“Backpacker Tax” Updates

Sophie and Graham were incredibly intrigued by the following case in the High Court of Australia this week about taxation for working holiday-makers. While we will obviously keep you updated on the changes that will affect you, we thought you might also be interested in a snack-sized version of this accounting news!

In January 2017, a new tax rate applicable to persons holding a working holiday visa was enacted and inserted into the Income Tax Rates Act 1986. This new section applied a flat rate to tax 15 per cent of the first $37,000 of an individual’s “working holiday taxable income” and a maximum tax liability of $5,500.

A UK convention, which Australia agreed to in 2003, specified that nationals of the UK should not be subjected in Australia to “other or more burdensome taxation” than may be imposed on Australian nationals in the same circumstances, in particular with respect to their residency in the other’s country.

A British national has won an appeal in the High Court of Australia, which found that she was discriminated against on the basis of her nationality. The tax rate was more onerous for her than for an Australian national undertaking the same work and earning the same income.

The ATO said it is currently considering the decision and would soon be providing further guidance as soon as possible, particularly for working holiday-makers who may be potentially affected by this decision. These workers are encouraged to check the ATO website for updated guidance “prior to lodging or amending a return or lodging an objection”. Employers should still continue to follow rates in the published withholding tables for working holiday-makers until the ATO website has been updated with further guidance.

“The decision is only relevant where the working holiday maker is both an Australian resident for tax purposes and from Chile, Finland, Japan, Norway, Turkey, the United Kingdom, Germany or Israel,” the ATO said in a statement shortly after judgement.

We will be waiting eagerly to see what the ATO’s updated guidance for working holiday makers is, and we will be sure to keep you in the loop.

ATO Small Business Tax Toolkits

This week we would love to share some incredibly useful ATO resources with you to help you keep on top of your tax obligations all year round (and make tax a little less confusing to understand).

This ATO web page has links to a range of calculators, tools and resources for small businesses including but not limited to:

  • Podcasts
  • Small business webinars
  • Small business workshops
  • Due dates by topic
  • Small business newsroom
  • Small business benchmarks

There are also downloadable PDF documents (accessible here) to help you understand such topics as:

  • Home-based business expenses
  • Motor vehicle expenses
  • Travel expenses
  • Using your company’s money or assets
  • Pausing or permanently closing your business

We recommend having a look around; you might find these useful for avoiding any surprises at tax time! Please be in touch in we can help clarify anything for you.

Company Director IDs

Applications for director IDs open on Monday 1 November.

Company directors are required to apply for a director ID by 30 November 2022. However, although existing directors have a year to apply for their director ID, new directors appointed between 1 November 2021 and 4 April 2022 will have just 28 days to apply for their director ID after their appointment.

Applications for your director ID are free and will open next month on the brand new Australian Business Registry Services (ABRS), a single platform that brings together ASIC’s 31 business registers and the Australian Business Register.

Directors must apply for their ID themselves and will be required to produce their myGovID alongside two identity documents from a list, including their bank account details, super account details, ATO notice of assessment, dividend statement, Centrelink payment summary, and PAYG payment summary.New directors who are appointed from 5 April 2022 will be required to apply for their director ID before appointment.

Directors who fail to apply for a director ID within the stipulated time frame can face criminal or civil penalties of 5,000 penalty units, which currently stands at $1.11 million. Directors of a CATSI organisation can face penalties of up to $200,000. Penalties will also apply for conduct that undermines the new requirements, including providing false identity information to the registrar or intentionally applying for multiple director IDs.

The director ID will be attached to a director permanently, even if they cease to be a director, change their name, or move interstate or overseas.

You might think that a year is a long way off, but given those penalties, it’s probably best to jump onto your application sooner rather than later! Please give us a call if we can help with anything.

Ransomware Attacks

We are imploring you to be extra careful when it comes to ransomware attacks. Take some time this week to double check your security systems. If you do become a victim, make sure part of your recovery involves examining how the cyber criminals gained access to your network, so that you can fix the problem.

Cybercriminals do not just target big business. In fact, in many cases smaller businesses are more desirable targets. This is because small businesses hold all of the information that big business has (such as client data), but often do not have all the means to invest in the best software and hardware to protect it.

Tips for avoiding cyber attacks:

  • make sure operating and security systems are up to date
  • apply multi-factor authentication wherever possible
  • regularly back up your network and store these back ups offline and to a cloud service
  • have a unique password for each login
  • don’t include easily accessible information in your password (birthdays, names of your children or pets etc.)

We also advise that you phone someone directly if they email you asking for key information to be updated, such as bank details. One of our clients recently received an email from a supplier asking for their bank details to be updated, and issuing an invoice with the new bank details. Unfortunately, the ‘supplier’ was a fraudulent account who had bought the identical domain name minus one letter. Therefore, looking at the email and the fake website, it looked legitimate. If a phone call had been made, a fraudulent payment might have been avoided. If in doubt, make sure you confirm with your clients/suppliers directly!

Your business insurance might not cover you in the event of a cyber attack, so it might be handy to have a plan in the event of a ransomware attack happening to your business. This is, obviously, in addition to ensuring you have done everything possible to prevent one occurring.

If it happens to you, it is best to be upfront with your customers. Rather than trying to hide a breach, today most companies will come out and say something like: 

“We have experienced a ransomware attack. Here’s what we’re doing to contain it, fix it, protect customer information, and this is how we’re planning to strengthen our systems going forward to make sure this doesn’t happen again.”

And if it does happen to you, rest assured that it really could happen to anyone; hackers are incredibly sophisticated nowadays. Nine Network, Toll Group and Service NSW are just a handful of high profile businesses who have been victims of ransomware attacks.

Stay safe online and offline!

Super Choice Rule Change

We hope you are all enjoying your first week out of lockdown! Graham and Melissa are supporting as many local restaurants as their budget allows (and enjoying every moment of it).

There has been a little change to the super choice rules, which will come into effect from 1 November 2021.

If you have any new employees starting after this date, and they don’t choose a super fund, you will now need to request their ‘stapled super fund’ details from the ATO. After confirming that you are their new employer, the ATO will give you the correct details for the employee’s existing super account.

This change aims to stop your new employees paying extra accounts for unintended super accounts set up whenever they start a new job.

What you need to do (from 1 November 2021):

  1. Offer your eligible employees a choice of super fund.
  2. If your employee doesn’t choose a super fund, request stapled super fund details from the ATO. (We can do this on your behalf, as your bookkeepers.)
  3. If your employee doesn’t choose a super fund AND the ATO have advised you that they don’t have a stapled super fund, pay their super into a default fund.

Please get in touch if you have any questions!