Practice Update - July 2022

Lowe Lippmann Chartered Accountants

Practice Update - July 2022

ATO’s small business focus for 2022 income year


The ATO announced that it will be focussing on the following matters for small business tax returns for the 2021/22 year:

  • Deductions that are private in nature and not related to business income, as well as overclaiming of business expenses (especially for taxpayers running a home-based business).
  • Omission of business income (ie. income from the sharing economy or new business ventures).
  • Record keeping – including insufficient or non-existent records that are needed to substantiate claims.


The ATO acknowledges that it has been a tough couple of years for many small business owners and encourages taxpayers to act early to find a solution if they are getting behind in their tax obligations, either by contacting their tax agent or the ATO.



ATO targeting SMSFs that fail to lodge annual returns


The ATO has observed an increase in the number of SMSFs that fail to lodge their first annual return and become what the ATO refers to as ‘NEVER’ lodgers. The ATO is particularly concerned where there has been a roll-over into these SMSFs, as this is a strong indicator illegal early release of superannuation benefits may have occurred.


A minority of SMSF trustees continue to ignore ATO reminders about lodging annual returns. This group is now being targeted with a compliance campaign the ATO calls ‘3 strikes and you’re out’.


Under this campaign, the ATO will take the following action:

  • The ATO’s compliance action starts with a blue letter, that encourages trustees to take immediate action and lodge their return and provides a pathway for those in need of support.
  • If the ATO does not receive a response to the blue letter, it will issue an amber letter warning the trustees of the consequences of failing to lodge their return.
  • If the ATO still does not receive a response, it will issue a final warning, a red letter advising the ATO is commencing the disqualification process and considering other enforcement action.


Last year the ATO issued red letters to trustees who had never lodged their first annual return and has now commenced disqualifying the 95 trustees that did not respond.



ATO updates ‘cents per kilometre’ rate for individuals


The ATO has updated the cents per kilometre rate relating to individual car expenses for the 2023 income year to 78 cents per business kilometre.


The cents per kilometre method:

  • uses a set rate for each kilometre travelled for business;
  • allows taxpayers to claim a maximum of 5,000 business kilometres per car, per year;
  • does not require written evidence to show exactly how many kilometres were travelled (but the ATO may ask taxpayers to show how they worked out their business kilometres, for example by means of diary records); and
  • uses a rate that takes all vehicle running expenses (including registration, fuel, servicing and insurance) and depreciation into account.


The cents per kilometre rate was 72 cents for the 2021 and 2022 income years.



ATO to target ‘wash sales’ this Tax Time


The ATO is warning taxpayers to not engage in ‘asset wash sales’ to artificially increase their losses to reduce gains (or expected gains). Wash sales are a form of tax avoidance that the ATO is focussed on this tax time.


Wash sales typically involve the disposal of assets (ie. cryptocurrency and shares) just before the end of the financial year, where after a short period of time, the taxpayer reacquires the same or substantially similar assets. Such sales are usually done to create a loss to be offset against a gain already derived, or expected to be derived, in certain circumstances, in a tax return.


The ATO’s sophisticated data analytics can identify wash sales through access to data from share registries and crypto asset exchanges. When the ATO identifies this behaviour, the capital loss is rejected, resulting in an even bigger loss to the taxpayer.


The ATO has warned taxpayers engaging in wash sales that they are at risk of facing swift compliance action and additional tax, interest and penalties may apply. Taxpayers are urged to ignore any advice encouraging a wash sale of any asset. The clear advice from the ATO is to check the ATO website or check with an independent registered tax professional and not to rely on advice received through media, social media, or advertisements.



Downsizer contributions age changes from 1 July 2022


From 1 July 2022, people aged 60 years and over will be eligible to make downsizer contributions of up to $300,000 per person ($600,000 per couple) from the sale proceeds of their home into their super. For downsizer contributions made prior to 1 July 2022, eligible individuals must have been aged 65 years or older at the time of making their contribution.


Eligible downsizer contributions do not impact or count towards the member’s concessional or non-concessional super contribution caps.


During the 2022 Federal election, the previous Coalition Government announced it would support a further reduction to the downsizer eligibility age to 55 years. However, this announcement has not become law. Accordingly, contributions received on or after 1 July 2022 from members who are 55 to 59 will:

  • be ineligible for treatment as downsizer contributions; and
  • generally count towards either the member’s non-concessional or concessional superannuation contributions caps.



Super guarantee contribution due date for June 2022 quarter


The due date for employers to make super guarantee contributions for their employees for the June 2022 quarter is 28 July 2022. Note that the super guarantee rate in relation to salary and wages paid on or before 30 June 2022 is 10%.


Employers that do not pay an employee’s superannuation guarantee amount on time (and to the right fund) are liable to pay the ‘superannuation guarantee charge’ (SGC). The SGC is more than the superannuation amount that is otherwise payable for the employee and is not tax deductible.


