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Employers’ frequently asked JobKeeper questions

Employers’ frequently asked JobKeeper questions

Source: https://www.ato.gov.au/

General

Question: What’s the difference between JobKeeper and JobSeeker?

Answer: The JobKeeper scheme supports businesses to retain their employees by contributing to their salary and wages and is administered by the ATO. Eligible businesses are required to register with the ATO to receive these payments for their eligible employees.

JobSeeker payments are a form of income support available to eligible individuals and are administered by Services Australia. These payments are paid directly to the individuals and not to their employers.

Question: I pay my employee $1,400 per fortnight before tax, plus I contribute $133 super per fortnight to meet super guarantee obligations. Does this qualify for the minimum $1,500 payment?

Answer: No. The minimum $1,500 does not include the amount you contribute as super to meet your super guarantee obligations. However, it does include super contributions made under a salary sacrifice arrangement.

Question: Do I need to be registered for GST to qualify for JobKeeper?

Answer: No, you don’t need to be registered for GST, but there are other requirements. See Employers.

Question: I run a business but do not have employees. Am I eligible for JobKeeper payments?

Answer: Yes, you may be eligible for JobKeeper payments where certain conditions are satisfied. See Sole traders and other entities.

Question: Does an employer have to be assessed by the ATO as being eligible before any payments are made?

Answer: Eligibility for JobKeeper payments is a self-assessment process, with the ATO administering the payment. However, if a payment is made and we later determine that the entity was not entitled to that payment (or was entitled to a lesser amount) the entity will be required to repay the overpaid amount.

Question: What if my pay cycles do not correspond with JobKeeper fortnights? Do I have to change my pay cycles?

Answer: You are not required to change your pay cycles to correspond with JobKeeper fortnights. What is important is that you pay your employees at some time during the JobKeeper fortnight.

However, if you usually pay your employees less frequently the payment can be allocated between fortnights in a reasonable manner. For example, if you pay your employees on a monthly cycle, you will still be entitled to receive a JobKeeper payment if your employees received the monthly equivalent of $1,500 per fortnight.

Employee nomination notice

Question: Why do I need to get my employees to fill out the JobKeeper Employee Nomination Notice?

Answer: An employee can only nominate one employer for JobKeeper. The employee must agree to be nominated by you for JobKeeper. If the employee does not complete the nomination notice, you can’t claim JobKeeper for them.

Question: Will the ATO accept a digital self-generated employee nomination notice?

Answer: For practical reasons, an employer may choose to create their own digital employee nomination notice, but it must include key information. See Creating your own employee nomination notice.

Your employee’s signature is not required by the ATO but can be requested by you. Employees can submit their nomination notice to their employer through their internal business process (for example, a business’s HR portal) or their own form of communication channel (for example, an email).

Turnover

Question: Can businesses qualify for JobKeeper payments after April, for example, if my business experiences a downturn in the future?

Answer: Yes. If you do not satisfy the turnover test for the current month or quarter, you can still assess your eligibility at a later date. To qualify later, the turnover month can be May, June, July, August, or September 2020, provided the fortnight you are qualifying for has ended that month or an earlier month. If the turnover for a quarter is being used, it can be the quarter:

  • from 1 April 2020 to 30 June 2020
  • from 1 July 2020 to 30 September 2020, but only if first seeking to qualify for fortnights ending in July 2020 or later.

Once you satisfy the decline in a turnover test, you do not need to retest again.

Question: Do I have to show that it is COVID-19 that caused a decline in the turnover of my business?

Answer: No. It does not matter whether it is COVID-19 or the subsequent effect on the economy that has caused the drop in turnover, provided the turnover has fallen by the required percentage and you satisfy the other eligibility criteria.

Question: My business suffered a steep decline in turnover in March, but I’ve changed to a new business model and I may build the business up again soon. Does this mean I lose JobKeeper?

Answer: No. You only need to satisfy the decline in a turnover test once to be entitled to JobKeeper. For example, satisfying it for March 2020 (compared in March 2019) is sufficient, even if your business recovers to previous levels after this.

There are ongoing reporting obligations for current and projected GST turnover, but even where these show a recovery of turnover they don’t affect eligibility.

Question: What happens if my predicted fall in turnover happens to be incorrect, so that the fall ends up being less than the 30% or 50%?

Answer: This does not necessarily mean you are ineligible for JobKeeper.

