The Australian Government recently announced some important changes to tax law and payroll requirements. We wanted to provide an update on what is happening and keep you in touch with future changes.
Common Reporting Standard (CRS)
2018 marks the first year of the Common Reporting Standard (CRS), a global standard for the collection, reporting and exchange of information. The information on the financial affairs of non-residents will be exchanged between financial institutions and the taxation authorities of participating countries.
In Australia, the Australian Taxation Office will receive financial account information on Australian residents with financial accounts in other countries.
Single Touch Payroll
Single Touch Payroll commences on 1 July 2018 for employers with 20 or more employees (measured at 1 April 2018). Single touch payroll means that the affected employers will report payroll information directly to the ATO from their payroll software in real time as they pay their employees.
The government has also announced that Single Touch Payroll will extend to all employers from 1 July 2019, although this is yet to be legislated.
Disclosure of business tax debts
The government is currently in negotiation with interested organisations on legislation whereby business tax debts would be reported to credit reporting bureaus. There has been draft legislation released for discussion that would allow the ATO to disclose a business tax debt to credit agencies. This has raised alarm bells with small business owners currently in arrears with the tax office, who have loans with financial institutions either directly or in their owners’ names.
Updated guidance on deductions available for an investment property
The ATO has updated its guidance on depreciating assets for investment properties. If an individual purchased their rental property at or after 7.30 pm on 9 May 2017, they may be impacted by the changes to legislation for depreciating assets.
These changes apply from 1 July 2017.
Individuals can no longer claim deductions for second-hand or used depreciating assets, whether they are bought with the property or separately. They also cannot claim depreciation deductions if they have used the asset for private purposes before installing it in their rental property.
They can still claim deductions for new depreciating assets.
If a taxpayer owned a rental property, or entered a contract to purchase a rental property before 7.30 pm on 9 May 2017, they may continue to claim deductions for decline in value of the depreciating assets that were in the property before that date.
It has no impact whether the depreciating asset installed in the property was new or used, or whether the property was new or not.