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Scam Alert
Email and SMS scams are on the rise. Especially around this time of the year when people are getting themselves organised for tax time. Be wary of any email that is offering you a refund or telling you your payment has failed (eg. Netflix or Apple). For more information on MyGov scams, visit:
https://www.acma.gov.au/articles/2023-01/scam-alert-fake-mygov-email-and-sms-scam
Using Emoji's could spell trouble
We all use emoji's in our electronic communications these days. They have become their own form of language. However, the meaning behind the image could spell trouble for the user.
PRACTICAL STEPS TO REDUCE CYBERSECURITY RISKS FOR BUSINESSES
- Review current cybersecurity policies and procedures to ascertain any weaknesses.
- Consider potential cybersecurity risks facing your business, including:
- What kind of data is handled by the business
- What damages could arise from unauthorised use of, or loss of, that data
- How your products and services, supply chain and/or operations could be affected by the unauthorised use of, or loss of, that data
- Consider your work practices and procedures, including:
- Your IT environment
- Your service providers for customer service relationship management
- Your software
- Your hardware
- Your remote working practices
- Any outsourced cloud-based service providers
- Consider your staff, their awareness of cybersecurity, resources available to them and implement regular training events for them, including refresher courses
- Give particular thought to the level of knowledge and expertise of your management team and senior staff as well as their ability to effectively identify, respond and manage cybersecurity risks that may face your business and whether additional training or resources are required specifically for them
- Consider the size of your business, resources available, specific risks in your business sector, your customer base, the data you handle and common practices in your sector to ascertain your ideal cybersecurity best practice
- Assess how regularly management and/or senior staff discuss cybersecurity risks and ensure that regular discussions are held to address any concerns and/or new potential risks are identified
- Consider involving experts in IT to assist you and your business - in ASIC v RI Advice, at [55] the Court acknowledged that “cyber risk management is a highly technical area of expertise”. An assessment of “adequate” protections for a particular business should involve experts.
The above steps will assist any business in fulfilling its obligations as well as ensure that it is better prepared for the every day cybersecurity threats it faces.
Additional tax on high superannuation balance earnings
On 31 March 2023, Treasury released consultation paper that provides details about the Government’s proposal to levy an additional 15% tax on superannuation balances above $3 million. This will bring the marginal tax rate on large superannuation accounts to 30%. The release of the consultation paper follows the Government’s earlier announcement and fact sheet issued on 28 February 2023.
The new marginal tax rate will apply from 1 July 2025 and apply from the 2025–26 financial year onwards. While this top marginal tax rate should effect less than 80,000 people, however:
- the threshold will not be indexed.
- The tax is levied on the value of the superannuation account which means tax will be payable on unrealised capital gains. This will result in a mismatch of taxation liability and cash flow.
- The tax base includes super guarantee contributions, voluntary (after tax) contributions, proceeds of income and disability insurance policies and assets received from a former spouse as part of a divorce settlement.
Changes to Shield Facebook Page Admins
Changes aimed at shielding Facebook page administrators from defamation lawsuits over posts by third parties are set to become law nationally, but not until at least 2024.
Under the proposal, social media page administrators would be able to rely on the defence of “innocent dissemination” to fend off lawsuits over third-party comments, but only if they set up complaints processes and took reasonable steps within seven days of a complaint to delete or prevent access to allegedly defamatory material.
If the administrator opted to leave the material online after a complaint, they would have the option of defending the matter using any other defences available to them, but this would be a costly approach.
Tax File Number Declarations
Have you taken on new employees? Did you know they can now complete a TFN declaration through ATO online services? If your new employee has a myGov account linked to the ATO, they can:
- access ATO online services
- go to the ‘Employment’ menu
- select ‘New employment’ and complete the form.
This sends the TFN declaration details straight to the ATO. Your employee will need your ABN to complete the form. Once they’ve submitted the form, the employee prints out and gives you a summary of their tax details to input ta into your system. Some accounting software allows you to link your payroll software to the online commencement forms.
You can also use the new employment form to collect the following information.
- Withholding declaration form
- Medicare levy variation declaration form
- Superannuation standard choice form.
Your employees can use the new employment form to update their tax circumstances with you, for example, if:
- their residency status has changed
- they no longer have a government study and training loan
- they are claiming the tax-free threshold from a different employer.
Superannuation Guarantee Levy: Employee for SG purposes or Contractor?
