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NSW Budget June 22

Watson Erskine • June 21, 2022

The New South Wales Treasurer, Mr Matt Kean, handed down the NSW Budget 2022–23 on 21 June 2022.

It includes the following measures relating to tax.

First Home Buyer Property Tax Option . First home buyers will be provided with an option to pay an annual property tax instead of stamp duty if the purchase price of the property is $1.5 million or less. The property tax will be based on the property's unimproved land value. The annual owner-occupier property tax rates will be set at $400 plus 0.3% of the property's unimproved land value in 2022–23. These rates apply as long as the first home buyer remains an owner-occupier. The measure will apply from 16 January 2023.

Eligible first home buyers that exchange contracts in the period between enactment of legislation and 15 January 2023 will be able to opt in and receive a refund of transfer duty paid.

Reduction in the discount available for early payment of land tax . The land tax early payment discount will be lowered to 0.5% (currently 1.5%) from 1 January 2023.

Increase to the foreign investor surcharge land tax . The foreign investor land tax surcharge of 2.0% will increase to 4.0% per annum from the 2023 land tax year.

Payroll tax relief for employers of age care workers . Payroll tax relief will be offered to employers of aged care workers who pass on payments received under the Commonwealth's Aged Care Workforce Bonus Payment program to their workforce. Eligible aged care employees can receive payments totalling up to $800 under the program. These payments would otherwise have been liable for payroll tax under the Payroll Tax Act 2007 (NSW).

Payroll tax exemptions under a subprogram of the "Future Economy Fund" . A subprogram of the Future Economy Fund will offer grant payments and payroll tax exemptions to encourage businesses of future industries to establish or expand in New South Wales.

The Future Economy Fund will be established to target the end-to-end stages of business growth; from research and development and commercialisation, through to industry growth right to investment attraction and maturity.

Increase to the point of consumption (PoC) tax and changes to other betting taxes . From 1 July 2022, the PoC tax rate will increase to 15% and the effective betting tax rates (including totalizator and fixed odds bets) charged under the Betting Tax Act 2001 (NSW) will be adjusted to 15%. The basis of PoC industry funding under the Betting Tax Act 2001 will change from 2% of net wagering revenue to 33% of PoC tax revenue collected by the government.

Sources: NSW Budget 2022–23, Budget Statement , 21 June 2022, accessed 21 June 2022; Premier of NSW, Dominic Perrottet, Treasurer and Minister for Energy, Matt Kean and Minister for Planning and Minister for Homes, Anthony Roberts, " Opening Doors for More First Home Buyers ", [media release], 21 June 2022, accessed 21 June 2022.

As previously reported , the NSW government is planning to overhaul the stamp duty regime in NSW to allow a buyer to opt out of paying stamp duty and instead pay an annual property tax. Details of the scheme have now been released with the government announcing that the scheme will only apply to first home buyers.

A first home buyer will be able to opt into the First Home Buyer Choice and elect to pay an annual property tax instead of stamp duty if the purchase price of the property is $1.5 million or less. The annual property tax will be $400 plus 0.3% of the land value of the property.

A property will not be locked into the scheme if it is sold.

Legislation to establish the annual property tax will be introduced during the second half of 2022 with first home buyers able to apply to opt into the property tax from 16 January 2023. For contracts exchanged in the period between enactment of the legislation and 15 January 2023, first home buyers will be able to opt-in from 16 January 2023 and receive a refund of stamp duty already paid.

First home buyers will continue to be eligible to apply for a full stamp duty exemption for properties up to $650,000. Stamp duty concessions remain in place for properties between $650,000 and $800,000.

Further information is available here .

Source: Premier of NSW, Dominic Perrottet, Treasurer and Minister for Energy, Matt Kean and Minister for Planning and Minister for Homes, Anthony Roberts, "Opening Doors for More First Home Buyers" , [media release], 21 June 2022.

