Declare money earned through the sharing economy
The ATO will use data matching – by comparing all payments made through a ride sourcing provider (e.g. Uber) to ride sourcing drivers (e.g. Uber drivers) – to check whether such drivers have declared such payments on their tax returns.
You may have also heard that the ATO will commence a foray into the cash economy. While the collection of avoided income tax is on the agenda, the ATO will also be looking to collect unpaid GST. Penalties and interest will be charged on the tax avoided. Penalties can be significantly reduced by making a voluntary disclosure to the ATO and in that event, the ATO is more amenable to arranging a debt repayment plan. The ATO is definitely less amenable if avoided tax is discovered during the course of an audit.
If you are deriving cash income from sharing economy activities, please contact us so that we can help you comply with your tax registration, reporting, lodgement and payment obligations as well as determine if the money earned should be subject to GST.
Important information if you employ backpackers from 1 January 2017
As mentioned in a previous Top Tax Tips, working holiday visa holders / backpackers will be taxed at a flat rate of 15% on earnings up to $37,000 from 1 January 2017 and employers of such workers will be required to register with the ATO.
Because the 15% rate is different from the usual PAYG withholding rates, the ATO published a specific “backpacker” withholding schedule to calculate the exact amount employers will need to withhold in respect of these types of workers. If employers did not register with the ATO before they employed a working holiday maker, they will have to withhold PAYG at the higher foreign resident rates.
Keep reading Top Tax Tips for more information on the Backpacker tax or contact your Nexia Edwards Marshall NT representative.
Reminder to restructure your limited recourse borrowing arrangements by 31 January 2017
Individuals who have used their self-managed superannuation funds (SMSFs) to borrow from related parties to fund the acquisition of properties – usually through using non-commercial limited recourse borrowing arrangements (LRBAs) – have until 31 January 2017 to ensure those borrowing arrangements are on arm’s length terms (e.g. there must be market interest rates, commercial lending periods and principal and interest repayment arrangements).
We can assist you in restructuring your borrowing arrangements to minimise the risk that such income generated from the LRBA will be taxed at 47% as non-arm’s length income (NALI).
Manage your tax debts to avoid an adverse credit rating
From 1 July 2017, the ATO intends to disclose to credit rating agencies tax debt information of businesses with tax debts of more than $10,000 that have been overdue for at least 90 days. Such a disclosure may lead to a potential adverse effect on the credit rating of such businesses.
Although the ATO does not currently disclose such information to credit rating agencies and the proposal is not yet law, we would strongly encourage any business with current outstanding tax debts to engage with a Nexia representative to ensure outstanding tax debts are paid in a timely manner. We can assist a business in establishing a payment plan with the ATO to avoid or minimise penalties and late interest charges on outstanding tax debts, or alternatively your Nexia Edwards Marshall NT representative can arrange solutions to refinance and restructure your debts, in order to manage your cashflow.
How can Nexia Edwards Marshall NT help you?
For any questions or to discuss any of the above in relation to your personal situation, please contact Grantley Stevens or your Nexia Edwards Marshall NT Advisor.