Post on 01-Aug-2020
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MYOB Tax Changes
Software changes and updates in the 2018 tax release
ATO Pre-fill
A walk through the new ATO Pre-fill features and workflow for I Returns
Budget Commentary
Tax highlights and summary from the 2018 Federal Budget
Support Matters
What’s changed with your support options and a look at some common tax calls
PLS Review
Overview of the how, why and when of PLS to date plus what’s next
Dates
All the important dates for your reference
Agenda
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1MYOB Tax Changes
Software changes and updates in the 2018 tax release
MYOB Tax Changes Tax Changes affecting Multiple Entity Types
Tax Changes for Individual Entities
Tax Changes for Partnership Entities
Tax Changes for Trust Entities
Tax Changes for Company Entities
Tax Changes for Superannuation and Self Managed Super Funds
Superannuation Changes From 1 July 2017
Tax Changes affecting Multiple Entity Types
Tax changes affecting multiple entity types
Temporary Budget Repair Levy Concludes
Foreign Residents Capital Gains Tax Main Residence Exemption and Principle Asset Test
Increased Capital Gains Tax Discount for Investors in Affordable Housing
Changes to Foreign Resident Capital Gains Withholding
Accelerated Depreciation for Small Business Entities further Extended
Limiting Plant and Equipment Depreciation Deductions for Residential Assets
Removal of Residential Rental Property Travel Expenses for Individuals
Vacancy Fee for Foreign Acquisition of Residential Property
Capital Gains Tax Changes to the Principle Asset Test
International Dealings Schedule
Tax Incentives for Early Stage Innovation Companies
Tax Incentives for Early Stage Venture Capital Limited Partnerships
Junior Minerals Exploration Incentive
Country by Country Reporting - Phase 2
Diverted Profits Tax
Treasury Laws Amendment (Temporary Budget Repair Levy) Act 2014 - received Royal Assent 25 June 2014
The application of the Temporary Budget Repair Levy (TBRL) ceased to apply after 30 Jun 2017
The 2017-18 assessment year will therefore no longer include the additional 2% TBRL for incomes exceeding $180,000
MYOB Tax has been updated to remove the TBRL component from the associated tax calculations
These changes include removal of the:
TBRL information for Individuals in the Medicare schedule
TBRL information for Trusts where the Trustee was liable under S99A
TBRL notes for Companies in the Company Tax Rates
TBRL notes for Superannuation Funds and SMSFs in the Superannuation Fund Tax Rates
Temporary Budget
Repair Levy Concludes
Forms affected - I T C F MS
Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No 2) Bill 2017 - Second Reading 19 March 2018
Denies Capital Gains Tax (CGT) Main Residence Exemption for foreign tax residents
Measure applies from 9 May 2017 (7:30pm AEST)
Existing properties grandfathered until 30 June 2019
Foreign residents disposing of property after 9 May 2017 must determine CGT liability and comply with CGT withholding rules
Foreign resident beneficiaries of Resident Deceased Estates will be entitled to an apportionment of CGT
Transitional arrangements apply to previously lodged Foreign Resident returns providing the tax payer reviews their CGT obligations in a “reasonable time frame”
Foreign Residents Capital
Gains Tax Main Residence
Exemption and Principle
Asset Test
Forms affected - I T
Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No 2) Bill 2017 - Second Reading 19 March 2018
Provides an additional 10% Capital Gains Tax (CGT) discount to resident individuals investing in qualifying affordable housing Increases CGT discount rate up to 60% from 50%
Also applies to affordable housing investments by a Managed Investment Trust (MIT) with discount distributed to resident individuals
Qualifying affordable housing must be: Provided at below market rent Made available to eligible tenants on low to moderate household incomes Managed through a registered community housing provider For a minimum investment period of three years
If this bill is passed MYOB Tax will be amended to include a new Affordable housing daysfield in the Capital Gains Item worksheet
Increased Capital Gains Tax Discount for Investors in Affordable
Housing
Forms affected - I T (g)
Treasury Laws Amendment (Foreign Resident Capital Gains Withholding Payments) Act 2017 - received Royal Assent 22 June 2017
Implements measures announced in the 2017 Federal Budget to extend Foreign Resident Capital Gains Withholding (FRCGW) obligations on asset disposals Reduces the threshold for real property interests down to $750,000 (from $2m) Increases the withholding rate up to 12.5% (increase from 10%)
Applies to contracts entered into on or after 1 July 2017
Changes to existing withholding obligations regime on asset disposals mainly affecting land, buildings, residential and commercial property sales
Withholding can be avoided for Australian Resident Vendors as follows: Real Property - ATO Clearance Certificate (by settlement date) Other Asset Types - Vendor Declaration
Likewise Foreign Resident Vendors may apply for a rate variation or make an Australian real property asset declaration
Changes to Foreign Resident
Capital Gains Withholding
No changes to MYOB Tax for 2017-18 - information only
Treasury Laws Amendment (Accelerated Depreciation for Small Business Entities) Act 2017 - received Royal Assent 22 June 2017
Extension of the Small Business Entity (SBE) instant asset write-off regime up to 30 June 2018 for assets less than $20,000
SBE Eligibility Criteria - covers over 98% of Australian Businesses
Annual turnover less than $10m
Turnover is aggregated
Note these SBE measures:
Mandates that all SBE assets be handled under the Simplified Depreciation Rules
Provides for instant write-off of Small Business Pool balances less than $20,000
Limits assets subject to accelerated depreciation are less than $20,000
Additional details in the Budget Commentary
No changes to MYOB Tax - Depreciation Worksheet calculations remain unchanged
Accelerated Depreciation for Small Business Entities further
Extended
No changes to MYOB Tax for 2017-18 - information only
Treasury Laws Amendment (Housing Tax Integrity) Act 2017 - received Royal Assent 30 November 2017
Depreciation deductions on previously used plant and equipment for residential rental properties are now no longer claimable
Applies to assets acquired at or after 9 May 2017 (7:30pm AEST)
Effectively stops depreciation double dipping resulting from property purchase asset revaluation activities
Depreciation treatment for purchases of additional new plant and equipment assets remains unchanged
The measures specifically targets Rental Property ownership by Individual tax payers or Personal Structures. For example, SMSF or Trust
Excludes Individuals (and Personal Structures) genuinely carrying on a rental property business
Transfers of new and renovated property are excluded if no depreciation has been previously claimed. For example, developer sales
Limiting Plant and Equipment
Depreciation Deductions
for Residential Assets
Forms affected - I P T MS (ren) (d)
Limiting Plant and Equipment
Depreciation Deductions
for Residential Assets
Forms affected - I P T MS (ren) (d)
Reminder text box added to Rental Property Schedule
Information text and new Y/N field (to nominate deduction status) added to Depreciation Worksheet
New non-deductible depreciation summary line
Treasury Laws Amendment (Housing Tax Integrity) Act 2017 - received Royal Assent 30 November 2017
Individual Travel Expenses for any residential rental property purposes are no longer claimable
Travel expenses can still be claimed:
If carrying a business of property investment
For commercial investment properties
By excluded entities (for example, company, super fund, public unit trust)
ATO commentary:
Owning several properties is not generally considered a rental property business
The receipt of rental payments does not constitute a rental property business
Travel expenses are still excluded from the capital gains calculation cost base
There are no changes to MYOB Tax because rental travel deductions are claimable in some situations
Removal of Residential
Rental Property Travel Expenses for Individuals
No changes to MYOB Tax for 2017-18 - information only
Foreign Acquisitions and Takeovers Fees Imposition Amendment (Vacancy Fees) Act 2017 - received Royal Assent 30 November 2017
Applies to foreign owners of unoccupied residential property or residential property not genuinely available for rent
Genuine availability is determined by rental market access for at least 183 days in a vacancy year on at least 30 day terms
Each vacancy year starts with the owners occupancy day anniversary (for example, settlement)