Your projected GST turnover is a point-in-time test and needs to be a reasonable assessment of what was likely at the time you calculated the test. If, at a later stage, it eventuates that your actual turnover for your test period is greater than your prediction of your projected turnover, you do not lose access to JobKeeper. We will accept your assessment of these turnovers unless we have reason to believe that your calculation of your projected GST turnover was not reasonable.

If there is a significant difference between your projected turnover and what eventuates, we may need to assess whether your assessment was reasonable, so you need to keep good records of your calculations.

Integrity rules are in place to deny or reduce an entitlement to JobKeeper payments if schemes are contrived to ensure payment conditions are satisfied, such as temporarily reducing or deferring turnover. Exceeding your turnover predictions by itself does not trigger these integrity rules.

Our compliance focus will be particularly directed toward schemes where there has not been a genuine fall in turnover in substance, but arrangements are contrived to ensure the turnover test is satisfied.

ATO tax return: Tax Office reveals new working from home expenses rules

Source : https://www.news.com.au/

The tax office has announced special arrangements this year – and it affects everyone working from home due to the coronavirus crisis.

The Australian Taxation Office has made a major change this year as a result of the ongoing COVID-19 pandemic.

With countless Australians now working form home in a bid to slow the spread of the virus, the ATO is rolling out a new working from home shortcut to make it easier for people to claim deductions.

The special new arrangement will allow people to claim a rate of 80 cents per hour for all their running expenses, instead of calculating costs for specific running expenses as taxpayers would under normal circumstances.

Multiple people living in the same house can claim this new rate individually, and it is no longer a requirement to have a dedicated work from home area in order to claim.

Assistant Commissioner Karen Foat said the new shortcut method – which will be in place from March 1 to June 30 – will make it easier for those who are working from home for the first time.

“The shortcut method provides a rate of 80 cents per hour and will only require you to keep a record of the number of hours worked from home,” Ms Foat said.

“This recognises that many taxpayers are working from home for the first time and makes claiming a deduction much easier.

“If you choose to use this shortcut method, all you need to do is keep a record of the hours you worked from home as evidence of your claim.”

This new shortcut arrangement does not stop people from making a working from home claim under the existing arrangements, which involves calculating all or part of your running expenses.

Claims for working from home expenses prior to March 1 can’t be calculated using the shortcut method, and must use the pre-existing working from home approach and requirements.

The ATO will review the special arrangement for the next financial year as the COVID-19 situation progresses.

Taxpayers will be able to choose one of three ways to calculate their additional running expenses for the period.

They include claiming a rate of 80 cents per work hour for all additional running expenses, claiming a rate of 52 cents per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture, plus calculate the work-related portion of your phone and internet expenses, computer consumables, stationery and the decline in value of a computer, laptop or similar device, or claiming the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.

The ATO is also reminding people the three “golden rules” for deductions still apply.

That means taxpayers must have spent the money themselves and not have been reimbursed, the claim must be directly related to earning income, and there must be a record to substantiate the claim.

Last month, the ATO revealed hundreds of thousands of Australians were set to receive a stern warning as the body takes on cryptocurrency traders.

The ATO is in the process of contacting up to 350,000 individuals either by letter or email to “remind them” of their taxation obligations when they trade in cryptocurrency, such as bitcoin.

Cryptocurrencies are considered to be a form of property and therefore an asset for capital gains tax purposes.

That means any financial gains made from the buying and selling of cryptocurrencies will generally be subject to capital gains tax and must be reported to the ATO.

ATO Tax incentives in response to COVID-19

Article 1

Instant asset write-off increased

For new or second-hand assets first used or installed ready for use from 12 March until 30 June 2020, the instant asset write-off threshold will be increased from $30,000 to $150,000 for
businesses with aggregated annual turnover of less than $500 million (up from the current $50 million threshold). The threshold applies on a per asset basis, so eligible businesses can
immediately write-off multiple assets. The threshold will revert to $1,000 for small businesses (turnover less than $10 million) from 1 July 2020, however businesses not entitled to the instant
asset write off from 1 July 2020 may be entitled to the 50% investment incentive as below.

