Practice Update – December 2022

Lowe Lippmann Chartered Accountants

ATO warning to SMSFs: "Paying the price for non-compliance"


There are various courses of action available to the ATO when trustees of self-managed super funds (SMSFs) have not complied with the super laws, including applying administrative penalties.


A number of factors determine the amount of the administrative penalty, including:

  • the type of contravention;
  • when it occurred; and
  • the number of penalty units that apply.


For example, if an SMSF contravenes a provision in relation to borrowings during the 2021/22 financial year, the ATO may apply a penalty of 60 penalty units and, at $222 per unit for that year, this would result in the SMSF trustee having to pay $13,320. This could be even more if there are multiple contraventions.


We note that the Government recently introduced a Bill to Parliament to increase the value of a penalty unit for Commonwealth offences committed on or after 1 January 2023 from $222 to $275, which may make an SMSF trustee exposed to an even larger amount after 1 January 2023.


The ATO imposed total administrative penalties of around $3.4 million on SMSF trustees last year for contraventions such as trustees illegally accessing super benefits, loans, or financial assistance given to members.


Also, just because a trustee receives an administrative penalty doesn’t mean the ATO won't undertake any other compliance action, such as issuing a notice of non-compliance or disqualifying the relevant entity as a trustee.


ATO's record-keeping tips


The ATO has reminded taxpayers that they should understand the record-keeping requirements for their business and keep accurate and complete records as they occur, as this should help them avoid penalties that may apply and reduce the possibility of the ATO denying their expense claims.


The following are some of the ATO's top tips to help businesses get it right and avoid record-keeping errors (based on common record-keeping errors the ATO sees):

  • Keep accurate records of all cash and electronic transactions.
  • Reconcile cash and EFTPOS sales regularly (by ensuring payments recorded internally match external records) and enter the amounts into the main business accounting software system.
  • Check for mistakes if things don't add up.
  • For expenses that are for both business and private use, work out and record the business portion accurately.
  • If the taxpayer has used trading stock for private purposes, remember to account for the stock as if the business sold it, and include the value in the business’s assessable income.
  • Don't use estimates to prepare tax returns and business activity statements (BASs).
  • If claiming credits for GST, set aside the GST in a separate ledger account to make record-keeping and calculations easier.
  • Most records must generally be kept for at least 5 years — from when the record was prepared or obtained, or the transaction or related acts were completed, whichever is later. Records relating to the calculation of losses may need to be kept longer, depending on when that loss is deducted (or offset against a capital gain).
  • Accurate and detailed records must also be kept when paying contractors to provide certain services on behalf of the business (so the business can easily complete its taxable payments annual report at the end of each year).
  • Use the ATO's Record-keeping evaluation tool to find out how well the business is currently keeping its records.

Input tax credits denied due to lodging BASs late


The Administrative Appeal Tribunal (AAT) has held that a taxpayer could not claim $91,239 of input tax credits (ITCs) at least partly because it lodged the relevant BASs more than 4 years too late.


Specifically, the GST Act operates such that, if an extension of time to lodge a BAS has not been granted prior to the expiry of 4 years after the day on which it was required to be given to the ATO, the entitlement to ITCs immediately ceases.


The AAT also noted that there is no discretion to circumvent this part of the GST Act, and the ATO cannot provide further time to lodge a BAS retrospectively outside of the relevant 4 year period.


It did not matter that the taxpayer was (for example) involved in a dispute with a franchisor nor that they were impacted by lockdown restrictions.


Therefore, the taxpayer was no longer entitled to claim ITCs in relation to the BASs lodged by the taxpayer 4 years after they were required to have been given (and was also denied other ITCs for BASs that were lodged within the required 4 year period, as a substantial amount of the ITCs claimed remained unsubstantiated by a valid tax invoice).


Chef spending most of a year on cruise ships still a 'resident'


The AAT has also held that a taxpayer, an Australian chef with over 20 years’ experience both in Australia and overseas, was an Australian resident for taxation purposes in the 2016 income year.


During that year, he spent only 86 days in Australia, being the period prior to him leaving Australia to commence employment with a cruise ship company, and a period during which he visited his family between deployments.


However, the AAT noted that he had no intention that any new place of residence be indefinite, and he did not become a resident of a new place.


Importantly, his 'domicile' for tax purposes (being Australia) did not change (and the AAT stated that "a ship cannot be a domicile").


Requesting stapled super fund details for new employees


The ATO is reminding employers that, when they have new employees that have not provided them with their choice of super fund, super contributions should be made into:

  • the employee's stapled super fund; or
  • the employer's nominated account (but only if the ATO advises that the employee does not have a stapled super fund).


A stapled super fund is an employee's existing super account which is linked, or 'stapled', to them and follows them as they change jobs.



In December 2022, the ATO is releasing a solution that enables employer software and payroll products to request stapled super funds. That is, stapled super enabled software will allow the employer to request stapled super details from within their business software, so they will no longer have to request them separately via ATO online services.


Employers should contact their software provider to find out if their software solution will incorporate the stapled super functionality.


The ATO also encourages employers using the 'bulk request process' to begin discussions with their software providers, as the ATO's current bulk request process will be decommissioned from mid-2023.





