Practice Update – June 2024

Lowe Lippmann Chartered Accountants

Year-end tax checklists for Individuals and Businesses


We have recently prepared two Year End Checklists which help explain some common strategies that may be considered for Individual and Businesses taxpayers.



ATO's three focus areas this tax time


The ATO will be taking a close look this 'tax time' at the following common errors made by taxpayers:

 

Work related expenses: Taxpayers using the 'revised fixed rate method' of calculating a working from home deduction must have comprehensive records to substantiate their claims, including records that show the actual number of hours they worked from home, and the additional running costs they incurred to claim a deduction.


Rental properties: Performing general repairs and maintenance on a rental property can be claimed as an immediate deduction. However, expenses which are capital in nature (such as initial repairs on a newly purchased property) are not deductible as repairs or maintenance.

 

Failing to include all income in tax return: The ATO warns taxpayers against rushing to lodge their tax return on 1 July. If they have received income from multiple sources, they need to wait until this is pre-filled in their tax return before lodging.


End of financial year obligations for employers


The ATO reminds employers they need to keep on top of their payroll governance. This includes:

  • using their tax and super software to record the amounts they pay;
  • withholding the right amount of tax; and
  • calculating superannuation guarantee (SG) correctly.


As 30 June gets closer, employers should check their reporting obligations, along with any upcoming key dates, including for:

  • PAYG withholding — From 1 July, the individual income tax rate thresholds and tax tables will change, which will impact their PAYG withholding for the 2025 tax year;
  • SG rate change — From 1 July, the SG rate will increase to 11.5%. Employers must pay their SG contributions by 28 July in full, on time and to the right fund; and
  • Single touch payroll (STP) reporting — Employers should remember to make STP finalisation declarations by 14 July for all employees the employer has paid during the financial year, and also check their employees' year-to-date amounts are correct.

Getting trust distributions right


As trustees prepare for year-end distributions, they should do the following:

  • review the relevant trust deed to ensure they are making decisions consistent with the terms of the deed;
  • consider who the intended beneficiaries are and their entitlement to income and capital under the trust deed;
  • notify beneficiaries of their entitlements, so that the beneficiaries can correctly report distributions in their tax returns;
  • consider whether the trust has any capital gains or franked distributions they would like to stream to beneficiaries; and
  • check any requirements under the trust deed governing the making of trustee resolutions (ie. that the resolution must be in writing). In any case, resolutions regarding distributions need to be made by the end of the income year.



If you need any assistance in relation to your trust distributions, please contact our office.


Support available for businesses experiencing difficulties


By paying their tax bill in full and on time, taxpayers can avoid paying the general interest charge (GIC), which is currently 11.34%, and which accrues daily for any overdue debts.


The ATO advises taxpayers that, if their business is dealing with financial difficulties, there are some options to help make their tax bill "less taxing".


Taxpayers who are struggling to pay in full or on time may be eligible to set up a payment plan. If they owe $200,000 or less, they may be able to do this themselves using online services. If they cannot do so, or they owe more than $200,000, they can contact the ATO to discuss their options.


Taxpayers can ask the ATO to remit their GIC. The ATO will then consider whether the tax bill was paid late because of circumstances that were:

  • beyond the taxpayer's control, and what steps the taxpayer took to relieve the effects of those circumstances; or
  • within the taxpayer's control, but led to results that the taxpayer could not foresee.

Minimum yearly repayments on Division 7A loans


To avoid an unfranked dividend under the Division 7A rules, loans from a private company to its shareholders or their associates must be either repaid in full or be covered by a 'Division 7A complying loan agreement' before the company's lodgment day.


Complying loan agreements require minimum yearly repayments (MYRs) comprising of interest and principal to be made each year, starting from the income year after the loan is made.


Taxpayers must ensure they can meet the required MYRs on complying loans. 


If they miss the MYR or do not pay enough in an income year, the shortfall may be treated as an unfranked dividend.


Note also that borrowing additional amounts from the same company, directly or indirectly, to make repayments on complying loans may result in the repayment not being taken into account in working out if the MYR has been made.


When making MYRs, borrowers need to:

  • start repayments in the income year after the complying loan was made;
  • use the correct benchmark interest rate (8.27% for the 2024 income year) to calculate the MYR for the current year; and
  • make the required payments on the loan by the due date — the end of the income year (ie. usually by 30 June).

ATO issues notice of crypto assets data-matching program


The ATO has advised that it will acquire account identification and transaction data from crypto designated service providers for the 2024 to 2026 income years.


This data will include the following:

  • client identification details (names, addresses, dates of birth, phone numbers, social media accounts and email addresses); and
  • transaction details (bank account details, wallet addresses, transaction dates, transaction times, transaction types, deposits, withdrawals, transaction quantities and coin types).



The ATO estimates that records relating to approximately 700,000 to 1,200,000 individuals and entities will be obtained each financial year.


The data will be acquired and matched to ATO systems to identify and treat clients who failed to report a disposal of crypto assets in their income tax return.



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

Liability limited by a scheme approved under Professional Standards Legislation


August 12, 2025
What are contract assets and contract liabilities that arise under the revenue accounting standards? Deferred revenue, accrued revenue, revenue received in advance, contract assets, contract costs asset, contract liabilities and receivables are all line items we see in the balance sheet in relation to revenue. It can be confusing to understand what these terms mean and whether different words are being used for the same thing.  We have provided a guidance to these and similar terms to enable you to use them confidently and understand their meaning in a balance sheet.
August 6, 2025
Paid parental leave changes have now commenced As from 1 July 2025, the amount of Paid Parental Leave available to families increased to 24 weeks, and the amount of Paid Parental Leave that parents can take off at the same time has also increased from two weeks to four weeks. Superannuation will now also be paid on Government Paid Parental Leave from 1 July 2025, at the new super guarantee rate of 12%, paid as a contribution to their nominated superannuation fund. Parents will also benefit from an increase in the weekly payment rate of Paid Parental Leave, increasing from $915.80 to $948.10 (in line with the increase to the National Minimum wage). This means a total increase of $775.20 over the 24-week entitlement.
July 28, 2025
Contracts often include price variations relating to bonuses / penalties / rebates – why do we need to consider these early? Many revenue streams are covered by AASB 15 Revenue from Contracts with Customers. The core principle of this standard is ‘that an entity shall recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.’ [emphasis added]. To determine what we expect to receive, all elements of the contract that are not fixed need to be reviewed. We need to review contracts for: Volume discounts Rebates Refunds Performance bonuses Penalties Price concessions Once we have identified variable consideration then we need to estimate the amount expected to be received using either: the expected amount using a probability weighted average of the likely outcomes or the most likely outcome. The method chosen is the one deemed to be the best estimate of the expected consideration, and the amounts may be updated at each reporting date. Once the consideration has been determined, the entity recognises only the revenue that is highly probable will occur – this is known as the constraint on revenue recognition. Practically, the requirements discussed above for variable consideration are relevant only where an entity satisfies the requirements for revenue recognition over time and contract crosses a reporting date.  As the estimate of the variable consideration changes, there may need to be a catch-up adjustment on previous revenue recognition for that contract.
More Posts