In its efforts to ensure that the Federal Government achieves its forecast budget surplus, they have announced a number of tax changes which will take effect from either 22 October 2012, or other dates as announced.
Fringe Benefits tax – remove concessional treatment of in-house fringe benefits
Currently, where an employee receives good or services from their employer that are identical or similar to those provided to customers by the employer, the taxable value is calculated and then is reduced by $1,000. This concession will be removed and the taxable value will be the lowest price at which an identical benefit is sold to the public or under an arm’s length transaction.
Large companies and PAYG Income Tax Instalments
In an attempt to bring forward collections, and to align tax payments with GST payments, large companies will be required to make PAYG income tax instalments monthly instead of quarterly. This change will be phased in over 3 years:
- turnover >$1 billion – 1 Jan 2014
- turnover > $100 million – 1 Jan 2015
- turnover >$20 million – 1 Jan 2016
This will require larger companies to be aware of their cash flow requirements, and to be prepared for more regular payments to the ATO.
Transfer of lost member’s accounts
The announcements will make changes to preserve the value of member accounts where a super fund has accounts with no activity, or unidentifiable members.
From 31 December 2012 the threshold below which inactive accounts must be transferred to the ATO will increase from $200 to $2,000. The period of inactivity before an account must be transferred has also been reduced from five years to 12 months. This will result in a greater number of lost accounts being transferred to the ATO.
In addition the ATO will, from 1 July 2013, pay interest on reclaimed superannuation accounts equivalent to Consumer Price Index (CPI) inflation.
SMSF levy
The SMSF Super levy is to be reformed which will include bringing forward payment so it is levied and collected in the same year of income. This change will be phased in over the 2013-2014 and 2014-2015 financial years.
In addition, the cost of the levy will increase from $191 to $259 per year from 2013-2014.
Tax certainty for deceased estates
The government will amend the law to continue to allow tax exemption on assets supporting a superannuation pension following the death of a member in pension phase. This exemption will continue to apply until the benefits are paid out, and will allow the sale of assets to continue to be tax-free. This measure takes effect from 1 July 2012.
Increase in ATO compliance activity
In line with the budget announcement, $390 million is to be provided for ATO compliance activities. This activity is expected to provide a net gain to the budget of $2 billion through to 2015-2016.
While this announcement is in line with previous expectations, it evidences that ATO will be looking to collect more to help Government achieve its surplus. This serves as a reminder to ensure that your compliance with tax law is up to date, and if there any changes that need to be made to comply with the tax law, it is best to do these now prior to any audit activity.
Tax exemption – Cricket World Cup
For the cricket fans out there, the Government will provide a tax exemption for the International Cricket Council for the Cricket World Cup held in Australia in early 2015.