Vacancy fees are $5,500 up to $1m with specific calculated values above that
Applies to Foreign Investment Review Board (FIRB) applications after 9 May 2017(7:30pm AEST)
Ownership is widely defined to cover Companies, Partnerships and Trusts with substantial foreign interests. For example, > 20% foreign ownership
Foreign owners are required to report annually to the Commissioner of Taxation
Mandatory reporting based on individual residential property
Must be submitted within 30 days of the end of the vacancy year
The ATO will advise any applicable (Ghost Tax) vacancy fees
Vacancy Fee for Foreign
Acquisitions of Residential
Property
No changes to MYOB Tax for 2017-18 - information only
Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No 2) Bill 2017 - Second Reading 19 March 2018
Provides for the application of the Principal Assets Test on an associate inclusive basis from 9 May 2017 (7:30pm AEST)
Ensures that Foreign Tax Residents cannot avoid Capital Gains Tax (CGT) by separation of indirect interests in Australian real property
Each individual related business interest will be separately assessed as to whether the assets are principally Taxable Australian Real Property (TARP)
The separate associated interests will then be aggregated to satisfy the 10% total participation interest test for CGT
ATO Administrative Treatment
Returns may continue to be lodged until the proposal is passed into law
Tax payers need to review their tax position once passed and lodge amendments as appropriate in a “reasonable time frame”
No tax shortfall penalties will be applied and any interest accrued will be remitted
Capital Gains Tax
Changes to the Principal
Asset Test
No changes to MYOB Tax for 2017-18 - information only
Tax Laws Amendment (Combating Multinational Tax Avoidance) Act 2015 - received Royal Assent 11 December 2015
Diverted Profits Tax Act 2017 - received Royal Assent 4 April 2017
Hybrid Mismatch Legislation - currently at Exposure Draft 7 March 2018
The Government has addressed concern regarding multinationals shifting profits out of Australia using associated foreign entities
This business strategy is being addressed with Diverted Profits Tax (DPT) and Base Erosion Profit Sharing (BEPS) legislation
Broad suite of international measures to combat tax avoidance in line with OECD initiatives
The International Dealings Schedule (IDS) provides focus on these tax avoidance activities by multinationals
The IDS changes are designed to provide global substance and transparency for future compliance risk modelling and analysis
The MYOB Tax IDS schedule has several new and altered labels for 2018
International Dealings Schedule
Forms affected - P T C (ids)
Changes to the International Dealings Schedule (IDS)
Tax Laws Amendment (Tax Incentives for Innovation) Act 2016 - received Royal Assent 5 May 2016
Treasury Laws Amendment (2017 Measures No 1) Act 2017 - received Royal Assent 4 April 2017
Provides concessional tax treatment for newly issued shares in qualifying Early Stage Innovation Companies (ESIC) with high growth potential by ‘Angel Investors’
Eligible high-wealth investors qualify as a sophisticated investor otherwise they are a retail (non-sophisticated) investorTax Incentives
for Early Stage Innovation Companies
Forms affected - I T C F MS
NO
TE ESICs must provide the Commissioner information about their investors within 31 days after the end of the financial year
Investments in Early Stage Innovation Companies (ESIC) may be eligible for a non-refundable tax offset of 20% and modified Capital Gains Tax (CGT)
Separate non-refundable tax offset limits and CGT concessions apply to sophisticated and retail investors
MYOB Tax 2017 included changes to enable initial claim of the offset
MYOB Tax 2018 will also:
Include carried forward tax offsets and pre-populate where appropriate
Apply modified CGT treatment in relation to qualifying shares
Pre-fill the tax offset from the ESIC reportTax Incentives for Early Stage
Innovation Companies
Forms affected - I T C F MS
Tax Laws Amendment (Tax Incentives for Innovation) Act 2016 - received Royal Assent 5 May 2016
Treasury Laws Amendment (2017 Measures No 1) Act 2017 - received Royal Assent 4 April 2017
Investments by a limited partner in an Early Stage Venture Capital Limited Partnership (ESVCLP) may be eligible for a non-refundable tax offset of 10% and modified Capital Gains Tax (CGT)
Measures also increase the ESVCLP fund size from $100m up to $200m and allows a wider range of investment activities
Tax Incentives for Early Stage Venture Capital
Limited Partnerships
Forms affected - I T C F MS
Tax Incentives for Early Stage Innovation Companies (ESIC) and Venture Capital Limited Partnerships (ESVCLP)
Labels for capturing ESIC and ESVCLP tax offsets
Individual
Item T8 Label K ESVCLP
Item T8 Label M ESVCLP
Item T9 Label L ESIC
Item T9 Label O ESIC
Company
Item 22 Label L ESVCLP
Item 22 Label P ESVCLP
Item 23 Label M ESIC
Item 23 Label R ESIC
Fund & SMSF Calculation statement:
Label D1 ESVCLP
Label D2 ESVCLP (Reassigned from 2017 ESIC use)
Label D3 ESIC
Label D4 ESIC
Label D Non-refundable non-carry forward tax offsets (D1 + D2 + D3 + D4)
Trusts
Item 52 Label H ESVCLP (Reassigned from 2017 Total Offset use)
Item 52 Label I ESIC
Item 55 Label T ESVCLP (Reassigned from 2017 Total Offset use)
Item 55 Label K ESVCLP
Item 55 Label J ESIC
Item 55 Label M ESIC
Label T Beneficiary Distribution statement worksheet ESVCLP (Reassigned from 2017 Total Offset use)
Label J Beneficiary Distribution statement worksheet ESIC
PartnershipItem 51 New quick access links to ESIC & ESVCLP worksheets
Partners Distribution statement worksheet Two new fields to manage distribution to Partners
NO
TE Exploration companies have to seek JMEI approval by electronic application to the ATO and there are associated reporting requirements
Treasury Laws Amendment (Junior Minerals Exploration Incentive) Bill 2017 - received Royal Assent 4 April 2017
The Junior Minerals Exploration Incentive (JMEI) provides a tax incentive for investment in small mineral exploration companies
JMEI replaces the Exploration Development Incentive that ceased on 30 June 2017
The Government has set an annual exploration credit cap over the next four years totaling $100m and allocation is on a first-come first-served basis
Eligible exploration companies can issue a tax credit portion to investors from their own tax losses associated with greenfield mineral exploration
Tax credits can only be issued against new shares in that income year
These issued credits reduce the companies carried-forward losses
Companies are liable for excess exploration credit tax and shortfall interest
Australian Resident shareholders will be entitled to a refundable tax offset
Note: Companies will receive franking credits and distribute these to shareholders
Junior Minerals Exploration
Incentive
Forms affected - I P T C F MS
NO
TE
MYOB Tax provides for relevant data capture in the International Dealings Schedule (IDS) but does not currently cover the preparation or lodgment of the CbC Report and associated files
Tax Laws Amendment (Combating Multinational Tax Avoidance) Act 2015 - received Royal Assent 11 December 2015
Country-by-Country (CbC) Reporting is part of the broad suite of measures to combat international tax avoidance by more comprehensive exchanges of information between countries
These measures also provide revised standards for transfer pricing documentation
CbC reporting implements Action 13 of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Action Plan
Applies to Significant Global Entities (SGE) and consolidated groups with annual incomes of A$1 Billion or more
Essentially requires higher levels of disclosure encompassing CbC report, master file and local file being lodged within 12 months of the end of their income year
Australian entities falling under the CbC reporting regime generally require local file lodging requirement as part of a consolidated group
Country by Country Reporting
Phase 2
Forms affected - I P T C F MS
Treasury Laws Amendment (Combating Multinational Tax Avoidance) Act 2017 -received Royal Assent on 4 April 2017
Measures designed to provide the ATO with extended powers dealing with tax payers transferring profits to related parties offshore using contrived arrangements to avoid Australian Tax
Part of the package design to tackle multinational tax avoidance
Also addresses the issue of providing timely information for resolution of tax disputes
Diverted Profits Tax (DPT) imposes a penalty rate of 40%
The DPT assessment process imposes liability at assessment, requires upfront payment and requires the tax payer to substantiate non-liability
Essentially - you are guilty until you prove otherwise!!!
