The company tax rate for small businesses has been reduced to 27.5% for 2016-17 and the maximum franking credit small businesses can allocate has decreased to 27.5% (previously 30%).

This reduced rate applies to companies with an aggregated turnover of less than $10 million.

If you are a small business and have issued distributions based on the 30% tax rate, you should tell your shareholders of the correct dividend and franking credit amounts as soon as possible.

This can be done by sending a letter with the correct amounts or issuing an amended distribution statement.

The company should let the ATO know the correct amounts through the company’s annual dividend reporting process.

Source: https://www.ato.gov.au/Tax-professionals/Newsroom/Income-tax/Rate-change-for-franking-credits/

Fuel tax credit rates increased on 1 February 2017 and change regularly.

To make sure you get the correct rates and claim the full amount you are entitled to:

• Use the fuel tax credit calculator each time you prepare your activity statements, or
• Check the fuel tax credit rates table for the correct rate. This page is now easier to read.

If you claim less than $10,000 in fuel tax credits a year, you can use simplified ways to calculate fuel tax credit claims and keep records.

Source: https://www.ato.gov.au/Tax-professionals/Newsroom/Your-practice/Getting-fuel-tax-credit-claims-right/

Refunds will be fast tracked for people affected by extreme weather and flooding caused by tropical cyclone Debbie and ex-Cyclone Debbie in Queensland and New South Wales. Taxpayers and their Tax and BAS agents will also have additional time to lodge income tax returns and activity statements.

Automatic deferrals of one month are now in place for tax lodgment and payment dates (excluding large pay as you go withholders) for people in identified postcodes. This means that those with income tax returns that were due 31 March 2017 now have until 30 April 2017 to lodge. Similarly, for monthly activity statements due 21 April 2017 the new lodgment and payment date is 21 May 2017, and for quarterly activity statements due 28 April 2017 the new lodgment and payment date is 28 May 2017.

Employers are reminded that they still need to meet their ongoing super guarantee obligations for their employees.

Tax Commissioner Chris Jordan said taxpayers do not need to apply for a deferral or a faster refund.

“If your business or residential address is in one of the identified affected postcodes it will happen automatically. You can visit the ATO website to see the new lodgment dates and check if your region is included. Further postcodes may be added as needed, so check our website for more information,” Mr Jordan said.

“People outside of the identified postcodes that have been impacted by the disaster are still able to contact us for assistance on 1800 806 218. If you are experiencing any difficulties meeting your tax obligations, please contact us so we can assist.”

“We understand that for many people their tax affairs are the last thing on their minds right now. When people are ready, we will make sure they are supported in meeting their tax obligations.”

For those with a tax debt the ATO is suspending debt recovery action until the end of May 2017.

The ATO are also offering a range of support measures, including:

• tailored repayment arrangements
• remission of interest where appropriate
• interest-free repayment arrangements for eligible small businesses

Additionally, the ATO may be able to release taxpayers from some or all of their debt if paying their tax debt would cause serious hardship – for example, being unable to provide food and accommodation for themselves or their family.

The ATO can also help reconstruct tax records where documents have been destroyed.

The ATO will continue to review the ongoing impact of these disasters and any further assistance that may be required for the affected communities.

Source: https://www.ato.gov.au/Media-centre/Media-releases/Tax-assistance-for-people-affected-by-Cyclone-Debbie/

From 1 July 2017, a new departing Australia superannuation payment (DASP) tax rate of 65% will apply to working holiday makers (WHM). WHM applications processed on or after 1 July may be liable for the higher tax rate.

If you have ever held a 417 (Working Holiday) or 462 (Work and Holiday) visa this may affect you.

You can submit an application by accessing the DASP online application system and you should submit DASP applications as soon as possible to allow sufficient time for them to be processed.

You also have the option to apply for DASP directly using the DASP online application system.

Individuals are encouraged to submit their applications as soon as possible. Applications processed on or after 1 July 2017 may attract a higher tax rate.

Source: https://www.ato.gov.au/Tax-professionals/Newsroom/Your-practice/New-tax-rates-for-DASP/

Concessional (pre-tax) contributions to your super include employer contributions and any amount you salary sacrifice into super. Personal contributions you claim as a personal super contribution deduction also count as concessional contributions. As these contributions are paid before tax is applied, it means that your super fund pays 15% tax on the contribution when it is paid to them.

From 1 July 2017, the concessional contributions cap is $25,000 for everyone. Previously, it was $35,000 for people 49 years and older at the end of the previous financial year and $30,000 for everyone else. The new cap will be indexed in line with average weekly ordinary time earnings (AWOTE), in increments of $2,500 (rounded down).

The intent of this change is to better target tax concessions to ensure the super system is equitable and sustainable.

Source: https://www.ato.gov.au/Individuals/Super/Super-changes/Change-to-concessional-(pre-tax)-contributions-cap/

From 1 July 2017, there is a limit on how much of your super you can transfer from your accumulation super account to a tax-free ‘retirement phase’ account to receive an account-based pension income.

This is known as the super ‘transfer balance cap’. If you have more than one super account, the cap applies to the combined amount in all of your pension phase accounts. You will be able to make multiple transfers into the retirement phase as long as you have available cap space.

The amount of the cap will start at $1.6 million, and will be indexed periodically in $100,000 increments in line with the consumer price index (CPI).

The cap relates to the amount you transfer into your retirement phase account. There is no limit to the amount of money you can have in your accumulation super account(s). If your pension account grows over time to more than $1.6 million, you won’t exceed your cap. If your pension account goes down over time, you can’t ‘top it up’ if you have already used your cap.

