TAX TIME 2024

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(Source Australian Taxation Office)

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       Tax time essentials 2024   (Click to navigate ATO website)

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Frequently asked questions

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Table of contents

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Employers

Payments and reporting

Interest and penalties

Cancelled supplies and events

International business

Self-managed super funds

Pausing or ceasing your business

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Support for business and employers.

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Individual Tax returns.

 

The ATO has clearly indicated across its various media channels that, this Tax Time, it will be focusing on the accuracy of claims for work-related expenses, rental properties and capital gains tax liabilities.

 

The following checklist may assist:

 

    The rate per kilometer for claiming car expenses is 78 cents per kilometer for 2022–23. The ATO’s draft administrative approach for electric vehicles in PCG 2023/D1 indicates 4.2 cents per km will be allowed for these vehicle using the logbook method and for FBT purposes for 2022–23. You cannot claim both 78 cents per kilometer plus another 4.2 cents per kilometer. 

    Refresh your understanding of the limited circumstances in which claims for conventional clothing are allowable, such as occupation-specific clothing, protective clothing, compulsory work uniforms and registered non-compulsory work uniforms (plus the cleaning of such clothing).

    The $250 non-deductible threshold for self-education expenses was removed from 1 July 2022. 

    The fixed rate method (52 cents per hour) and the temporary shortcut method (80 cents per hour) for working from home (WFH) expenses both ended on 30 June 2022. From 1 July 2022, the ATO’s administrative approach in PCG 2023/1 indicates that the ATO will not apply compliance resources if taxpayers claim WFH expenses at the rate of 67 cents per hour. From 1 March 2023 to 30 June 2023 (and later income years), taxpayers must keep a record of the total number of actual hours WFH, while from 1 July 2022 to 28 February 2023 only, the ATO will allow taxpayers to keep a representative record of the total number of hours WFH.

    The ATO’s Occupation and industry specific guides are a useful reminder to your clients about what they can and cannot claim.

    Ensure clients declare all rental income received, and do not declare net rent (instead of gross rent) then claim expenses (such as property management fees) again against the net rent.

    Ensure that interest expenses are correctly apportioned where the property is used for private use, the property is not genuinely available for rent or there is mixed use of borrowed funds.

    Correctly apportion borrowing expenses over the five-year period (but not on a straight line basis), or the term of loan if less.

    Correctly characterize building expenditure as a deductible repair, a non-deductible initial repair or capital works.

    The limitation on travel expenses and second-hand depreciate assets relating to residential rental properties applies from 1 July 2017. 

    Ensure all capital gains on cryptocurrency, shares and properties (as well as other CGT assets) are correctly calculated and reported. Record keeping is essential to this.

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Superannuation

 

Making contributions

 

To ensure individuals do not exceed their concessional contributions cap of $27,500, checks should be made with superannuation funds and employers to determine what contributions have already been made during 2022–23. This includes identifying any contributions made under salary sacrifice arrangements.

 

If further contributions are intended to be made by 30 June 2023 to maximum the concessional contributions cap (including any carry forward limits that are available), allow sufficient time for processing and receipt of payment. This is particularly important when using external payroll services and commercial clearing houses to ensure that the contribution is received by the fund by the end of 30 June and not merely paid (and still sitting within the banking system such that the fund does not receive the payment until July).

 

While employers have until 28 July to satisfy their superannuation guarantee obligations, payments need to be made (i.e. received by the fund) by the end of 30 June if the employer seeks a deduction for the payments for 2022–23 (instead of 2023–24).

 

Changes to the work test from 1 July 2022 have removed the need for individuals aged 67–74 years to pass the work test when making non-concessional contributions and salary sacrifice contributions, but the work test still applies when making personal deductible contributions.

 

Transfer balance cap and income streams

 

The increase in the transfer balance cap (TBC) to $1.9 million from 1 July 2023 will ensure more earnings on superannuation balances in retirement phase are tax-free, but the cap remains $1.7 million for 2022–23. Calculating the proportionate indexation of an individual’s personal TPB will become even more complex as the general TBC continues to increase.

