up to budgets on policies to address disadvantage and boost economic participation.

Its report spans topics including the adequacy of income support payments, full employment, place-based arrangements, and support for families.

Download the Economic Inclusion Advisory Committee report [PDF 1.5MB]

Consultation open on financial adviser education standards reform
The Albanese Government yesterday announced that is committed to an advice industry with strong professional standards that gives Australians access to high quality financial advice.

A media release from The Hon Stephen Jones MP, Assistant Treasurer and Minister for Financial Services, stated that since 2019, over 10,000 financial advisers have left the industry in response to new standards. However, this has pushed some experienced advisers, with no history of misconduct, out of the industry, reducing access to advice.

The release went on to say that the Government will fulfill its election commitment to better recognise the experience of long‑serving advisers. Today, draft legislation has been released for consultation.

The draft legislation would deem an adviser to have met the education requirements if they:

• have 10 years (cumulative) experience providing advice between 1 January 2007 and 31 December 2021; and
• have not recorded any disciplinary action on the Financial Advisers Register before 31 December 2021.

Advisers and their licensee would need to make a declaration that they meet these requirements, which would need to be lodged with ASIC and reflected on the Financial Adviser Register.

Please note that all advisers must still pass the financial adviser exam.

Feedback has also highlighted that some individuals currently fail to meet the education standards for purely technical reasons, despite completing the substance of an approved degree. The legislation aims to address this by providing the minister with discretion to approve qualifications for new entrants.

Treasury stated that will commence further engagement with industry shortly and encourage interested parties to provide feedback on the draft legislation before 3 May 2023. Treasury concluded the release by stating that it was committed to reviewing the education settings for new entrants and not creating unnecessary barriers to entry, ensuring financial advice remains a career of choice.

Are your clients starting a new business?
The ATO is advising tax professionals to help their clients understand their obligations and get set up correctly from the start.

As a tax professional, you’re often the first to see when your clients start generating new sources of income or taking some new steps in life. You’re often also their first source of guidance when they’re looking to start a business.

The ATO’s Starting your own business web content has been updated to help your clients who:

• are new to business
• aren’t sure if their activities are considered a business
• need to better understand what it means to be in business.

This information will help them:

• determine if they’re eligible for an ABN
• understand the different kinds of business structures available to them
• learn what their tax, super and registration obligations are.

They also have steps to help them work out if they’re in business, such as, when their hobby starts to earn them money.

For your clients who are new to business, the cash flow coaching kit is a great resource for you to help them manage their cash flow, which is essential for small business success.
Visit the ATO’s support for small business page to access resources that will help your client’s get started with their new business.

THURSDAY

Online services for foreign investors
Online services for foreign investors will be available from 26 June 2023 for foreign investors and their representatives to interact with the ATO and manage their obligations relating to Australian investments.  The Foreign Investment reforms received Royal assent on 10 December 2020 and Online services for foreign investors is part of these reforms and also supports the new Register of Foreign Ownership in Australian Assets(commencing 1 July 2023).

Foreign investors and their representatives will need myGovID access.  The strength of identification required will depend on whether the foreign investor has an ABN.  If you are a representative of a foreign investor, the foreign investor will first need to set up their own access and then authorise your access.

The ATO website details what you should do now to prepare for the transition and will continue to be updated to explain foreign investor obligations under the Register, and to assist in the registration and representative authorisation process.

Tax Practitioners Board (TPB) – updates and webinars
The TPB have reminded tax and BAS agents of their focus on unregistered preparers, updating their website with the latest Federal Court decision regarding a former tax agent who was sentenced to imprisonment for preparing and lodging tax returns for a fee whilst not registered.

To assist tax and BAS agents meet and maintain the high professional standards required, the TPB are running two free webinars on Thursday 27 April. You can register here:

• Know your obligations – for tax and BAS agents that are new, returning or seeking a refresher to understand their ongoing registration obligations.
• Using the cloud – for tax and BAS agents to understand their responsibilities in relation to client confidentiality if using a cloud service provider for client records.

Your opinion matters
Draft Legislative Instruments
The ATO are seeking comments on the following draft Legislative Instruments:

• Draft Legislative Instrument Taxation Administration (Remedial Power – Work Test for Personal Superannuation Contributions) Determination 2023

With the relocation of the ‘work test’ from the superannuation legislation to the income tax legislation, this Instrument ensures certain individuals who were eligible to claim a deduction for their personal contributions under the extended definition of employee e.g., company directors, statutory officeholders, parliamentarians, and members of the ADF, continue to be able to do so.  Comments are due 5 May 2023.