DPT only applies to Significant Global Entities (SGE) for income years starting 1 July 2017 or when the tax benefit occurs after this date
Australian Income must be > $25m
Sufficient Foreign Tax Test and Sufficient Economic Substance Test exemptions apply
Diverted Profits Tax
No changes to MYOB Tax for 2017-18 - information only
Tax Changes for Individual Entities
Tax Changes for Individual Entities Medicare Levy Low-Income Threshold Increase
Temporary Budget Repair Levy Fringe Benefit Tax Changes - FBT Rate Sunset
Fringe Benefit Tax Changes and Income Tests for Tax Offsets
Allocation of PAYG Credits and Payments Received against Overseas Repayment Levies
Cost of Managing Tax Affairs - New Reporting Requirements
Tax Deductions for Personal Superannuation Contributions
Tax Offset for Spouse Contributions - Increase in Income Threshold
Transfer Balance Cap
Transfer Balance Cap - Defined Benefit Income Stream
Taxable Government Grants and Specified Payments Reporting
In line with inflation the Medicare Levy Low-Income Thresholds have been increased for the 2017-18 income year
The threshold values for 2017-18 are as follows:
MYOB Tax has been updated to reflect the new threshold calculation values
Increased to: Up from:
Singles $21,980 $21,655
Couples (Family) $37,089 $36,541
Dependent Child $3,406 $3,356
Single Seniors and Pensioners (SAPTO) $34,758 $34,244
Marries Seniors and Pensioners $48,385 $47,670
Medicare Levy Low-Income
ThresholdIncrease
Forms affected - I (mlv)
Tax Laws Amendment (Temporary Budget Repair Levy) Act 2014 -received Royal Assent on 25 June 2014
Fringe Benefits Tax Amendment (Temporary Budget Repair Levy) Act 2014 - received Royal Assent on 25 June 2014
The application of the Temporary Budget Repair Levy (TBRL) ceased to apply after 30 June 2017 and the 2017-18 assessment year will therefore no longer include the additional 2% TBRL for incomes exceeding $180,000
Under the TBRL regime there was also an additional 2% applied to Fringe Benefits Tax starting on 1 April 2015 up until 31 March 2017
MYOB Tax has been updated to reverse the FBT increase and restore the rate to 47% for all calculations
Temporary Budget Repair
Levy Fringe Benefit Tax
Related ChangesFringe Benefit
Tax Rate Sunset
Forms affected - I
Budget Savings (Omnibus) Act 2016 : Schedule 15 Fringe Benefits - received Royal Assent on 16 September 2016
Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 -received Royal Assent on 29 November 2016
From 1 July 2017 removes the Reportable Fringe Benefits Amounts (RFBA) adjustment (49%) from the calculation of Adjusted Taxable Income (ATI)
ATI is used in the calculation of many entitlements including:
Net Medical Expenses Tax Offset (NMETO)
Dependent (Invalid and Invalid Carer) Tax Offset (DICTO)
Low-Income Superannuation Tax Offset (LISTO)
Dependent Child for Medicare Levy purposes
Also removes RFBA adjustment from the calculation of ‘Rebate Income’ used to determine eligibility for Seniors and Pensioners Tax Offsets
There is no change to RFBA treatment for benefits received from employers who are exempt from Fringe Benefits Tax (FBT) under Section 57A of the FBT Assessment Act 1986. For example, hospitals
Fringe Benefit Tax Changes and Income Tests for Tax
Offsets
Forms affected - I
Education Legislation Amendment (Overseas Debt Recovery) Act 2015 and the Student Loans (Overseas Debtors Repayment Levy) Act 2015 - received Royal Assent on 26 November 2015
These Acts provided for the recovery of Higher Education Loan Program (HELP) and Trade Support Loans (TSL) repayments from debtors residing overseas
Essentially these Acts imposed the same repayment obligations on Australians living overseas as applied to those living locally
Overseas debtors are required to register contact details with the ATO
Section 8AAZLD of the Tax Administration Act 1953 stipulates that Pay As You Go Withholding (PAYGW) credits are applied against income contingent loans amounts before being applied against other non-Running Balance Account (RBA) amounts (which includes income tax)
Accordingly the ATO will apply payments from overseas debtors against any HELP or TSL loan repayment commitments before payment of any other tax obligations
Allocation of PAYG Credits
and Payments Received against
Overseas Repayment
Levies
No changes to MYOB Tax for 2017-18 - information only
Cost of Managing Tax Affairs
Individuals claim the Cost of Managing Tax Affairs at label D10
Label D10 records a range of claimable amounts
To provide a more accurate breakdown the ATO have split label D10 into three sub-components
N - Interest charged by the ATO
L - Litigation costs
M - Other expenses incurred in managing your tax affairs
Forms affected - I
As a corresponding change the ATO have also revised the ‘Other income’ item 24 by splitting the ‘Category 1 income’ label
Y - Category 1 income
X - Category 2 income (ATO interest)
V - Category 3 income
Other Income
Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016 - received Royal Assent 29 November 2016
Removes the 10% salary and wages income rule for an Income Tax Deduction for Personal Superannuation Contributions to eligible funds
Effective from 1 July 2017 and applies to most Australians under 75
Tax payers aged 65 to 74 will need to meet the Work Test
Contributions are included in the individual’s Concessional Contributions Cap (CC)Note: the Concessional Cap has been reduced to $25,000 from 1 July 2017
Contributions are subject to 15% contributions tax
Individuals are still required to lodge a Notice of Intention (NOI) to claim the deduction with their fund before lodging their tax return
Can only claim a deduction for the amount on the NOI
Contributions by members to certain schemes and funds are not eligible For example, a Constitutionally Protected Fund (CPF)
MYOB Tax has been updated to remove the 10% Salary and Wages Income Rule confirmation field on the Personal superannuation contributions worksheet
Tax Deductions for Personal
Superannuation Contributions
Forms affected - I (psc)
Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016 - received Royal Assent 29 November 2016
Increases the Income Threshold for Spousal Contributions up to $37,000
Effective from 1 July 2017 (Increase from previous $10,800 threshold)
Applies to super contributions for any married or de facto spouse
Provides for an 18% tax offset of up to $540 (Maximum $3,000 Contribution)
Tax payers aged 65 to 74 will need to meet the Work Test
Contributions are included in the individual’s Concessional Contributions Cap (CC)Note: the Concessional Cap has been reduced to $25,000 from 1 July 2017
Contributions are subject to 15% contributions tax
The offset is not claimable when the spouse receiving the contribution:
Exceeded their Non-concessional Contributions Cap (NCC) for the relevant financial year
Has a Total Superannuation Balance (TSB) that is equal to or exceeds the General Transfer Balance Cap ($1.6m for 2017-18) before the start of the financial year
The MYOB Tax internal calculation base has been changed for Item T3 Super Contributions on behalf of your spouse and additional information has been added to the Spouse Superannuation Contributions (ssc) schedule regarding eligibility criteria
Tax Offset for Spouse
ContributionsIncrease in
Income Threshold
Forms affected - I (ssc)
Forms affected - I (ssc)
Tax Offset for Spouse ContributionsIncrease in Income Threshold
New conditions regarding eligibility criteria for Item T3 Superannuation contributions on behalf of your spouse
Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016 - received Royal Assent 29 November 2016
Places a cap on the amounts that can be transferred from concessionally taxed accumulation accounts to a tax-free retirement account
Effectivity limits the ability of high wealth retirees to pursue earnings tax exemptions
Measure is effective from 1 July 2017
The cap is $1.6m for the 2017-18 financial year
The cap will be indexed in $100,000 increments in line with the Consumer Price Index Increment indexation at current CPI would be around 5 years
Individuals exceeding the Transfer Balance Cap will generally need to commute the excess amount back to accumulation
The ATO will advise and crystallise the excess transfer amount
The ATO Default Commutation Notice advises the voluntary commutation date (60 days) and the superannuation funds they will send Commutation Authorities to in the case of non-compliance
Excess Transfer Balance Tax will apply on the transfer balance earnings for the period when the cap was exceeded
Excess transfer balance earnings are calculated on a notional basis and willcompound daily
TransferBalance Cap
Forms affected - I (pen)
REF ATO Guidance note for Super - 5 (JS 38724-5)
ATO Web Site - Transfer Balance Cap (QC 50880)
If the taxpayer receives a Defined Benefit Income Stream they have to determine the overall value of their Defined Benefit Income Stream
This calculation is the lifetime special value of the defined benefit stream
The taxpayer needs to calculate whether the Defined Benefit Income Stream fits within the $1.6m Transfer Balance Cap (TBC) and if not subsequent tax treatments will apply from 1 July 2017
A Defined Benefit Income Stream Cap of $100,000 will apply for 2017-18
This cap will also be subject to the same indexation regime as the general TBC
When the Defined Benefit Income Stream exceeds the $100,000 Cap
Taxpayers with mixed income streams can commute account based income amounts back into accumulation or withdraw lump sum payments
The excess value of the income stream(s) will be treated as taxable income but is subject to further concessional arrangements
TransferBalance Cap
Defined Benefit Income Stream
Forms affected - I (pen)
Transfer Balance CapDefined Benefit Income Stream
NO
TE ATO Guidance note for Super - 5 (JS 38724-5)ATO Web Site - Transfer Balance Cap (QC 50880)
The following tax arrangements apply when the Defined Benefit Income Stream exceeds the $100,000 Cap
50% of the tax-free component plus the tax element above the cap is taxed at marginal rates
The tax offset for untaxed defined benefit income is limited to the taxpayer cap
The untaxed portion will be applied before the taxed source
Tax payers turning 60 will have apportioned caps for that year
MYOB Tax has two changes:
A new Label M Assessable amount from capped defined benefit income stream at item 7 Australian annuities and superannuation income streams
Additional instructions in the Tax offset worksheet at Item T2 Australian superannuation income stream
Forms affected - I (pen)
NO
TE
The ‘Import from Tax Office Pre-filled Report’ option in MYOB Tax 2018 has been updated to import these transactions at Item 24 Other Income Label V Category 3 Income Code D Taxable Scholarship/Bursaries etc.
