Welcome to our latest tax update for medical professionals.
It has been a quiet from the tax front. The Federal Government has been getting everyone ready and prepared as JobKeeper is phased out.
One thing seems certain. The Federal government is slowing getting the states to realise that if States start locking down to control the Virus, it will not be the Federal Government that bails them out. It will be down to the State Government to provide financial assistance to businesses.
This partly explains the shorter 3- and 5-day lockdowns in Brisbane, Perth and Victoria.
But behind the scenes things have been happening. Below are some of the tax and other changes that have taken place in the last couple of months:
- From 1 January 2021:
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- Superannuation
We are very excited about the new Superannuation rules which will drastically reduce the number of Superannuation accounts that incur unnecessary fees. Many of you may have self-managed funds but there are many medical professionals but there are many that do not.
We hate fees unless they add value. Having two or more Superannuation accounts does nothing for you except make someone else rich.
You will have more power to choose their own superannuation fund: ‘Your Superannuation, Your Choice’ allows around 800,000 Australians to decide where their retirement savings are invested, representing around 40% of all employees covered by a current enterprise agreement.
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- Homebuilder – It has been Extended!
The Government’s HomeBuilder program has been extended to 31 March 2021. The scheme is expected to support the construction or major rebuild of an additional 15,000 homes.
But many of you may not qualify so please get in touch and we can advise you.
- Home Office Expenses Extended
The ATO has extended (again) the ability to utilise the “shortcut rate” for claiming home office running expenses to 30 June 2021 (it previously only applied until 31 December 2020).
We have fund this very useful for contactor doctors who would remain at home and undertake Telehealth.
The ATO’s guideline allows certain taxpayers to claim a fixed rate per hour (80 cents per hour) for most additional running expenses incurred when working from home by keeping a record of the number of hours they have worked from home, rather than needing to calculate specific running expenses.
The expenses included in the shortcut rate include lighting, heating, cooling and cleaning costs, the decline in value and repair of home office items (such as furniture and furnishings in the area used for work, computers and laptops, etc.), and phone and internet expenses.
However, the guideline does not cover “occupancy expenses”, such as rent, mortgage interest, property insurance and land taxes.
Be careful if you want to claim this as opposed to the old rules. We will always calculate and compare both so that you get the maximum amount.
- JobKeeper – the ATO is Not Happy – Nothing New There Then
A taxpayer got a early Xmas present because on 21 December 2020, they won a case relating to a taxpayer’s eligibility for JobKeeper payments.
A taxpayer applied for an ABN to be reactivated after JobKeeper was announced and backdated it to December. They then applied for JobKeeper.
The Court held that the taxpayer met the JobKeeper requirement to have an ABN on 12 March 2020.
But the ATO wants to spoil the party and has lodged an appeal in the Federal Court.
The ATO will postpone finalising decisions regarding an entity’s eligibility for JobKeeper where the entity has backdated its registration in order to qualify.
The ATO is taking a similar position in regard to eligibility for the Cash Flow Boost.
- SMSF related party rental income deferrals due to COVID‑19
Generally, if you rent a building from your Superannuation Fund, the fund cannot give you a loan, or any breathing space when it comes to rental payments.
In other words, you have to pay it. But Covid19 changed all that and the ATO has advised that trustees of SMSFs do not inadvertently breach the “in-house asset rules” where the fund allows a related party to defer the payment of rent under a lease agreement (on arm’s length terms) because of the financial impact of COVID‑19.
This has been very useful for some of our clients who own the premises of medical centres via their Superannuation fund
- ATO data-matching programs
The ATO is spying on you again. It will:
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- acquire motor vehicle registry data from state and territory motor vehicle registry authorities for 2019/20 through to 2021/22, with records relating to approximately 1.5 million individuals to be obtained each financial year.
In order words if you have bought a car, the ATO will know about it.
Why are they doing this? Well, if you own a 7 series BMW but your tax return shows your income would be in the 3 series range, they want to ask a few questions.
The ATO is being very clever and using this to catch many medical professionals who may be under declaring income.
If you are splitting PSI income or using bucket companies to reduce income and taxes when you should not be, this is the way the ATO are finding out.
If you would like a second opinion please contact us here
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- it will acquire data on Australian sales made through online selling platforms such as Catch, Ebay and Amazon for the 2018/19 through to 2022/23 financial years, collecting 20,000 to 30,000 account records each financial year (with around half of the matched accounts relating to individuals).
Why? Well, if you are registered on Ebay they want to know if the income should be declared in your tax return. If you sold stuff for $1,000 the ATO could not care less but $20,000 or in a recent case I know about $1.3M they want to see a tax return with the figures.
- JobMaker: open from 1 February 2021
The JobMaker Hiring Credit is being administered by the ATO and provides a wage subsidy payment directly to employers as an incentive to employ additional job seekers aged 16 to 35 years.
Registrations for the JobMaker Hiring Credit scheme opened on 7 December 2020, and claims for the first JobMaker period can be made from 1 February 2021.
There are some rules – obviously:
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- are up to date with their tax and GST lodgment obligations for the last 2 years;
- have not claimed JobKeeper payments for a fortnight that started during the JobMaker period; and
- are reporting through Single Touch Payroll.
- Money Laundering on the Back Burner
Transactions in cash is the easiest way to launder money. Now I get the occasional dentist that gets paid in cash for an implant, but most doctors do not get paid in cash and I have not come across anyone who has laundered money. But then again, they are hardly going to tell me!
It appears that the Government has decided not to proceed with its proposal to limit cash payments in Australia to $10,000.
This measure was originally raised as part of the 2018/19 Budget, and the Government subsequently introduced a Bill to the House of Representatives, proposing to make it an offence for entities to make or accept cash payments of $10,000 or more.
