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Upcoming Tax and Compliance Changes - 21st January 2020
1. Expansion of the Taxable Payment Reporting System
This compliance burden was introduced a number of years ago as a 'Payment Summary for Contractors' in the building and construction industry.
Since its introduction, the system has been expanded to cleaners and couriers in the June 2019 year and to road freight, information technology, security, investigation or surveillance in the current June 2020 year.
This means that if you are in any of those industries and you pay contractors, you need to report the amounts you have paid them, in the correct format by 28 August each year.
The Australian Taxation Office (ATO) receives this data from payers in these industries and checks the data to income tax returns to ensure all income has been declared by the contractors.
Most software packages have simple methods to collect the amounts paid to contractors so if you need any assistance in this area, please contact our office.
Prediction - I can see this system being expanded to payment of all contactors by all businesses, but see e-invoicing below.
2. Move Over Auskey
From 01 April 2020, the Auskey will be replaced with a myGovID and a Relationship Authorisation Manager (RAM) instead. As part of tightening up security of who can access government services, this new system will be introduced in the next few months.
If you currently have an Auskey, you will need to apply for a myGovID and link that ID to the Australian Business Number (ABN) of your business.
We are about to do ours so hopefully we will be able to assist you soon in this regard.
Prediction - there will be a rush to apply for myGovID's in March, so please apply for your ID with plenty of time to spare.
3. Welcome to E-Invoicing
This year marks the start of the Federal Government's e-invoicing framework, which includes a commitment to pay electronically supplied invoices from small business suppliers up to $1m within five days, or interest will be paid.
Whilst e-Invoicing will not be compulsory for all businesses, initially it will be compulsory for any businesses dealing with government agencies.
E-invoicing refers to the direct exchange of invoices between a supplier and a buyer's computer systems. It is estimated that e-invoicing will eventually save the Australian economy $28 billion over 10 years due to a reduction in errors made in re-keying invoices.
Prediction - e-invoicing will become the norm between all business to business invoicing, and you guessed it, the government will be able to see, in real time, all invoices being issued all over Australia.
4. The Expansion of Single Touch Payroll (STP)
A number of exemptions from the STP system will expire this year. This means all employers will soon need to report details of all wages being paid to all employees regardless of the number of employees (even wages paid to just one employee will need to be reported) and regardless of the relationship between employer and employee (currently there are some exemptions for reporting wages paid to family members).
The government has already flagged changes to the STP system where they will want even more details of wages paid, breakups between gross wages and allowances, etc. Watch this space for more compliance requirements.
If you haven't already moved into the STP system and need assistance, again, please contact our office.
Prediction - the ATO will move this year from 'education' mode to 'enforcement' mode. It's very similar to what they did when the Goods and Services Tax (GST) was introduced.
In the early days they were very active in educating and assisting, but after a couple of years they moved their focus to compliance, enforcement and prosecution.
Change is a constant in our world and 2020 will see even more changes as the ATO and government move to an almost 100% digital platform. I'll leave you with a sobering thought:
We are as far away from the year 2050 as we are from 1900....
If you have any queries about any of the above topics that may relate to you or your business please do not hesitate to contact our friendly office staff on +61 2 4929 5533.
AV Chartered Accountants - Committed to Your Business Success
Two convenient locations:
WARATAH +61 2 4629 5533 | MAITLAND +61 2 4933 6100
Email: mail@avca.net au