 

Ensure income stream recipients make their minimum annual payments. The required percentage was halved again for 2022–23 (as it was in 2019–20, 2020–21 and 2021–22 due to the pandemic) but it returns to normal levels from 1 July 2023. Failure to make the minimum payment:

 

    Causes the income stream to cease for tax purposes; 

    Treats the fund as not having paid an income stream from the start of the income year and any payments made as lump sum payments; and 

    Prevents the fund from treating any income as exempt current pension income, so the fund loses its tax exemption on the earnings for that year.

 

Incentive schemes

 

Changes to the First Home Super Saver Scheme from 1 July 2022 increased the maximum releasable amount of voluntary concessional and non-concessional contributions to $50,000 (from $30,000). Changes to the downsizer contributions measure, also from 1 July 2022, reduced the eligibility age from 65 years to 60 years.

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Small (to medium) business boosts

 

Three boosts are on offer for businesses with an aggregated turnover of less than $50 million, covering eligible expenditure:

 

    Incurred on business expenses and depreciating assets that support the business’ digital adoption (technology investment boost);

    Incurred on external training courses provided to employees (skills and training boost); and

    On the cost of eligible depreciating assets that support electrification and efficient energy usage (energy incentive boost).

 

The first two boosts remain in a Bill before Parliament, while the energy incentive boost is yet to be introduced into Parliament. The concerning aspect of this is that the technology investment boost ends on 30 June 2023, and its status as (yet-to-be) enacted law may be confirmed only in the closing weeks of the incentive. The first and the third boosts are subject to a maximum cap of $20,000 (or $100,000 of eligible expenditure) per business The second and third boosts will end on 30 June 2024.

 

The delay in legislating time-sensitive measures, designed to encourage businesses to invest in their operations and sustainability, creates uncertainty that undermines the intent of the measures.

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Small businesses granted tax amnesty

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The Australian Taxation Office (ATO) is encouraging small businesses that have overdue income tax returns, fringe benefits tax returns or business activity statements to take advantage of a new amnesty to get their lodgments back on track.

 

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The amnesty was announced in the 2023-24 Budget. It applies to tax obligations that were originally due between 1 December 2019 and 28 February 2022 and runs from 1 June 2023 to 31 December 2023.

To be eligible for the amnesty, the small business must be an entity with an aggregated turnover of less than $10 million at the time the original lodgment was due.

During this time, eligible small businesses can lodge their eligible overdue forms and the ATO will then proactively remit any associated failure to lodge (FTL) penalties.

ATO Assistant Commissioner Emma Tobias urged small businesses to take advantage of the amnesty to get back on track with their tax obligations if they have fallen behind.

"The past few years have been tough for many small businesses, with the pandemic and natural disasters having a significant impact. We understand that things like lodging ATO forms may have slipped down the list of priorities. But it is important to get back on track with tax obligations. Lodging these forms are not optional, so we hope our amnesty will make it easier for impacted small businesses to get back on track."

When forms are lodged with the ATO under the amnesty, businesses or their tax professionals will not need to separately request a remission of FTL penalties.

"All you need to do is lodge your outstanding tax returns or activity statements and we’ll take care of the FTL penalty remission from our end. You might see an FTL penalty on your account for a short period of time, but don’t worry, we will remit it."

Ms Tobias also noted that outstanding lodgments can be an early indicator that a small business is not actively engaged with the tax system, which can be a red flag.

"We encourage all businesses to lodge any overdue forms even if they are outside the eligibility period. Whilst forms outside the amnesty eligibility criteria will attract FTL penalties, the ATO will consider your circumstances and may remit such penalties on a case-by-case basis.

‘We understand that some small businesses may be worried about paying an amount owing on their overdue lodgment. If you are unable to make full payment of your debt, remember we can work together with you or your registered tax or BAS agent to figure out the right solution for you."

The ATO offers a range of support options, including payment plans. Many small businesses are also able to set up their own payment plan online.