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ATO review of rental property expenses for 2022-2023

By Watson Erskine • May 23, 2023
Income and tax deductions from rental properties is one of the four key areas the Australian Taxation Office (ATO) is focusing on this tax time. It’s an area that’s easy to get wrong, and needs extra care when lodging. The ATO Random Enquiry Program has found that nine out of ten tax returns that reported rental income and deductions contain at least one error, even though most of those property owners were assisted by a registered tax agent. The ATO is therefore urging rental property owners to ensure they carefully review their records before declaring income or claiming deductions this tax time, and for registered tax agents to ask a few extra questions of their clients. Assistant Commissioner Tim Loh explained “Registered tax agents can only work with the information they gather from their clients, and we know some clients won’t know everything they need to tell their agent. We don’t expect agents to be Sherlock Holmes, but we do expect them to ask the right questions to ensure their client’s return is right.” Mr Loh said that rental property owners are urged to ensure they know what income they need to declare and what can be claimed as a deduction. “We are concerned about mistakes, and in particular, leaving out income or deliberate over-claiming of rental property deductions this year.” “Getting it right the first time, will ensure you receive the tax refund you are owed, and avoids us knocking on your front door down the track.” The ATO are looking to ensure: · You include all rental income · You get your claim for expenses right · You disclose any sales of rental properties as a CGT event · You obtaining a clearance certificate before you sell · You keep good records to prove your claims Rental property deductions – the ATO is particularly focused on interest expenses and ensuring owners understand how to correctly apportion loan interest expenses where part of the loan was used for private purposes or the loan was refinanced with some private purpose.

Topics for March 2021

By Watson Erskine • March 24, 2021
Topics in our monthly newsletter for March include: Update your ABN now! You could be missing out on stimulus measures, grants and other government support if your ABN details are out of date. The ATO and the Australian Business Register are making efforts to remind businesses and relevant taxpayers that it is essential to ensure ABN registration details are accurate and completely up-to-date. It is a business owner's responsibility to make sure this is done (contact the Australian Business Register, see www.abr.gov.au). If you have an ABN you can update the company details or get us to do it for you. Director ID numbers There could be just around the corner. Under the scheme, directors will be required to have their identity verified and have a unique and permanent identifier issued to them. Companies will need to put processes in place to ensure that all existing directors apply for a DIN within the prescribed timeframe once the regime is implemented. new directors will have 28 days after appointment as a director to apply for a DIN. The procedures and documents required to obtain a DIN are not included in the legislation, and will probably be set out in a separate announcement in the coming months. For more information on any of these topics, sign up to our newsletter or contact on mail@watsonerskine.com.au

ATO support measures

By Watson Erskine • March 18, 2020
ATO support measures for those affected by Coronavirus outbreak, 18 March 2020 The ATO will implement a series of administrative measures to assist Australians experiencing financial difficulty as a result of the COVID-19 outbreak. Businesses impacted by the coronavirus are encouraged to get in touch with the ATO to discuss relief options. Options available to assist impacted businesses include: • deferring by up to four months the payment date of amounts due through the business activity statement (BAS, including PAYG instalments), income tax assessments, FBT assessments and excise • allowing businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get quicker access to GST refunds they may be entitled to • allowing businesses to vary Pay As You Go (PAYG) instalment amounts to zero for the March 2020 quarter; businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters • remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities, and • working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low-interest payment plans. Employers will still need to meet their ongoing super guarantee obligations for their employees. To make it easier for people to apply for relief, the ATO will be increasing its presence in the areas of highest impact. A temporary shopfront with staff specialising in assisting small business will be established in Cairns within the next few weeks. It will also consider ways to enhance its presence in other significantly affected regions. Additional temporary shopfronts and face-to-face options are currently under consideration. The ATO will also continue to work with the tax profession, other government agencies and local organisations to make sure other impacted communities are also supported. Outside of business, the ATO will also work with individuals experiencing financial hardship, and their tax agents, and will apply appropriate tax relief measures for serious and exceptional circumstances, such as where people cannot pay for food or accommodation. Unlike the bushfire relief measures, which applied automatically to particular geographic areas, assistance measures for those impacted by COVID-19 will not be automatically implemented. Anyone impacted by COVID-19 is advised to contact the ATO to request assistance on their Emergency Support Infoline 1800 806 218. Alternatively ask us to contact the ATO on your behalf.

