Our November 2021 Tax Update contains information on a number of recent developments, including:

  • Preparing for the new Director ID regime
  • Varying PAYG installments due to COVID-19
  • Permanent changes to AGMs and electronic communications
  • AUSTRAC transaction report information data-matching program
  • Government payments data-matching program

 


Preparing for the new Director ID regime

As part of its Digital Business Plan, the Government announced the full implementation of the ‘Modernising Business Registers’ program.

This included recently enacted legislation introducing the new director identification number (‘director ID’) regime.

The director ID is a unique identifier that a director will need to apply for once and will keep forever.

The introduction of director IDs is intended to create a fairer business environment by helping prevent the use of false and fraudulent director identities, which “will go a long way to better identifying and eliminating director involvement in unlawful activity”.

Note that all directors will need to apply for a director ID, including directors of corporate trustees of self-managed super funds (‘SMSFs’) and of family trusts.

Individuals will be able to apply for a director ID from 1 November 2021 on the new Australian Business Registry Services (‘ABRS’) website (at abrs.gov.au) and will need to log in using the myGovID app (set to a ‘Standard’ or ‘Strong’ identity strength).

When an individual must apply for a director ID depends on the date they became a director.  For directors under the Corporations Act:

  • who became a director on or before 31 October 2021, they must apply for a director ID by 30 November 2022;
  • who become a director between 1 November 2021 and 4 April 2022, they must apply for a director ID within 28 days of appointment; and
  • who become a director from 5 April 2022, they must apply for a director ID before their appointment.

Individuals will need to apply for their director ID themselves to verify their identity (i.e., no one can apply for it on their behalf, including agents).

Varying PAYG installments due to COVID-19

Taxpayers can vary their pay as you go (‘PAYG’) installments throughout the year if they think they will pay too much, compared with their estimated tax for the year.

To assist taxpayers who continue to be affected by COVID-19, the ATO has stated that it will not apply penalties or interest on varied installments for the 2021/22 income year for excessive variations when the taxpayer has taken reasonable care to estimate its end of year tax.

The ATO says this means making a reasonable and genuine attempt to determine the tax liability.  When considering if a genuine attempt has been made, the ATO takes into account what a reasonable person would have done in the same circumstances.

Note that variations do not carry over into the new income year.

Therefore, if a taxpayer made variations in the 2020/21 income year, they may need to vary again in 2021/22.  The varied amount or rate will apply for all of the remaining installments for the income year, or until the taxpayer makes another variation.

The ATO encourages taxpayers to review their tax position regularly and vary their PAYG installments as their situation changes.

If a taxpayer realises they have made a mistake working out their PAYG installment, they can correct it by lodging a revised activity statement or varying a subsequent installment.

If a taxpayer is unable to pay an installment amount, they should still lodge their installment notice and discuss a payment arrangement with the ATO to ensure they will not have debt at the end of the year.

Permanent changes to AGMs and electronic communications

The Government has introduced into Parliament a Bill to permanently allow companies to use technology to meet their regulatory requirements, and ensure that companies can continue to meet their obligations amid the uncertainty of the COVID‑19 pandemic.

These reforms build on the recently renewed temporary relief, which we reported in September 2021, and which will remain in place until 31 March 2022.

Specifically, the new permanent reforms will:

  • ensure that meetings can be held physically, as a hybrid, or (if expressly permitted by the entity’s constitution) virtually, provided that members, as a whole, are given reasonable opportunity to participate in the meeting;
  • ensure that companies (and registered schemes) can meet their obligations to send documents in hardcopy or softcopy, and give members the flexibility to receive documents in their preferred format; and
  • allow documents, including deeds, to be validly executed in technology-neutral and flexible manners, including by company agents.

AUSTRAC transaction report information data-matching program

The ATO will acquire transaction report information data from AUSTRAC for the period of 17 June 2021 through to 30 June 2027.

The data elements made available to the ATO will depend on what is captured in the reporting process and can include identifying information of customers and institutions facilitating transactions, identifiers such as ABNs, ACNs, and Australian Financial Services Licence details, and transaction details (including transaction type, accounts, instruments, amounts, and currency).

The ATO estimates that records relating to approximately nine million individuals will be obtained each financial year.

The data will be acquired and matched to ATO data to support the administration and enforcement of tax and superannuation laws, including registration, lodgment, reporting, and payment responsibilities.

Government payments data-matching program

The ATO will acquire government payments data from government entities who administer government programs for 2017/18 to 2022/23 financial years.

The data items include:

  • service provider identification details (names, addresses, phone numbers, email, dates of birth, service type, ABN, ACN); and
  • payment details (service provider ID, name of service, type of service linked to program, value of payments received for the financial year, count and type of claim, withholding, and re-credit amount).

The ATO estimates that records relating to approximately 36,000 service providers will be obtained each financial year (including approximately 11,000 individuals each financial year).

 

SMSF COVID-19 Audit Relief Extended

The ATO has extended COVID-19 relief for SMSF trustees. The relief measures, which protect trustees from COVID-19 related contraventions of the super laws, now extend from the 2019-20, 2020-21 and 2021-22 financial years. The relief measures provide:

  • Residency relief where the pandemic has prevented members from returning to Australia. This measure prevents the SMSF from breaching the residency conditions to be an Australian super fund.

  • Rental relief where a COVID-19 reduction, waiver or deferral has been provided to a tenant.

  • Loan repayment relief where relief is provided on commercial terms.

  • In-house asset relief where the SMSF exceeded the 5% in-house asset threshold at 30 June due to the impacts of COVID-19.

Overseas gifts and loans in the spotlight

The ATO has recently issued an alert on gifts or loans from overseas. The ATO is particularly concerned about schemes and arrangements designed specifically to circumvent Australian tax laws. In general, Australian-resident taxpayers need to declare their worldwide income in their Australian tax return. Some schemes however disguise offshore capital gains or income as a gift or loan.

So, how do the ATO know if money from overseas is a genuine gift or loan? Generally, the ATO will expect to see some form of evidence that the gift is genuine such as a deed of gift prepared by the donor, formal identification of the donor, a copy of the donor’s bank account, or in the case of an inheritance, the will or distribution statement from the estate.

If you have received a loan from overseas, the ATO will expect to see properly executed loan documentation, and other documentation supporting why the loan was made and its purpose. Third party documentation is best as documentation from a family member may not be accepted as conclusive evidence of a loan.

The ATO will form its view based on the evidence available.

Loans received from companies or trusts can still trigger tax issues in Australia.

 

Note: The material and contents provided in this publication are informative in nature only.  It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.

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