Ms Tobias also explained that if a business has ceased trading, they needed to advise their registered tax professional, or the ATO directly.

The amnesty applies to income tax returns, business activity statements, and fringe benefits tax returns. It does not apply to superannuation obligations and excludes other administrative penalties such as penalties associated with the Taxable Payments Reporting System.

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Jobs Plus program

 

The Jobs Plus program provides support to Australian and international businesses that want to start or expand their operations in NSW. Program support will help reduce the costs and financial risks of growing a business or moving its operations to NSW.

To be eligible for the program, Australian businesses must currently employ at least 20 workers and overseas businesses must employ at least 80 workers. All businesses must be able to create at least 30 net new full-time equivalent (FTE) jobs in NSW before 30 June 2024. Further conditions apply.

For more information about eligibility criteria, as well as details about funding, visit Jobs Plus program.

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Export assistance grant

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Grant provides grants to eligible businesses to assist them to recover from the impacts of bush fires, drought and COVID-19 on their export business and export development activities.

Eligible exporting businesses can apply for 50% reimbursement of certain export-enabling expenses, such as marketing and e-commerce, for expenses already paid since 1 January 2020.  

For eligibility criteria and to apply, visit Apply for an export assistance grant.

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Small and medium enterprise (SME) guarantee scheme Phase 2

Phase 2 of the SME Guarantee Scheme closed for loans on 30 June 2021

The Coronavirus Small and Medium Enterprises (SME) Guarantee Scheme Phase 2 provided SMEs (including sole traders and not-for-profits) with vital additional funding to help them get through the impact of Coronavirus, recover and invest for the future. Under the Scheme, the Government provided a 50 per cent guarantee to participating lenders to enhance their ability to extend credit to SMEs.

Phase 2 of the Scheme supported secured and unsecured loans for up to $1 million for terms of up to 5 years with a cap on interest rates. Phase 2 of the Scheme commenced on 1 October 2020 and ceased for loans on 30 June 2021.

Interest rates were capped at 10 per cent for fixed rate loans. For variable rate loans the cap is 10 per cent plus an amount calculated using the Bank Bill Swap Bid Rate. The Scheme Rules [PDF 594KB] have more information on how interest rate caps rates are calculated. Rules for interest rates varied between schemes. In the first instance check the details of your loan agreement as well as the relevant scheme rules

The Australian Government will guarantee 50% of the value of eligible business loans to small and medium enterprises impacted by COVID-19. Maximum loan value is $250,000 and there will be a repayment-free period of six months. For more information, visit the Australian Banking Association.

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Instant asset write-off and Temporary Full Expensing.

 

Overview of eligibility

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If the asset is not first used or installed ready for use until after 30 June 2023, the asset will be subject to the rules that apply for the 2023–24 income year:

 

For small business taxpayers:

     -   If the asset costs less than $20,000 (GST-exclusive), it will be able to be fully written off under the yet-to-be-legislated increase in the instant asset write-off threshold to $20,000 (only for 12 months); or

     -   If the asset costs $20,000 or more, the asset will need to be allocated to a general use pool and depreciated according to the pooling rules;

     -    Larger business taxpayers (aggregated turnover of $10 million or more) will need to depreciate the asset in accordance with the normal depreciation rules, noting the ATO has an administrative approach of allowing low-cost assets to be fully deducted in the year in which they were acquired, but only up to $100 (GST-inclusive).

 

Consider the tax treatment of any depreciating assets that were sold during 2022–23 and which had previously been fully expensed. The proceeds received on sale are generally assessable

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Loss carry back

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This COVID-19-era temporary measure also ends on 30 June 2023. Any corporate tax entity with an aggregated turnover of less than $5 billion that makes a tax loss in 2022–23 can choose to carry that loss back against taxed profits made from 2018–19 to 2021–22. The refundable income tax offset is available by lodging the 2023 income tax return.