ATO support

By Watson Erskine • March 15, 2020
COVID-19 The ATO can provide relief for some tax obligations for people and businesses affected by the coronavirus outbreak on a case by case basis. Businesses impacted by COVID-19 can phone the Emergency Support Infoline on 1800 806 218 for help tailored to your circumstances. The ATO has translation and interpreting services available to help you with your call 13 14 50 Aboriginal and Torres Strait Islander peoples can phone the Indigenous helpline 13 10 30 If you have difficulty hearing or speaking to people who use a phone you can contact the National Relay Service External Links (NRS) You can also talk to us so we can work with the ATO to support you to manage your tax affairs. This LINK provides more information.

Superannuation Guarantee Amnesty Bill

By Watson Erskine • March 15, 2020
The superannuation guarantee amnesty bill passed Parliament on 24 February and has now received Royal Assent and is law. This law change provides a number of incentives for employers to pay any unpaid historical superannuation guarantee ("SG") amounts (the compulsory employer superannuation contribution for employees) relating to the period 1 July 1992 to 31 March 2018. This is a one off opportunity. Please read the newsletter HERE and get in touch if you would like to discuss in further detail.

Travel Allowances

By Watson Erskine • January 13, 2020
Travel Allowances Travel allowance is a payment made to an employee to cover accommodation, food, drink or incidental expenses they incur when they travel away from their home overnight in the course of their duties. In most circumstances, when claiming other deductions you will be expected to be able to substantiate the expense being claimed with documentary evidence and be able to produce that evidence if requested by the ATO. Guidelines provided by the ATO are updated annually on exceptions to substantiate claims – if the ATO considers the total claimed to be 'reasonable'. For more information on travel allowances, keeping travel expense records, visit the ATO website. If you would like to discuss this or any topic further, please email: mail@watsonerskine.com.au Read our newsletters at www.watsonerskine.com.au and find current and archived information under client tools, newsletter and report.

!Scam Alert!

By Watson Erskine • April 9, 2019
Watch out Scammers about! The ATO has warned of a current scam involving pre- recorded robocalls impersonating the ATO and threatening immediate arrest for an unpaid tax debt. The number shows in caller ID as a genuine ATO number. If you receive one of these calls or a voice mail HANG UP or DELETE it. If you have shared any personal information, please call us immediately. As always, if you have any concerns with your tax affairs please call us. For more information from the ATO on scammers follow this link – FAKE Or email mail@watsonerskine.com.au

Employers - changes to deductions for non compliant payments to workers

By Watson Erskine • February 25, 2019
Employers - Changes to deductions for non-compliant payments to workers From 1 July 2019 the rules for claiming deductions for payments to workers are changing. Deductions can only be claimed for payments made to workers where the employer has met the pay as you go (PAYG) withholding obligation for that payment. Where the PAYG withholding rules require an amount to be withheld, you must: withhold the amount from payment before you pay the worker report that amount to the ATO The deduction won't be lost if the following is withheld: An incorrect amount by mistake – to minimise any penalties the mistake can be corrected by lodging a voluntary disclosure in the approved form from the ATO. The correct amount but make a mistake when reporting The deduction will only be lost if there is a withholding or reporting requirement and no amount is withheld or reported to the ATO unless a voluntary disclosure in the approved form is made before the ATO has begun an examination of your affairs. The change is part of the government response to recommendations from the Black Economy Taskforce. From the ATO website: changes to deductions for non compliant payments to workers.

Single Touch Payroll

By Watson Erskine • February 25, 2019
Single Touch Payroll Single Touch Payroll (STP) is coming – are you ready? What is STP? It is the new ATO requirement that will change the way tax and super reporting is managed. It means that employers will report payments such as salaries, wages, PAYG withholding and Super information DIRECTLY from their payroll solution at the same time as paying their employees. Does it affect me? Eventually, all employers will be required to comply. Currently it only affects businesses employing more than 20 people. This started on 1 July 2018. From 1 July 2019 it will include smaller business with less than 19 employees. Transition provisions will be available. What do I need to do? Check out the ATO information on Single Touch Payroll If you would like to discuss this or any topic further, please email: mail@watsonerskine.com.au
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