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Quarterly Newsletter: June 2022

2022-2023 Budget Measures that are now law


Low and Middle Income Tax Offset


A measure that will no doubt be beneficial for individual taxpayers is the increase in the Low and Middle Income Tax Offset (‘LMITO’) for the 2022 income year by $420. The LMITO is a tax offset which reduces an individual taxpayer’s tax liability.


This means that the maximum amount of the LMITO for the 2022 income year will now be $1,500 (up from $1,080 for the 2021 income year).


However, the LMITO will not be extended to the 2023 income year.


Reduction in Fuel Excise


Fuel excise on petrol and diesel will be reduced by 50% (a reduction of 22.1 cents per litre) from 30 March 2022 to 28 September 2022.


This temporary reduction in the fuel excise is to soften the impact of increased petrol and diesel prices that have been triggered by Russia’s invasion of Ukraine.


Tax deductions for work-related COVID-19 tests


Last month’s edition of Practice Update discussed a proposal for COVID-19 tests, to be both:

  • tax-deductible; and

  • exempt from FBT;

broadly where they are purchased for work-related purposes.


This proposed legislative change is now law with effect from 1 July 2021.



Disclosure of business tax debts


The ATO is in the process of writing to taxpayers that may be eligible to have their tax debts disclosed to credit reporting bureaus (‘CRBs’).


The ATO can potentially report outstanding tax debts to a CRB where the following criteria are satisfied:

  • The taxpayer has an Australian business number and is not an excluded entity;

  • The taxpayer has one or more tax debts and at least $100,000 is overdue by more than 90 days;

  • The taxpayer is not engaging with the ATO to manage their tax debt; and

  • The taxpayer does not have an active complaint with the Inspector-General of Taxation about the ATO’s intent to report its tax debt information.

Excluded entities are a deductible gift recipient, a complying superannuation fund, a registered charity and a government entity.


The purpose of this letter from the ATO is to raise awareness of the actions that the ATO can now take under the Disclosure of Business Tax Debts measure.


The letter will be sent to all taxpayers with business tax debts that currently meet the criteria (discussed above) for disclosure.


This letter from the ATO provides business taxpayers with information on how to effectively engage with the ATO to manage their tax debt.


Taxpayers can avoid disclosure to a CRB by making payment in full or negotiating a payment plan.


If an eligible taxpayer does not take steps to actively manage their debt, they will remain eligible for disclosure.


Before the ATO takes any final action to disclose a tax debt, it will issue the taxpayer with a formal Intent to Disclose Notice.


If a taxpayer receives an Intent Notice, asking them to 'Act now or your tax debt will be reported to credit reporting bureaus', the taxpayer or their tax agent must contact the ATO within 28 days of receiving the notice to avoid the debt being reported.


It is crucial for taxpayers to engage with the ATO early before their debts become unmanageable.



Get ready for super changes from 1 July 2022


As the new financial year approaches, employers need to be aware of two important super changes.


From 1 July 2022, employees can be eligible for super guarantee (‘SG’), regardless of how much they earn, because the $450 per month eligibility threshold for when SG is paid has been removed.


Employers only need to pay super for workers under 18, when they work more than 30 hours in a week.


Furthermore, the SG rate will increase from 10% to 10.5% on 1 July 2022. Employers will need to use the new rate to calculate super on payments made to employees on or after 1 July, even if some or all of the pay period is for work done before 1 July.


Employers should update their payroll and accounting systems to ensure they continue to pay the right amount of super for their employees.



 

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.