ATO Liabilities – TJN Accountants

Higher Education Debt – should I make voluntary repayments?

Higher Education Debt:

Should I Make Voluntary Repayments?

Higher education debts (eg. HECS/HELP debts) that are unpaid on 1 June (and have been outstanding for 11 months) are automatically increased by an indexation rate. Previously, these debts have been increased by CPI. Last year, the application of CPI as the relevant indexation rate saw HECS debts increase by 7.1% last year – the highest indexation rate ever applied.

On 6 May 2024, the Federal Government announced that the calculation of the indexation rate for HECS/HELP debts would be changed. They would be increased by either the Consumer Price Index (CPI) or the Wage Price Index (WPI) whichever is lower. They also announced that this would be backdated to 1 June 2023. The relevant WPI for June 2023 is 3.2% (less than half of the 7.1% CPI rate applied last year). Noting that this is subject to the legislation being passed.

For anyone who had a HECS/HELP debt that was indexed on 1 June 2023 at the 7.1% CPI rate, you will receive a credit on 1 June 2024 for the difference between the 7.1% CPI and the new 3.2% WPI rate*.

Prior to this announcement, we knew that the CPI rate for the June 2024 indexation of the HECS/HELP debts was 4.7%. We are now awaiting the release of the WPI figures to determine the indexation rate under WPI. The Federal Government have suggested that this will be approximately 4%*.

For anyone who has a HECS/HELP debt, it is forecasted that it will be indexed on 1 June 2024 by approximately 4%* (with a credit also applied for the reduction in the indexation rate at 1 June 2023 noted above).

Any reduction of the debt prior to this date will mean the amount of indexation will be lower (as the debt is lower). If you have an outstanding tax return that will reduce the debt, we recommend you lodge the return as soon as possible to ensure the payment from your tax return is applied.

If you want to make a voluntary repayment towards the debt, we recommend this be done no later than 22 May to ensure it is received by the ATO and applied to your debt prior to 1 June.

You can check your outstanding higher education debt via your myGov app if it is linked to the ATO. You can also find payment details for the debt in your ATO account via myGov. If you have any problems finding these details, please do not hesitate to contact us.

For your reference, the following debts are affected by indexation:

Higher Education Loan Program (HELP, formerly HECS)
VET Student Loan (VSL)
Student Financial Supplement Scheme (SFSS)
Student Start-up Loan (SSL
ABSTUDY Student Start-up Loan (ABSTUDY SSL)
Trade Support Loan (TSL)

* The recent announcements by the Federal Government are subject to the passing of legislation. If the legislation is not passed, the backdated credit will not be applied for the 2023 year and the indexation rate applied on 1 June 2024 will be 4.7% (CPI).

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Jeanette Lingard

Jeanette has over 20 years experience as an accountant in public practice. She is a Chartered Accountant, registered tax agent and accredited SMSF Association advisor. When she is not helping business owners grow their empires, you will likely find her out running on the trails or at the gym. Book in to see Jeanette today.

Upcoming Changes to ATO Interest: What Businesses Need to Know

As part of the Mid-Year Economic and Fiscal Outlook, the Government announced that it will pass legislation to deny deductions for ATO interest charges (this includes General Interest Charge (GIC) and shortfall interest charges (SIC)) from 1 July 2025.

This applies to all GIC and SIC charged by the ATO – including interest charged on payment arrangements.

Despite the ATO’s interest rates rendering it an expensive debt financing option (current rate is 11.34% in June 2024), numerous businesses have favoured it for its ease and accessibility, bypassing the formalities associated with traditional lenders like banks.

Although the ATO imposed GIC/SIC will no longer be deductible, if businesses were to seek finance elsewhere to pay their ATO debt, interest on this finance is deductible.

What does this mean for businesses?

If you currently use payment plans with the ATO as a means of financing your tax liabilities (including GST, PAYG withholding and income tax), we recommend that you review your cashflow forecasting to ensure you have sufficient cashflow to pay your tax liabilities as and when they fall due.

Cashflow forecasting should always be a cornerstone of your business planning. However, if you don’t currently forecast your cashflow, we recommend that you start from at least 1 July 2024 to ensure that you have sufficient cashflow to fund your 2024-25 and future ATO liabilities.

As needed, consider exploring alternative financing avenues to pay ATO liabilities, such as bank overdrafts or loans secured by property. Interest incurred on such borrowings is tax-deductible when used for business purposes, including paying ATO obligations.

How can we help?

We’re here to help you evaluate your business’s cash flow and forecasts. Additionally, we can connect you with finance brokers who specialise in assisting clients in accessing additional financing options for their businesses.

Note: Legislation to enact this has not yet been passed. We will keep you up-to-date of the passage of the relevant legislation.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Jeanette Lingard

Jeanette has over 20 years experience as an accountant in public practice. She is a Chartered Accountant, registered tax agent and accredited SMSF Association advisor. When she is not helping business owners grow their empires, you will likely find her out running on the trails or at the gym. Book in to see Jeanette today.