Backing business investment incentive

The Government is introducing a time limited 15 month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating
depreciation deductions. Businesses with aggregated annual turnover of less than $500 million per annum will be able to deduct 50 per cent of the cost of an eligible asset upon installation,
provided it was acquired after 12 March 2020 and first used or installed by 30 June 2021. There is no asset value threshold for this 50% investment incentive. Existing depreciation rules
applying to the balance of the asset’s cost

 

Article 2

Cash flow assistance for businesses

Up to a $25,000 tax-free payment to small and medium-sized businesses with aggregated annual turnover of less than $50 million that employ workers, between 1 January 2020 and 30
June 2020. These eligible businesses will receive a payment equal to 50% of their PAYG withheld, delivered as a credit in their BAS from March to June 2020, with a minimum $2,000
payment and up to a cap of $25,000.

Supporting apprentices and trainees

Eligible small business employers will be able to apply for a wage subsidy of 50% of the apprentice’s or trainee’s (in training as at 1 March 2020) wage for up to 9 months from 1 January
to 30 September 2020, up to $21,000 per apprentice. Employers can register for the subsidy from early April 2020 with final claims for payment due by 31 December 2020.

Stimulus payments

A one-off $750 payment will be available from 31 March 2020 to social security, veteran and other income support recipients and eligible concession cardholders including pensioners. There
will be one payment per eligible recipient. Assistance for severely affected regions The Government has set aside $1 billion to support those regions and communities that have
been disproportionately affected by the economic impacts of COVID-19, including those heavily reliant on industries such as tourism, agriculture and education.

Assistance for severely affected regions 

The Government has set aside $1 billion to support those regions and communities that have  been disproportionately affected by the economic impacts of COVID-19, including those heavily 
reliant on industries such as tourism, agriculture and education.

Article 3 

ATO relief 

On 12 March 2020, the Australian Taxation Office (ATO) announced a series of administrative  concessions to assist businesses impacted by COVID-19, which include: 
deferring by up to 4 months the payment of tax amounts due through the BAS (including  PAYG instalments), income tax assessments, FBT assessments and excise by affected  businesses; 
allowing affected businesses on a quarterly reporting cycle to opt into monthly GST  reporting to get quicker access to any GST refunds; 
 
allowing affected businesses to vary PAYG instalment amounts to zero for the April 2020  quarter. Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters; 
remitting any interest and penalties, incurred by affected businesses on or after 23  January 2020, that have been applied to tax liabilities; and 
allowing affected businesses to enter into low-interest payment plans for their existing and ongoing tax liabilities. 
The ATO assistance is not automatic, taxpayers must first contact the ATO to request assistance, and if eligible, the ATO will ‘tailor the assistance package for the relevant taxpayer. Legislation to give effect to these measures will be introduced into Parliament, which resumes on 23 March 2020. It is expected that it will be passed urgently. As certain incentives in the 
economic package will only be available for a short period of time, businesses should consider taking action as soon as practicable. State Governments are also anticipated to release their 
own stimulus packages in the coming weeks. 

Remote area tax concessions and payments should be overhauled

The Productivity Commission has called for significant reforms to the tax concessions and payments for residents and businesses in remote Australia as they are “outdated, inequitable and poorly designed”.

Its draft report assessed the zone tax offset (ZTO), the remote area allowance (RAA) and the fringe benefits tax (FBT) remote area concessions.

The Commission recommended the abolition of the ZTO as it is an “ineffective and blunt instrument”. There is no general role for the government to compensate taxpayers for the disadvantages of life in particular areas. Were it to be retained, the ZTO would need to be overhauled.

The RAA is a small supplementary payment directed to people on income support in remote areas. It has a legitimate role but needs a “refresh”, with boundaries updated to contemporary measures of remoteness, payment rates reviewed and transparency enhanced.

Finally, FBT remote area concessions are “overly generous and complex”. They should be redesigned to adhere to the fundamental principle of equitable tax treatment while reducing the cost burden on taxpayers. Most importantly, concessions on employer-provided housing should change. The current exemption should be reverted to a 50% concession (as it was prior to 2000), and provisions allowing employers to claim housing exemptions solely because it is “customary” to do so should be removed.

The closing date for comments on the draft report is 11 October 2019.

Changes to payment summaries , income statements are here

How you get your end of financial year information from your employer showing your earnings for the year (also known as a payment summary or income statement) depends on how your employer reports your income, tax and super information to us. You will be provided with either:

  • An income statement – if your employer reports your income, tax and super information to us through Single Touch Payroll (STP) they are no longer required to give you a payment summary, this information will be made available to you through ATO online services via myGov and finalised by 31 July.
  • A payment summary – if your employer is not yet reporting through STP they will continue to provide you with a payment summary by 14 July (as they do now).

