Regulatory Roundup – February 2016

Tax Office about to make some private companies a little less private

Recent changes to the law now requires the Tax Office to publish income tax information for Australian-owned resident private companies that report a total income of $200 million or more.

The Tax Office recently announced that reporting will start for the 2013-14 financial year onwards. It says that it has written to the affected companies already, and asked them to check their information and confirm (or otherwise) that the data the Tax Office has is correct.

The information for these companies will be taken directly from their tax return, and will include amendments requested before the reporting cut-off date (September 1, 2015). The resulting information will be published in March 2016 on the government’s website (see this page).

Where a company reports a tax loss for the year, the taxable income and tax payable fields in the report will be left blank.

Cybersecure voice identity check coming to your device

The Tax Office launched its “voiceprint” taxpayer authentication system in September 2014, and the success of the system has now prompted it to work towards extending the service to mobile devices via the ATO app.

It has now signed a deal with US software firm Nuance to further roll out the voice “biometrics” system, with an aim to integrate voice authentication into the Tax Office’s mobile app.

It says the second-phase implementation will allow taxpayers to say one word to log in to the Tax Office via its mobile app without having to use a text username, password or PIN, and says this system is more secure as voiceprints are of little value to anyone attempting to fraudulently access a taxpayer’s details.

In fact, cybersecurity is a big motivator in adopting voiceprint. The Tax Office is joining many others in moving away from a reliance on traditional usernames and passwords, which is a security development that is gaining traction across worldwide financial markets.

Big four accounting firm KPMG, in its annual report of predictions for the cybersecurity industry, has even called for passwords to be scrapped. The report affirms that passwords are “broken”, and that they have become “one of the weakest links in our security chain. People are being forced to adopt more and more convoluted passwords, while simultaneously trying to avoid the temptation to reuse those super-strong passwords.”

“It is high time we moved to a more sophisticated approach of authenticating people which blends biometrics, behavioural analysis and contextual information,” KPMG says, “rather than relying on knowledge of a single, increasingly user-unfriendly password.”

Nuance also has deals with Telstra, Westpac, Optus and Vodafone, and agencies including the Department of Human Services and the Department of Immigration.

A voiceprint is a digital representation of the sound, rhythm, physical characteristics and patterns in a voice. Unlike voice recognition software, which tries to work out what the caller has said, a voiceprint matches the unique characteristics of the caller’s voice to verify who they are.

The Tax Office says its system already has 1.4 million voiceprints on file, having implemented voice authentication to its call centres over 2015. Taxpayers need only enrol once, with the voiceprint that they record able to be used to verify the person’s identity in future calls. The Tax Office advises that voiceprint authentication will work even if the caller has a cold because many physical characteristics of the voice will not change.


Employers: Are you withholding enough for car allowances?

Employers are reminded that if you pay staff a car allowance, you need to withhold tax on any amount you pay that is more than 66 cents per kilometre from July 1, 2015. If you haven’t been doing this, it may be an idea to start now to avoid employees having a tax debt.

Even though the 66 cents amount was legislated in September 2015, the amount applies retrospectively from July 1, 2015.

Also consider pre-existing car allowance arrangements that have remained unchanged for this financial year.  Employers should enquire with relevant employees whether they would prefer to increase the withholding amount for the remainder of the financial year to cover any possible shortfall.

Recap on car expense substantiation method changes

The government reduced the options for car expense deductions from July 1, 2015. Before this, there were four methods for calculating a deduction for work related vehicle use (cents per kilometre, log book, 12% of original value and one-third actual expenses methods).

From July last year, the government abolished the one-third of actual expenses method and 12% of original value method, leaving the cents per kilometre method (still with a 5,000km cap) and the logbook method (with unlimited kms).

There is no change to the principle that work related car expenses are deductible, and no impact on salary packaged cars.

Fuel excise indexation has returned, from February 1

The prices of your petrol and diesel have just risen due to increases in taxes. Excise and customs duty on all non-aviation fuels will now be indexed to the CPI, and is scheduled to increase fuel prices on February 1 and August 1 each year. This is following legislative changes that were made last year.

Indexing fuel taxes was abandoned in March 2001 following the introduction of the GST amid concerns that rising oil prices at the time would push domestic fuel prices higher. A static benchmark rate of 38.143 cents per litre had remained since then.

Over time, ceasing fuel tax indexation meant that the real value of revenue from this source has declined. At the time of the indexation freeze, fuel tax represented 43.4% of the average national petrol price, but by March 2014 this had fallen to 25%.

Based on 2014-15 budget commitments to invest in road infrastructure, the government decided that funding should be through increasing fuel taxes.  Re-introducing indexing to fuel excise was seen to be necessary to give a predictable and growing revenue source.

A “best practice regulation update” issued by the Department of the Prime Minister and Cabinet (read it here) has looked at the likely affects of the re-introduction of indexation to fuel duties. Apart from a revenue boost of $2.2 billion over four years, the update estimates that the price impact “will fall most heavily on households and owners of light commercial vehicles”.

The impact for business is however likely to be minimal, the update says, due to the entitlement to fuel tax credits, although there may be some slight compliance cost increase.

Free employer SuperStream webinars from the Tax Office

Employers with 19 or fewer members of staff have still got until June 30, 2016 before they need to comply with the new SuperStream standard for superannuation payments.

Under SuperStream, you need to pay super contributions for your employees electronically and also send the associated data electronically.

The new system requires a standard format so it can be transmitted consistently across the super system – between employers, funds, service providers and the Tax Office. The data is linked to the payment by a unique payment reference number.

The Tax Office says this will mean:

– employers can make all their contributions in a single transaction, even if they’re going to multiple super funds

– contributions and rollovers can be processed faster, more efficiently and with fewer errors

– people can be more reliably linked to their super, reducing lost accounts and unclaimed monies.

To help employers, the Tax Office is hosting free webinars, which are designed to help employers understand SuperStream and the steps necessary to prepare. It advises employers to register soon as places are limited.

SuperStream for employers webinars 

1. Wednesday 10 February 2016 3:00pm
Register for this webinar here

2. Tuesday 8 March 2016 4:00pm
Register for this webinar here

3. Wednesday 13 April 2016 3:00pm
Register for this webinar here

4. Thursday 12 May 2016 10:00am
Register for this webinar here

5. Wednesday 1 June 2016 4:00pm
Register for this webinar here

The Tax Office has also updated its Employer checklist: a step-by-step guide to preparing for SuperStream to make it easier for employers to see what they need to do and choose a solution that best suits them.


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