business tax update australia

December Tax Update

Common GST reporting errors, tax-time scams and guidance around the First Home Super Saver scheme: here’s what you need to know in this month’s tax update.

Beware of ATO scams

Although tax time 2018 is over, the ATO has warned taxpayers and their agents to remain on high alert for tax scams.

Assistant Commissioner Kath Anderson has said scammers are growing increasingly sophisticated and hope to exploit vulnerable people, often using aggressive tactics to swindle people out of their money or personal information. The ATO has noticed an increasing trend of scammers demanding tax payments through Bitcoin ATMs.

Be wary if someone contacts you demanding payment of a tax debt that you didn’t know you owed. The ATO’s advice is simple: it will never ask a person to make a payment into an ATM or via gift or pre-paid cards such as iTunes and Visa cards, or ask for direct credit to be paid to a personal bank account.

Taxpayers who lodge through a registered tax agent generally have longer to pay their tax bill, and will be advised by their tax agent if and when any tax payment is due. However, the ATO warned that scammers have been known to attempt to impersonate tax agents too. If you have doubts about the legitimacy of a phone call or other communication, call the ATO (toll-free) on 1800 888 540 or speak to your accountant.

ATO identifies thousands of incorrect rental property travel expense claims

The ATO has identified 26,000 taxpayers who have claimed deductions during tax time 2018 for travel to their investment residential rental properties, despite recent changes to tax laws.

From 1 July 2017, investors cannot claim travel expenses relating to inspecting, maintaining or collecting rent for a residential rental property as deductions, subject to certain exceptions.

Taxpayers must follow three golden rules when claiming a deduction:

  • the taxpayer must have spent the money (and not been reimbursed);
  • the claim must be directly related to earning the taxpayer’s income; and
  • they must keep records to prove it.

Common GST reporting errors and how to correct them

Do you make simple mistakes when reporting your GST?

The ATO reminds taxpayers that avoid the following common GST reporting errors:

  • Calculation errors. These mistakes often happen when manually entering amounts, so it’s important to double-check all figures and calculations before submitting your BAS
  • No tax invoice. You must keep tax invoices to be able to claim GST credits on business-related purchases;
  • Transaction classifications. It’s important to check what GST applies for each transaction; for example, transactions involving food may be GST applicable.
  • And finally, errors in accounting systems. A system with one coding error can classify several transactions incorrectly.

Correcting GST errors

If you make a mistake made on a previous activity statement, the ATO advises you to:

  • correct the error on a later activity statement if the mistake fits the definition of a “GST error” and certain conditions are met;
  • lodge an amendment – the time limit for amending GST credits is four years, starting from the day after the taxpayer was required to lodge the activity statement for the relevant period; or
  • contact the ATO for advice.

First Home Super Saver scheme: ATO guidance

On 1 November 2018, the ATO issued Super Guidance Note SPR GN 2018/1 to provide general information about the First Home Super Saver (FHSS) scheme. The guidance note explains who is eligible to use the scheme, the kind of contributions that can be released, how to apply for a FHSS determination and the requirement to purchase a house. Interesting points made in SPR GN 2018/1 include that:

  • an individual who holds real property as the trustee of a trust (including a unit trust or self-managed super fund) can qualify for the FHSS scheme;
  • the eligibility of an individual who is a beneficiary of a trust depends on their particular rights as a beneficiary;
  • before the transfer of a deceased person’s property, the beneficiary of the deceased estate can apply for a FHSS determination; and
  • contributions that are ineligible for release include amounts contributed to superannuation as part of the CGT small business concessions.
As always, if you have any concerns or questions about business tax, call CHN Partners on 03 9870 1300 for a confidential chat.
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