Your employer will let you know if they won’t be giving you a payment summary this year. You should talk to your employer if you are unsure how they will be providing this information to you.

If you have more than one employer, you may receive both a payment summary and an income statement. You will need to check that income from your payment summaries is included in your return. This information may be pre-filled for you or you might need to enter it manually.

Your tax agent

Your tax agent will be able to access your payment summary or income statement information through their software or the Tax Agent Portal, this has not changed.

If your employer is reporting through STP, your agent will need to wait until the income statement has been marked as ‘Tax ready’ to prepare and lodge your return. Employers have until 31 July to do this.

We will send a notification to your myGov inbox when all of your income statements are ‘Tax ready’.

Through ATO online services via myGov

If your employer has started reporting through STP, they are no longer required to give you a payment summary. You will instead receive an income statement. You will be able to access this information through your ATO online services via myGov.

Your income statement will show your year-to-date salary and wages, the tax that has been withheld and the reported amounts of your employer super.

Your income statement/s will be ready to use in your tax return when your employer marks it as ‘Tax ready’. They have until 31 July to do this but will often do it earlier. It is important that you don’t use any information that is not marked ‘Tax ready’ as your employer may finalise your income statement with different amounts which means you may have to amend your tax return.

We will send a notification to your myGov inbox when all of your income statements are ‘Tax ready’.

How to access your income statement

If your myGov account is set up and linked to ATO online services, you need to:

  • Log in to myGov using your email address or mobile phone number.
  • Select ATO online services.
  • Select Employment and then view my Income statement.

On the screen you will see the income you have earned from your employer or employers for the financial year, and the tax that has been withheld.

If you can’t access your information via myGov, you can contact us on 13 28 61 for a copy of your income statement.

Thinking of setting up a self-managed super fund (SMSF)?

If you set up a self-managed super fund (SMSF), you’re in charge – you make the investment decisions for the fund and you’re held responsible for complying with the super and tax laws. It’s a major financial decision and you need to have the time and skills to do it. There may be better options for your super savings.

An SMSF must be run for the sole purpose of providing retirement benefits for the members or their dependants. Don’t set up an SMSF to try to get early access to your super, or to buy a holiday home or artworks to decorate your house. These things are illegal.

It’s best to see a qualified, licensed professional to help you decide. The Australian Securities and Investments Commission website has information about choosing a financial adviser

 

*News Source (ATO) – https://bit.ly/2wpb0Ob

Why you should keep record for Capital Gain Tax

You must keep records of every transaction, event or circumstance that may be relevant to working out whether you’ve made a capital gain or loss from a capital gains tax (CGT) event. Generally you need to keep your records for at least five years after the year when the CGT event happened.

Keeping adequate records will help you work out your capital gain or loss correctly when a CGT event happens.

Good records can also help your beneficiaries deal with the impact of CGT. If you leave an asset to another person, it may be subject to CGT if they dispose of it in the future. For example, if your daughter sells shares you’ve left her in your will, she will need your records to work out her cost base for the shares and how much CGT she has to pay.

You should also keep records for a net capital loss in a year, which you may be able to offset against a capital gain in a later year. (There’s no time limit on how long you can carry forward a net capital loss.)

Once you’ve offset the loss against a capital gain, you should generally keep your records of the CGT event that resulted in the loss for a further two years (for individuals and small businesses; four years for other taxpayers).

On this page:

  • Records to keep
  • It’s never too late

Records to keep

Your records must be in English (or be readily accessible in or translatable to English) and must show:

  • the nature of the transaction, event or circumstances
  • the date it happened
  • the parties to the transaction
  • how the transaction, event or circumstances are relevant to working out the capital gain or loss.

These are the kind of records you’ll need to keep:

  • receipts of purchase or transfer
  • details of interest on money you borrowed relating to the asset
  • records of agent, accountant, legal and advertising costs
  • receipts for insurance costs, rates and land taxes
  • any market valuations
  • receipts for the cost of maintenance, repairs and modifications
  • accounts showing brokerage fees on shares.

You should also keep records to establish whether you’ve claimed an income tax deduction for an item of expenditure. If you’ve claimed a deduction for an amount, you can’t also include the amount in the cost base of the asset.

It’s never too late

If you haven’t kept records of your CGT assets, or your records have inadvertently been destroyed, you can still do something about it.

If you bought real estate, your solicitor or estate agent may be able to give you copies of most of the records you need.

