News

Government ‘backflip’ on superannuation changes

Following further consultation, the government has announced the following ‘improvements’ to the superannuation changes announced in the 2016/17 Budget:

  • the $500,000 lifetime non-concessional cap will be replaced by a new measure to reduce the existing annual non-concessional contributions cap from $180,000 per year to $100,000 per year;
  • individuals with a superannuation balance of more than $1.6 million will no longer be eligible to make non-concessional contributions from 1 July 2017; and
  • the commencement date of the proposed ‘catch-up’ for concessional superannuation contributions will be deferred by 12 months to 1 July 2018.

Also, the government will now not change the contribution rules for those aged 65 to 74.

Editor:  Clients who wish to discuss these superannuation changes should contact our office.

DHS – Data matching project

 

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The Department of Human Services (DHS) (which operates Centrelink) has launched its ‘Non Employment Income Data Matching project’, matching income data it collects from “customers” with tax return related data reported to the ATO.

This project will assist the DHS to identify social welfare recipients who may not have disclosed income and assets to the Department, including welfare recipients who have lodged a Tax Return with the ATO during 2011 to 2014.

Fallout from ‘Panama Papers’ spreads

Editor:  Earlier in the year, we reported that an unknown source had leaked 11.5 million documents from the Panamanian law firm of Mossack Fonseca – these are now referred to as the ‘Panama Papers’.

Basically, the documents illustrated how many wealthy individuals are hiding their money and income from tax authorities around the world.

The Commissioner of Taxation, Chris Jordan, has announced that the ATO has made significant progress in dealing with those exposed in the Panama Papers who have tried to avoid their tax obligations.

He went on to say that, having commenced the assessment of the data, the ATO believes that some  overseas structures and trusts are being used to:

  • evade tax;
  • avoid corporate responsibility;
  • disguise and hide unexplained wealth; and
  • facilitate criminal activity and launder the proceeds of crime.

The ATO has obtained information on offshore service providers who have established entities for Australians in secrecy jurisdictions to conceal their interests and wealth.

“Importantly, the sheer size of the information available to us for analysis should send a clear message to those who believe that their data is secure, hidden and beyond the reach of law enforcement and tax authorities – it is not.”

Editor:  In related news, the International Consortium of Investigative Journalists (ICIJ) has revealed that it has obtained a leaked Bahamian corporate registry which provides names of directors and owners of more than 175,000 Bahamian companies, trusts and foundations registered between 1990 and early 2016, which will also be made available to the public.

ATO exposes dodgy deductions

With over eight million Australians claiming work-related expenses each year, the ATO is reminding people to make sure they get their deductions right this tax time.

Assistant Commissioner Graham Whyte said that, in 2014/15, the ATO conducted around 450,000 reviews and audits of individual taxpayers, leading to revenue adjustments of over $1.1 billion in income tax.

“Every tax return is scrutinised using increasingly sophisticated tools and data analytics developed (by) the ATO.  This means we can identify and review income tax returns that may omit information or contain unreasonable deductions,” Mr Whyte said.

The ATO also set out some case studies, which provide a fascinating insight into the ATO’s methods, including:

  • A medical professional who made a claim for attending a conference in America, and provided an invoice for the expense, but when the ATO checked, it found that the taxpayer was still in Australia at the time of the conference (the claims were disallowed and the taxpayer received a substantial penalty); and
  • A taxpayer who claimed deductions for car expenses, but the ATO found they had recorded kilometres in their log book on days where there was no record of the car travelling on the toll roads, and further inquiries identified that the taxpayer was out of the country.  Their claims were also disallowed.

Deductibility of airport lounge memberships

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The ATO has also confirmed that the cost to a business taxpayer of a yearly airport lounge membership (e.g., Qantas Club, Virgin Lounge) that will be used by its employees is ordinarily deductible, and should not give rise to any FBT liability for the employer (even if the majority of (or indeed only) use of the airport lounge membership is for private purposes).