Tax Administration Act 1953 - Schedule 1 Subdivision 396-B
The Tax Administration Act covers the reporting of government grants and payments
While this is not new, additional third-party reporting legislation now requires that government entities report on some grants and payments
This reporting includes grants paid to third party entities with an ABN and payments for the supply of services
Transactions for the first reporting period 1 July 2017 to 30 June 2018 must be lodged by 28 August 2018
This data will be available on the ATO Pre-fill Report
Taxable Government Grants and Specified Payments Reporting
Forms affected - I (oly)
Tax Changes for Partnership Entities
No partnership changes for tax 2018
Tax Changes for Partnership Entities
Tax Changes for Trust Entities
No trust changesfor tax 2018
Tax Changes for Trust Entities
Tax Changes for Company Entities
Tax Changes for Company Entities Tax Rate Reduction for Companies
who qualify as Base Rate Entities
Extension of Tax Rate Reduction for Companies
Tax Rate Reductions for Companies - Franking Credits
Treasury Laws Amendment (Enterprise Tax Plan) Act 2017 - received Royal Assent 19 May 2017
Provides for a reduction in the corporate tax rate to 27.5% (down from 30%) for entities with an aggregated turnover of less than:
$25m for the 2017-18 income year
$50m for the 2018-19 income year
Companies self-assess their eligibility for the lower corporate tax rate
Company entities eligible for this lower corporate tax rate will be known as a Base Rate Entity (BRE)
There is the possible impact of substituted accounting periods
The corporate tax rate will be further reduced for BREs as follows:
2024-25 Income year - 27%
2025-26 Income year - 26%
2026-27 Income year - 25%
MYOB Tax contains changes to forms, rates, calculations and tests
Tax Rate Reduction
for Companies who qualify as Base Rate
Entities
Forms affected - C
Treasury Laws Amendment (Enterprise Tax Plan Base Rate Entities) Bill 2017 - Senate first reading 12 February 2018
This bill has not yet been passed and current expectation is that it will be passed into law sometime in June 2018
The bill will modify the requirements to qualify as a base rate entity
Replaces the existing business test with a passive income test
Passive income includes items such as interest, royalties, rent, non-portfolio dividends, net capital gains, non-share dividends and income arising from Partnerships or Trusts that is predominately passive
Companies with greater than an 80% passive income will not be eligible for the lower corporate tax rates
In general the following entities will still be considered to be BREs:
Non-profit companies
Pooled Development Funds
Retirement savings account providers
Public trading trusts
Tax Rate Reduction
for Companieswho qualify as Base Rate
Entities
Forms affected - C
Treasury Laws Amendment (Enterprise Tax Plan 2) Bill 2017 - Senate first reading 12 February 2018
Provides for the extension of corporate tax rate reductions to all corporate entities
This bill has not yet been passed and current expectation is that there will be vigorous opposition raised in the Senate
If the bill is passed in its current form this would result in the following corporate tax rates being applicable:
Income Year Tax Rate Complying Condition
2019-20 27.5% $100m aggregate turnover
2020-21 27.5% under $250m aggregate turnover
2021-22 27.5% under $500m aggregate turnover
2023-24 27.5% under $1,000m aggregate turnover
2024-25 27% -
2025-26 26% -
2026-27 25% -
Extension of Tax Rate
Reduction for Companies
Forms affected - C
NO
TE
Practical Compliance Guide PGC 2017/D7 covers the situation whereby distributions have been issued based on an incorrect franking rate - shareholders have to be advised who may then need to file amended returns
The maximum Franking Credit that can be allocated to a Corporate FrankableDistribution will be based on that entity’s applicable Corporate Tax Rate for Imputation Purposes (CTRFIP)
Simply the company must frank their distributions for the current year on the assumption that their current year income will be the same as the previous year
So for the 2017-18 income year the Corporate Tax Rate for Imputation Purposes will be:
27.5% - if the company met the Base Rate Entity requirements for the prior 2016-17 income year, or the company is a Base Rate Entity in its first year of business
This may mean that the company has a current corporate tax rate of 30% but a Franking Credit Rate for Imputation Purposes of 27.5%
30% - for all other companies
Tax RateReduction for Companies
Franking Credits
Forms affected - C
Tax Rate reduction for Companies that qualify as Base Rate Entities (BRE)
Tax Changes for Superannuation & Self Managed Super Funds
Tax Changes for Superannuation & Self Managed Super Funds
Strengthening the Integrity of Income Streams
Removing the Existing Anti-detriment Provisions
Total Superannuation Balance
Transfer Balance Cap - Capital Gains Tax Relief
Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 -received Royal Assent 29 November 2016
Treasury Laws Amendment (2017 Measures No 2) Act 2017 Superannuation Reform Package Amending Provisions - received Royal Assent 22 June 2017
Transitions to Retirement Income Streams (TRIS) allow people to who have reached their preservation age to access their superannuation benefits without having to retire or leave their jobs
TRIS was intended to allow older workers to transition to retirement
Reduced working hours being supplemented by the superannuation income stream
The TRIS payments are generally subject to Exempt Current Pension Income (ECPI)
However, TRIS has often been used by the taxpayer to simply continue working and avoid tax
The government will remove the TRIS tax advantages and retain the original transitional retirement benefits
Strengthening the Integrity of Income Streams
Forms affected - F MS (xF)
As at 1 July 2017 these changes include:
Removal of the tax-exempt status of asset income for TRIS accounts not in retirement phase -such income will be taxed at 15%.
Removal of tax-free treatment for lump sum superannuation income stream payments.
Lump sum payments will not count towards an individual’s annual minimum pension payments.
All commutations of superannuation income streams will be treated as lump sums.
Superannuation Funds and SMSFs need to ensure that TRIS payments being accessed by the tax payer meet the general TRIS legislative intent
Need to clearly identify the change between fund accumulation and retirement phases.
Treat costs as deductible where the TRIS is not eligible for transitional purposes.
Identify and report to the ATO all TRIS accounts in accumulation phase.