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Selling a property? Do you need a tax clearance certificate?

Property Sales

Do you need a tax clearance certificate?

From 1 July 2016, purchasers of residential property were required to withhold 10% of the purchase price where the property cost was more than $2 million (this changed to 12.5% and $750,000 from 1 July 2017). The ultimate goal of the withholding regime was to have tax withheld for the anticipated capital gain for foreign vendors. However, under the legislation all sellers are deemed to be foreign vendors. Australian residents could only avoid the withholding obligation by obtaining a clearance certificate from the ATO and providing it to the purchaser.

Recently, the Government announced that from 1 July 2025, it would increase the withholding rate to 15% and reduce the threshold for withholding to $0. As such (provided the relevant legislation is passed for these changes), from 1 July 2025, all Australian resident vendors of property will be required to obtain a clearance certificate to provide to the purchaser. Failure to do so will result in 15% of the sales proceeds being withheld by the purchaser and remitted to the ATO.

What do you need to do?

If you are an Australian resident selling property, currently you will need to obtain a clearance certificate from the ATO if the sales price is more than $750,000. From 1 July 2025, all Australian resident vendors will need to obtain a clearance certificate.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Jeanette Lingard

Jeanette has over 20 years experience as an accountant in public practice. She is a Chartered Accountant, registered tax agent and accredited SMSF Association advisor. When she is not helping business owners grow their empires, you will likely find her out running on the trails or at the gym. Book in to see Jeanette today.

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Navigating FBT at Christmas Time

Navigating Fringe Benefits Tax at Christmas

Fringe Benefits Tax (FBT) is a tax that employers pay for non-cash benefits they provide to their employees. Rather than taxing the employees on these benefits, the employer pays fringe benefits tax.

Christmas provides employers with a great opportunity to reward their staff. Understanding the key FBT considerations during Christmas time is crucial to avoid potential pitfalls and optimise tax outcomes.

Christmas parties

Hosting a Christmas party is also a great way to celebrate the end of the year. However, there may FBT implications associated with the party.

The costs associated with Christmas parties (for example, food and drink) are exempt from FBT if they are provided on a working day on your business premises and consumed by current employees.

Alternatively, if you hold your Christmas party away from your business premises, the party will be exempt if it costs less than $300 per employee.

Christmas presents

Gifts that are given to employees can attract FBT. However, if the value of the gift is below $300 per employee, it is exempt.

Tax deductions and GST

You can only claim a tax deduction and GST on benefits that are subject to FBT. So, if the benefits you are providing to your employees (gifts and/or Christmas party) are under $300 and exempt from FBT, they will not be tax deductible nor can you claim any GST on the cost.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Jeanette Lingard

Jeanette has over 20 years experience as an accountant in public practice. She is a Chartered Accountant, registered tax agent and accredited SMSF Association advisor. When she is not helping business owners grow their empires, you will likely find her out running on the trails or at the gym. Book in to see Jeanette today.

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Small Business Lodgement – Penalty Amnesty

As part of the 2023-24 Budget the Federal Government announced a small business lodgement penalty amnesty. This is a time-limited initiative introduced to provide small business owners with the chance to get their tax obligations up-to-date without incurring any late lodgement penalties. The amnesty is effective from 1 July 2023 until 31 December 2023.

To be eligible you will need to meet the following criteria:

You are a small business with an aggregated turnover of less than $10 million at the time the original lodgement was due.
You have outstanding income tax returns, business activity statements and/or fringe benefits tax returns that were due between 1 December 2019 – 28 February 2022.
Eligible overdue forms are lodged between 1 June 2023 and 31 December 2023.

If you lodge your outstanding returns as part of the amnesty, any late lodgement penalty will be remitted.

The amnesty doesn’t apply to private owned groups or individuals controlling over $5 million of net wealth.

Please contact us if you have outstanding lodgements and would like assistance in getting these up-to-date.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Melanie Faass

Mel hails from New Zealand’s beautiful North Island. She came to Australia in 2008 and has over two decades of experience in public practice. Mel joined TJN Accountants in 2018 and is the trusted advisor to many small businesses. Mel is also the financial controller for #Beatniks Records, an independent music store run by her husband Jayden. Book in to see Mel today.

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Increased Penalty Units: Implications for Taxpayers

Under tax laws, the ATO can impose administrative penalties if you fail to meet your tax obligations.

From 1 July 2023, the base penalty unit has increased by almost 14% to $313.

When the ATO imposes penalties, they can calculate the penalty using either:

a statutory formula, based on the taxpayers behaviour and the amount of tax avoided; or
multiples of the base penalty unit.

