Taxpayers beware: No deductions if you don't meet your tax obligations
December 2018
New laws passed by parliament last month directly target the behaviour of taxpayers that don't meet their obligations.
Taxpayers who don't meet their tax obligations are the target of new legislation that has passed in the Australian Parliament, particularly where they are not meeting their PAYG, taxable payments reporting, and contractor payment reporting obligations by not allowing tax deductions.
So what does this mean for you and your business?
Tax deductions denied
Failing to meet PAYG withholding obligations means that from 1 July 2019, taxpayers will not be able to claim a tax deduction for the following types of payments:
- Salary, wages, commissions, bonuses or allowances to an employee;
- Directors' fees;
- To a religious practitioner;
- Under a
labour hire arrangement; or - Made for services where the supplier does not provide their ABN.
The main exception includes realising that a mistake has been made and voluntarily correcting it, for
In these circumstances, a deduction may still be available if it is voluntarily corrected however penalties may still apply for the failure to withhold the correct amount of tax.
This underlines the importance of strategic planning for business owners who may be used to taking the funds from their companies and getting the accountants to clean it up afterwards when the compliance work is done.
Real-time compliance – and enforcement
The ATO is moving towards
When it commenced on 1 July 2018, Single Touch Payroll was targeted to employers with 20 or more employees and the system will eventually replace PAYG payment summaries and numerous other reporting requirements.
Single Touch Payroll is designed to capture real-time data relating to mainstream employees and together with Super Stream (the payment of superannuation electronically by employers, including
The main strategic point for business owners is… think ahead
The best strategy is to have a strategy in the first place: Reporting and keeping your payments
Business owners often have strategic, personal or other reasons not to pay themselves a salary from their businesses, but without appropriate tax planning strategies, this can result
So once the strategy is in place, ensure it is implemented. The intention of this legislation is to capture the strategy being implemented after the event. It doesn't take much to ensure it happens real-time. That's why we are here.
Need a review?
Talk to us on 02 9957 4033 or email the team and we can work with you to implement the right approach to managing your reporting and payment obligations.
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Disclaimer
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.
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