MYOB Tax contains several changes as follows:
Fund Return (F) - Section B Label Y (instructional changes)
SMSF Return (MS) - Section A : Q10 (instructional changes)
SMSF Return (MS) - Section B Label Y (instructional changes)
SMSF Return (MS) - Sections F & G Member and supplementary member information –New field to record the number of TRIS accounts in accumulation phase
Strengthening the Integrity of Income Streams
Forms affected - F MS (xF)
Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 -received Royal Assent 29 November 2016
This measure commenced on 1 July 2017 and the change removes the existing anti-detriment provision to ensure a consistent treatment of lump sum death benefits across all superannuation
Anti-detriment provisions provided options for a fund to claim a tax deduction for additional payments to eligible dependents on the death of a member
These additional payments could refund the 15% contributions tax paid by the deceased member over their lifetime
The Act provides for a two-year transitional period up to 30 July 2019
MYOB Tax contains instructional changes as follows:
Fund Return (F) - Section C
SMSF Return (MS) - Section G
Removing the Existing
Anti-detriment Provisions
Forms affected - F MS
Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 -received Royal Assent 29 November 2016
The Total Superannuation Balance (TSB) is the fund balance as at 30 June reported each financial year
There are multiple superannuation changes dependent on the individual’s TSB
From 1 July 2017 the TSB will be used to determine eligibility for:
the unused concessional contributions cap carry-forward
the non-concessional contributions cap and the two or three-year bring forward period
the government co-contribution
The tax offset for spouse contributions
SMSF (or small APRA funds) to determine use of the segregated assets method to calculate exempt current pension income
Forms affected - MS (xF)
Total Superannuation
Balance
Total Superannuation Balance
There are no changes to MYOB Tax for Fund Returns (F) but the SMSF Return (MS) has additional labels to calculate the TSB correctly
SMSF - Section F and G: Member Supplementary member information
Label S1 - Accumulation phase account balance
Label S2 - Retirement phase account balance (Non-capped defined benefit income)
Label S3 - Retirement phase account balance (Capped defined benefit income)
Label X1 - Accumulation phase value
Lebel X2 - Retirement phase value
Analysis labels S1 + S2 + S3 must equal Label S -Closing Account Balance
Labels X1 & X2 are optionally completed if the mandatory fields aren’t equal to the accumulation and retirement phase values
Forms affected - MS (xF)
Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 -received Royal Assent 29 November 2016
The introduction of the Transfer Balance Cap (TBC) effective from 1 July 2017 ($1.6m for 2017-18) affects Individual Returns (I) for 2017-18
In complying with Transfer Balance Cap provisions superannuation funds would have been liable to a capital gains event and Capital Gains Tax (CGT) relief was available for one (1) year in some circumstances
Funds utilising the CGT relief were required to notify the Commissioner by lodging a 2016-17 CGT Schedule prior to lodging their 2016-17 tax return
Where a fund has so notified the Commissioner, they now need to report that for 2017-18 the deferred notional gain has been realised
MYOB Tax has been changed as follows:
BW Schedule Item 8Remove label F Capital gains deferred due to CGT reliefRemove label G Capital gain amount deferred
CGT Schedule Item 1 Add label S Amount of capital gain previously deferred undertransitional CGT relief for superannuation funds
Forms affected - F MS (bw) (cgt)
Transfer Balance CapCapital Gains
Tax Relief
Superannuation Changes from 1 July 2017
Superannuation Changes from 1 July 2017
Concessional Contributions Cap
Non-concessional Contributions Cap
Five Year Carry Forward of Concessional Contributions Cap
First Home Super Saver Scheme
Division 293 Threshold Reduction
Streamlining Superannuation Release Authorities
Innovative Retirement Income Stream Products
Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 -received Royal Assent 29 November 2016
The annual concessional contributions cap on pre-tax superannuation contributions will be reduced down to $25,000 (from $30,000 or $35,000) for the 2017-18 year
The differential age based cap treatment has been removed
All Defined Benefit Contributions for members of a Defined Benefit Fund (DBF) will be included in the cap from the 2017-18 year onwards
MYOB Tax calculations have been updated to reflect these Concessional Contribution Cap changes
Fund managers should note the changed reporting requirements for:
Member Contribution Statements (MCS)
Transfer Balance Report (TBAR)
Member Account Attribution Service (MAAS)
New Streamlined Release Authorities cover the release process of amounts from superannuation funds for concessional contributions
Concessional Contributions Cap Reduction
Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 - received Royal Assent 29 November 2016
The annual con-concessional contributions cap will be reduced down to $100,000 (from $180,000) for the 2017-18 year
Non-concessional contributions for Individuals with a Total Superannuation Balance (TSB) of more that the General Transfer Balance Cap ($1.6m for 2017-18) will be in excess
Individuals under age 65 can generally bring forward 2 years of non-concessional contributions ($300,000 over 3 years)
The TSB on the day prior to the period will determine the bring forward amount
TSB above $1.5m - no bring forward
TSB above $1.4m - bring forward limited to $200,000 over 2 years
There are no changes to MYOB Tax
The new Streamlined Release Authorities also cover the release process of amounts from superannuation funds for non-concessional contributions
Non-Concessional Contributions Cap Reduction
Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 - received Royal Assent 29 November 2016
From 1 July 2018 individuals with a Total Superannuation Balance less than $500,000 can make catch-up concessional contributions
They can access their unused Concessional Contribution Cap for a period of Five (5) Years
Any unused concessional contribution cap will expire after 5 years
The 2019-20 financial year will be the first period in which an Individuals concessional contribution cap can be extended by accessing previously unused concessional contributions
There are no changes to MYOB Tax
Five Year Carry Forward of
Concessional Contributions Cap
Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No 1) Act 2017 - received Royal Assent 13 December 2017
First Home Super Saver Tax Act 2017 - received Royal Assent 13 December 2017
The First Home Super Saver Scheme (FHSS) enables taxpayers to save for a first home deposit within their superannuation fund
FHSS enables taxpayers to save using the concessional tax superannuation regime
Scheme eligibility is taxpayer based - therefore relationship status has no impact
From 1 July 2017 a taxpayer can make voluntary contributions into their superannuation fund under the following conditions:
Concessional contributions (including salary sacrifice) - taxed at 15%
Non-concessional contributions
all contributions are subject to existing superannuation contribution caps
Contributions can be made to multiple funds
Contributions to defined benefit funds or constitutionally protected funds are not eligible for FHSS
Note: FHSS is a scheme to access funds and not an account
First Home Super Saver
Scheme
From 1 July 2018 the voluntary contributions together with the associated earnings can be released to assist with the purchase of a first home
First Home Super Saver Scheme (FHSS) releases are based on application and are subject to the following:
the maximum FHSS release amount outlined in the FHSS determination
there is a limit of $15,000 against contributions for any one year (together with earnings)
the maximum FHSS withdrawal is $30,000 (together with earnings)
First In - First Out processing and non-concessional contributions take precedence
a single FHSS release application restriction
FHSS releases are subject to ATO withholding and will be taxed at the taxpayers marginal rate (including Medicare) less a 30% tax offset
a catch for some taxpayers may be the allocation of FHSS funds against other Commonwealth debt before release
an ATO service processing time of up to 12 working days will apply
the fund may also apply additional fees or changes
a FHSS release does not affect the calculation of concessional or non-concessional contributions for cap determination purposes for the relevant year
unused FHSS release amounts must be repaid and are subject to a 20% FHSS tax
There are no changes to MYOB Tax
First Home Super Saver
Scheme
Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 -received Royal Assent 29 November 2016
From 1 July 2017 the Division 293 income threshold for the 2017-18 year has been reduced to $250,0000 (down from $300,000)
High-Income Earners pay tax on their concessional superannuation contributions at 30% above this threshold
The MYOB Tax calculations have been changed to reflect the new threshold value
Division 293 ThresholdReduction
Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 - received Royal Assent 29 November 2016
The ATO have introduced additional streamlining of Superannuation Release Authorities with electronic forms processing on the portal
Essentially these changes move processing to a single combined approach and have a variable implementation impact
2013-14 Financial year onwards
Excess concessional contributions determinations and amended determinations
Excess non-concessional contributions determinations and amended determinations
Excess non-concessional contributions tax and amended assessments
2012-13 Financial year onwards
Division 293 due and payable tax assessments and amended assessments