In JMC Pty Limited v FCT [2022] FCA 750 the Federal Court ruled that a lecturer engaged by a company to provide higher education courses was an "employee" for Super Guarantee purposes, and not an independent contractor, as his right to sub-contract the teaching services was limited and required consent.
The taxpayer offers higher education courses in the creative technologies sector. It engaged a qualified sound engineer to provide teaching services comprising the delivery of lectures and marking exams. The teaching services were provided under a series of written contracts and emails which contained a formal memorandum of agreement. The lecturer was required to submit invoices, time sheets and lesson plans and was paid by reference to hourly rates for lectures and marking but JMC did not make any superannuation contributions as it considered him to be an independent contractor.
The ATO issued JMC with superannuation guarantee charge (SGC) assessments for a total of $17,370 in relation to the lecturer because the ATO considered that he was an "employee" at common law, or under the extended meaning of that term in s 12(3) of the Superannuation Guarantee (Administration) Act 1992 (SGAA). While there was meaningful evidence that the teacher was an independent contractor, the Federal Court held that superannuation was payable because JMC had significant rights of supervision and control of the lecturer.
But wait, this decision has been appealed...
Army officer not entitled to deductions for cost of a law degree
The Administrative Appeals Tribunal has held that a soldier in the Australian Army in 2008 was not entitled to claim deductions for work related self-education expenses incurred when studying for a law degree.
Facts
The taxpayer joined the Australian Army in 2008 and was commissioned as an officer in 2012. In 2018 he began a post-graduate law degree (which he subsequently completed). The taxpayer was promoted from the rank of Captain to Major effective January 2022.
The taxpayer claimed deductions under s 8-1(1) of the Income Tax Assessment Act 1997 for work-related self-education expenses submitting that the expenses should have been allowed as his studies improved his ability to perform his job and led to his promotion from Captain to Major, which resulted in an increase in income.
The Commissioner submitted that the course of study was too general for there to be a sufficient connection between the self-education expenses and the taxpayer’s role in the Army. Importantly, while tertiary study may have been a factor that was viewed favourably when the soldier was promoted the new role did not require further tertiary study much less a law degree.
Decision
The AAT held that the study did not have the necessary relevant and incidental connection to the gaining or producing of the taxpayer’s income. The duties performed by the taxpayer that were said to be relevant to his legal studies were infrequent and did not comprise a substantial or consistent part of his job. Some of the tasks were better described as policy-based or commercial rather than legal. While the tertiary studies were viewed favourably and were a relevant factor in the taxpayer’s promotion, they were only one of the factors considered by the Army and could not be regarded as having led to the increase in his income.
Source: YDXM v FC of T 2022 ATC 10-636; [2022] AATA 2382.
Distinguishing between employer or contractor
The ATO has issued a decision impact statement on the High Court decision in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1 (the CFMMEU case).
The CFMMEU case considered whether the applicant was an employee of Personnel Contracting Pty Ltd for the purposes of the Fair Work Act 2009. In relation to the common law test of employment, the decision provided clarity in the approach to be taken when characterising the legal relationship of the parties.
The Commissioner said that the High Court has not disturbed the well-established practice of examining the totality of the relationship. The most significant clarification arises in primarily examining the terms of the written contract between the parties to establish the character of the relationship, where that contract is an accurate and accepted record of the agreement struck between the parties.
While the court rejected the multifactorial test, the Commissioner notes that Kiefel CJ, Keane, Edelman, Gordon and Steward JJ considered that a court may look beyond a written contract and consider the conduct of the parties in circumstances where:
- the contract is an oral contract, or is partly written and partly oral to determine when the contract was formed and the contractual terms that were agreed
- the terms of the written contract have been varied
- the terms of the written contract are being challenged as invalid (eg being a sham)
- a party to the contract asserts rectification, estoppel or any other legal, equitable or statutory rights or remedies.
The long-established employment indicia are still relevant, but they are to be considered through the focusing question of whether the putative employee is working in the business of the employer. The Commissioner said that this reflects his understanding and application of the business integration test. The High Court has elevated that test as one of the primary aspects of the examination of the contractual terms.
Did you know?
Did you know that, as of 1 April 2022, virtual company meetings are now a permanent feature of company law?