      -     Loss carry back tax offset       

 

Companies with substituted accounting periods

If your company has an approved substituted accounting period (SAP) for an early balance date and is entitled to a refund, you can lodge your company tax return before the lodgement due date and receive a refund immediately if the company both:

• is a full self-assessment taxpayer

• has an approved SAP with a balancing period that has concluded.

For example, if you have an approved SAP with an early balancing period ending on 31 December 2019, your ordinary lodgement due date would be 15 July 2020. If you choose to lodge your 2020 tax return before that date, you can receive your refund immediately.

However, if you have a debt with us and you are due to receive a refund, we are required by law to use the refund, credit to reduce your debt. If you don’t want this to happen, contact us to discuss your circumstances.

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Changes announced in the  2019 Budget

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The changes announced in the 2018–19 Budget that are now law, include:

• changes to income tax rate thresholds in the 2018–19, 2022–23 and 2024–25 income years

• a new low and middle income tax offset to reduce the tax payable by low and middle income earners in the 2018–19, 2019–20, 2020–21 and 2021–22 income years

• a new low income tax offset from the 2022–23 income year (to replace both the new low and middle income tax offset and the current low income tax offset).

The following table outlines the rates and thresholds that apply, along with the offset entitlements related to these changes.

Find out about the key changes this tax time, ATO service commitment, what you can do to prepare, and things to consider before lodging to ensure your clients' tax returns are correct and to help prevent delays in processing.

ATO will start full processing of 2018–19 tax returns on 5 July 2019 and expect to start paying refunds from 16 July 2019.

ATO aim to finalise the majority of electronically-lodged current year tax returns within 12 business days of receipt.

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Private health insurance statements

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From 1 July 2019, health insurers are no longer required to send private health insurance statements. Previously they were required to send statements by 15 July each year, it is now optional to send this information.

Private health insurance information will be available in the pre-fill report, usually by mid-August. If it is not populated by then, taxpayers may need to request a statement from their health insurer.

It is important to correctly report private health insurance information as we use it to calculate:

• private health insurance rebates taxpayers are entitled to

• the Medicare levy surcharge, if applicable.

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Low and middle income earner tax offsets.

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Eligibility for the tax offsets

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From 1 July 2022 you may be eligible for the low income tax offset only, if you earn up to $66,667.

Between 2018–19 and 2021–22, you may have been eligible to receive one or both of the:

• low income tax offset – if you earn up to $66,667

• low and middle income tax offset – if you earn up to $126,000.

LMITO ended on 30 June 2022. The last year you can receive it is the 2021–22 income year.

To be eligible, you need to:

• be an Australian resident for tax purposes

• pay tax on your taxable income

• have a taxable income below certain income thresholds.

 

Receiving the tax offsets

You don't need to do anything to claim either of these tax offsets, except lodge your tax return. We work out the offsets after you lodge.

You can see the tax offset amount on your notice of assessment at Less non-refundable tax offsets.

These offsets reduce the tax you need to pay. They can only reduce your tax payable to $0. They are not a separate payment. Any unused offsets can't be refunded.

 

Low income tax offset (LITO)

The amount of low income tax offset (LITO) you receive will depend on your taxable income. If you earned:

• $37,500 or less, you will get the maximum offset of $700

• between $37,501 and $45,000, you will get $700 minus 5 cents for every $1 above $37,500

• between $45,001 and $66,667, you will get $325 minus 1.5 cents for every $1 above $45,000.

We will work out your offset and reduce your tax payable by this amount.

 

Low and middle income tax offset (LMITO)

LMITO ended on 30 June 2022. The last year you can receive it is the 2021–22 income year.

LMITO is not available for the 2022–23 income year and later income years.

For the 2018–19 to 2021–22 income years, in addition to the LITO, you could receive the LMITO.

You receive LMITO if your taxable income is less than $126,000. You must also be an Australian resident for tax purposes. You will not receive it if your taxable income is $126,000 or more. We will work out your offsets and reduce your tax payable by this amount.

 

LMITO not available 2022–23 income year onwards

Low and middle income tax offset (LMITO) ended on 30 June 2022. This means it doesn't apply for the 2022–23 income year.

