Star & Associates General Update: December 2022

Welcome to our bi-monthly update of important news across business, tax, super and accounting. With the holiday season on our doorstep, it’s an important time for organisations to take care of last-minute tasks and start preparing for a busy 2023.

We hope you have a fantastic end-of-year break and enter the New Year feeling revitalised and ready to take your business to the next level! Here’s some important news and updates that may affect you.

Important dates over the holiday season

Star & Associates will be out of office for the holidays from Friday the 23rd to Monday the 9th of January. 

Merry Christmas to you and your loved ones! We hope you have a relaxing and revitalising break, and we look forward to working with you again in 2023.

Our office renovation: a fresh new look!

We recently renovated our Sydney-based office to give it a fresh new look and provide our staff and clients with an improved collaboration space.

We look forward to welcoming you.

International transfer pricing – concepts and risk assessment

Bolstered by significant additional resources provided in the latest Budget, the ATO is committed to thwarting Australian businesses that underpay on their tax. As part of this project, they have clarified Australia’s transfer pricing rules and the basic concepts of international transfer pricing when a business may face review or audit.

According to the ATO, the rules aim to ensure all businesses price their related-party international dealings in line with what is expected from independent parties in the same situation. Pricing for international dealings between related parties should reflect the right return for the:

• activities carried out in Australia;
• Australian assets used (whether sold, lent or licensed); and
• risks assumed in carrying out these activities.

How private transactions are impacted when using business money

Do you use business money for private purposes? If so, you need to be aware of the tax consequences and whether or not those transactions are legal. As you are no doubt already aware, the ATO is cracking down hard on non-compliance, and business owners are in the crosshairs for FY22–23 and beyond.

As the ATO says, if you use money or assets from your company or trust for private purposes, tax considerations apply for business money and assets including:

• salary, wages and director’s fees;
• fringe benefits and allowances;
• company dividends or trust distributions; and
• loans of money or assets from a company or trust.

It’s always best to speak to the experts to ensure you are doing the right thing, so feel free to contact us anytime to find out more about your obligations when spending business money.

Superannuation changes in effect

A number of changes to super came into effect this financial year, so it’s important that you avail yourself of them and ensure you – and your business – remain compliant.

As of July 1st, the $450 per month eligibility threshold for when super guarantee (SG) is paid was removed. This means employees can be eligible for SG regardless of how much they earn and employers are now required to pay superannuation from ‘the first dollar’ of an eligible employee’s wages.

The SG rate also increased from 10% to 10.5% at the start of FY22–23, and is legislated to increase again to 12% by 2025. We recommend checking your payroll software to ensure the correct superannuation rate is being applied.

This is potentially difficult news for business owners, particularly those with a high number of casual employees. The hospitality, events and retail industries are traditionally heavily reliant on casual workers and were the most heavily impacted by COVID.

CPA Australia released a helpful podcast explaining what accountants and businesses need to know about the super changes.

Don’t forget about Director ID – fines may apply!

While plenty of Australian directors have already signed up for their Director ID from the Australian Business Registry Services (ABRS), the ATO claims that more than a million eligible directors still haven’t applied. With the 14 December deadline (extended), that means many business leaders could be liable for a $13,200 fine or up to $1.1 million in civil penalties.

You must apply for a Director ID if you are the director of:

• a company, registered Australian body, or registered foreign company under the Corporations Act 2001 (Corporations Act); or
• an Aboriginal and Torres Strait Islander corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act).

An eligible officer is a person who is appointed as either:

• a director; or
• an alternate director who is acting in that capacity.

If you were a director on or before 31 October 2021 then you only have until 14 December 2022 to apply. Make sure you apply for your Director ID here.

Key takeaways from the latest Budget

With Treasurer Jim Chalmers releasing his Budget 2022 in late October, we’ve now had time to come to grips with the proposed changes and how the government’s financial vision for Australia will affect businesses.

Here are some of the top takeaways that may impact you and your organisation:

• A number of energy grants will help SMEs shift to more energy-efficient solutions in order to battle soaring power bills.
• The ATO now has more funding and power to take on tax-avoiding businesses.
• A three-pronged skilled-migrant strategy is intended to reduce the impact of the skills and labour shortage.
• Business owners will have more support from SME mental health and financial counselling programs.

We have a full write-up on what the Budget means for our clients here.

Other news and advice from the industry

• Driving reform in the NFP landscape: The regulatory landscape for not-for-profits (NFPs) is changing for the better, but more work needs to be done to help these essential organisations operate smoothly. This write-up provides keen insights into the state of the reforms and how a standardised financial reporting framework is adding credibility to the information provided by NFPs.
   
• Flood support for businesses and individuals: The ATO has announced supportive measures in the wake of the numerous eastern floods this year. Be sure to speak to your tax agent about your eligibility for financial respite. Large businesses that need assistance in relation to lodgment dates should speak directly to the ATO to work through any concerns.
   
• Auditor independence: Helpful guidance from the ATO around what to understand when complying with independence requirements as an approved self-managed super fund (SMSF) auditor.

Feel free to get in touch with us directly for further insight and detail – we’re always happy to chat. You can also find regular news on our website and contact us on 1300 308 460 for all your tax planning, accounting and advisory needs.