The Corporations Act now permanently permits:
- a company to hold “hybrid” members’ meetings (giving members the option to either attend in person or remotely) or, if the company’s constitution permits it, hold wholly virtual meetings;
- the electronic signing and sending of documents relating to a meeting, whether the meeting is physical, hybrid or wholly virtual;
- a member to elect to receive meeting-related documents electronically or in hard copy;
- the electronic signing of company documents generally, including by a company’s agent and by a proprietary company with a sole director and no company secretary.
When it comes to voting, a resolution may be decided on a show of hands unless a poll is demanded. For listed companies, the changes mean that a member, or group of members, having at least 5% of the votes may request that the company appoint and independent person to observe the conduct of the poll, or scrutinise the outcome of the poll, and prepare a report in relation to it.
Changes concerning the signing and execution of documents commenced earlier, on 23 February 2022.
Employee or Contractor?
The working landscape has changed dramatically in recent times, with the advent of the sharing (or gig) economy and working remotely. With sharing economy platforms, one of the main revenue concerns is the non, or under-reporting of, income derived from the provision of services. The Australian Taxation Office has increased their compliance focus on employee and contractor relationships, given the implications for PAYG withholding, Superannuation Guarantee, Single Touch Payroll reporting and GST purposes. There are also payroll tax and workers’ compensation implications at a State level.
The ATO provides an online employee/contractor decision tool that assists employers in identifying the correct working arrangement based on a number of determining factors. ATO web guidance explains the difference between an employee and a contractor, and set out the six common features that assist in characterising a worker:
- Delegation: Ability of the worker to subcontract/delegate the work
- Basis of payment: Whether the worker is paid for the time worked, a price per item or activity or by way of commission
- Equipment: Extent to which the worker is required to provide equipment, tools and other assets, or is reimbursed for the cost of them
- Risk: Extent of commercial risk borne by the worker, and whether they are legally responsible for the work done and liable for the cost of rectifying any defective work
- Control: Extent to which the worker has control over the work or is directed by the business as to the way in which the work must be done
- Independence: Whether the worker operates independently from the business or is working within it and is considered part of the business.
Not-for-profit FBT concessions
As the 2022 fringe benefits tax year draws to a close (31 March 2022), it’s time to consider whether your charity or other not-for-profit entity has FBT lodgement and payment obligations.
Even if your not-for-profit organisation is exempt from income tax it can still have an FBT liability if it has provided fringe benefits to its employees (or their associates). There are certain FBT concessions that can reduce that liability therefore it’s important for committee members to check their FBT status. This can usually be found by searching your entities name on the Australian Business Register at this site: ABN Lookup
Can you help Justice Connect build cutting edge technology by sharing YOUR story?
Justice Connect (https://justiceconnect.org.au/) connects people with legal help.
Justice Connect is developing cutting-edge technology to increase access to legal support, resulting in a language processing tool that can be integrated into any intake and triage system to help understand and diagnose someone’s legal problem as they are describing it.
They want to make sure the way they build the tool is as inclusive as possible and they need your help. Can you contribute an unedited written or verbal samples describing a legal problem either you or someone in your community have experienced?
Justice Connect will de-identify every sample prior to it being annotated and used to train the tool (see their Privacy Policy). The more diverse the range of samples and participants, the better the language processor will work for all kinds of uses across the legal service sector.
Justice Connect is actively seeking people from a diverse range of groups.
Can you help? Simply click on the links above.
Can you work from home indefinitely?
In Hair v State of Queensland (Queensland Health), the Queensland Industrial Relations Commission considered the circumstances in which an employer refused an employee request to continue to work remotely. Whether or not an employee can work from home indefinitely will depend on a number of factors, including the requirements of the role, the employer’s operational requirements. and the practicalities of the flexible working arrangement requested by the employee.
In this case, the employee began working remotely due to COVID-19 health directions, but sought to continue working remotely because they were relocating to another state. In these circumstances, the Commission found it was fair and reasonable to deny the flexible work request. Take a look at these online resources about flexible work requests, including working from home.
The Windfall Gains Tax is now law in Victoria
This tax applies to the “windfall” that occurs when the value of land increases by more than $100,000 because of rezoning. The tax is calculated at a rate of 62.5% of the uplift in excess of $100,000. If the uplift exceeds $500,000, the tax is calculated at a rate of 50% on the whole uplift.
Taxpayers can defer payment of the tax until the earlier of:
• 30 years after rezoning,
• A dutiable transaction occurring in relation to the land
• A “relevant acquisition” occurs g in relation to the land
Exemptions apply in specified circumstances for residential land, land used exclusively for charitable purposes and land rezoned to correct technical errors.