As we noted in our June Practice Update, the super guarantee rate increases to 10.5% in relation to salary and wages paid on or after 1 July 2022 (even if they are paid in relation to work performed before that date).


Note also, contributions received by superannuation funds after 30 June 2022 will not be deductible in the 2022 income year, even if they are made in relation to work performed during the 2022 income year.



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

November 4, 2026
ATO to continue accepting credit cards until 30 June 2027, but the clock it still ticking Last month, in our Practice Update for October 2026 ( see here ), we noted the Australian Tax Office ( ATO ) announced it will stop accepting credit cards as a payment method after 30 November 2026, following the Reserve Bank of Australia’s ( RBA ) ban on card surcharges from 1 October 2026. The ATO has since confirmed that it will continue to accept credit card payments for tax obligations until 30 June 2027 . After 30 June 2027, taxpayers who wish to continue using a credit card to meet their tax obligations may continue to use third-party payment providers as outlined at www.ato.gov.au/howtopay What do these change mean for you? The extension does not cancel the planned withdrawal of direct credit card payments. From 1 July 2027, you will need to use another method to pay the ATO directly. Available alternatives include: Debit card BPAY Bank transfer Direct debit Payment at Australia Post (where available) International money transfer services (where applicable) Some third-party payment providers may continue to offer ways to pay tax using a credit card after the deadline. However, these services may charge additional fees and take longer to process payments. Check the total cost, processing time and payment conditions before relying on one. Why does your payment method matter? Credit cards can help bridge short-term cash-flow gaps, but the convenience comes at a cost. Interest, annual fees and other charges can erode the benefit, particularly if you regularly carry a balance. There is also a risk that a payment will not be processed in time, potentially leaving you with an overdue tax liability and additional interest. Switching to BPAY, bank transfer or direct debit may provide a simpler and more predictable way to manage tax payments. The right option will depend on your circumstances, including when funds are available in your business account and whether you need to retain flexibility over payment dates. Pay particular attention if you have an existing ATO payment plan linked to a credit card. The ATO has been contacting affected taxpayers, but you should check your own arrangements rather than assume they will continue unchanged. Confirm how future instalments will be paid and allow enough time to update the payment method before the deadline. What should you do now? Use the extended timeframe to prepare rather than leaving the change until the last minute. Review your current arrangements. Check whether you use a credit card for one-off tax payments, regular instalments or an ATO payment plan. Choose an alternative. Consider which payment method best suits your cash-flow cycle, taking account of fees and processing times. Update recurring payments early. Make sure any new arrangements are in place well before 30 June 2027 and check that payments are processed successfully. Review your cash flow. If you rely on the credit card interest-free period to manage tax liabilities, consider whether you need to set aside funds earlier or adjust your payment planning. Seek advice if needed. If tax payments are putting pressure on your cash flow, speak with us early so we can help you review your position and consider practical ways to manage upcoming liabilities. The extension to 30 June 2027 gives businesses more time to adjust, but it should not be mistaken for a permanent reprieve. Planning ahead can help you avoid unnecessary fees, missed payments and last-minute disruption when the ATO’s direct credit card facility closes.
October 7, 2026
ATO to stop accepting credit cards as payment method after 30 November 2026 The Australian Tax Office ( ATO ) has announced it will stop accepting credit cards as a payment method after 30 November 2026. The move follows after the Reserve Bank of Australia’s ( RBA ) Review of Merchant Card Payment Costs and Surcharging, where the RBA concluded that “it is in the public interest” to scrap surcharging for all designated card networks from 1 October 2026 (including EFTPOS, Mastercard, and Visa). It said that as a government agency, the ATO has decided it would not be appropriate for the cost of credit card merchant fees to be transferred to the community. The ATO recognises that some taxpayers currently rely on credit card payments to manage their tax payments and understands this change may require some adjustments. The ATO is writing directly to those who currently have a payment plan linked to a credit card to explain the changes and outlining the steps they need to take. There are alternative payment options available for taxpayers, including direct deposit, direct debit from a debit card, direct debit from an Australian cheque or savings account, Government EasyPay, in person at Australia Post, by mail, or international money remitter. The ATO said it is committed to helping taxpayers transition to alternative payment methods and will continue to support those experiencing financial hardship or other circumstances that make it difficult to meet their obligations. Alternative payment options for taxpayers are outlined at www.ato.gov.au/howtopay Taxpayers who need extra support are encouraged to visit www.ato.gov.au/supporttolodgeandpay , contact the ATO on 13 11 42 during business hours or speak with their registered tax professional.
September 4, 2026
Yesterday, Treasurer Jim Chalmers released draft legislation to implement the key components of the 30% minimum trust tax on discretionary trusts announced in the Federal Budget during May 2026.
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