Your tax return outcome may be different this income year. You may have a lower refund (less than when LMITO was available) or you may receive a tax bill. See Why your tax return outcome may change in 2023.

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Low and middle income earners may be eligible for the low income tax offset and the low and middle income tax offset. We work out the offset amounts when you lodge your tax return.

To be eligible for one or both of these tax offsets:

• you need to be an Australian resident for income tax purposes and pay tax on your taxable income

• your taxable income needs to be below certain income thresholds.

You don't need to complete a section in your tax return to get these tax offsets. If you meet the conditions above, your entitlement to any offset amount is added to your tax return. You can see the amount on your notice of assessment (you won't receive the offset as a separate payment).

On this page:

• What is a tax offset?

• How tax offsets affect the tax you pay

• Claiming income tax offsets

• Changes to the Personal Income Tax Plan

• Low income tax offset

• Low and middle income tax offset

 

What is a tax offset?

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A tax offset reduces the tax you pay (known as your tax payable) on your taxable income. Your taxable income is your total income minus any deductions you claim.

The low income tax offset and the low and middle income tax offsets can only reduce the tax you pay to $0 (zero). Any offset amount that remains once your tax payable is zero isn't refunded to you.

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How tax offsets affect the tax you pay

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The tax offset amount you receive depends on your taxable income and the amount of tax you need to pay on this income (your tax payable).

Offsets can't reduce your Medicare levy and Medicare Levy Surcharge (if any). The Medicare levy is 2% of your taxable income, in addition to the tax you pay on your taxable income.

So, if your taxable income is $18,200 or less and you:

• have not paid any tax, an offset can't reduce the tax you pay – your tax payable amount is already zero

• have paid any tax on this income, you will generally receive all of this tax back as a refund – your tax payable amount is zero so no offset can be applied.

If your taxable income is $18,201 or more, we use your taxable income to work out how much tax you're required to pay. We then reduce the tax you need to pay with the offset amount you're entitled to.

If you are under 18 years old as at 30 June of the income year and you have unearned income, these offsets can't reduce the tax payable on this income.

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Claiming income tax offsets

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You don't need to complete anything in your tax return in order for us to work out your low income tax offset or the low and middle income tax offset. We work out the amounts of these tax offsets for you once you lodge your tax return.

Any offset you are entitled to is included when we work out the result of your tax return.

If you want to find out how much of an offset you were entitled to, you can see this amount on your notice of assessment. Look for the Less non-refundable tax offsets section.

If you lodge online, your notice of assessment will be sent to your myGov Inbox once your return has been finalised.

If you receive a tax refund it will be deposited into your nominated bank account. Any refund may also be reduced by any debt you have with us or any Australian government agency, the law requires us to use refunds or credits to pay debt.

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Changes to the Personal Income Tax Plan

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In the 2020–21 federal Budget, the Australian Government brought forward stage two of the personal income tax plan from 1 July 2022 to 1 July 2020. These changes are now law which means:

• the low income tax offset has been increased

• the low and middle income tax offset is available for the 2020–21 income year.

The government also announced in the 2021–22 federal Budget that the low and middle income tax offset will continue to be available for the 2021–22 income year. This change is now law.

See also:

• Job-Maker Plan – bringing forward the Personal Income Tax Plan

Low income tax offset

The maximum low income tax offset is $700 for the 2020–21 and later income years. This has been increased from $445 as a result of the 2020–21 federal budget.

If your taxable income is:

• $37,500 or less, you will get the full offset of $700

• between $37,501 and $45,000, you will get $700 minus 5 cents for every $1 above $37,500

• between $45,001 and $66,667, you will get $325 minus 1.5 cents for every $1 above $45,000.

Low and middle income tax offset

The low and middle income tax offset amount is between $255 and $1,080.

The full offset is $1,080 per annum but you might not receive the full $1,080. The base amount is $255 per annum.

This offset is available for the 2018–19, 2019–20, 2020–21 and 2021-22 income years.