Examples of Tax Penalties

These are some of the examples of penalties that the ATO may impose:

Failing to retaining records as required (maximum 20 penalty units = $6,260)
Failing to register (or cancel) GST registration when required (maximum 20 penalty units = $6,260)
Failure to lodge a return or statement for a small entity (1 penalty unit for each 28 days late, up to 5 penalty units = $313 to $1,565)

Superannuation funds

The increase in penalty units can impact significantly on superannuation funds. For superannuation funds, the penalty units are imposed per trustee. Where a fund has a corporate trustee, the penalty will be imposed solely on the corporate trustee. However, where a fund has individual trustees, the penalty will be imposed on each trustee. Effectively doubling the penalty where the fund has two individual trustees.

This is another reason that we recommend that a superannuation fund should have a corporate trustee.

It is possible to change the trustee of your superfund to a corporate trustee. Please contact us if you would like to discuss this further.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Melanie Faass

Mel hails from New Zealand’s beautiful North Island. She came to Australia in 2008 and has over two decades of experience in public practice. Mel joined TJN Accountants in 2018 and is the trusted advisor to many small businesses. Mel is also the financial controller for #Beatniks Records, an independent music store run by her husband Jayden. Book in to see Mel today.

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Small Business Technology Investment Boost

Legislation was passed on 23 June 2023 to enable small businesses to claim an additional 20% deduction for eligible technology expenditure.

What is the boost?

Small businesses (who have an aggregated turnover of less than $50 million) will be able to claim an additional 20% deduction for expenses incurred to support their digital operations.

The boost is available for expenditure incurred between 29 March 2022 and 30 June 2023 and is capped at $100,000 per income year. The maximum bonus deduction is $20,000 per income year.

Eligibility

To be eligible for the additional deduction, you must meet the following conditions:

You have an aggregated turnover of less than $50 million for the income year in which you incur the expenditure;
The expenditure is “eligible expenditure” (see below);
The expenditure is deductible for your business under Australian tax law;
The expenditure has been incurred between 29 March 2022 and 30 June 2023.

Eligible expenditure

Eligible expenditure may include (but is not limited to):

digital enabling items;
digital media and marketing;
e-commerce;
cyber security.

At the end of this article we have included a table of example expenditure that may be eligible for the boost.

What cannot be claimed?

You cannot claim the following expenses towards the boost:

Salary and wages
Capital works costs
Financing costs
Training or education costs (but these may be eligible for the Small Business Skills and Training Boost)
Expenses that form part of your trading stock.

Cap on the deduction

There is an annual cap of $100,000 on eligible expenditure (with the bonus deduction capped at $20,000).

When do you claim the deduction

For any expenditure incurred between 30 March 2022 and 30 June 2022, you claim 100% of the deduction in the 2022 tax return and the 20% bonus in the 2023 tax return.

For any expenditure incurred between 1 July 2022 and 30 June 2023, you claim both the 100% deduction and the 20% bonus in the 2023 tax return.

What do you need to do?

To check your eligibility for the boost, we recommend you take the following steps:

1. Review your technology expenditure from 29 March 2022 to 30 June 2023;

2. Identify any expenditure that has been incurred to help digitise your business;

3. If you use online accounting software, attach a copy of the invoice to the transaction in your software;

4. Provide us (your accountant) with the details of all relevant costs incurred that meet the eligibility criteria.

Provided we have the relevant documentation to prove eligibility to the boost, we will claim the additional 20% deduction in your tax return.

Please do not hesitate to contact us if you would like further information about the boost.

Examples of Possible Eligible Expenditure

Example expenditure

Digital enabling items

Computer and telecommunications hardware

Desktop and laptop computers
Digital tablets
Computer keyboards
Webcams
Computer mouse, trackpads, stylus
Computer cables
Powerpacks
Electrical and power adapters
Repairs and improvement costs to computer hardware and equipment

Digital enabling items

Telecommunications hardware and equipment

Landline phones
Mobile phones
Smart watches
Telephone accessories
Repair and maintenance costs

Digital enabling items

Software

Initial purchase
Annual subscriptions (eg. accounting software subscriptions, Office 365, anti-virus, ServiceM8)

Digital enabling items

Internet

Usage costs
Connection costs
Repair costs

Digital enabling items

Computer systems

Subscriptions to support digital capabilities
Help desk support fees and charges
IT support charges
Repairs and improvement costs

Digital media and marketing

Audio and visual content creation
Web page design
Web page update costs
Search engine optimisation fees
Email marketing fees
Photo stock fees
Music royalty fees

E-Commerce

E-commerce website setup
E-commerce website optimisation
Setup of social media store functionality
Costs associated with setting up online methods of payment
Photography costs for online display
Photostock fees
Portable payment devices
Digital inventory management
Subscription to cloud-based services
Advice on digital operations

Cyber Security

Cyber security consultant fees
Cyber security software (eg. anti-virus)
Cyber security installation and implementation costs
Cyber security backup management
Cyber security monitoring services

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Jeanette Lingard

Jeanette has over 20 years experience as an accountant in public practice. She is a Chartered Accountant, registered tax agent and accredited SMSF Association advisor. When she is not helping business owners grow their empires, you will likely find her out running on the trails or at the gym. Book in to see Jeanette today.

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