Claims for home office expenses increased

The ATO has updated the hourly rate taxpayers can use to determine deductions for home office expenses from 45 cents to 52 cents per hour for individual taxpayers, effective 1 July 2018 (i.e., from the 2019 income year).

According to the ATO’s recently updated PS LA 2001/6, individual taxpayers who claim deductions for either work or business-related home office running expenses may either:

• claim a deduction for the actual expenses incurred; or

• calculate the running expenses at the rate of 52 cents per hour.

Taxpayers who use the rate per hour method to claim a deduction for home office running expenses only need to keep a record to show how many hours they work from home.

This reduced substantiation requirement can be recorded either:

• during the course of the income year; or alternatively

• they can keep a representative four-week diary (where their work from home hours are regular and constant).

Division 293 assessments

The ATO has been issuing ‘Additional tax on concessional contributions (Division 293) assessments’ with respect to liabilities relating to the 2018 income year.

Division 293 imposes an additional 15% tax on certain concessional (i.e., taxable) superannuation contributions.

It applies to individuals with income and concessional superannuation contributions exceeding the relevant annual threshold.

This means that impacted individuals may ultimately pay 30% tax (when the Division 293 tax is combined with the existing 15% contributions tax) with respect to:

• superannuation contributions made on their behalf as a result of employer super guarantee obligations or effective salary packaging arrangements; or

• personal deductible contributions.

The ATO reportedly expects to issue about 90,000 assessments during the first two months of 2019.

Payment needs to be made by the due date to avoid any additional interest charges, although alternative payment methods are available (including the ability to release money from any existing super balances).

Single Touch Payroll for all small businesses

On 12 February 2019, the Parliament passed legislation to extend Single Touch Payroll (STP) reporting to include all small employers, those with 19 or less employees, from 1 July 2019. 

Single Touch Payroll (STP) is a change to the way you report payroll information to the ATO. Each time you pay your employees you will also be sending your employee salary and wage information, pay as you go (PAYG) withholding and super information to the ATO. These will be year-to-date amounts.

 You will need to make sure your current payroll software is updated by your digital service provider (DSP) to offer STP reporting, or choose payroll software that is STP-enabled.

Business Cars & Fringe Benefits Tax Return

The ATO has recently advised that it will be contacting taxpayers (and tax agents on behalf of their clients) that have been identified as having cars registered in their business name who have not lodged an FBT return.

The ATO has reminded businesses that:

• a car fringe benefit will occur when a business owns or leases a car and makes it available for an employee's private travel or use (including garaging the car at or near an employee's home and making it available for private use); and that

• business directors are also 'employees' for FBT purposes.

SMS Sent For Incorrect Bank Account Submission

The ATO has advised that it will send SMS text messages directly to taxpayers where incorrect bank account details were included in their tax returns and they were entitled to a refund.

The SMS will advise impacted taxpayers that:

• their refund cannot be processed due to incorrect bank account details; and

• they should phone the ATO on 13 28 61 to correct their details.

If impacted taxpayers contact the ATO with their correct details within seven days, any refund due will be issued electronically.

Taxpayers need to exercise additional caution when dealing with electronic messaging from (or purportedly from) the ATO. The authenticity of ATO correspondence can be verified by calling the ATO on 1800 008 540.