Tax Blog
I know we promised not to talk about boring Tax, but these are just a few comments on the Government mini-budget as there are some less obvious tax measures worthy of note.
Swan is not going after big business, he has lost many of the cases because big business has the money and access to the best legal counsel. Accordingly, it will be small business and superannuation that will be attacked. Over the next four years he expects to recover over $2b, for an outlay to the ATO of only $390m.
These will be the main targets:
- SMSF and dealings with members - check leases are compliant on business and on commercial terms for premises leased to the employer, no use of SMSF assets privately, and avoid excess contributions.
- The ATO regards Contractors as Employees - make sure contracts are sound, comply with Personal Services business rules, superannuation is required on individual contractors, contractors to check deductions are allowable.
- In the building industry, builders must report annually on all payments to sub-contractors (by 20 July).
- Fringe Benefits Tax will now apply on salary sacrifice arrangements for employers' products, although not seen much by small business salary sacrifices could come under more scrutiny.
- Be careful of claims for conferences and then going on a holiday; the ATO will question the proportions claimed, including cost of accompanying spouse.
- Ensure tax returns are lodged annually; the ATO can issue a default assessment and force its payment. Defending requires doing the outstanding return(s) and also proving the ATO is wrong in its assessment.
Business will have tough trading conditions for a while longer, but the ATO has been allowed to be more aggressive. That is why we have become more proactive, checking, questioning, and concerned. We are looking at audit insurance for clients, just in case, so please let us know if you may be interested in this (say $400 to save a few thousand dollars).