Practice Update - October 2021

Lowe Lippmann Chartered Accountants

Practice Update - October 2021

Extra super step when hiring new employees

Employers may soon need to do something extra when a new employee starts to work for them.  Currently, if a new employee does not choose their own fund, their employer can pay contributions for them to a default fund.

From 1 November 2021, if a new employee does not choose a specific fund, their employer may need to request the employee's "stapled super fund" details from the ATO.  A stapled super fund is an existing account which is linked (or "stapled") to an individual employee, so it follows them as they change jobs.

We recently released a Tax Alert considering this issue in more detail and it can be found here .

ATO support for employers with expansion of Single Touch Payroll (STP)

As part of the expansion of Single Touch Payroll (known as STP Phase 2 ), from 1 January 2022, employers will need to report additional payroll information in their STP reports including:

  • Disaggregation of gross amounts (including separate reporting of paid leave, allowances, overtime, directors' fees and salary sacrifice amounts);
  • Employment and taxation conditions (including information from the TFN declaration); and
  • Income types (for example, salary and wages, working holiday maker income, foreign employment income).

To support employers with the move to STP Phase 2 reporting, the Australian Taxation Office ( ATO ) will take the following approach:

  • Employers that can start Phase 2 reporting by their digital service provider's deferral date, do not need to apply to the ATO for more time.
  • If an employer's software will be ready for 1 January 2022 and they are able to start reporting before 1 March 2022, they do not need to apply to the ATO for more time (in other words, an automatic extension applies).

The ATO has also advised that penalties will not be applied for genuine mistakes in the first year of Phase 2 reporting until 31 December 2022.

Reminder for first-time share investors to declare income

With the growth of micro-investment platforms helping new investors enter the market, the ATO has issued a reminder for first-time share and Exchange Traded Funds ( ETFs ) investors.  The ATO is concerned that first-time investors often do not understand their tax obligations in relation to reporting capital gains from the sale of shares and income in the form of dividends and distributions.

This could result in errors when they lodge their tax return and delay tax refunds.

While the ATO pre-fills data from third parties into individual tax returns, investors are urged to check that all relevant data has been included, or make sure their registered tax agent has all the necessary information before lodging.

We always recommend that investors keep accurate and up-to-date records in relation to their investments.

Documenting gifts or loans from related overseas entities

We have recently learned that the ATO has been reviewing certain arrangements where Australian taxpayers have attempted to disguise undeclared foreign income as a gift or loan, in order to obtain a tax advantage.

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.

In this context, 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 keeping practices is desirable to help reduce any stress and effort required to respond to the ATO in instances where they request clarification of details to verify whether an amount is a genuine gift or loan.

The ATO has published some guidance to help taxpayers properly document genuine gifts or loans received from related overseas entities that are used for income purposes, and this guidance can be found here .

Additional ATO support during the pandemic

The ATO is providing additional support to taxpayers having difficulty meeting their tax and superannuation guarantee charge obligations for employees because of COVID.

Available support includes the following:

  • Lodgment or payment support options – for example, payment plans or remitting interest and penalties.
  • Varying PAYG instalments – The ATO will not apply penalties or charge interest on varied instalments that relate to the 2022 income year where taxpayers have taken reasonable care to estimate their end of year tax liability.
  • Moving from quarterly to monthly GST reporting for quicker access to refunds.
  • Applying for administrative relief for Division 7A minimum yearly repayments.

If you are experiencing difficulties to meet your tax or super obligations, contact your Lowe Lippmann Relationship Partner and we can assist with identifying your options and (if necessary) apply to the ATO on your behalf.

Victorian State Revenue late payment interest waiver extended

The Victorian State Revenue Office ( SRO ) has advised that due to continued financial pressures caused by the pandemic, the late payment interest waiver period has been extended to 31 December 2021.

The SRO also said that after this date, any outstanding taxation debts that have not been paid will once again be subject to late payment interest calculated from the date of the tax default.

The SRO currently offer a variety of payment options, and more information is available for each of the taxes, duties, levies and fees administered - they can be found here .

Paid Parental Leave changes support parents in lockdown

The Paid Parental Leave ( PPL ) scheme has been amended to enable expectant parents whose work has been affected by COVID lockdowns to access Parental Leave Pay or Dad and Partner Pay under the scheme.

Many people who would otherwise have qualified for PPL, may no longer meet the "work test" condition to be eligible for payment because of continued lockdowns across much of Australia.

For example, this could apply to a person who has been stood down, had their hours of work reduced or ceased work entirely, as a result of a lockdown.

The changes to the PPL ensure that the period a person receives a Commonwealth Government COVID payment or the COVID Disaster Payment (that is, because their work has been impacted by lockdowns) counts towards the work test, so that they may still receive Parental Leave Pay or Dad and Partner Pay.