Division 293 deferred debt assessments and amended assessments
2018-19 Financial year onwards
First Home Super Saver Scheme
There are no changes to MYOB Tax
Streamlining Superannuation
ReleaseAuthorities
Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 - received Royal Assent 29 November 2016
Measures designed to stimulate the development of retirement products
Covers lifetime product initiatives such as deferred products and group self-annuities
Designed to provide retirees with greater choice and flexibility
From 1 July 2017 the government has removed the tax barriers and streamlined the process for product providers to deal with government agencies
Such products were previously required to make annual payments to the earnings on assets to be tax exempt
Treat the reporting of such lifetime products to be the same as other superannuation products
Total Superannuation Balance (TSB)
Transfer Balance Cap (TBC)
Contribution Caps
There are no changes to MYOB Tax
Innovative Retirement
Income Stream Products
2Budget Commentary
Tax highlights and summary from the 2018 Federal Budget
CommentaryFederal Budget 2018 Individuals
Business
Superannuation
Black Economy Measures
Post Budget Mutterings and Related Matters
IndividualsSeven-year Personal Income Tax (PIT) Plan to be implemented in three steps
Step 1: Low and Middle-Income Tax Offset to be introduced A Low and Middle-Income Tax Offset (LMITO) will provide a lump sum non-refundable tax offset
Assessed by the ATO and processed at tax assessment
Will apply to income years from 2018-19 to 2021-22 for taxable incomes up to $125,333
The LMITO will be in addition to the existing Low-Income Tax Offset (LITO)
Taxable Income LMITO
< $37,000 $200
$37,000 - $47,999 $200 plus 3c per $ above $37,000
$48,000 - $90,000 $530
$90,001 - $125,333 $530 less 1.5c per $ above $90,000
Step 2: Bracket creep relief for middle-income tax payersFrom 1 July 2018
the 32.5% tax bracket threshold will increase to $90,000 (up from $87,000)
From 1 July 2022
the Low-Income Tax Offset (LITO) will increase to $645 (up from $445)
LITO will be changed for incomes up to $66,667
the 19% tax bracket threshold will increase to $41,000 (up from $37,000)
the 32.5% tax bracket threshold will be further increased to $120,000 (up from $90,000)
Taxable Income LITO
< $37,000 $645
$37,001 - $41,000 $645 less 6.5c per $ above $37,000
$41,001 - $66,667 $385 less 1.5c per $ above $41,000
Tax Rate 2017-18 Threshold 2024-25 Threshold
Nil < $18,200 < $18,200
19% $18,201 - $37,000 $18,201 - $41,000
32.5% $37.001 - $87,000 $41,001 - $200,000
37% $87,001 - $180,000
45% > $180,000 > $200,000
Step 3: 37% personal income tax bracket removalFrom 1 July 2024
the 37% tax bracket will be removed
the 32.5% tax bracket threshold will increase to $200,000 (up from $120,000)
Essentially this leaves four (4) tax brackets as illustrated in the following table:
Medicare low-income thresholds will be increased from 1 July 2017
The proposed increase in the Medicare levy from 2% to 2.5% of taxable income that was to apply from 1 July 2019 will now not proceed
this will also affect other consequential linked tax rate changes such as Fringe Benefits Tax (FBT)
Increased to: Up from:
Singles $21,980 $21,655
Couples $37,089 $36,541
Dependent Child $3,406 $3,356
Single Seniors and Pensioners (SAPTO) $34,758 $34,244
Married Seniors and Pensioners $48,385 $47,670
Medicare Changes
Income Tax Exemption for certain Veteran Payments
From 1 May 2018 Supplementary amounts paid to veterans and full payments made to a spouse (or partner) of a deceased veteran will be exempt from income tax
This includes such payments as pension supplements, rent assistance and remote area allowances
Licence schemes of an Individual’s Fame or Image
This measure is intended to target the licencing of an Individual’s fame or image to other related entities such as a Company or Trust - often referred to as the fame tax
Income from that arrangement goes to the licence holder and can create opportunities to take advantage of differential tax treatments and avoided tax outcomes
From 1 July 2018 all remuneration including non-cash benefits resulting from the commercial exploitation of fame or image will be included as assessable income of that Individual
Research and Development Tax Incentive Changes
The Research and Development (R&D) Tax Incentive calculation will change for income years beginning on or after 1 July 2018
The threshold for claiming accelerated R&D Incentives will increase to $150m (up from $100m)
Some R&D changes have a differential application dependent on the company's aggregated annual turnover
Companies with an annual aggregated turnover of less than $20m(Smaller R&D claimant)
Companies with an annual aggregated turnover of greater than $20m
Business
Companies with Annual Aggregated Annual Turnover of less than $20m
Current R&D Incentive
A 43.5% refundable tax offset is available with a minimum eligible R&D expenditure of $20,000 per annum
Proposed R&D Incentive
A refundable tax offset of 13.5% above the company's corporate tax rate (CTR)
The proposed tax offset rate would remain the same at 43.5% for most entities
The newly defined Base Rate Entities (BRE) have a lower CTR and therefore have a tax offset of 41%
The maximum refundable tax offset will be capped at $4m per financial year
R&D tax offsets above the $4m cap can be carried-forward to future years as non-refundable tax offsets
Companies with Annual Aggregated Annual Turnover of more than $20m
Current R&D Incentive
A 38.5% non-refundable tax offset is available with a minimum eligible R&D expenditure of $20,000 per annum
Proposed R&D Incentive
Introduction of an entity R&D Intensity Percentage based on the amount of company expenditure spent on R&D
Four levels of non-refundable tax offset based on the R&D intensity percentage and the entities corporate tax rate
R&D Intensity% BRE offset% Std offset%
0-2% 31.5% 34%
2-5% 34% 36.5%
5-10% 36.5% 39%
> 10% 40% 42.5%
$20,000 Asset Immediate Write-off Extended
The Small Business Entity (SBE) instant write-off regime for assets less than $20,000 will be further extended for another 12 months
SBEs will get an immediate deduction for all assets costing less than $20,000 and installed ready for use on or before 30 June 2019
SBE Eligibility Criteria - covers over 98% of Australian Business
Annual turnover less than $10m
Mandates that all SBE assets be handled under the Simplified Depreciation Rules
Includes the instant write-off of Small Business Pool balances less than $20,000
The lock out laws which prevent SBEs from re-entering the pooling rules for five (5) years when they opt out will continue to be suspended until 30 June 2019
Division 7A Unpaid Present Entitlements Rule Strengthened
Division 7A of the Income Tax Assessment Act 1936 will be amended to clarify the circumstances regarding application to Unpaid Present Entitlements (UPE)
This integrity rule covers the UPE resulting in situations when a related private company hasn’t yet been paid a trust distribution as a beneficiary but has provided a benefit to its shareholder
This measure will ensure the value of the UPE is either:
repaid to the private company over time as a complying loan
or subject to tax as a dividend
Division 7A amendments are part of the reforms announced in the 10-Year Enterprises Tax Plan in the 2016-17 budget
The amendments will be deferred to take effect from 1 July 2019 so that all Division 7A amendments progress as a consolidated package
Deductions for Vacant Land to be Denied
From 1 July 2019 tax deductions will not be claimable for expenses associated with holding vacant land and any such costs cannot be carried forward to later income years
These measures will apply to land held for both residential or commercial purposes
Denied deductions such as borrowing expenses and council rates may still be used as part of the asset cost base for Capital Gains Tax (CGT) purposes on sale
The measure does not apply to land where an occupiable rental property exists or the land is used for business purposes such as primary production
This integrity measure will address the issue of deductions being improperly claimed for expenses such as interest costs where the land is not genuinely held for the purpose of earning accessible income
Small Business Capital Gains Concession for assignment of Partnership Rights
From 8 May 2018 (7:30pm AEST) the Small Business Capital Gains Tax (CGT) Concession will no longer be available to partners that assign their rights to the future income of a partnership
The SBE CGT concessions assist owners of small business by providing relief from CGT on the disposal of assets related to the partnership business
This integrity measure will clarify use of the Everett Assignment and the associated sale of the partnership assets for SBE CGT concession purposes
Everett Assignment - 1980 High Court decision regarding the assignment of partnership income to the wife
Some taxpayers were inappropriately accessing these concessions by assigning their rights to future partnership income to an entity without giving that entity any role in the partnership
Non-compliant Payments to Employees and Contractors
From 1 July 2019 business will no longer be able to claim deductions for payments to employees when the employer has not meet met their Pay as You Go (PAYG) obligations
These PAYG obligations include reporting or remitting PAYG to the ATO
These measures also cover the business deduction on payments to contractors subject to withholding
A business paying a contractor who did not provide an ABN must make a withholding at the top marginal tax rate
When this is not down correctly the entire payment is non-deductible
Significant Global Entity Definition
The definition of Significant Global Entity (SGE) will be amended to include members of large multinational groups headed by Private Companies, Trusts, Partnerships and Investment entities
