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Top Tax Tips – 9 August

Building & construction businesses to report payments made to contractors by 28 August 2017

Taxpayers operating in the building and construction industry (e.g. builders, architects, engineers, project managers, painters and landscapers) must lodge their Taxable payments annual reports, detailing the total payments made to contractors in 2017, with the ATO by 28 August 2017. Penalties may apply for late lodgement.

Early stage innovation companies (ESIC) have to report by 31 August 2017

To stimulate investments in innovative start-up companies, investors who purchase new shares in such ESICs will generally be entitled to:

  • a non-refundable carry forward tax offset equal to 20% of the amount paid for the shares (subject to certain restrictions) when they invest; and
  • a CGT exemption for capital gains on investments held for at least 1 year but less than 10 years when they sell the investment.

An ESIC needs to report all such investments for new shares issued in the 2017 income tax year by 31 August 2017.  We would be happy to assist you with this reporting obligation.

Furthermore, the requirements to qualify for this innovation incentive are complex.  We recommend that you contact us if you are a new business, if you are involved with innovative activities or if you are an investor in businesses involved in innovative activities and would like to know more about this new incentive. We can also advise you on whether you should restructure your business to be able to qualify for this incentive.

What to do if the ATO imposed a penalty on you?

The ATO can impose fixed administrative penalties on taxpayers that make false or misleading statements on their tax returns that result in under paid tax. For example, if a person claims excessive deductions to which they are not entitled or do not declare all income they have earned they may pay insufficient tax.

The amount of the penalty is fixed depending on the amount of “culpability” the taxpayer exhibited when filling in the tax return:

  • 25% of the shortfall amount for taxpayers failing to take reasonable care (e.g. did not act like a reasonable person when completing your tax return);
  • 50% of the shortfall amount for taxpayers acting recklessly (e.g. suspected that there would be real risk of a shortfall amount arising in your tax return but disregarded this risk); or
  • 75% of the shortfall amount for taxpayers acting with intentional disregard of the law (e.g. fully aware of the clear tax obligation but disregarded the obligation)

Please contact us if you have been subject to such a penalty so that we can assist you in dealing with the ATO.  We may be able to have your penalty remitted in full or partly depending on your circumstances (e.g. your compliance history and whether tax was deferred or avoided).

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 Sarah McEachern or your Nexia Edwards Marshall Advisor.

The material contained in this publication is for general information purposes only and does not constitute professional advice or recommendation from Nexia Edwards Marshall. Regarding any situation or circumstance, specific professional advice should be sought on any particular matter by contacting your Nexia Edwards Marshall Advisor.

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