March 2015 Tax Update

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Research & Development Tax Incentive


For some time now, we’ve been discussing the proposed changes in the rates at which the R&D Tax Incentive will be paid from 1 July 2014. The changes outlined were to change the amounts from 45% (for turnover less than $20 million) and 40% (for turnover greater than $20 million) to 43.5% and 38.5% respectively.


In an interesting development, the Senate has voted down these proposed changes. As a result, for the financial year ending 30 June 2015 and beyond, the rates will remain unchanged, ensuring startups receive the level of R&D funding they currently experience. Great news!


Superannuation: Taxation of Excess Non-Concessional Contributions


Federal Treasury has released exposure draft regulations on the proposed changes to the taxation of excess non-concessional contributions. Non-concessional contributions are any contributions made from a person’s post-tax income (formerly known as undeducted contributions).


Prior to these changes, excess non-concessional contributions could attract excess contributions tax of up to 93%.


The proposed regulations primarily enable superannuation providers to release amounts to individuals that make an election to release non-concessional contributions. The amendments also allow payments under release authorities to meet certain tax liabilities for temporary residents.


The regulations also address the time period for the amendment of assessments to provide the Commissioner with four years rather than the standard two year period where an individual makes an election to release non-concessional contributions from superannuation. Treasury is seeking comments on the proposed changes by 18 March 2015.


ATO moving with the times – One Touch Payroll


On 28 December 2014, the Government announced proposed reforms to the tax and superannuation reporting obligations for employers called Single Touch Payroll. The ATO have now followed up on this announcement releasing a discussion paper detailing the proposed reforms. Single Touch Payroll would require all employers to electronically report payroll and superannuation information to the ATO when their employees are paid using Standard Business Reporting enabled software.


It would also provide a digital channel to simplify the addition of new employees by streamlining TFN declarations and Super Choice forms, and could also notify superannuation funds and government agencies when an employee ceases employment. While employers will be encouraged to use single touch payroll from July 2016, the implementation is planned to be staggered.


Employers with Withholding greater than $100,000 will be expected to use the system from July 2017 and all other employers by July 2018 (some exemptions may apply in exceptional circumstances).


This is an initiative that is expected to have a significant impact on all employers. The ATO is aware that introducing this system will have some negative impacts on business and so is seeking feedback and comments on the proposed operation of the new system. The closing date for submissions is 6 March 2015.