If you are currently in excess of your transfer balance cap, then you may have to remove the excess from retirement phase and pay tax on the earnings in excess of the cap.

Different tax rules will apply if you receive a capped defined benefit income stream as you usually can’t transfer or remove excess amounts from these pensions. These pensions are commonly provided by defined benefit funds, but may be provided by other funds, including some self-managed super funds (SMSFs).

If you have to move assets out of your retirement phase account back into your accumulation account to be under the cap before 1 July 2017, capital gains tax (CGT) relief is available to your super fund to reset the cost base(s) of these assets. CGT relief is available if your fund holds the assets between 9 November 2016 and 30 June 2017.

Source: https://www.ato.gov.au/Individuals/Super/Super-changes/New-transfer-balance-cap-for-pension-phase-accounts/

The tax rates for working holiday makers on a 417 or 462 visa changed on 1 January 2017. They now pay 15% tax on all income up to $37,000 after which foreign resident tax rates apply.

If you employ these working holiday makers:
• You must register to use the new tax rate by 31 January
• You must withhold tax at the new rate from 1 January
• You will need to issue two payment summaries for this financial year (one for income earned up to 31 December 2016 and one for income earned from 1 January 2017)

If you don’t register, you must withhold tax at 32.5% and penalties may apply for failing to register.

If you plan to employ working holiday makers, you must register to withhold at the new tax rate before your first payment to a working holiday maker.

Source: https://www.ato.gov.au/Tax-professionals/Newsroom/Income-tax/WHM/

In the 2016-17 Budget, the Government announced an increase to the tax discount for unincorporated small businesses incrementally over 10 years from 5 per cent to 16 per cent.

From 1 July 2016, the tax discount will increase to 8 per cent, remain constant at 8 per cent for eight years, then increase to 10 per cent in 2024-25, 13 per cent in 2025-26 and reach a new permanent discount of 16 per cent in 2026-27.

The increases will coincide with staggered cuts in the corporate tax rate to 25 per cent. The current cap of $1,000 per individual for each income year will be retained.

The tax discount applies to the income tax payable on the business income received from an unincorporated small business entity.

From 1 July 2016, the discount will be extended to individual taxpayers with business income from an unincorporated business that has an aggregated annual turnover of less than $5 million.

The ATO will accept all tax returns as lodged during the period up until the law change is passed by Parliament.

If the new law is enacted as expected, taxpayers who did not claim the offset will need to review their positions for the 2016-17 income year and seek amendments. If a reduction in liability results, interest on overpayment will be paid.

If the new law is not enacted as expected, those taxpayers who incorrectly claimed the offset will need to seek amendments. No tax shortfall penalties will be applied and any interest accrued will be remitted to the base interest rate up to the date of enactment of the law change. In addition, any interest in excess of the base rate accruing after the date of enactment will be remitted where taxpayers actively seek to amend assessments within a reasonable timeframe after enactment.

This change is not yet law and is subject to the normal parliamentary process.

Source: https://www.ato.gov.au/General/New-legislation/In-detail/Direct-taxes/Income-tax-for-businesses/Increase-the-unincorporated-small-business-tax-discount/

Your employer may pay your wages to you in cash (or with a cash cheque), rather than into your bank account. Paying wages in cash is legal and may be more convenient.

Some businesses deliberately use cash transactions to avoid meeting their tax and employee responsibilities.

If you receive ‘cash-in-hand’, you need to:

• be paid (at least) the correct award wages
• ensure you don’t end up with a large tax bill because your employer hasn’t taken tax out of your pay
• get the benefit of super contributions
• be covered by your employer’s workers compensation insurance in case of an accident.

If you are being paid cash, you:

• must declare the cash as income when you lodge your tax return
• should still receive a pay slip showing all your earnings and the amount of tax taken out
• should receive a payment summary at the end of the year setting out your full earnings for the year and the amount of tax deducted
• should check that your employer is making super contributions on your behalf.

Tips are income. If you receive cash tips, you must declare them on your tax return – regardless of how you receive them. It makes no difference if tips come from your employer or direct from customers.

Some tips are collected for all workers (like in a tip jar) by employers and shared between employees. These tips are part of your wages.

Source: https://www.ato.gov.au/Individuals/Working/Working-as-an-employee/Receiving-cash-for-work-you-do/

From 1 July 2017, departing Australia superannuation payments (DASPs) made to Working Holiday Makers (WHMs) will be taxed at 65%.

If you hold or have held a 417 (Working Holiday) or 462 (Work and Holiday) visa, you are classified as a WHM.

This change is related to a new income tax rate for WHMs which was introduced by the Australian Government in December 2016.

Your total DASP will be subject to the 65% tax rate where:

• you hold or have held a 417 or 462 visa and had super contributed for you while working under either of these visas, and
• DASP is paid to you on or after 1 July 2017.

The 65% rate will apply to your total DASP amount, including any super you may have earned while working under a different visa.

Payments made before 1 July 2017 will be taxed at the current rate, which is 38% for a taxed-element.

DASP applications are generally processed within 28 days. You can only submit an application once you have left Australia and your visa is cancelled or expired. If you are a WHM and are considering submitting a

DASP application, you may want to do so at your earliest convenience to allow super funds with the best opportunity to process and pay your claim.

Source: https://www.ato.gov.au/Individuals/Super/Accessing-your-super/Working-Holiday-Makers/