Documenting gifts or loans from related overseas entities
Genuine gifts or loans received from related overseas entities (including family members and friends) are sometimes used to fund businesses or to acquire income producing assets. However, the ATO is currently reviewing arrangements where Australian taxpayers seek to disguise undeclared foreign income as a gift or loan.
A genuine gift or loan is one where:
• the characterisation of the transaction as a gift or loan is supported by appropriate documentation.
• the parties’ behaviour is consistent with that characterisation; and
• the monies provided are sourced from funds genuinely independent of the taxpayer.
Having good contemporaneous record to support a claim that a gift or loan is not unreported taxable income is important.
The ATO has published detailed information to help taxpayers properly document genuine gifts or loans received from related overseas entities that are used for income purposes and this can be found by following the links from this page.
https://www.ato.gov.au/law/view/document?DocID=TPA/TA20212/NAT/ATO/00001
World Mental Health Day
10th October is World Mental Health Day. This year, Mental Health Day comes at a time of unprecedented challenge to the mental health and wellbeing of our entire community due to the COVID-19 pandemic.
Ambry Legal would like to thank every mental health care worker for their professional, quality and compassionate care. We acknowledge your courage and commitment to care for your clients and communities whilst being impacted personally and professionally throughout this time.
Thank you for your valuable contribution and please remember to care for each other and yourselves as well as you care for those in our community.
Charities that are endorsed as Deductible Gift Recipients are entitled to receive gifts which are deductible from the donor's income tax.
For some charities DGR status has a more significant benefit in that philanthropic organisations can only donate to charities that are a DGR:
Here is a tool that will help you work out if your charity can become a registered DGR.
Taxpayers who withdrew money from their superannuation under the COVID-19 early release scheme will be denied a deduction from 1 July 2021 for personal contributions to super
Taxpayers who withdrew money from their superannuation under the COVID-19 early release scheme will be denied a deduction from 1 July 2021 for personal contributions to super until they have repaid the amount withdrawn under the COVID-19 release scheme, or June 2030, whichever comes first.
You can claim a deduction for personal contribution made up until 30 June 2021, however this amount won’t count towards repaying the amount withdrawn under the Covid-19 early release scheme.
However, rather than making a personal contribution into super a taxpayer could make a salary sacrifice contribution. arrangement, where possible, to get these COVID-19 release amounts back into super. As always, it is necessary to consider your personal circumstances before deciding what to do.
Paradigm shift in residential tenancy laws
New renting rules came into effect on 29 March 2021, so it’s time for renters, rental providers (landlords) and property managers to find out about the changes. The new rules create a fairer, safer system for everyone. Over 130 reforms have been introduced.
The new laws ensure rental properties meet basic standards and allow renters to make simple modifications without seeking permission. Rental providers benefit too, from clearer accountabilities for renters, clearer obligations, and modern regulations and processes. Visit the Consumer Affairs Victoria website to find out more.
Superannuation Transfer Balance Cap
The Australian Taxation Office has announced that the Transfer Balance Cap will rise from $1.6 million to $1.7 million on 1 July 2021 – as a result of an increase in the consumer price index.
The indexation means that individuals will now have a personal transfer balance cap of between $1.6 million and $1.7 million. However, individuals who had a transfer balance account before 1 July 2021 will have a cap calculated proportionally on the highest balance of their transfer balance account.
The tax office has said: “We will calculate each individual’s personal TBC based on the information reported to and processed by us. If you report pre 1 July 2021 events after 1 July 2021, we will go back and recalculate the member’s personal TBC and apply that new cap to their affairs”
The changes will make the application of the TBC quite complex and will also impact a number of other caps and limits relating to superannuation. The ATO will hold a webinar to explain the changes on March 2, 2021.
The ATO make mistakes on job keeper eligibility
Superannuation Guarantee Levy Amnesty
Victorian SME Co-vid 19 grants to be tax free
On 11th December 2020 the Commonwealth Government legislated that the $30 million worth of grants to small and medium sized businesses as part of Victoria’s Melbourne City Recovery Fund program (which was announced on 14 September 2020) will be non-assessable, non-exempt income for tax purposes if the business has an annual turnover below $50 million. Read More ➝
Statutory Interpretation
This post is for the lawyers in the room. The content is brilliant, but my “take away” is how well this training material has been presented.
Cyber Security
Scam emails are raking in cash for rogues impersonating the Trump and Biden election campaigns. Test yourself with this five minute quiz from the Australian Cyber Security Centre.