If you made improvements to an investment property – for example, if you built an extension – ask the builder for a copy of the receipt for payment.

If you bought shares in a company or units in a unit trust, your stockbroker or investment adviser may be able to give you the information you need.

If you received an asset as a gift and didn’t get a market valuation at the time, a professional valuer can tell you what its market value was at the relevant date.

If you lost your records in a natural disaster, we can help you reconstruct them.

The main thing is to get as many details as possible so you can reconstruct your records.

 

*News Source ATO – https://bit.ly/2YZyxS1

Increased and extended Instant asset write – off

You can choose to use the simplified depreciation rules if you have a small business with an aggregated turnover (the total normal income of your business and that of any associated businesses) of less than:

  • $10 million from 1 July 2016 onwards
  • $2 million for previous income years.
Under these rules, if you purchased assets from 7.30pm (AEST) on 12 May 2015 and first used or installed them ready for use:
From 7.30pm (AEST) on 12 May 2015 until 28 January 2019From 29 January 2019 until before
7.30pm (AEDT)
2 April 2019
From 7.30pm (AEDT) on
2 April 2019 until 30 June 2020
You can immediately deduct the business portion of most depreciating assets costing less than $20,000 each (the instant asset write-off threshold).You can immediately deduct the business portion of most depreciating assets costing less than $25,000 each (the instant asset write-off threshold).You can immediately deduct the business portion of most depreciating assets costing less than $30,000 each (the instant asset write-off threshold).

If you’re a business with a turnover from $10 million to less than $50 million you may be eligible for the instant asset write-off for assets purchased from 7.30pm (AEDT) on 2 April 2019. Visit the general depreciation rules for more information.

Small businesses can also:

  • pool the business portion of most higher cost assets (those with a cost equal to or more than the relevant instant asset write-off threshold) and claim:
    • a 15% deduction in the year you start to use them or have them installed ready for use
    • a 30% deduction each year after the first year
  • deduct the balance of the small business pool at the end of the income year if the balance at that time (before applying the depreciation deductions) is less than the instant asset write-off threshold.

If you choose to use the simplified depreciation rules, you must:

  • use them to work out deductions for all your depreciating assets except those specifically excluded
  • apply the entire set of rules, not just individual elements (such as the instant asset write-off)
  • only claim a deduction for the portion of the asset used for business or other taxable purposes and not for the portion for private use.

If you choose to stop using the simplified depreciation rules or become ineligible to use them, you must use the general depreciation rules. However, any assets in your small business pool will continue to be depreciated in the pool, even if you stop using the simplified depreciation rules.

Cost

The cost of an asset includes both the amount you paid for it and any additional amounts you spent on transporting and installing it ready for use.

If you are registered for the goods and services tax (GST) and can claim the full GST credit, you exclude the GST amount you paid on the asset when you calculate your depreciation amounts (and your instant asset write-off threshold is exclusive of any GST).

If you are not registered for GST, you include the GST amount you paid on the asset in your depreciation calculations (and your instant asset write-off threshold is inclusive of any GST).

If you are only able to claim a portion of the GST credit then the cost is reduced by the portion you can claim.

Trade-ins

When you trade-in a car or any other asset, typically the agreed price of your trade-in is deducted from the cost of your new asset. The sale and purchase of the two assets may appear as one transaction.

There are two transactions, the purchase of a new asset and the disposal of an existing asset. If the purchase price of your asset (irrespective of the amount you were paid for your trade-in) is equal to or more than the relevant threshold, then it needs to be added to the small business pool and can’t be immediately written-off.

Business vs private use

Your depreciation deduction is limited to the percentage your asset is used for business or other taxable purposes (for example, to manage your investments or rental properties). You cannot claim a deduction for the portion of the asset used for private purposes.

In determining whether the instant asset write-off applies, you must take into account the full cost of the asset, but your deduction is limited to an estimate of how much you use the asset in earning assessable income.

For example, if you buy a car for $19,000, and you estimate it is used 50% for business purposes and 50% for private purposes, it is immediately written-off, but your deduction is $9,500.

Asset sales and disposals

If an asset is part of the small business pool and you sell it (or it is lost or damaged and you receive a compensating insurance payout), the balance of the pool is reduced by the amount of the sale proceeds or insurance payout – to the extent the asset has been used and depreciated for taxable purposes.

