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August 2012 News Letter

 ATO Discretion to Retain Refunds - Recent Changes

The tax law has been recently amended to provide the ATO with the discretion to retain refunds while they undertake integrity checks on claims.

The changes are designed to "support those doing the right thing and strengthen our ability to identify possible fradulent activity", althought certain threshold tests must be met before the discretion can be exercised.

The amendment applies to:

  • refunds claimed on a Business activity statement (BAS); and
  • refunds claimed by self-assessement tax payers for income purposes (primarily companies and super funds)

but does not apply to individuals for income tax purposes, and normal processes for them still apply.The amendments set out the steps the ATO needs to take, including notifying the taxpayer when a refund will be retained, and the relevant timeframes.


GDP Adjustment for 2012/13 PAYG Installment Amounts

The ATO has advised that, from 1 July 2012, the gross domestic product (GDP) adjustment used to work out quarterly PAYG instalment amounts will be 6%.

Editor. This is the adjustment made to PAYG installment amounts to reflect expected changes in the economy, to ensure that PAYG instalment amounts reflect a taxpayer's expected tax liability for the current income year as accurately as possible.

As the GDP adjustment is worked out using information from earlier years, the ATO notes that this means it may not match current economic conditions.

That is, when economic growth slows, the GDP adjustment may seem relatively high, while in conditions of sudden economic growth, the GDP adjustment may seem relatively low.

Editor. If your PAYG instalment as worked out by the ATO seems too high (or too low), please contact our office, as we may be able to vary the installment amount (although it should be noted that the 'general interest charge' may be payable if the PAYG instalment amount is varied down but at the end of the year the taxpayer ends up having paid less than 85% of the tax that they should have paid on their business and investment income.


Car Depreciation Limit for 2012/13

The ATO has advised that the car depreciation limit for the 2012/13 financial year is $57,466 (unchanged from the 2011/12 year).


On 9 July 2012 a taxpayer purchases a motor vehicle for $65,000 wholly for use in carrying on their business. In working out the vehicle's depreciation for the 2012/13 income year, the cost of the vehicle for depreciation purposes is basically reduced to $57,466.

Editor. Note, however that the luxry car tax threshold for 2012/13 (which is used to determine if luxury car tax is payable), has increased to $59,133.


ASX Securities Data-Matching Project

The ATO will request and collect identity and transaction details pertaining to securities held in all ASX listed entities from:

  • Link Market Services Limited;
  • Computershare Limited;
  • Australian Securities Exchange Limited;
  • Boardroom Pty Ltd;
  • Advanced Share Registry Services Pty Ltd; and
  • Security Transfer Registrars Pty Ltd.

Details relating to approximately 1.2 million individuals will be electronically matched with certain ATO data holdings to identify non-compliance with CGT, income tax and GST obligations under taxation law (although it is anticipated that administrative action will be taken on a very small percentage (less than 1%)).


Reporting TFN's Quoted to Tusts for the First Time in 2012

Where the trustee of a 'closely held trust' (which includes a discretionary trust or family trust) makes a beneficiary 'presently entitled' to a share of trust income as at 30th June, unless an exclusion applies, the trustee is required to withhold an amount equal to 46.5% of their share of the trust's net (taxable) income, unless the beneficiary has provided their tax file number (TFN) to the trustee of the trust before year end.

Note. Exclusions are available for such entities as non-residents, deductible gift receipents, and beneficiaries who are under a legal disability for the purposes of the Tax Act, such as minors and bankrupts (as the trustee pays tax on their behalf).

However, if the beneficary has provided their TFN for the first time in the 2012 financial year, the trustee is required to report the TFN to the ATO by the last day of the month following the end of the quarter in which the TFN was quoted. For example, if a TFN was quoted to a trustee in June 2012, it must be reported to the ATO in a TFN report by 31st July 2012.

The TFN reporting requirement can only be satisfied by reporting the TFN to the ATO within the appropriate time frame, and on the approved form (either electronically or paper form).

Editor. If any distributions were made to new beneficiaries for the first time in the 2012 financial year, please let us know so we can assist you with lodging the TFN report.


ATO Cash Sales Benchmarks Permanently Withdrawn

Editor. Some of you will be aware of the ATO's benchmarking program, whereby they use information provided to them to work out what is 'normal' for a particular industry. They publish these benchmarks so that tax payers can find out if they are outside the norms and, if so, get the right records together to explain why this is the case.

It has been reported that the ATO has decided to discontinue its 'cash sales' benchmarks, as it was unable to obtain consistent data that allows for correct calculation of cash sales benchmarks.However, the ATO said that withdrawal of the cash sales benchmarks did not impact its performance benchmarks and input benchmarks, their use or validity, so these benchmarks can still be used.


CGT Improvement Threshold: 2012/13

For the 2012/13 income year, the improvement threshold is $134,200 (up from $130,418 for the 2011/12 income year).This threshold is used for working out when a capital improvement to a pre CGT asset is a seperate asset, and for capital improvements to CGT assets where a rollover may be available.


Reasonable Overtime Meal Allowance Amounts - 2012/13

The reasonable amount for overtime meal allowance expenses, where an allowance is paid under an award, order, determination, industrial agreement or a Commonwealth, State or Terriority law, is $27.10 per meal for 2012/13. An overtime meal allowance (being an allowance paid for food and drink in connection with overtime worked) which does not exceed the reasonable amount does not need to be shown on the payment summary, and the employee amy not need to show it on their tax return if it has been fully spent on deductible expenses.

Editor. Please contact us if you would like to know the other reasonable allowance amounts, such as for travel, set out by the ATO.


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.




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