Tax Tips

Written by: Evan Lowenstein

Single Touch Payroll: How it affects employees

From 1 July 2019, employers who employ less than 20 people will be required to change the way they report wages and superannuation to the ATO.

Under this new reform known as Single Touch Payroll (STP), from this date they will be required to report real time data to the ATO every time they make a payroll entry. This reporting could be each week, fortnight, month or quarter depending on their payroll cycle.

Leaving aside what this means for employers, book keepers, practitioners and software providers, this reporting system will have an impact on the employee.

The effect of this measure on employees is that they will be able to view their wages and superannuation entitlements in real time by viewing their MyGov account. In addition employees will no longer have to worry about receiving Payment Summaries from their employers because the data will automatically be prefilled into their tax return whether done by a tax agent or by themselves using MyTax, thereby doing away with having to request their payment summaries.

Therefore, it is recommended that all employees set up a MyGov account and link it to the ATO.

This is not necessarily a straightforward process. If taxpayers have a myGov account already linked to other services such as Centrelink or Medicare, adding the ATO can be problematic e.g. the name on the Centrelink account has to exactly match the name on ATO records – the ATO is likely to have a taxpayer’s full name whereas a Centrelink account may only have first and last name. This may prevent the ATO from being added to a taxpayer’s myGov account. The situation can be rectified but may require a trip to a Centrelink office.

ATO focuses on rental properties

Following on from the success that the ATO claims to have had by cracking down on work-related expenses – see previous editions of the Newsletter – the ATO have stated that their next focus will be on rental income and deductions. As part of the ATO’s broader random enquiry program, ATO auditors have now completed over 300 audits on rental property claims and “found errors in almost 9 out of 10 returns reviewed”.

The Commissioner said that amongst the errors that they are seeing are:
  • incorrect interest claims for the entire investment loan where the property has been refinanced for private purposes;
  • incorrect classification of capital works as repairs and maintenance; and
  • taxpayers not apportioning deductions for holiday homes when they are not genuinely available for rent for a period of time.

  • We wish to advise all our clients that we will be vigilant in ensuring that correct claims are made.
    It’s better for us to be pedants rather than the ATO.

ABN Cancellations

Over the coming months the ATO has advised that it will be increasing its focus on the bulk ABN cancellation program, to continue “to ensure the integrity of the Australian Business Register”.

The ATO says it has refined its models to help it identify businesses that are no longer active or have forgotten to cancel their ABN when they ceased business. Things the ATO looks for include ABN holders that:
  • have stopped reporting business income or expenses;
  • provide the ATO with no other indications they may be in business.

  • If the ATO cancels an ABN as part of this bulk cancellation process and it is needed it in the future, the taxpayer can easily reapply and will receive the same ABN if the business structure remains the same.