Reminder of SG obligations for September 2021 quarter

Under the Superannuation Guarantee ( SG ) scheme, employers are required to make quarterly contributions on behalf of their employees.

From 1 July 2021, the minimum contribution required is 10% (up from 9.5%) of an employee's Ordinary Time Earnings base, up to a maximum quarterly contribution base of $58,920 for 2021-22.

Employers are reminded that the due date for making SG contributions for the September 2021 quarter is 28 October 2021.


Please do not hesitate to contact your Lowe Lippmann Relationship Partner if you wish to discuss any of these matters further.

Practice Update – October 2025

October 3, 2025
ATO interest charges are no longer tax deductible – What you can do As we explained in our Practice Update for September, general interest charge ( GIC ) and shortfall interest charge ( SIC ) imposed by the ATO is no longer tax-deductible from 1 July 2025. This applies regardless of whether the underlying tax debt relates to past or future income years. With GIC currently at 11.17%, this is now one of the most expensive forms of finance in the market — and unlike in the past, you won’t get a deduction to offset the cost. For many taxpayers, this makes relying on an ATO payment plan a costly strategy. Refinancing ATO debt Businesses can sometimes refinance tax debts with a bank or other lender. Unlike GIC and SIC amounts, interest on these loans might be deductible for tax purposes, provided the borrowing is connected to business activities. While tax debts will sometimes relate to income tax or CGT liabilities, remember that interest could also be deductible where money is borrowed to pay other tax debts relating to a business, such as: GST; PAYG instalments; PAYG withholding for employees; and FBT. However, before taking any action to refinance ATO debt it is important to carefully consider whether you will be able to deduct the interest expenses or not. Individuals If you are an individual with a tax debt, the treatment of interest expenses incurred on a loan used to pay that tax debt really depends on the extent to which the tax debt arose from a business activity: Sole traders: If you are genuinely carrying on a business, interest on borrowings used to pay tax debts from that business is generally deductible. Employees or investors: If your tax debt relates to salary, wages, rental income, dividends, or other investment income, the interest is not deductible. Refinancing may still reduce overall interest costs depending on the interest rate on the new loan, but it won’t generate a tax deduction.

Audit Lowe Down – Costs incurred in acquiring / forming a business

September 9, 2025
Costs incurred in acquiring / forming a business. Further to the recent blog about capitalisation of costs when acquiring an asset, we have received a number of questions in relation to costs incurred in setting up / purchasing a business. Formation costs on establishing a business: These costs would include: Incorporation fees ASIC registration fees Legal fees Business name registration Pre-operating costs Pre-opening costs. The relevant standard for these costs is AASB 138 Intangible Assets and paragraph 69a confirms that these start-up costs are expensed when incurred. There is no identifiable asset controlled by the entity when the costs are incurred as the entity does not exist. Business acquisition costs These costs would include: Legal and accounting fees Due diligence and valuation costs Stamp duty Advisory or brokerage fees Project management costs related to the acquisition Internal costs allocated to the transaction In contrast to the asset acquisition discussed previously, AASB 3 Business Combinations requires all acquisition costs to be expensed as incurred. This means that they are not included as part of the consideration paid and therefore do not affect calculated goodwill.  Entities purchasing businesses should be aware that these costs are not able to be capitalised as they can often be substantial, and purchasers often do not expect the costs to be taken directly to the income statement

Practice Update – September 2025

September 8, 2025
ATO to include tax 'debts on hold' in taxpayer account balances From August 2025, the Australian Taxation Office ( ATO ) is progressively including 'debts on hold' in relevant taxpayer ATO account balances. A 'debt on hold' is an outstanding tax debt where the ATO has previously paused debt collection actions. Tax debts will generally be placed on hold where the ATO decides it is not cost effective to collect the debt at the time. The ATO is currently required by law to offset such 'debts on hold' against any refunds or credits the taxpayer is entitled to. The difficulty with these debts is that the ATO has not traditionally recorded them on taxpayer's ATO account balances. Taxpayers with 'debts on hold' of $100 or more will receive (or their tax agent will receive) a letter before it is added to their ATO account balance (which can be viewed in the ATO's online services or the statement of account). Taxpayers with a 'debt on hold' of less than $100 will not receive a letter, but the debt will be included in their ATO account balance. The ATO has advised it will remit the general interest charge ( GIC ) that is applied to 'debts on hold' for periods where they have not been included in account balances. This means that taxpayers have not been charged GIC for this period. The ATO will stop remitting GIC six months from the day the taxpayer's 'debt on hold' is included in their account balance. After this, GIC will start to apply.
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