August tax update. Warning to watch out for MyGov and ATO scams.

October 2018 Tax Update

From a new extension of asset write-offs, claiming work-related expenses to tax returns, here’s what you need to know about tax this month.

ATO data analytics and prefilling help tax return processing

The ATO reports that a record number of tax returns were finalised in the first two months of tax time this year, thanks to the ATO’s data prefilling arrangements and correction of mistakes using analytics and data-matching. Over $11.9 billion has been refunded to taxpayers, and errors worth more than $53 million were detected and corrected before refunds were issued, Assistant Commissioner Kath Anderson has reported.

Most of the income adjustments made by the ATO were for simple mistakes, like leaving out bank interest or salary and wages. But for some, the ATO suspects, peoples’ priority was on generating a refund rather than getting it right, as they deliberately ignored the prefill information that was available at the time of lodgment, Ms Anderson said.

Taxpayers who may be tempted to bend the rules and deliberately leave out income (or over-claim deductions) should remember that the ATO’s analytics and data-matching setup is likely to pick that up, Ms Anderson said, warning that penalties between 25% and 75% can apply.

The ATO has prefilled over 80 million pieces of data from banks, employers, health funds and government agencies, however, some people are still getting it wrong. Ms Anderson said the ATO’s advanced analytics allow it to scrutinise more returns than ever before, and make immediate adjustments where taxpayers have made a mistake.

Twelve-month extension of $20,000 instant asset write-off

The Treasury Laws Amendment (Accelerated Depreciation for Small Business Entities) Bill 2018 has now passed through Parliament without amendment.

The Bill makes changes to the tax law to extend by 12 months the period during which small businesses can access expanded accelerated depreciation rules for assets that cost less than $20,000. The threshold amount was due to revert to $1,000 on 1 July 2018, but will now remain at $20,000 until 30 June 2019.

Australian Small Business and Family Enterprise Ombudsman Kate Carnell has welcomed the extension, but reminded small businesses and family enterprises that the instant asset write-off is a tax deduction, not a rebate – your small business needs to make a profit to be eligible to claim the benefit.

Claiming work-related expenses: ATO guides and toolkits

This year, the ATO has launched its biggest ever education campaign to help taxpayers get their tax returns right. The ATO says the campaign, which is running throughout tax time, includes direct contact with over three million selected taxpayers, as well as specialised guides and toolkits for taxpayers, agents, employers and industry bodies. A key component of the campaign is simple, plain English guidance for the most common occupations, like teachers, nurses, police officers and hospitality workers.

These can be found by clicking here.

Have questions about your business tax? Speak to one of the experienced team at CHN Partners today by contacting us here.

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