The current definition encompasses only groups headed by Public Companies and Private Companies required to provide consolidated financial statements
This measure applies to income years commencing on or after 1 July 2018
This change will extend the application of the SGE information collection regime and ensure that the Commissioner will be able to monitor Australia’s multinational tax integrity rules
Multi-national Anti-avoidance Law (MAAL)
Diverted Profits Tax (DPT)
Tightening of Thin Capitalisation Rules
This change will ensure that the value of assets for Thin Capitalisation purposes will be aligned with the value included in the financial statements
Essentially this means that asset valuations used to justify debt deductions are robust
This measure applies to income years commencing on or after 1 July 2019 with transitional arrangements available for asset valuations made before 8 May 2018 (7:30pm AEST)
Foreign controlled consolidated groups who also control a foreign entity will be treated as both outward and inward investment vehicles for Thin Capitalisationpurposes
This ensures inbound investors cannot access tests that are only intended for outward investors
Tax Exempt Entity Loans
Tax exempt entities that become taxable after 8 May 2018 will not be able to claim tax deductions arising from the repayment of the principle on a concessional loan
Such deductions result from the complex interaction between the rules for Taxation of Financial Arrangements (TOFA) and the rules dealing with Deemed Market Values for Tax Exempt Entities
Concessional loans entered into by a tax exempt entity that has become taxable will be valued as if they were originally made on commercial terms
This integrity measure is designed to protect the future revenue base
Removal of Capital Gains Tax Discount for Managed Investment Trusts and Attribution Managed Investment Trusts
Managed Investment Trusts (MIT) and Attribution Management Investment Trusts (AMIT) will not be able to apply the 50% Capital Gains Tax (CGT) discount at the trust level
This prevents CGT discounts flowing through to beneficiaries who would not be entitled to the CGT discount in their own right
The change ensures that an investors income from MITs and AMITs is taxed correctly as if they had invested directly
This measure applies to payments made from 1 July 2019
Extension of Anti-avoidance Rules for Circular Trust Distributions
The anti-avoidance rule that applies to a Closely Held Trust engaging in circular trust distributions will be extended to cover Family trusts
Circular Trust Distributions occur where trusts are beneficiaries of each other in a round robin arrangement
The ATO can impose tax on such distributions at a rate equal to the top Individual Tax Rate plus the Medicare Levy
This measure will apply from 1 July 2019
Testamentary Trusts and Injected Assets
The Concessional Tax Rates available to minors receiving income from a Testamentary Trust will be limited to income derived from assets that are transferred from the deceased estate or the proceeds of the sale of those assets
Income received by minors from a Testamentary Trust is taxed at normal adult tax rates rather than the higher rates applying to minors
An injection of assets unrelated to the deceased estate into the Testamentary Trust could enable an inappropriate benefit from the lower tax rate
This measure clarifies the tax rates for minors and applies from 1 July 2019
Self Managed Superannuation Fund Membership
Self Managed Superannuation Funds (SMSF) will be allowed to have up to six (6) members
Applies from 1 July 2019
Self Managed Superannuation Fund Audit Cycle
Self Managed Superannuation Funds (SMSF) with a history of good record keeping and compliance will have changed annual audit requirements
SMSF trustees that have three (3) consecutive years of clear audit reports and timely lodgments will qualify
This change applies from 1 July 2019
Superannuation
Preventing Inadvertent Concessional Cap Breaches
Individuals whose income exceeds $263,157 per annum and who work for multiple employers will be able to nominate that wages from an employer are not subject to the Superannuation Guarantee (SG)
This change is intended to ensure that Individuals can avoid unintentionally breaching the $25,000 annual concessional contributions cap due to multiple compulsory SG contributions
This measure applies from 1 July 2018
Personal Contributions Deductions Integrity
Individual Income Tax returns will include a tick box for Individuals with personal superannuation contributions to confirm that they have complied with the requirements to submit a Notice of Intent (NOI)
The NOI is required when the taxpayer intends to take a tax deduction for the contributions
When no NOI is received by the superannuation fund no tax is paid by the fund but the Individual taxpayer has also taken the deduction against taxable income
This measure applies from 1 July 2018
Recent Retiree - Personal Superannuation Work Test
An exemption from the Work Test for voluntary superannuation contributions will be introduced
Currently the work test restricts the ability to make voluntary superannuation contributions for individuals aged 65-74 and working more than 40 hours in any 30 day period
The work test exemption allows retirees flexibility to address their financial affairs in the transition to retirement
The change applies to people aged 65-74 with superannuation balances below $300,000 in the first year the retiree does not meet the work test
This measure applies from 1 July 2019
Illegal Phoenixing and Black Economy Reforms
The government will reform the corporations and tax laws to provide regulators with the ability to deter and disrupt illegal phoenix activity
Illegal phoenixing involves the deliberate misuse of the corporate form
The package includes reforms to:
introduce new offences targeting those who conduct or facilitate illegal phoenixing
prevent directors improperly backdating resignations to avoid liability or prosecution
limiting the ability of directors to resign when this would leave the company with no directors
restrict the ability of related creditors to vote on the appointment, removal or replacement of an external administrator
extend the director penalty regime to GST, Luxury Car Tax and Wine Equalisation Tax
expand the ATO’s power to retain refunds where there are outstanding tax obligations
Black Economy Measures
Taxable Payments Reporting System Expansion
The Taxable Payments Reporting System (TPAR) will be expanded to include the following industries:
Security Providers
Investigation Services
Road Freight Transport
Computer Design and related services
These changes are in response to the Black Economy Taskforce findings which identified these industries as being at higher risk of non-compliance with tax obligations
The ATO will be providing a new online TPAR processing option to streamline manual reporting
This measure applies from 1 July 2019 with the first subsequent TPAR due on 28 Aug 2020
Large Government Contract Tenders
Business seeking to tender for large Australian Government contracts will be required to provide a statement of compliance regarding the status of their tax obligations
The proposal will apply to contract tendering over $4m (including GST)
This measure applies from 1 July 2019
Several Members of the House have indicated that they will vigorously oppose various budget matters and this could have a significant impact of the packaged nature of some measures
Kelly O’Dwyer, the Minister for Revenue and Financial Services, has announced the intention to provide a one-off 12 month amnesty starting 24 May 2018 for historical under-payment of Super Guarantee (SGC) - this is thought to be a pre-cursor to a stricter penalty regime following the introduction of Single Touch Payroll (STP)
Significant market commentary surrounding the proposed introduction of a $10,000 economy wide cash payment limit has been widely noted
An extension to the pension loans scheme was announced to provide pensioners over the age of 65 with a reverse mortgage of $11,799pa (for an Individual) using the equity in their own home
Provides an income stream with a 5.25% interest rate
Administered by the Department of Human Services
Post Budget Musing, Mutterings and Related Matters
Several changes will be introduced to cap and control various Superannuation Fund fees
Charge the ATO with managing the consolidation of Low Balance Superfunds
3% annual cap on passive fees for fund balance below $6,000
Removal on exit fees for all superfund accounts
Change the application of integrated Insurance options
The removal of Luxury Car Tax on the reimportation of vehicles sent overseas for refurbishment
From 1 July 2019 the treatment of GST on online hotel bookings will be treated the same for both domestic and off-shore agencies
The Civil Aviation Authority will be granted $3m to manage safety standards for both commercial and recreational drone usage
Also of interest was the announcement to provide the International Cricket Council (ICC) a five (5) year tax exemption for the Twenty20 World Cup being held in 2020
3PLS Review
Overview of the how, why and when of PLS to date plus what’s next
PLS Review• The Practitioner Lodgment Service (PLS) started to replace
the ATO's venerable Electronic Lodging System in early 2017
• PLS uses high security communication technology to send Standard Business Reporting (SBR) messages over the internet to the ATO's SBR End-point
• Messages are transported using the Hypertext Transport Protocol Secure (HTTPS) protocol and encrypted using Transport Layer Security (TLS)
• Essentially this is a more interactive technology environment as compared to ELS and will enable the ATO to further extend and enhance their interactive services
• This is a mandated change and all standard return lodging for 2018 will now be managed entirely through PLS