If your taxable income is between $37,001 and $126,000, you will get some or all of the low and middle income tax offset. This is in addition to the low income tax offset.

The amount of offset you receive depends on your circumstances, such as your taxable income and how much tax you have paid.

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Income statement

If an employer reports through Single Touch Payroll they are not required to provide a payment summary to their employees.

Income statements will replace payment summaries. Employees can access their income statements through ATO online services via my Gov, at any time. Employees will receive a notification from us in their my Gov inbox when their income statement is 'Tax ready', so they can complete their tax return.

Employees will be able to contact us for a copy of their income statement if they do not have access to my Gov.

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• Accessing your income statement or payment summary information online

Research and development tax incentive amendments

On 8 May 2018, the government announced it would reform the research and development (R&D) tax incentive to encourage additional investment in R&D while ensuring the integrity and fiscal affordability of the incentive. These changes are expected to apply for income years commencing on or after 1 July 2018.

We will accept tax returns as lodged during the period up until the proposed law change is passed by parliament. After the new law is passed, taxpayers will need to review their position and, if required, seek an amendment.

See also:

• Better targeting the Research and Development Tax Incentive

Hybrid mismatch rules

On 24 August 2018, legislation was passed implementing the Organisation for Economic Cooperation and Development (OECD) hybrid mismatch rules. These rules apply to income years starting on or after 1 January 2019.

However, unless an importing payment is made under a structured arrangement, the imported mismatch rule will apply to income years starting on or after 1 January 2020.

The hybrid mismatch rules prevent entities that are liable to income tax in Australia from avoiding income tax or obtaining global double tax benefits through hybrid mismatch arrangements that exploit differences in the tax treatment of an entity or instrument under the laws of two or more tax jurisdictions.

The rules operate to deny a deduction, or include an amount in assessable income for payments that give rise to a hybrid mismatch outcome.

See also:

• Implementation of the OECD hybrid mismatch rules

Increasing access to company losses

On 1 March 2019, legislation was passed that will supplement the current ‘same business test’ for losses with a more flexible 'similar business test'. The new test will expand access to past year losses when companies enter into new transactions or business activities.

The similar business test allows a company (and certain trusts) to access losses following a change in ownership where its business, while not the same, is similar, having regard to the:

• extent to which the assets that are used in its current business to generate assessable income were also used in its former business to generate assessable income

• extent to which the activities and operations from which its current business is generating assessable income were also the activities and operations from which its former business generated assessable income

• identity of its current business and the identity of its former business

• extent to which any changes to the former business resulted from the development or commercialisation of assets, products, processes, services, or marketing or organisational methods of the former business.

As a test for accessing past year losses, the 'similar business test' will only be available for losses made in income years starting on or after 1 July 2015.

The 'same business test' and the 'similar business test' will be collectively known as the 'business continuity test'.

See also:

• Increasing access to company losses

• LCR 2017/D6 The business continuity test – carrying on a similar business

Down-sizer contribution into superannuation

From 1 July 2018, members aged 65 years old or older, and meet all the eligibility requirements may choose to make a down-sizer contribution (a new contribution type) of up to $300,000 into superannuation from the proceeds of selling their primary residence. To be eligible, the contract for sale must be entered into on or after 1 July 2018.

If a member makes a down-sizer contribution it is reported in the year it is made. The member will need to provide a Downsizer contribution into super form, either before or when they make their contribution.

Downsizer contributions should be made within 90 days of the change of ownership of the dwelling (usually the date of settlement). An extension of time may be granted where there is a delay, but will not be granted to allow the member to meet the age requirement.

Downsizer contributions can be made regardless of contributions caps and other restrictions (age and work test) that may apply when making voluntary contributions.

See also:

• Downsizing contributions into superannuation

First home super saver scheme

If a taxpayer requested the release of an amount under the First home super saver (FHSS) scheme during the 2018–19 income year, they must include in their 2019 tax return:

• any assessable FHSS amount

• the tax withheld amount.

They will receive a payment summary from us showing the assessable FHSS amount and tax withheld.

