APRIL TAX UPDATE

We hope you have had a great break over the Easter long weekend

As we draw to the close of the 2015 financial year we need to ensure we plan over the next few months and make sure we have covered every possible deduction before 30 June 2015. ATO super crackdown

The ATO is currently running an education campaign for business owners to help them better understand their super obligations. It will be undertaking audits from July 2015 of employers who continue to not meet super obligations for their employees. The ATO is also reminding directors of companies, that are required to pay Superannuation Guarantee (SG) for their employees, that they may be personally liable for any unpaid or unreported SG Charge liabilities of their companies

ATO's audit targets

The ATO has set up a new page on its website called "Building confidence", which talks about its current compliance activities, and the amounts of tax and penalties it has collected in 2014 from its various initiatives. Some of the areas that the ATO has stated it will be focusing on are:

• Work-related expenses:

• motor vehicle expenses for travelling between home and work

• overnight travel; and

• the work-related proportion of use for computers, phones and other electronic devices.

• Rental property expenses

• excessive deductions being claimed for holiday homes

• husbands and wives inappropriately splitting rental income and deductions for jointly owned properties; and

• interest deductions being claimed for the private proportion of loans.

• Cash economy

• the building and construction industry; and

• the restaurant, café and takeaway industry.

• Contractors

• employers misusing contracting arrangements with the intention of avoiding employment overheads.

Contractor payments data matching program

The ATO has announced that it will continue to acquire details of entities that receive contractor payments from other businesses for the 2013/14, 2014/15 and 2015/16 financial years. The data that will be obtained includes:

• Australian Business Number (ABN) of the payer business;

• ABN of the payee business (contractor);

• Name, address and telephone details of the contractor;

• Dates of payments to the contractor; and

• Amounts paid (including details of whether the payment included GST).

The ATO estimates that records for approximately 25,000 entities will be obtained each year, including the records for approximately 12,500 individuals. The purpose of this data matching program is to ensure that taxpayers are correctly meeting their taxation obligations in relation to contractor payments.

Eligibility for net medical expenses tax offset

The ATO has reminded taxpayers that the net medical expenses tax offset (NMETO) is being phased out. To be eligible for the NMETO for 2014/15, a taxpayer must have received an amount of the tax offset in both of their 2012/13 and 2013/14 income tax assessments. If a taxpayer's 2012/13 notice of assessment shows an amount of zero for NMETO, they wouldn't have received this offset in that year and so are not eligible to make a claim in 2013/14 or 2014/15. However, the eligibility rule for the NMETO does not apply to clients with out-of-pocket medical expenses relating to disability aids, attendant care and aged care (these expenses can continue to be claimed until 30 June 2019).

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.