After a very well-deserved break to ease themselves into the new year, the politicians shuffle back into Canberra on 5 February – and awaiting them is a list of tax and financial legislation to chew over. Over the past few years, the ATO has been clamping down on tax compliance issues for businesses big and small as well as individuals, and 2018 will continue in a similar vein. To keep you abreast of what’s on top of the pollies’ agenda, here are the top four items on their tax and finance radar.
Financial advice continues to be a focus
ASIC’s focus on financial advice – thankfully – shows no signs of abating in 2018, with financial advice, superannuation funds and accountants all set to be under further scrutiny this year. The continued improvement of accountants’ knowledge of their Australian Financial Services licence is a key area of focus, in regards to compliance obligations. Accountants who’ve entered the world of financial advice and are providing unlicensed financial advice, meanwhile, will have the spotlight firmly shone in their direction. Meanwhile, a consultation is set to take place, on training standards in general and personal advice, and guidance offered on products other than relevant financial products. While the quality of SMSF advice will continue to be put to the test, with ASIC reviewing advisers’ legal compliance with their best interest duty to customers who set up an SMSF.
Ultimately, the focus is to benefit us – the business people who trust and rely upon financial services expertise – so don’t take the knowledge of your accountant or financial adviser for granted.
After all, it’s your money, and your financial future, you’re entrusting to them.
Single Touch Payroll is (nearly) here. Are you ready?
If you’re an employer with 20 or more employees, Single Touch Payroll (STP) is going to be a significant change for you this year, when it comes into practice on 1 July. Essentially, STP reports all salaries and wages, PAYG and super information to the ATO when you pay your employees. All that it relies on, of course, is you having the right technology in place. The majority of major payroll tech players are implementing the technology into their systems in time for the new tax year to start, however it’ll be in your interests to check in with your provider and find out exactly what will be in place and when. If you don’t get satisfactory answers, a change in payroll solution may be in order.
Company taxes – who qualifies for a lower rate?
Sitting before the House of Representitives on their return is the Bill to progressively lower the corporate tax rate (from 27.5% to 25% by 2026/27, and an associated bill to ensure a company will not qualify for the lower company tax rate if more than 80% of its assessable income is passive income (ie interest, dividends, or rent). Lucky House of Reps. Potentially unlucky property rental companies.
For now, though, businesses will need to satisfy a passive income test to access the 27.5% corporate tax rate from 2017-18. For the 2016-17 income year, a company only needed to be carrying on a business and have a turnover of under $10m to qualify for the 27.5% tax rate.
Proposed GST changes in the property sector
If you’re involved in the property chain professionally, or indeed looking to purchase a new residential property in 2018, listen up, this is one you need to be across. Draft legislation states that from 1 July 2018, Goods and Services Tax (GST) law will be amended, and it will require people who purchase new residential property to withhold and remit the GST on the purchase price direct to the ATO as part of settlement (which must be paid upon settlement). Previously this obligation was on the vendor or developer, but it will now need to be taken on by legal practices or conveyancers. While the government suggests this will have minimal impact on buyers, the reality is it’s going to increase the complexity of home finance, and likely increase costs, too.
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