Newsletter - May 2020

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Cents & Sensibility | Tax News | Views | Clues 

 

1 May

knpeople

 

JobKeeper Update – by Mei Wu 

Making sense of it all with Ali Roshan – Transparency within Super Funds

 

According to ASIC, a number of Superannuation funds are falling short on their obligations to provide transparency.   The websites of Twenty-one super funds were identified as failing to meet transparency requirements. Two of these funds were large institutions with assets exceeding $10 billion.  Recent surveys found that these trustees had failed to keep up to date the required transparency information regarding remuneration and/or disclose governance and other information related to the fund, as required by the Stronger Super reforms.   

 

With trillions of dollars tied up in Australia’s super funds, there is still obstacles in finding out where all that money is invested.   

 

It’s a situation the government has tried to remedy over a number of years, but from 31 December 2020 all that’s changing. You will finally have a chance to see exactly what assets your super fund has invested in using your retirement savings.  ASIC will regulate greater transparency about funds’ portfolio holdings which will encourage superannuation trustees to focus on designing website disclosure about holdings that is accessible and clear for their members. 

 

The competitive pressure on performance caused the trustee to have substituted equities and fixed interest exposure with unlisted property and infrastructure. The practice of classifying unlisted assets as partly defensive has been the subject of scrutiny, especially in recent months. There are some within the industry that suggest certain funds are ‘gaming’ the system by presenting a high-risk option as a traditional growth option.  

 

It is important to sit down with your financial planner to see if your Super fund offers you the transparency required to make an educated decision and if the underlying investments are right for you.  

 

Ali Roshan is an Authorised Representative (ASIC No. 000378611) of Lifespan Financial Planning  

 

ABN 23 005 921 735 AFSL Number 229892 

 

No Advice Warning / General Advice 

 

The purpose of this article is to provide general information only and the contents of this website do not purport to provide personal financial advice. knp Solutions strongly recommends that investors consult a financial adviser prior to making any investment decision. 

 

The contents of this knp Solutions article does not take into account the investment objectives, financial situation or particular needs of any person and should not be used as the basis for making any financial or other decisions. 

 

The information is selective and may not be complete or accurate for your purposes and should not be construed as a recommendation to invest in any particular product, investment or security. The information provided on this website is given in good faith and is believed to be accurate at the time of compilation. 

New laws can make directors personally liable for GST

 

The government recently passed new legislation designed to strengthen laws to "crack down on illegal phoenixing activity by dodgy business operators who try to avoid their obligations to their customers, employees and creditors."

 

In particular, the changes allow the ATO to collect estimates of anticipated GST liabilities, and make company directors personally liable for their company’s GST liabilities in certain circumstances (basically by including these liabilities in the director penalty notice regime).

 

Importantly, the expansion of the director penalty notice regime to include GST liabilities will commence from 1 April 2020.

New super guarantee amnesty

 

On 6 March 2020, the government introduced a superannuation guarantee ('SG') amnesty.

 

This amnesty allows employers to disclose and pay previously unpaid super guarantee charge ('SGC'), including nominal interest, that they owe their employees, for quarter(s) starting from 1 July 1992 to 31 March 2018, without incurring the administration component ($20 per employee per quarter) or Part 7 (double SGC) penalty.

 

In addition, payments of SGC made to the ATO after 24 May 2018 and before 7 September 2020 will be tax deductible.

 

Employers who have already disclosed unpaid SGC to the ATO between 24 May 2018 and 6 March 2020 don’t need to apply or lodge again.

 

Employers who come forward from 6 March 2020 need to apply for the amnesty.

 

The ATO will continue to conduct reviews and audits to identify employers not paying their employees SG.

New vacant land tax measures

 

A new ‘vacant land’ measure limits the deductibility of costs incurred on or after 1 July 2019 (i.e., from the 2020 income year) that relate to holding vacant land, even if the land in question was first held before that date.

 

Importantly, however, the new provisions include (amongst other exceptions) a ‘carrying on a business’ exception.  This exception means that the limitations will not apply to the extent that the ‘vacant land’ is used, or available for use in carrying on a business, including a business carried on by either the taxpayer (i.e., the owner of the land) or by a specified related entity. 

 

Further, an additional business exception also applies where ‘vacant land’ is leased at arm’s length for use in any business (i.e., not just a business of the taxpayer or of a related entity).

 

In addition, land is considered to be “available for use” if it is held for future use in a business currently carried on by the taxpayer or is made available to a specified related entity for future use in a business that entity currently carries on.

ATO on property investments

 

The ATO has reminded taxpayers in a property business or thinking about investing in property that there are things they should know, such as:

  • they need a clearance certificate from the supplier when buying property over $750,000;
  • they may have to pay the GST on the sale of brand-new residential property separately to the ATO; and
  • income from property activities could increase their total business turnover.

 

The ATO says taxpayers with property should keep accurate and complete records where they:

  • rent it out as a residential property (even short-term through the sharing economy);
  • flip houses; and/or
  • build a new house to sell for a profit.

 

In addition, when it's time to lodge, taxpayers should remember:

  • Some expenses need to be claimed over time.
  • It is only possible to claim expenses for:

        –   periods when the property is genuinely available for rent; and

        –   travel related to renting property, if the taxpayer is in the business of letting properties.

Important:

Clients should not act solely on the basis of the material contained in Cents & Sensibility. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. Cents & Sensibility is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval. Please contact us if you wish to discuss how the points raised in this edition specifically affect you. 

 

Yours faithfully,

The knp Team

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ATO on property investments

 

The ATO has reminded taxpayers in a property business or thinking about investing in property that there are things they should know, such as:

  • they need a clearance certificate from the supplier when buying property over $750,000;
  • they may have to pay the GST on the sale of brand-new residential property separately to the ATO; and
  • income from property activities could increase their total business turnover.

 

The ATO says taxpayers with property should keep accurate and complete records where they:

  • rent it out as a residential property (even short-term through the sharing economy);
  • flip houses; and/or
  • build a new house to sell for a profit.

 

In addition, when it's time to lodge, taxpayers should remember:

  • Some expenses need to be claimed over time.
  • It is only possible to claim expenses for:

        –   periods when the property is genuinely available for rent; and

        –   travel related to renting property, if the taxpayer is in the
           business of letting properties.

ATO on property investments

 

The ATO has reminded taxpayers in a property business or thinking about investing in property that there are things they should know, such as:

  • they need a clearance certificate from the supplier when buying property over $750,000;
  • they may have to pay the GST on the sale of brand-new residential property separately to the ATO; and
  • income from property activities could increase their total business turnover.

 

The ATO says taxpayers with property should keep accurate and complete records where they:

  • rent it out as a residential property (even short-term through the sharing economy);
  • flip houses; and/or
  • build a new house to sell for a profit.

 

In addition, when it's time to lodge, taxpayers should remember:

  • Some expenses need to be claimed over time.
  • It is only possible to claim expenses for:

        –   periods when the property is
         genuinely available for rent; and

        –   travel related to renting property, if the
         taxpayer is in the business of letting
         properties.