Not-for-profits Given Discretion When Calculating Job-keeper Thresh Hold
- An Australian government agency
- Local government body
- The United Nations or its agency.
Very Nice To Have
September 2020
I have just found this little gem hidden in the budget papers. A small businesses using the simplified depreciation rules can deduct the entire balance of their low value asset pool at the end of either the 2021 0r 2022 income year.
This means you can claim a tax deduction for the written down value of all those small assets you purchased in previous years. As I said, a little gem but many clients have $5,000 - $20,000 of low value asset sitting in that pool.
Mens' Sheds
September 2020
From 1 October 2020, a new general category of deductible gift recipients (DGR) is available for not-for-profit organisations that provide activities for their members that promote mental health and relieve social isolation.
Valuing SMSF Assets
August 2020
Each year self managed super funds are required to provide objective and supportable evidence to their auditor to establish that assets of the fund are valued at market value. The ATO has advised that it will not apply a penalty for SMSF trustees that have difficulty in obtaining evidence to support market valuations this year and next because of COVID-19, but you will probably receive a letter reminding you that valuations must be obtained by 2022.
https://www.ato.gov.au/.../Regulation-8-02B-and-evidence.../
A Beginners Guide to Superannuation:
https://www.superguide.com.au/how-super-works/beginners-guide?utm_source=sendinblue&utm_campaign=October_2020_newsletter_taster&utm_medium=email
Some Good News for Students and Veterans
July 2020
The independence test to obtain higher Youth Allowance and ABSTUDY payments will be temporarily revised from 1 January 2021. Young people who are seeking to qualify as independent will be provided with incentives to participate in seasonal work in the agricultural industry.
Veterans’ disability pensions will be exempt from the income test for Commonwealth Rent Assistance (CRA) and income support payments.
Small Business Grants to be Tax Free
June 2020
Victoria has reached agreement with the Commonwealth government that its grants to small and medium sized business made under the recent Victoria’s Business Resilience Package will be exempt from income tax. These grants would ordinarily be taxed under section 15-10 of the 1997 Tax Act. The Commonwealth will extend this arrangement to other States and Territories if they make similiar grants program for SME’s. The tax exemption only applies to grants paid before 30 June 2021.
Sensible Changes to Small Business Lending Rules
The Commonwealth Government has announced plans to overhaul credit laws to enable more efficient flow of credit to small business as the economy fights its way out this recession.
ASIC will no longer enforce the “responsible lending rules” for banks and other mainstream lenders, eliminating duplication of the work done by APRA. The change comes after ASIC lost its Federal Court action against Westpac over home loan lending standards, with the full court finding that a borrowers historical spending pattern was not a necessary element in the assessment of the borrower’s ability to service new loans.
The objective of the reforms is to make the loan application process more efficient by shifting the onus from “lender beware” to “borrower responsibility”. This new principle will place greater responsibility on borrowers to provide accurate information when submitting a loan application, while at the same time reducing the risk of lenders being penalised for relying on incorrect information provided by the borrower.
ASIC will continue to retain the oversight of higher cost forms of borrowing, such as consumer leases, pay day loans and pawn broking. The government has tightened the lender’s obligations in regard to these forms of lending and will impose key elements of the lending standards that apply to banks to non-banks.
Any business that charges a fee to represent consumers in disputes with financial institutions and manage negotiated loan repayment agreements will now require an Australian Credit Licence and be regulated by ASIC.
There has been an attempt to remove the ambiguity regarding the application of consumer lending laws to small business lending. This problem often arises when a small business loan is secured by a mortgage over a borrower’s family home.
Bushfire Recovery Plan or the Honey Industry
Australia’s 2019-20 bushfires destroyed an estimated 15.6 million hectares of native forests. Critical nectar and pollen sources for honey bee colonies have been lost.
Our ability to meet the pollination needs of the Australian agriculture industry is now severely compromised as with the ability to meet demand for domestic and export honey.
A 6-point recovery action plan has been developed through industry wide consultation to recover the beekeeping industry over the next five years.
Commissioner’s appeal on invalidity benefits of ex ADF members
The Full Federal Court has held that invalidity benefits received by 3 taxpayers discharged from the Australian Defence Force (ADF) on medical grounds were, in the cases of the first and third taxpayers, a “superannuation lump sum” and, in the case of the second taxpayer, a “superannuation income stream”. I