If they requested a release during the 2018–19 income year, they must include the amount in their 2019 tax return, even if they did not receive the amount until after 30 June 2019.

See also:

• First home super saver scheme

 

Changes to the thin capitalisation rules to prevent double gearing structures

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On 5 April 2019, legislation was passed to improve the integrity of the income tax law by modifying the thin capitalisation rules to prevent double gearing structures. Double gearing structures involve the use of multiple layers of ‘flow-through’ entities (such as trusts and partnerships) to issue debt against the same underlying asset.

These changes apply to income years starting on or after 1 July 2018.

The changes will affect entities with interests in trusts (other than public trading trusts) and partnerships, as the threshold for the purposes of the associate entity debt, associate entity equity, and the associate entity excess amounts has been reduced from 50% to 10%.

The changes also affect how the arm’s length debt amount is calculated. To determine both the independent lender and independent borrower amounts of the test, an entity must consider the debt-to-equity ratios of any other entity in which it has an interest.

 

 

Foreign resident capital gains withholding payments - impacts on foreign and Australian residents.

 

 

Foreign resident capital gains withholding applies to vendors disposing of certain taxable Australian property. A 12.5% non-final withholding is applied to these transactions at settlement.

The assets subject to the withholding tax are:

• taxable Australian real property with a market value of $750,000 or more

• an indirect Australian real property interest

• an option or right to acquire such property or interest.

Where the seller of these Australian assets is deemed a foreign resident, the buyer must pay 12.5% of the purchase price to the ATO as a foreign resident capital gains withholding payment.

The foreign resident seller can claim a credit for the foreign resident capital gains withholding payment by lodging a tax return for the relevant year.

See also:

• Foreign resident capital gains withholding payments

• Taxable Australian property

 

Background

 

Broadly, where a foreign resident disposes of certain taxable Australian property, the purchaser is required to withhold an amount from the purchase price (see note below) and pay that amount to the Australian Taxation Office (ATO).

Note: the legislation specifies that the withholding is actually on the "first element of the cost base". However, as purchase price is understood by vendors and purchasers, and in many instances will equate with the "first element of the cost base", we have used the term purchase price for simplicity.

Annual charge on foreign owners of under utilized residential property.

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The vacancy fee is part of the Government's comprehensive housing affordability plan that was announced on 9 May 2017. This measure is intended to encourage foreign owners of residential dwellings to make them available for rent where they are not used as a residence and so increase the number of dwellings available for Australians to live in. The reporting and notification requirements are also expected to provide greater visibility of vacancy rates for foreign owned residential dwellings.

On 30 November 2017 the Treasury Laws Amendment (Housing Tax Integrity) Act 2017 received royal assent. The Act amends the Foreign Acquisitions and Takeovers Act 1975 to require foreign owners of residential dwellings to annually inform the ATO whether the dwelling is residentially occupied or genuinely available on the rental market as a residence for at least six months per year. If the person fails to notify the ATO or notifies the ATO that the dwelling is not residentially occupied or genuinely available on the rental market as a residence for at least six months per year they will be liable for a fee. The fee will be equivalent to the relevant foreign investment application fee for the property at the time it was acquired by the foreign investor.

The obligations under the Act apply to foreign persons who make a foreign investment application for residential property from 7:30PM (AEST) on 9 May 2017. The obligations also apply to foreign purchasers who acquire residential dwellings utilising a New Dwelling Exemption Certificate where the certificate was applied for from 7.30PM (AEST) on 9 May 2017.

Legislation and supporting material

The Treasury Laws Amendment (Housing Tax Integrity) Act 2017External Link received royal assent on 30 November 2017

Limit plant and equipment depreciation deductions to outlays actually incurred by investors.

 

Income tax deductions for the decline in value of previously used plant and equipment in rental premises used for residential accommodation are no longer allowed. The changes are now law.

 

The changes apply from 1 July 2017 to:

• previously used plant and equipment acquired at or after 7.30 pm on 9 May 2017 unless it was acquired under a contract entered into before this time

• plant and equipment acquired before 1 July 2017 but not used to earn income in either the current or previous year.

