Blog

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.

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.

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.

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!

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!

Exciting news this week: Sophie and Graham were interviewed for Accountants Daily about how Book Us Bookkeeping is managing in Covid times, as well as their future plans. Have a read here and tell us what you think!

JobSaver payments will also change form when NSW reaches the 80% double vaccination rate. Payments will be reduced from 30% to 15% of weekly payroll. These payments will end on 30 November 2022, coinciding with the further relaxation of restrictions.

Now to what we know about relief payments and their end dates. The COVID-19 Disaster Payment will be transitioning to a new form as states reach 70% full vaccination. The automatic renewal of the payment will end, and individuals will have to reapply each week that a Commonwealth hotspot remains in place.

Under the payment, eligible recipients have received $750 per week if they lost over 20 hours of work, $450 per week if they lost between eight and 20 hours, and $200 per week for those on income support payments who lost over eight hours of work. When a state or territory reaches 80% full vaccination, the payment will step down over a period of two weeks before ending.

The government will leave in place the Pandemic Leave Disaster Payment (for those who cannot work because they must self-isolate or quarantine) until 30 June 2022.

The ATO has just announced a deferral for the commencement of Single Touch Payroll Phase 2.

Employers who were previously required to begin Phase 2 by 1 January 2022, now have until 1 March 2022 to meet their updated reporting obligations.

The rollout of STP Phase 2 will be largely driven by the payroll and accounting software you use. Please check in with your software provider to ensure you will be meeting your new obligations by the required date.

Benefits of STP Phase 2 for employers include:

• You will no longer have to send employees’ TFN declarations to the ATO (though you will have to keep them with employee records)
• If you’re using a concessional reporting option, such as for closely held payees or for inbound assignees, you’ll be able to tell us through reporting income types
• You won’t need to provide Lump Sum E letters to your employees
• If you change software or an employee’s payroll ID, you can tell the ATO in your STP report which will help fix issues with duplicate income statements
• You may no longer need to provide separation certificates when your employees leave as the date and reason will be in your STP report

Benefits of STP Phase 2 for employees include:

• It will be easier for employees at tax time, as the ATO will have better visibility of the types of income they’ve received and where it should be pre-filled on their individual income tax return
• Over time, the new information reported will allow the ATO to tell employees if they’ve provided an employer with incorrect information that may lead to them getting a tax bill (e.g. where an employee hasn’t notified you that they have a Study and Training Support Loan)
• The ATO will also share data with Services Australia to streamline their interactions with customers and ensure they are being paid correctly

Please note that there won’t be penalties for genuine mistakes for the first year of Phase 2 reporting until 31 December 2022.

Please get in touch if we can help explain this, or help you get set up for STP Phase 2.

By 27 September 2021, employers (other than small business employers with fewer than 15 employees) need to assess whether any existing casual employees (employed before 27 March 2021), should be offered the opportunity to convert to permanent employment.

Employers need to:

• make a written offer to convert their casual employees to permanent employment (this must be done within 21 days after making the assessment), or
• write to employees explaining why they won’t be made an offer (this needs to be done within 21 days of making the assessment but by no later than 27 September 2021).

To accept an offer to convert, employees need to respond in writing within 21 days after getting the offer. If they don’t respond, employers can assume that they’ve declined the offer.

Small business employers (defined as a business with fewer than 15 employees) do not have to offer casual conversion to casual employees.

However, casuals may make a request to their small business employer if they meet the below requirements:

• they have been employed for at least twelve months,
• they have worked a regular pattern of hours in the last six months on an ongoing basis,
• their regular hours could continue as a permanent employee without significant changes,
• they haven’t refused an offer to become a permanent employee in the last six months,
• the employer has not informed the employee that they won’t be offering casual conversion on reasonable grounds, and
• the employer has not already refused a request based on reasonable grounds in the last six months.

Click here to download and read the full Casual Employment Information Statement. This document must also now be given to all new casual employees.

You can find further information about these changes at the Fair Work website, especially this page about becoming a permanent employee.

You might have received a slightly panic-inducing email on Friday from Services NSW, informing you that you would have to prove your decline in turnover fortnightly to continue receiving JobSaver payments. We are here to tell you to not add this particular stress to your plate!

This change was made without consultation, resulting in backlash from accountants and other business professionals. Services NSW have therefore announced a grace period, meaning that this is not required for the fortnight beginning 13 September 2021. In the next few weeks, professional accounting bodies will be meeting with the NSW government to discuss workarounds or alternatives to this new fortnightly retesting.

We will keep you updated as we learn more about the changes . Be assured that the professional accounting bodies have our backs (and yours too)!

Also, if you have not yet applied, but think you might be eligible for the NSW 2021 COVID-19 Business Grant (check eligibility here), please note that the application deadline has now been extended to 1 October 2021.

Thank you so much for your enthusiastic (and entertaining) replies to last week’s trivia questions. We hope you enjoyed them even half as much as we did!

You might not know about the Small Business Fees and Charges Rebate. Eligible businesses or not-for-profits only need to apply for the rebate once, but can submit multiple claims until the full value of $1,500 is reached. 

Funds from this rebate can be used to offset the costs of eligible NSW and local government fees and charges due and paid from 1 March 2021. These include, but are not limited to:

• vehicle registration (business use fee)
• council rates
• issue or renewal of a driver licence
• food authority licences
• liquor licences
• tradesperson licences
• event fees
• outdoor seating fees

You might be eligible for this rebate if you:

• have total Australian wages below the NSW Government 2020-21 payroll tax threshold of $1.2 million
• have an Australian Business Number (ABN) registered in NSW and/or have business premises physically located and operating in NSW.

This rebate will be available until 30 June 2022. Check the full eligibility criteria here.

If you are eligible for the NSW 2021 COVID-19 Business Grant (check eligibility here), please note that you must lodge your application before 13 September 2021.

JobSaver Payment grants have an application deadline of 18 October 2021. Check your eligibility and application requirements here. 

Please get in touch if you need help with your evidence requirements.