If an asset has previously been written-off (either under the instant asset write-off or as part of a low value pool), the proceeds from the asset’s sale must be added to your assessable income – to the extent the asset has been used and depreciated for taxable purposes.

*News Source (ATO) – https://bit.ly/2XisUhi

Update on reporting of Contractors-from ATO

In the most recent Federal Budget, Government announced these three additional industries to lodge taxable payments reports with the ATO. Now you have to lodge a Taxable payments annual report (TPAR) by 28th August 2020 & then each year, if you are in the following business-

These industries were already covered & applicability was there from 01st July 2018.

What is TPRS ?

Under the taxable payments reporting system (TPRS), targeted businesses need to report information to ATO about the payments they make to contractors for services. This additional reporting to the ATO is in the form of an annual report and put this reporting in line with payments made for salaries and wages to employees. This needs to be reported annually.

A purchaser that makes, or is liable to make, a payment for a specified supply during a year must give a report (the “taxable payments annual report”) to the Commissioner. It can be done and lodged from XERO itself.

What details needs to be reported ?

  • ABN
  • Name (business name or individual’s name)
  • Address
  • Gross amount & GST for the financial year

 

All these must be there in the Invoice received from the contractors.

What if ABN of contractor, not quoted ?

If purchaser/businesses failed to quote ABN of any of the contractors, PAYG withholding with specified rate prescribed by ATO (say 20%) needs to be deducted from their payments. An intention of this type of policy is to ensure the industry at large is doing the right thing and paying workers appropriately.

Note-There are heavy penalties for the businesses who are in agreement with the individuals to provide services as a contractor when the law would state that they are employees.

If you are looking for some more information regarding this update then you can get in touch with your tax accountant for more update and how it will affect you.

ABN’s proposed to be cancelled on late lodgements

An announcement in the 2019 federal budget looks to implement further obligations on Australian Business Number (ABN) holders. This is an expansion of black economy measures which have been implemented over the past few years.

From 1 July 2021, the proposed measure introduces an income tax return obligation for all ABN holders. That is, all ABN holders will be required to lodge their income tax return each year.

Also, from 1 July 2022, the proposed measure introduces an annual confirmation with the Australian Business Register (ABR). All ABN holders will be required to confirm the accuracy of their details with the register.

Income tax return obligation

Currently, there is no requirement for an ABN holder to lodge the entity’s income tax return. Therefore, an enterprise may go many years without lodging details regarding income and expenses with the Australian Taxation Office (ATO). There appears to be no change to the concept that all tax payments will be required to be paid and “squared off” after making lodgements. The problem for regulators, however, lies with matching risky business-to-business transactions with related parties which may go undeclared for many years.

Requiring ABN holders to lodge their income tax returns each year mitigates some of this risk.

Other similar measures

After this announcement, there have been no specifics regarding the punishment for ABN holders for non-lodgement.

A careful look at other black economy measures recently enacted offers some insights towards the potential restrictions around the income tax return obligation. These may include ensuring three of the past four lodgements are lodged on time, as is necessary for government contract tenderers.

However, the announcement specially relates to the lodgement of an income tax return, which is required each year. A strict reading of the announcement may indicate that the ATO is looking to cancel ABN’s if lodgements are not up to date, or late.

Confirmation of accuracy of details

Currently, Australian companies registered with ASIC are required to review the details surrounding the shareholdings and officeholders each year. It can be presumed that a similar type of statement will be required with the ABR should this become law.

Currently, details such as trading names, location and current registrations as displayed on the register. Therefore, entities who are enterprises may be required to make sure any changes to this data is kept up to date, from 1 July 2022.

Risk mitigation steps

Should a proposal such as this become law, it is necessary for entities (and their advisers) to keep a clear line of communication with the ATO. Keeping the regulator in the loop regarding when a future income tax return will be lodged (if late) is imperative in ensuring an ABN is not cancelled.

It may be that an ATO late lodgement notice will come with a requirement to lodge within 28 days, or else the ABN will be cancelled.

A cancelled ABN may throw business processes into chaos. Without an ABN, all business-to-business invoices are required to be withheld at the top marginal rate, which could wreak havoc on an enterprises cash flow situation. So in this case you can contact your tax accountant to discuss regarding this.

Also, there are penalties relating to knowingly making a false and misleading statement. Therefore, by displaying a cancelled ABN, an enterprise leads itself to penalties from the regulator. Penalties for intentional disregard are currently 60 penalty units, or $12,400 per offence.

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