Employees will receive a notification from The Australian Taxation Office (ATO) in their myGov inbox when their income statement is 'Tax ready', so they can complete their tax return. Employees will be able to contact the ATO for a copy of their income statement if they do not have access to myGov.
Employers are required to finalise these income statements by 31 July 2019, not 14 July 2019. To reduce the risks of mistakes and therefore amendments on tax returns, it is strongly advised to wait until income statements are ‘tax ready’ before lodging. ATO correspondence such as Notices of Assessment will be sent to the taxpayer’s myGov account.
PRIVATE HEALTH INSURANCE
From 1 July 2019, health insurers are no longer required to send private health insurance statements directly to policy holders. Previously they were required to send statements by 15 July each year, it is now optional to send this information.
Private health insurance information should be included in the Australian Taxation Office (ATO) pre-fill report by mid-August. If it is not populated by then, taxpayers may need to request a statement from their health insurer. It is important to correctly report private health insurance information as the ATO use it to calculate private health insurance rebates taxpayers are entitled to and the Medicare levy surcharge, if applicable.
RENTAL PROPERTY DEDUCTIONS
The ATO has announced that it will double the number of audits scrutinising rental deductions. The ATO will have a specific focus on over-claimed interest, capital works claimed as repairs, incorrect apportionment of expenses for holiday homes let out to others, and omitted income from accommodation sharing. The ATO have also stated that they are still receiving tax returns from agents where travel to rental properties has been incorrectly included.
LOW-AND-MIDDLE-INCOME TAX OFFSET (LMITO)
Taxpayers may be eligible for an income tax offset if they are an Australian resident for income tax purposes and their taxable income is in the appropriate income range. They do not have to claim this offset. The ATO will work it out for the taxpayer when their tax return is lodged. If the changes proposed in the 2019–2020 Budget become law after 1 July 2019 the ATO will automatically amend assessments – no action will be required by the taxpayer. The offset can only reduce the amount of tax they pay to zero and it does not reduce their Medicare levy.
It is estimated that there are between 500,000 to one million Australians that have invested in crypto assets. The ATO is now collecting bulk records from Australian cryptocurrency designated service providers as part of a data matching program to ensure people trading in cryptocurrency are paying the right amount of tax.
EXPANDING ACCELERATED DEPRECIATION FOR SMALL BUSINESSES
Small businesses can claim an immediate deduction for most depreciating assets purchased after 12 May 2015 and first used or installed ready for use for a business purpose:
- from 7.30pm (AEDT) on 2 April 2019 until 30 June 2020, if they cost less than $30,000 each;
- from 29 January 2019 and before 7.30pm (AEDT) 2 April 2019, if they cost less than $25,000 each; and
- before 29 January 2019, if they cost less than $20,000 each.
The balance of the general small business pool is also immediately deductible if the balance is less than $30,000 at the end of an income year that ends on or after 2 April 2019 and on or before 30 June 2020 (including an existing general small business pool).
The 'lock out' laws have also been suspended for the simplified depreciation rules until the end of 30 June 2020. The lock-out laws prevent small businesses from re-entering the simplified depreciation regime for five years if they have opted out.
The instant asset write-off threshold now includes businesses with a turnover from $10 million to less than $50 million. These businesses can claim a deduction for the business portion of each asset that costs less than $30,000 if they are purchased and first used or installed ready for use from 7.30pm (AEDT) on 2 April 2019.
INCREASING ACCESS TO COMPANY LOSSES
On 1 March 2019, legislation was passed that will supplement the current ‘same business test’ for losses with a more flexible 'similar business test'. The new test will expand access to past year losses when companies enter into new transactions or business activities.
The similar business test allows a company (and certain trusts) to access losses following a change in ownership where its business, while not the same, is similar, having regard to the:
- extent to which the assets that are used in its current business to generate assessable income were also used in its former business to generate assessable income;
- extent to which the activities and operations from which its current business is generating assessable income were also the activities and operations from which its former business generated assessable income;
- identity of its current business and the identity of its former business; and
- extent to which any changes to the former business resulted from the development or commercialisation of assets, products, processes, services, or marketing or organisational methods of the former business.
As a test for accessing past year losses, the 'similar business test' will only be available for losses made in income years starting on or after 1 July 2015. The 'same business test' and the 'similar business test' will be collectively known as the 'business continuity test'.
DOWNSIZER CONTRIBUTION INTO SUPERANNUATION
From 1 July 2018, members aged 65 years old or older, and meet all the eligibility requirements may choose to make a downsizer contribution (a new contribution type) of up to $300,000 into superannuation from the proceeds of selling their primary residence. To be eligible, the contract for sale must be entered on or after 1 July 2018.
If a member makes a downsizer contribution it is reported in the year it is made. The member will need to provide a Downsizer contribution into super form, either before or when they make their contribution.
Downsizer contributions should be made within 90 days of the change of ownership of the dwelling (usually the date of settlement). An extension of time may be granted where there is a delay but will not be granted to allow the member to meet the age requirement.
Downsizer contributions can be made regardless of contributions caps and other restrictions (age and work test) that may apply when making voluntary contributions.