Black economy: Combatting illicit tobacco
Importers of tobacco will be required to pay all duty and tax liabilities upon importation, applying from 2019-20. For tobacco products that are held in licensed warehouses at the commencement of the measure on 1 July 2019, transitional arrangements will apply. Current weekly settlement arrangements will no longer apply to imported tobacco.
Other measures to target the black economy include the formation from 1 July 2018 of an Illicit Tobacco Task Force to target illicit tobacco smuggling, and further funding will be provided to the ATO to bolster its capabilities to detect and destroy domestically grown illicit tobacco crops.
From 1 July 2019, permits will be required for all tobacco imports (except for tobacco imported by travellers within duty free limits).
The ATO will upgrade and modernise its excise and excise equivalent goods payment systems beginning 2020-21 to replace the outdated paper lodgment system.
Black economy: Taxable payments reporting
The Government will expand the taxable payments reporting system (TPRS) from 2019-20 to three additional industries — security providers and investigation services, road freight transport, and computer system design and related services
Under the TPRS, businesses are required to report payments to contractors to the ATO. Businesses will need to ensure that they collect information from 1 July 2019, with the first annual report required in August 2020. A new online form is expected to make the reporting process easier.
High profile individuals, for example sportspeople and actors, will from 2019-20 no longer be able to licence their fame or image to another entity such as a related company or trust. The Government notes that the licencing structure has created opportunities to take advantage of different tax treatments and that it facilitates misreporting and incorrect tax outcomes.
Tax compliance funding
The Government has set aside $130.8 million for the ATO to increase its compliance activities conducted towards taxpayers and their tax agents.
The funding, from 2018-19, is intended to provide the ATO with the resources needed to undertake new compliance activities, including additional audits and prosecutions, improving education and guidance materials, pre-filling of income tax returns and improving real time messaging to tax agents and individual taxpayers to deter over-claiming of entitlements.
It is expected that the increased compliance activities will generate revenue of $1.1 billion in fiscal balance terms over the forward estimates period.
Denial of deductions for vacant land
The Government will deny deductions for expenses associated with holding vacant land from 2019-20. Denied deductions will not be able to be carried forward for use in later income years.
This is an integrity measure to address concerns that deductions are being improperly claimed for expenses, such as interest costs, related to holding vacant land, where the land is not genuinely held for the purpose of earning assessable income.
Combatting illegal phoenix activity
The Government will introduce a package to deter and disrupt illegal phoenix activity. This measure follows on from the Black Economy taskforces. The package introduces new phoenix offences to target those who conduct or facilitate illegal phoenixing. It will prevent directors improperly backdating resignations to avoid liability or prosecution, limit the ability of directors to resign when this would leave the company with no directors, and restrict the ability of related creditors to vote on the appointment, removal or replacement of an external administrator.
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