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Tax tips

Tax lodgements

Just a friendly reminder that for those clients who wish to lodge their 2017 tax returns without incurring any nasty penalties and fines, you have up until May 15 this year to do so.

Please arrange to send your paperwork in to Lowensteins or, alternatively, make a time to see one of our accountants to get this tax return all sorted before the due date of 15 May 2018.

Capital tax changes for non residents

The Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 2) Bill 2018 was put forward on 8 February 2018. It aims to remove the entitlement to the Capital Gains Tax (CGT) main residence exemption for foreign residents from 9 May 2017 — the date of the last federal Budget announcement. The current law allows foreign residents to access the CGT main resident exemption in the same way as Australian residents do.

A ‘grandfathering’ arrangement will apply for properties acquired on or before 9 May 2017, with the change taking effect for these properties from 1 July 2019.

This means that only sales take place after the 2019 date will be affected.

The main residence exemption allows individuals to disregard a capital gain they make on the sale of a property if it is/was established as their main residence.

Some economists are concerned that this amendment will lead to a massive sell-off of properties by non-residents before the cut of date in 2019.

Beware of the ‘phoenix’

Illegal ‘phoenix’ activity occurs when a new company is created to continue the business of an existing company that has been deliberately liquidated to avoid paying its debts, including taxes, creditors and employee entitlements. You can avoid dealing with phoenix companies by knowing who you’re dealing with.

To protect your business you could:
  • confirm the business is registered and its ABN is valid
  • obtain a credit check
  • ask for credit and other business references
  • get a company report from ASIC
  • search the name of the company and its directors online for any adverse media reports
  • ask for payment up front or in instalments
  • include a clause in your contract requiring the business to have all their taxes paid up-to-date. This creates a contractual right that you can enforce in the event of illegal phoenix activity.

    • The Phoenix Taskforce has been set up by the ATO to provide a whole-of-government approach to support businesses who want to do the right thing; and at the same time deal firmly to deter those that choose to engage in illegal phoenix behaviour.

Ransomware

We have been made aware by one of our clients that they has been subject to a ransomware attack. ‘Ransomeware’ is a type of malware that prevents or limits users from accessing their computer system – either by locking the system’s screen or by locking the users’ files – unless a ‘ransom’ is paid. More modern ransomware families, collectively categorised as ‘crypto-ransomware’, encrypt certain file types on infected systems and force users to pay the ransom through certain online payment methods to get a decrypt key.
Ransom prices vary depending on the ransomware variant and the price or exchange rates of digital currencies. Thanks to the perceived anonymity offered by cryptocurrencies, ransomware operators commonly specify ransom payments in bitcoins. Recent ransomware variants have also listed alternative payment options such as iTunes and Amazon gift cards. It should be noted however, that paying the ransom does not guarantee that users will get the decryption key or unlock tool required to regain access to the infected system or hostaged files.
We again remind clients and friends not to open any suspicious looking emails that are sent from unfamiliar addresses. If you do encounter ransomware, contact your IT technician immediately.

NSW Stamp Duty on insurances

With effect from 1 January 2018, NSW small businesses will be exempt from paying Stamp Duty on certain types of insurance.
Small businesses are defined as entities that
  • are carrying on a business; and
  • have an aggregating turnover of less than $2m per annum.

    • What types of insurance will the exemption apply to?
  • Commercial vehicle insurance – for a motor vehicle used primarily for business purposes
  • Commercial aviation insurance – for an aircraft used primarily for business purposes
  • Occupational indemnity insurance – insurance covering liability arising out of the provision by a person of professional services or other services (other than medical indemnity cover)
  • Product and public liability insurance – insurance covering liability for personal injury of property damage occurring in connection with a business or arising out of the products or services of a business.

ATO to disclose tax debts to credit agencies

There is a proposal to allow the ATO to disclose the tax debt information of businesses to credit agencies. Draft legislation and a draft legislative instrument were released on 11 January 2018 to amend some tax legislation to authorise the ATO to disclose business tax debts to registered credit reporting bureaus (CRBs) where the businesses have not effectively engaged with the ATO to manage their debt .The draft legislation intends to place tax debts on a similar footing to other debts to increase timely payment or engagement with the ATO for businesses who want to avoid having their debt information affect their credit worthiness.
The following types of taxpayer may be subject to the new disclosure arrangements:
  • registered on the Australian Business Registry (ABR);
  • has a tax debt and at least $10,000 of the debt is overdue for more than 90 days;
  • is not a Deductible Gift Recipient ie charity , not-for-profit entity, government entity or complying superannuation entity;
  • is not effectively engaging with the ATO to manage their tax debt; and
  • the Commissioner has taken reasonable steps to confirm that the Inspector-General of Taxation does not have an active complaint from the entity.