Regulatory Roundup – March 2016

Automatic cancelling of the ABNs of inactive trusts

From February onwards, the registrar of the Australian Business Register will begin cancelling the Australian business numbers (ABNs) of certain trusts.

The targeted trusts are entities for which tax records indicate that they are no longer carrying on an enterprise. The business register forecasts that approximately 220,000 trusts could be in line to have their ABN struck out.

ABN cancellations are to be initiated where the tax data matching indicates no lodgement of business activity statements and/or trust income tax returns in the past two years.

Exclusions to these ABN cancellations apply to trusts that are registered with Australian Charities and Not-for-profits Commission or are a non-reporting member of a GST or income tax group. However, there has been significant activity in the deregistering of charities for dormant or no compliance activity.

The government says trustees will receive a letter if their ABN has been cancelled. The letter will include the reason for the cancellation, and a phone number to ring to get the ABN reinstated. The government says this should be able to be affected immediately if a trustee does not agree with the decision, although it is not clear if evidence of activity or viability will be required.

It is recommended that you check or myGov site as well, and contact your business adviser.

If you have a trust and its ABN is cancelled you do not receive a letter, it could mean your contact details are not up to date on the Australian Business Register’s ABN database.


Boats, planes, cars, horses, art… data matching to uncover wealth

The Tax Office has announced that it is working with insurance providers to identify Australians with policies covering an expanded range of asset classes.

Coming under its net are insurance policies that include cover for damage or loss related to marine, aviation, enthusiast motor vehicles, fine art and thoroughbred horses.

The Tax Office says it uses data matching to identify the wealthy lurking among us, and that this information will be used by it to get a more accurate estimate of the true wealth of individual taxpayers.

The Tax Office says it has issued and will issue formal notices to insurers to provide it with these policy details. Communications have also been published for tax professionals notifying them of its intentions regarding matching data to insurance records.

It says it expects to receive around 100,000 records where the different asset classes meet certain threshold amounts.



Internal tax documents released — a peek into court interpretations

The ATO has released on its legal database a series of what until recently have been internal ATO documents.

The release of these documents in an initiative that the ATO has labelled “iNOW!” (a contraction of “interpretation now”) and is, according to assistant commissioner Gordon Brysland, “a reinvention initiative to drive awareness on what is happening on the statutory interpretation front”.

The documents (or “episodes” as the ATO calls them) are the brainchild of the ATO’s Tax Counsel Network, and have been released with an aim to raise awareness about what courts are saying about statutory interpretation.

The series began last year, and the ATO says it has now made them public in response to growing external interest. Until now, they have been filed under “miscellaneous papers” in the ATO’s legal database.

Brysland says an additional aim is to draw attention to key principles, expressed in easily digestible chunks, “and to provide ‘iTips’ on how they may be applied”. The documents comment briefly on various cases (not necessarily tax cases) and indicate why they are important.

The documents are not public rulings or legal advice, and are not binding on the ATO. The episodes released already can be downloaded from the list below:

– Episode 1

– Episode 2

– Episode 3

– Episode 4

– Episode 5

– Episode 6

– Episode 7

– Episode 8

To get further episodes, go to the ATO’s legal database page, and search for “iNOW”.



Small business fix-it squads: Get help, or get involved

The ATO launched its small business fix-it squads with a view to understand and address the difficulties small business owners face, and hopefully make it easier for both budding as well as established entrepreneurs to not only stay in business (and keep paying taxes) but to actually have a better chance of making their venture a success.

It describes its small business fix-it squads as “rapid-design projects” where small business owners, tax professionals, federal, state and local government agencies and intermediaries work together to examine problems affecting small business owners. The squad then develops recommendations to fix the problem.

For example, one fix-it squad found that small business owners found that restructuring, for example moving from operating as a sole trader to a company, was not as simple as they assumed. The three core problems the ATO identified were that small business owners:

– find it difficult to choose the right structure for their situation and understand what it means for their business

– don’t understand the duties and responsibilities of being the director of a company

– struggle with the complexity of the process and having to contact various government agencies at different points in the process.

The fix-it squad created several resources and made them available online (see examples on this page, as well as this ASIC page).

Other recognised issues for small business owners include taking on employees, starting up (especially for younger entrepreneurs) and completing business activity statements.

The make-up of each fix-it squad changes depending on the problem the ATO is trying to solve. If you’d like to nominate a cross-government problem that affects small business owners, you can send the ATO an email.

Want to get involved?
Small business participants for the fix-it squads come from the ATO’s “small business consultation panel”. Members on the panel work with the ATO on an ad-hoc basis to develop tailored tax, super and whole-of-government products for small business.

The panel is a list of small business operators who help the ATO deliver improved services by providing practical business and industry expertise. The ATO says it is always looking for new members.

Panel members are engaged on a short-term, as-needs basis to participate in various consultation activities, including:

– participating in workshops, research sessions and focus groups

– participating in online consultation activities

– providing feedback on processes and documentation

– providing opinions from the perspective of a small business operator

– conducting end-user testing of products.

The ATO says that panel members may be paid for activities they participate in, depending on time commitments and the type of activity, but participants may need to check this.

To apply, go to this page and complete the application form.


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