• Furthermore the ATO expect to retire the existing ELS service for all forms from 2017 onwards in December 2018
Lodgment Manager
Home Page
ATO PLSLodgment Manager Review
PLS is simple to configure and works in Terminal Server environments
May require Windows Firewall reconfiguration
Provides a simultaneous lodging solution
PLS Service availability and uptime has been variable
www.ato.gov.au/General/Online-services/System-maintenance/
Generally the migration to PLS has been very straight-forward
PLS provides the benefits of real-time lodging and subsequent portal updates
ATO Deeper Validation means that returns are being more rigorously checked
Ongoing service development will further extend and enhance the service capabilities
Lodgment Manager
Track the status of returns through the PLS workflow
Completed Clean Validation
Ready to Lodge Prepared for Lodgment
Transmitting Being transmitted by the MYOB PLS Service
Transmitted Received by MYOB
Lodged Lodged Return (Hidden by default)
Rejected Rejected Return
PLS Lodgment Flow
TRANSMITTED
PLSNew features
for 2018
PLS Lodgment Batch Management Provides a similar "batching"
capability to ELS
PLS Pre-fill
ATO PLS Pre-fill option for I Returns
PLS Lodgment Batch Management
Assigns a unique Batch ID during the lodging process
New Lodgment Batch Viewer Home Page
Date-driven real-time batch information status display
Option to print Combined Validation Report
PLSPlanned new
features
ATO Client Reports - expected release 2018 Q3
ATO Lodging Statistic Reports - expected release 2018 Q3
ATO EFT Reconciliation Report - expected release 2018 Q3
PLS Desktop Activity Statements - expected release 2018 Q4
Currently under development
Future extension
Integration of Online PLS Form lodging status to Desktop
Electronic Notices of Assessment
4ATO Pre-fill
A walk through the new ATO Pre-fill features and workflow for I Returns
ATO PLS Pre-fill for I Returns The I Return PLS pre-fill productivity feature was introduced in MYOB Tax 2017.3
Pre-fill is built around the ATO SBR online services technology
Replaces the previous Tax Agent Portal based approach and provides both extended and enhanced functionality
Note: Only I Return pre-fill data is available from the ATO for pre-filling
Uses an interactive pre-fill request and download option
Can process either for an individual client or for a selected client list
Clients must have a Tax File Number (TFN) assigned
Downloaded pre-fill reports are stored locally according to practice configuration
Integrates with MYOB Document Manager (DM) if installed
Simple point and click option to pre-fill downloaded data into tax returns
Returns must be rolled over and "Ready to Pre-fill"
ATO Pre-fill data cannot be edited but can be deleted at the individual schedule level
The ATO requires pre-fill data to be explicitly accepted
Each pre-fill item is considered to be a new line entry - not matched to existing data
Pre-fill data does not roll-forward - it is designed to be completely refreshed
ATO PLS Pre-fill Report
ATO PLS Pre-fill Data
Salary and wages
Private Health Insurance
Government payment
Employee Share
ATO interest
Bank interest
Dividends
Averaging - PP
Averaging - Div 405
Managed Fund
Higher Education
Pension - non super
ETP
Super income stream
Super lump sum
ATO PLS Pre-fill Status
Messages
Pre-fill Status Description
Not Requested No pre-fill download has been requested
Downloading Pre-fill download has been requested
Download error There was an error while requesting the pre-fill report
Received Pre-fill Report has been received
Pre-filled Tax return has been pre-filled
Import error There was an error while importing the pre-fill data
ATO PLS Pre-fill for I Returns
5Support Matters
What’s changed with your support options and a look at some common tax calls
Support MattersGeneral
Practice Backup Strategy
Installing updates
Not keeping up to date with MYOB Releases
Make sure you get the eBulletin
Read the Release Notes
Turn off Anti-virus during installation
Basic system navigation
Drop down menus
Home page features - Field Chooser, Re-order, Re-size, Sorting, Grouping
Practice Security - Tax Return Security
Failed Migrations
Migrations are a relatively straight forward project
But they do require a degree of technical expertise
There may also be wider implications such as PLS reconfiguration
MYOB have remote and online services available to assist
Interactive Voice Response (IVR) changes
MYOB has a program of constant service improvement
The IVR and associated queues will change with service requirements
Support Matters
The Top 3 Knowledge
Base Articles
How to restart the SBR Sender Service
MYOB Tax SBR Server Sender - runs on the server
Controlled through Windows Services Manager
Recommended: Set up a Desktop Shortcut
KB 38335
PLS lodging - Troubleshooting returns stuck as Transmitting or Transmitted
Knowledge Base article will assist with checking these returns
In some cases correction will require MYOB Support assistance
KB 38226
Machine Name not unique
This occurs in situation where the system has detected a workstation conflict
There can be various reasons for this situation
Terminal Server environments generally require specific launch configuration
KB 27473
Help and Knowledge
Base Updates
The Information Experience Team have been working through a major project to review, reformat and consolidate the Online Help and Knowledge Base articles
All articles are being reviewed
Anything no longer relevant for current usage has been deleted
Any duplication is being removed
Information has been extensively checked for accuracy
The articles have been reformatted for consistency
The project goal is the consolidation of the Help and Knowledge Base articles into a single self-service platform
Providing simplified access
Consistent searching experience
Improved search results
Enhanced presentation utilising collapsing menus
Support for additional information linking and embedding
Tax 2018 will include the new Help environment which will be extended to cover additional product modules over the coming months
F1 Help
Will continue to provide the consistent HELP experience
We have rebuilt the Knowledge Base
my.MYOB is still the access point
http://help.myob.com/wiki/x/MYHMAQ
There is a new search landing page …
Search the whole knowledge base or limit to a product …
Click the drop down arrow to select a product
Enter your search here
Too many results - use the filters !!!
Refine searches using the ‘Filter by’ section to select a product
Great looking help
KB Article ID and the product the article relates to
remains the same
Feedback goes direct to the Information
Experience Team
Collapsing menu
FAQs from the Support Team
Distributing a Foreign Tax Credit (FTC) from a Trust return
Distributing an overall trust loss between trusts (V335 error)
Distributing a Foreign Tax
Credit from a Trust Return
Issue
When distributing a Foreign Tax Credit (FTC) via the <F4> distribution function, it does not populate the Foreign Income Tax Offset at Item 23 label Z
Impact
Overlapping of the FTC $1,000 rule for individuals
Solution
Modify the estimate generation by switching on the tax tables for the Trust and reverting the answers back when completed
Additional details are available in the Knowledge Base article KB 33905
Distributing a Foreign Tax
Credit from a Trust Return
1. On the Front Cover answer Yes to the question Is any tax payable by the trustee ?
2. Change Select applicable Tax Table to 9
3. Navigate to and click in item 23 label Z then press F4 to process the distribution
4. At the Distribution tab, complete the distributions for all beneficiaries
5. Finish by reverting the changes made at Steps 1 & 2 back to the original values
Distributing an overall Trust loss between
Trusts(V335 error)
Issue
Trust A has a capital gain together with a income loss and the overall position of Trust A is a gain
This gain is now being distributed to Trust B who has a capital loss situation greater than the gain being distributed from Trust A
The net result of the distribution will therefore be an overall loss situation for Trust B
Impact
Trust A has a capital gain together with a income loss and the overall position of Trust A is a gain
Validating Trust B will produce a V335 error
This is because MYOB Tax immediately offsets the capital gain against the capital loss and the validation check assumes that Trust B has only received a loss from Trust A
Solution
In Trust B remove the loss from item 8 and instead add the loss amount to the losses schedule
Distributing an overall Trust loss between
Trusts(V335 error)
1. Go to the Income tab Item 8 and update label R to NIL
2. On the Deductions tab at Item 25 enter NIL
Distributing an overall Trust loss between
Trusts(V335 error)
3. Create a BP Losses schedule
4. Include the income losses incurred this year at Part A
5. Complete the reconciliation at Part F
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6Dates
All the important dates for your reference
Important Dates
MYOB Tax v2018.0 software releaseTax 2018 will be released and available on my.MYOBfor download
Friday 22 June 2018
ATO ELS GatewaysWill continue to accept 2018 Activity Statements only
ELS Client Lists and EFT Reconciliation Report will remain available until
30 September 2018
ATO PLS LodgmentsWill accept 2018 tax forms from
Monday 25 June 2018
ATO Refund ProcessingTaxpayers should start receiving 2018 tax refunds from
Tuesday 17 July 2018
Getting AssistanceExtended
Support Hours
Extended support hours for the 2018 tax season
Monday to Friday8:30am - 7.00pm (AEST)
• 25 June 2018 to 10 August 2018
Saturdays 10.00am - 3.00pm (AEST)
• 30 June 2018
• 7 July 2018
Getting Assistance
Online Services
24/7 access to Online Help and Knowledge Base
Online community forum for accountants
www.myob.com/AEforum
www.myob.com/AOforum
End of Financial Year Hub
www.myob.com/au/accountants-and-partners/support/end-of-financial-year
MYOB Tax Tables