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


May 4, 2026
Special Topic: Payday Super changes apply from 1 July 2026, act now to be prepared! The ATO has issued further guidance on Payday Super changes that apply from 1 July 2026. In particular, the ATO released a ‘Payday Super checklist for Employers’ ( click here ), which is a good summary of the tasks that should be completed before 1 July 2026, and now is the time to act. Understanding ‘qualifying earnings’ From 1 July 2026, employers will calculate super using ‘qualifying earnings’ ( QE ) instead of the current ‘ordinary time earnings’ ( OTE ). For many employers, the new concept of QE is broader than OTE, but it should not change the amount they need to pay for their employees. However, it may require updates to payroll software configuration and reporting. Employers should review and prepare to correctly map pay codes now to meet reporting obligations and ensure readiness when their updated payroll software is available. QE include the following payments: OTE (ie. payments for ordinary hours of work), including certain types of paid leave, allowances, bonuses and lump sum payments. There are no changes to what payments are considered OTE under Payday Super. For a full list of payments which are included within OTE – click here . All commissions paid to an employee. Salary sacrifice amounts that would qualify as QE had they not been sacrificed to superannuation. Earnings paid to workers who fall under the expanded definition of employee, including payments to independent contractors paid mainly for their labour. Some payments may fall into more than one category of QE, such as commissions, and those payments are covered only once to the extent of the overlap in categories. The total QE for a pay period is determined by aggregating all qualifying payments made to or for an employee on the relevant day, forming the basis for calculating superannuation guarantee ( SG ) contributions. Each payday, employers will need to report both year-to-date QE and superannuation liability for each employee through Single Touch Payroll ( STP ). Employers should confirm their updated payroll software has this reporting functionality built in. Understanding new timing requirements for super contributions From 1 July, employers are responsible for ensuring that super contributions reach super funds within 7 business days of the relevant payday , calculated on the QE amount. Super funds will have 3 business days (down from 20 days) to allocate or return contributions that cannot be allocated. There is currently no obligation for the Super fund to confirm that an employee contribution has been allocated successfully, however if 3 days have elapsed we can accept that the employee contribution has been processed correctly. A super payment only counts once it is received by the employee’s superannuation fund, not when it is submitted. Submitting on day seven may not allow enough time, and we note there is no extension for rejected payments - so employers must ensure there is enough time to correct any errors and for SG contributions to reach funds within the 7 business days. Understanding importance of testing payroll software before 1 July 2026 Prepare now, review your payroll system readiness, engage with payroll software providers and ensure the functionality for these new changes will be supported. It has been widely suggested that new payroll software functionality is tested and everything is running smoothly before 1 July. Note that super payments for pay cycles in July 2026 may be due before your final quarterly super payment is due on 28 July 2026 (ie. for the June 2026 quarter, being April to June). Contributions received on or before 28 July 2026 will reduce any super owing for the June 2026 quarter first . If there is any remainder, contributions will then be used under Payday Super. If you pay on time for the June 2026 quarter and Payday Super you do not risk incurring penalties. The ATO has provided an example of this issue ( click here ), and explains that if the employer pays the correct amount for the June 2026 quarterly payments and the first Payday Super payment (ie. for the first pay cycle in July, which could be weekly or fortnightly) is paid in full both contributions will be made on time. Understanding cash flow pressure Employers may have multiple super payments due during July 2026, including: super payments for each Payday (after 1 July 2026); plus the final quarterly super payment due 28 July, for June 2026 quarter (ie. April to June). Employers should review their expected pay cycles for July 2026 to understand the impacts of paying super each payday after 1 July 2026. Employers may consider setting aside additional funds to make sure they can meet their obligations. If cashflow permits, employers can pay the June 2026 quarter super on or before the first payday in July (ie. the first pay cycle in July, which could be weekly or fortnightly). If an employer can do this, your business will have: a more seamless changeover to the Payday Super system; and time to correct any rejected payments before the 28 July deadline. We recommend that all employers take actions as soon as possible to be best prepared for the Payday Super changes coming in from 1 July 2026. If you require assistance, please contact your Lowe Lippmann representative.
April 12, 2026
Know when a new logbook is required Keeping a car logbook may be required to accurately calculate the business-use percentage of vehicle expenses (ie. fuel, registration, insurance and depreciation) for tax deductions. Taxpayers can keep the same logbook for their car for five years, but there are circumstances where they may need a new one during that period. Relying on a logbook that no longer represents a client's work-related travel may result in them claiming more, or less, than they are entitled to. A new logbook may be required when a taxpayer: moves to a new house or workplace — updating their residential or work address may then be necessary; or has changes to their pattern of use of the car for work purposes — checking that they are still doing the same role and routine may then be necessary. Taxpayers using the logbook method for two or more cars need to keep a logbook for each car and make sure they cover the same period. Clients who purchase a new car during the income year and want to continue relying on their previous car's logbook must make a nomination in writing. The nomination must be made before they lodge their tax return and state: they are replacing their original car with a new car; and the date that nomination takes effect. Taxpayers should remember that, if their employer provides them with a car or they salary sacrifice a car using a novated lease, they are not entitled to claim work-related car expenses using the logbook or cents per kilometre method, as they do not own the car. When claiming car expenses using the logbook method, taxpayers also need to keep various types of other records, including (among other things) odometer records for the start and end of the period they own the car, proof of purchase price, decline in value calculations, and fuel and oil receipts (or records of a reasonable estimate of these expenses based on odometer readings).
March 2, 2026
$20,000 instant asset write-off extended The Government recently passed legislation to extend the $20,000 instant asset write-off for small businesses by 12 months to 30 June 2026. Taxpayers should note that if their business has an aggregated annual turnover of less than $10 million, they may be able to use the instant asset write-off ( IAWO ) to immediately deduct the business portion of the cost of eligible assets which cost less than $20,000. Eligible assets must basically have been first used (or installed ready for use) between 1 July 2025 and 30 June 2026. The $20,000 limit applies on a per asset basis, so taxpayers can instantly write-off multiple assets. The IAWO can be used for both new and second-hand assets (but some exclusions and limits apply).
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