Tax Alert – December 2021

As COVID-19 turbulence starts to settle, the ATO is moving away from its supportive position and returning to its more usual compliance focus.

That means taxpayers need to be aware their financial affairs will come under renewed attention in the year ahead.

Data gathering programs increase

In recent months the ATO has announced programs to gather data on various aspects of Australians’ financial lives to use in its ongoing data-matching projects.

Recent programs include gathering data on property management and rental bonds, cryptocurrency, online selling and novated leases for the upcoming financial year (2022-23). The ATO will also be collecting data on payments made by government agencies such as Comcare, the Department of Health, the NDIA, Department of Veterans’ Affairs and the clean energy regulator.

Taxpayers who buy and insure high-value lifestyle assets will also be under the microscope, with the ATO looking to collect details that will “assist with profiling [to obtain] a holistic view of a taxpayer’s wealth”. Under this program, the taxman will be obtaining information from insurance companies for the period 2020-21 to 2022-23 about assets exceeding certain nominated thresholds.

These high-value assets include boats valued over $100,000, motor vehicles (including caravans) and thoroughbred horses valued over $65,000, fine art worth over $100,000 per item and aircraft valued over $150,000. Data obtained from insurers will include individual client identification and policy details.

Overseas gifts or loans under scrutiny

The ATO has also announced it will be increasing scrutiny of undeclared foreign gifts or loans from related overseas entities, including family and friends.

The regulator says it has encountered many situations where Australian taxpayers are deriving assessable income or capital gains offshore but failing to declare these in their income tax returns. The ATO will be looking at arrangements where taxpayers are attempting to avoid tax on foreign assessable income by disguising amounts as gifts or loans.

Anyone receiving genuine monetary gifts or loans should keep supporting documentation. Inheritances count as gifts, so if you receive an inheritance from overseas, get a certified copy of the person’s will or estate distribution statement.

Focus on working from home deductions

On a positive note, if you are still working from home due to COVID-19, you can continue using the shortcut method for claiming deductions until 30 June 2022.

From 1 July 2022, you will need to use either the traditional fixed rate or actual cost methods and meet their eligibility and recordkeeping requirements.

The ATO says it’s currently reviewing the 52 cents per hour fixed rate method to make it easier and simpler to use, given more people will be working from home in the longer term.

Backpacker tax under fire

Employers paying working holidaymakers will need to keep a close eye on developments in this area following a decision by the High Court that tax rates applied to these employees is discriminatory as it is based on nationality.

The decision could affect the applicability of the backpacker tax for workers from countries with double tax agreements with Australia. According to the ATO, this means working holidaymakers from Chile, Finland, Germany, Japan, Norway, Turkey, UK, Germany or Israel.

The ATO is currently considering the implications of the High Court decision and will provide further guidance for employers. In the meantime, employers should continue using the tax rates in the ATO’s published withholding tables for backpackers.

Self-education expense threshold to go

The government has made good on its May 2021 Budget promise to remove the $250 non-deductible threshold for claiming work-related self-education expenses.

The Treasury Laws Amendment (2021 Measures No.7) Bill 2021 is currently before Parliament. If passed, it will remove the current threshold for taxpayers claiming self-education expenses. It’s also expected to simplify the claims process in your annual tax return.

The start date for the change is likely to be 1 April or 1 July 2022.

Reminder on super stapling

If you are an employer, don’t forget to request super fund details from new employees, now the government’s super stapling rules are in place.

If a new employee doesn’t choose a super fund, you must request their stapled super fund from the ATO if they have one. This fund is linked to them and must be used for your Superannuation Guarantee (SG) contributions unless the employee requests otherwise.

If you would like help getting your tax affairs in order for the new year, contact our office today on 03 5120 1400 and speak to one of our tax accountants or send us a message via our contact page.

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.




What super stapling means for employers

If there’s one certainty in business these days, it’s constant change. Now there’s an extra step you need to take with new employees to comply with the superannuation choice of fund rules.

From 1 November 2021, whenever a new employee starts with your business and they don’t select a super fund for their Super Guarantee (SG) contributions, you will need to ask the ATO for their stapled super fund details.

New fund choice rules

Under the new rules covering choice of super fund, every employee is now stapled (or linked) to an existing super account that follows them for life as they change jobs unless they choose otherwise.

This reform to the super rules was introduced by the Federal Government to reduce duplicate account fees and insurance premiums paid by employees on their super. Up until now, many employees ended up with a new super account each time they started a new job, often losing track of multiple accounts and unnecessary fees along the way.

A stapled fund can be any type of eligible super fund, including SMSFs and defined benefit super funds.

The new stapling rules do not affect your existing employees, so in most situations you will only need stapled fund details if a new employee fails to give you a choice of fund form.

You must, however, request the stapled super fund details for any new employee who is a temporary resident or who is covered by an enterprise bargaining agreement or workplace determination made before 1 January 2021.

If the employee doesn’t have a stapled fund, you can make your SG contributions into your employer default MySuper product (unless they are subject to an enterprise bargaining agreement or modern award stipulating a prescribed super fund).

What to do from 1 November 2021

To ensure you’re ready to request stapled fund details, check you have enabled online services with the ATO and your authorised representative has all the necessary permissions in place.

When you onboard a new employee on or after 1 November 2021, the first step of offering your employee an ATO Superannuation Standard Choice Form within 28 days remains the same. If they fail to choose a super fund, you will then need to check with the ATO whether or not your employee has a stapled super fund.

Before you can make a stapling request, however, you need to have lodged either a Single Touch Payroll (STP) event or a tax file number (TFN) declaration for your new employee with the ATO.

If your new employee has a stapled fund, you simply pay your SG contributions into that fund. Employees always retain the right to change super funds if they wish and their new super fund then becomes their stapled fund.

More than one super fund

If your employee has more than one super fund, they are automatically stapled to the fund that most recently received a super contribution on their behalf. Where there is more than one active super fund, the most appropriate fund (such as the one with the largest balance), will be selected by the ATO.

The new stapled fund rules don’t mean your business can avoid nominating a default super fund to receive your SG contributions.

If your new employee doesn’t have a stapled fund, you will need to make your contributions into this fund.

The reforms mean it’s also a good idea to check whether the superannuation clauses in your employment contracts for new employees cover the possibility of super contributions being made into an employee’s stapled fund.

As an employer, if you fail to meet your obligations under the choice of fund rules – such as checking for a stapled fund – additional penalties may apply on top of the normal SG Charge (SGC) penalties.

If you would like more information on stapling, or the rules about making contributions for your employees’ super in general, please contact our office today and speak to a Financial Adviser on 03 5120 1400 or send any questions you may have via our website contact page.

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.