April 2019 update
Continued focus on the cash economy
ATO Assistant Commissioner Peter Holt has announced that, in the 2019/20 financial year, the ATO will be visiting a further 10,000 small businesses across the country, including up to 500 small businesses in Tasmania.
He further said that businesses that advertise as ‘cash only’ and businesses that are operating outside of the ATO’s performance benchmarks for their industry will be especially targeted for a visit from the ATO.
Common errors with new GST withholding rules
The ATO has noticed some common errors made in activity statements since the introduction of “GST at settlement” on 1 July 2018.
Editor: These new laws require purchasers to withhold GST on settlement (and pay it to the ATO directly) generally when buying ‘new residential premises’ from developers.
In particular, the new “GST at settlement” law does not affect a supplier’s obligation to lodge their activity statement and report their GST liabilities on taxable supplies in the activity statement period in which settlement occurred.
In addition, suppliers are advised not to report GST that has been withheld at settlement and paid to the ATO by the purchaser.
Instead, a credit for the amount the purchaser withheld and paid will appear on the supplier’s activity statement account once the activity statement is processed.
Latest ATO benchmarks released
The ATO has released updated benchmark data drawn from over 1.5 million small businesses around the country to “help small businesses across the country . . . gauge the strength of their business and keep an eye on their competition”.
Updated benchmarks for more than 100 industries are now available for the following categories:
- Accommodation and food;
- Building and construction trade services;
- Education, training, recreation and support services;
- Health care and personal services;
- Automotive electrical services;
- Machinery and equipment repair and maintenance;
- Architectural services;
- Veterinary services;
- Retail trade; and
- Transport, postal and warehousing.
The benchmarks are one of the tools the ATO uses to crack down on the black economy, along with data matching and referrals from the community.
“Businesses operating outside the benchmarks may trigger a red flag for businesses we suspect could be engaging in the black economy,” Mr Holt said.
“A frequent red flag is a business reporting minimal profit while the business owner seems to be maintaining a lifestyle far exceeding their personal income.”
“If you use a registered tax professional, it’s also a good idea to have a chat with them about where your business sits in comparison with our benchmarks. They might have some advice about steps you can take to improve your performance.”
Taxpayer living in serviced apartments overseas not a resident
The Full Federal Court has found that a taxpayer had a “permanent place of abode” in Bahrain, even though he lived in temporary accommodation, and therefore allowed his appeal against a decision that he was a resident of Australia.
This decision confirms that the correct focus of the “permanent place of abode” residency test is whether there has been an abandonment of Australian residence (i.e., to live permanently outside of Australia), rather than whether a person actually lives in permanent accommodation overseas.
In particular, the Full Court considered that the phrase “place of abode” is not a reference to a person’s house or flat or other dwelling but rather the town or country in which a person is physically residing permanently.
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.