• Draft Explanatory Statement Taxation Administration (Remedial Power – Remission of Charges and Penalties) Determination 2023

This Instrument makes amendments to remove doubt as to the power of the Commissioner, and ensure he is able to continue the long-standing practice of providing low value, low risk remissions of GIC, SIC and FTL penalties, agreement-based remissions prior to a liability arising and remissions of penalties as administrative responses to serious and adverse events impacting communities. Comments are due 19 May 2023.

APRA exemption for RSE licensee directors
Individuals must seek approval from APRA to own or hold a controlling stake of more than 15% in an RSE licensee. APRA has released a draft instrument to exempt certain RSE licensee directors that are not entitled to a personal financial benefit from their shareholding, from compliance with the rigorous change of control and ownership provisions of the Superannuation Industry (Supervision) Act 1993.  Comments are due 17 May 2023.

Financial Adviser Education Standards  
To fulfil its election commitment, the Government has announced the release of draft legislation to better recognise the experience of financial advisors that may not have met all requirements of the  education and qualification framework.

As a transition measure, the draft legislation deems an adviser to have met the education requirements if they:

• have 10 years (cumulative) experience providing advice between 1 January 2007 and 31 December 2021; and
• have not recorded any disciplinary action on the Financial Advisers Register before 31 December 2021.

To be considered an experienced adviser, an adviser must still pass the financial adviser exam.

The draft legislation also increases the flexibility of the degree approval process and removes the duplication of qualification requirements for financial advisors who are also registered tax advisors.

Comments are due 3 May 2023.

If you have concerns, comments or feedback you would like IFPA to include in a submission regarding any of the above, please contact member services at (03) 8851 4555.

Friday

Integrity measures
ATO and ASIC power to disclose to NDIS Fraud Taskforce
Regulations have been issued enabling ATO and ASIC officers to share specified information with the NDIS fraud taskforce without breaching the Tax Administration Act 1953. The Fraud Fusion Taskforce is a multi-agency force set up to tackle fraud against the NDIS.

Extension of money laundering to “tranche-two” entities” including accountants and lawyers 
The Attorney-General, The Hon Mark Dreyfuss KC MP, has announced consultation on proposed reforms to Australia’s anti-money laundering and counter-terrorism financing regime.  In addition to simplifying and modernising the regime, it will be extended to accountants, lawyers, trust and company service providers, real estate agents, and dealers in precious metals and stones (known as tranche-two entities). The Attorney General notes that Australia is only 1 of 5 jurisdictions (including the United States) out of more than 200 that do not regulate tranche-two entities and that by not doing so puts Australia at risk of being ‘grey-listed’ by the Financial Action Task Force – the global financial crime watchdog of which Australia is a founding member.  Comments are due by 16 June 2023.

ATO Superannuation website updates

• There is a new login page for accessing Super Enquiry Service (SES) from this Saturday 22 April 2023 which will have the new name “Online services for digital Partners”.

• Following consultation, the ATO have updated the Super Standard Choice Form(and associated web guidance) noting as there have been no changes in the law, previous versions of the choice form may continue to be used to allow employer time to transition to the new form.

• The ATO has reminded SMSF trustees that their transfer balance account report (TBAR) due date is changing.  From 1 July they are required to report certain events by lodging their TBAR quarterly, with all unreported events occurring before 30 September 2023 to be reported by 28 October 2023. The ATO is encouraging those clients who have been lodging the TBAR annually to report any events that have may have occurred during the current year whilst preparing to lodge their 2021-22 SMSF annual return.

• To reduce the risk of superannuation being inappropriately released, where members have requested payment of benefits on compassionate grounds, the ATO is encouraging funds to validate the members determination against the ATO’s approval notification (sent via Online services for business).

No GST credits for creditable acquisitions 
The Federal Court recently found for the Commissioner, denying the taxpayer’s claim for input tax credits in respect of legal and other fees paid in respect of related group entities.  Although the amounts incurred were “acquisitions of a taxable supply” (ie included GST), the Court held the acquisitions were not made in the course of the taxpayer’s enterprise. The taxpayer was carrying on an enterprise, but the enterprise did not include the provision of legal services or procuring legal services. Taxpayers should keep in mind the need for there to be a sufficient connection between the expense or outgoing and the enterprise being carried to be able to claim GST input tax credits, particularly where there are multiple entities in a family group. (Konebada Pty Ltd ATF the William Lewski Family Trust v FCT [2023] FCA 257)