Investors who purchase new plant and equipment will continue to be able to claim a deduction over the effective life of the asset.

The changes do not affect deductions that arise in the course of carrying on a business, or for:

• corporate tax entities

• superannuation plans other than self-managed superannuation funds

• public unit trusts

• managed investment trusts

• unit trusts or partnerships whose members are the above listed entities.

Legislation and supporting material

The Treasury Laws Amendment (Housing Tax Integrity) Act 2017External Link received royal assent on 30 November 2017.

See also:

• Media release No. 86External Link issued on 7 September 2017 by the Treasurer and the Assistant Minister to the Treasurer

• Media release No. 46External Link issued on 9 May 2017 by the Treasurer and the Assistant Minister to the Treasurer

Disallow the deduction of travel expenses for residential rental property.

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From 1 July 2017, travel expenses relating to inspecting, maintaining, or collecting rent for a residential rental property cannot be claimed as deductions by investors. The changes are now law. The travel expenditure is also not recognised in the cost base of the property for CGT purposes.

You can continue to deduct travel expenditure if:

• the losses or outgoings are necessarily incurred in carrying on a business for the purposes of gaining or producing assessable income; or

• you are an excluded class of entity.

An excluded class of entity is:

• a corporate tax entity;

• a superannuation plan that is not a self-managed superannuation fund;

• a public unit trust;

• a managed investment trust; or

• a unit trust or a partnership, members of which are entities of a type listed above.

Legislation and supporting material

The Treasury Laws Amendment (Housing Tax Integrity) Act 2017External Link received royal assent on 30 November 2017.

See also:

• Media release No. 86External Link issued on 7 September 2017 by the Treasurer and the Assistant Minister to the Treasurer

• Media release No. 46External Link issued on 9 May 2017 by the Treasurer and the Assistant Minister to the Treasurer

 

Expanding tax incentives for investments in affordable housing.

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On 9 May 2017 the Government announced that from 1 January 2018, it will provide an additional ten percentage point capital gains tax (CGT) discount for resident individuals who invest in qualifying affordable housing.

This will increase the CGT discount to 60%.

To qualify for the 60% discount, housing must be provided to low to moderate income tenants, and rent charged at a discount below the private market rental rate.

The Government has undertaken consultation and confirmed that qualifying affordable housing must be managed through a registered community housing provider (CHP) and the investment held for a minimum of three years in aggregate.

CHPs will determine the tenant eligibility criteria, including the rent charged, consistent with state and territory affordable housing policies.

Legislation and supporting material

Legislation is being developed for this measure.

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Improving the integrity of GST on property transactions.

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On 9 May 2017 the Government announced that it will strengthen compliance with the GST law by requiring purchasers of newly constructed residential properties or new subdivisions to remit the GST directly to the ATO as part of settlement.

Under the current law (where the GST is included in the purchase price and the developer remits the GST to the ATO), some developers are failing to remit the GST to the ATO despite having claimed GST credits on their construction costs. As most purchasers use conveyancing services to complete their purchase, they should experience minimal impact from these changes.

This change takes effect from 1 July 2018.

 

Lowering of repayment thresholds for higher education and training loans.

 

On 1 May 2017 the Government announced a range of higher education reforms. This proposal included expanding the current repayment rates and thresholds for higher education and training loans from 8 to 18, commencing 1 July 2018. As part of the proposal, the minimum repayment threshold will be lowered to $42,000 with a one per cent repayment rate.

This measure was further detailed on 9 May 2017 as part of the Government's Federal Budget announcement.

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Black Economy Task force - prohibition on sales suppression technology and software.

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On 9 May 2017, the Government announced that the manufacture, distribution, possession, use or sale of electronic point of sale (POS) sales suppression technology and software will be prohibited.

Sales suppression technology and software allows businesses to understate their incomes by untraceably deleting selected transactions from electronic records in POS equipment.

Source: Australian Tax office - www.ato.gov.au