PM: Proposed tax changes to increase housing supply
The Prime Minister has announced the following proposed tax incentive changes to help increase the supply of housing: (a) increasing “the depreciation rate from 2.5% to 4% per year for eligible new build-to-rent projects” where construction commences after 9 May 2023; and (b) reducing the withholding tax rate for eligible fund payments from managed investment trusts (MITs) to foreign residents on income from newly constructed residential build-to-rent properties after 1 July 2024 from 30% to 15%, subject to further consultation on eligibility criteria.

Treasurer: Proposed small business tax deduction energy incentive
The Government has announced that small business operators will be provided with a new tax incentive in this month’s Budget to assist with their energy transformation. It is intended to help small businesses make investments like electrifying their heating and cooling systems, upgrading to more efficient fridges and induction cooktops, and installing batteries and heat pumps. The bonus tax deduction will provide businesses with an annual turnover of less than $50m an additional 20% deduction on spending that supports electrification and more efficient use of energy. Up to $100,000 of total expenditure will be eligible for the incentive, with the maximum bonus tax deduction being $20,000 per business. Eligible assets or upgrades will need to be first used or installed ready for use between 1 July 2023 and 30 June 2024.

ATO reminder: Consultation Open on Commissioner’s remedial power Determinations
The ATO has issued a reminder that it is seeking public comment on two draft proposals to exercise the Commissioner’s remedial power (CRP). These are: (a) Remedial Power – Work Test for Personal Superannuation Contributions. Comments on the draft Taxation Administration Remedial Power – Work Test for Personal Superannuation Contributions Determination 2023 are due by Friday 5 May 2023 (see accompanying explanatory statement); and, (b) Remedial Power – Remission of Charges and Penalties. Comments on the draft Taxation Administration (Remedial Power – Remission of Charges and Penalties) Determination 2023 are due by Friday 19 May 2023 (see accompanying explanatory statement).


Expansion of Home Guarantee Scheme
The Government has announced an expansion of criteria for the Home Guarantee Scheme. Eligibility criteria for all elements of the scheme – including the First Home Guarantee, the Regional First Home Buyer Guarantee, and the Family Home Guarantee – will be expanded. From 1 July this year, friends, siblings, and other family members will be eligible for joint applications under the First Home Guarantee and the Regional First Home Buyer Guarantee. These guarantees had previously been restricted to people that were married or in a de‑facto relationship, in addition to single applicants. The guarantees will also be expanded to non‑first home buyers who haven’t owned a property in Australia in the last ten years.
R&D tax offset denied to oil company
The AAT has ruled that an oil company was not entitled to the R&D tax offset as the relevant activities were not eligible R&D activities as they came within the exclusion for exploring, prospecting, or drilling stated in s 355-25(2) of ITAA 1997. In addition, the AAT ruled that they did not come within the meaning of eligible “experimental activities”.  The AAT also noted the lack of relevant internal records. (Lakes Oil NL v Innovation and Science Australia [2023] AATA 811, 14 April 2023)
ATO: “Troubleshooting” for businesses and tax practitioners
The ATO has released information on the availability of ATO systems for businesses and tax practitioners. The information deals with: Online services for agents; Practitioner lodgment service (PLS) and Standard business reporting (SBR); Online services for business; Single Touch Payroll (STP); and other matters.



Super: Employers required to pay super on same day as payday
The Government has announced that it will amend the superannuation laws to require super to be paid on payday – a reform it says that “will benefit the retirement incomes of millions of Australians”. From 1 July 2026, employers will be required to pay their employees’ super at the same time as their salary and wages. By way of example, the Government says that by switching to payday super, a 25-year-old median income earner currently receiving their super quarterly and wages fortnightly could be around $6,000 or 1.5% better off at retirement. It also said that more frequent super payments will make employers’ payroll management smoother with fewer liabilities building up on their books.

Draft leg instrument: cents per kilometre car rate
The ATO has issued draft legislative determination LI 2023/D12. It applies to eligible taxpayers who use the cents per kilometre method to calculate the income tax deductions for their work-related car expenses. It will set the “cents per kilometre rate” for calculating work-related motor vehicle expense deductions at 85 cents per kilometre for the income year commencing 1 July 2023.



ATO: SMSF member in receipt of ENCC determination
The ATO has advised that if a member of an SMSF has received an “excess non-concessional contributions” (ENCC) determination, the ATO may send the SMSF a release authority which must be actioned within 10 business days of the issue date by paying the amount to the ATO.  By way of background, the ATO says it assesses members contributions when it has contributions information and the member lodges their tax return for the same financial year. If a member exceeds their non-concessional contributions cap, the ATO will then send them an ENCC determination.

Monthly exchange rates for April 2023
The ATO has released details of the average monthly exchange rates for April 2023 for selected countries as follows (to Australian $1): Chinese renminbi 4.6103; European euro 0.6110; Hong Kong dollar 5.2551; Indian rupee 54.9247; Indonesian rupiah 9931.1765; Japanese yen 89.3894; Malaysian ringgit 2.9626 New Taiwan dollar 20.4535; New Zealand dollar 1.0783; Philippine peso 37.0718; Singapore dollar 0.8916; South Korean won 885.0047; Swiss franc 0.6020; Thai baht 22.9418; UK pound sterling 0.5383; United States dollar 0.6695; Vietnamese dong 15714.5882. Note: General information on exchange rates and their application to tax can be found at the ATO website, here.

ASIC calls on investment product issuers to improve on DDO
ASIC has called on investment product issuers to “lift their game” after an initial review found significant room for improvement in how they meet their “design and distribution obligations” (DDO). [Note the DDO scheme requires financial products to be designed and distributed with clear and contemporary consideration of the objectives, financial situation and needs of the consumers and retail investors being targeted.] In its Report 762 Design and distribution obligations: Investment productsASIC outlined the review findings and actions taken by ASIC in response. The review found that a significant number of the product issuers made deficient target market determinations, with poorly defined target markets and unclear or inadequate product governance arrangements.



ATO: STP and managing Super Guarantee non-compliance
The ATO (via the Tax Practitioner Stewardship and Forum) has released information about expanding the use of Single Touch Payroll data for the purpose of managing Superannuation Guarantee (SG) non-compliance. It states that the ATO is enhancing how it matches and store STP and MATS data to proactively support employers and future improvements to its administration of SG. Among other things, the ATO says that practitioners and tax agents should make sure they understand the record keeping rules for business and that they should check that reporting and payments are timely and accurate. The ATO also states that payroll governance processes should be regularly reviewed to confirm they are appropriate for the relevant business. Finally, the ATO emphasises that SG payments need to be received by the employees’ fund on or before the due date.

ATO: Applying for a lodgment deferral
The ATO has released information about how to apply for a lodgment deferral. The ATO states that before you apply, you will need to find out how lodgment deferrals work, which obligations are eligible and when you don’t need to apply. The information you need will to apply, include full details of: why you are submitting the request and if applicable, why it’s after the lodgment due date; and the exceptional or unforeseen circumstances affecting your ability to lodge by the due date.

ASIC: updated guidance for licensees on “reportable situations”
ASIC has reported that it has released updated guidance for industry on making notifications to ASIC under the reportable situations regime (formerly breach reporting). The updates to Regulatory Guide 78 Breach reporting by AFS licensees and credit licensees (RG 78) clarify aspects of the existing guidance and provide new guidance in response to operational issues that have arisen since the implementation of the regime on 1 October 2021. ASIC said its focus is to improve consistency and quality of reporting practices by licensees and reduce regulatory burden.

Weekly Updates