Taxpayers need to get their GST right at the settlement
The ATO reminds taxpayers that if their income-making activities include selling property and they make $75,000 or more in a year from selling property, even if it is from a ‘one-off profit-making property transaction’, they may need to register for GST.
Once they have registered, ‘GST at settlement’ may apply when they sell new residential premises or potential residential land.
It is important to remember that not all property sales are subject to GST, and not all vendors need to register for GST.
Suppose GST applies at settlement to the sale of property. In that case, the vendor must notify the purchaser before settlement occurs that it applies, state the amount the purchaser needs to withhold, and tell the purchaser when to withhold that amount.
The purchaser then must withhold the GST from the contract price and pay it to the ATO at settlement.
When settlement occurs, taxpayers should remember to report their property sales on label G1 and GST on those sales on label 1A on their Business activity statement (‘BAS’).
Taxpayers will then receive a credit for the GST amount paid by the purchaser in their GST property credit account. The GST credit for the SA will move into their BAS account and be offset against any GST they owe after their BAS has been lodged. Taxpayers can refer to ‘G at settlement’ on the ATO’s website for assistance.
Changes to Deductible Gift Recipient (DGR)
The law underpinning the DGR registers reform measure is enacted on 1 January 2024. This means that from 2 January, the NFP team in Parramatta will assess DGR eligibility for all DGR categories, including:
- cultural organisations
- environmental organisations
- harm prevention charities
- developing country relief funds or organisations.
The new law contains transitional provisions to ensure organisations already endorsed as DGRs under one of the 4 unique DGR categories remain endorsed if they continue to meet eligibility criteria.
The transitional provisions also apply to organisations that applied with one of the four government departments and have not been notified of the outcome of their request by 31 December 2023. These applications will be transferred to the ATO for finalisation in early 2024.
Public fund obligations
The transitional provisions do not treat your public fund as your gift fund under the new law.
You may need to change your public fund arrangements to comply with the new law. For example, you may replace our public fund with a gift fund or change your public fund rules.
You will need to remove requirements incompatible with the new law, such as requiring receipts to be in your organisation’s public fund.
You may also choose to change your public fund rules to remove the requirement that most responsible persons be on the management committee or replace your public fund with a gift fund that does not have this requirement.
Suppose you do make changes to your governing document. In that case, you must comply with the terms of your governing document, which specify how changes or amendments to your governing document are made.
If you are a registered charity, you continue to have additional obligations to the Australian Charities and Not-for-profits Commission (ACNC). You must notify the ACNC about changes to your governing g document. Refer to the ongoing obligations of the ACNC.
Gift fund
You need to meet the gift fund requirements; you may either:
- use your existing public fund (which may require amendments to its rules so it complies with the gift fund requirements)
- establish a separate gift fund.
If you establish a gift fund, it may either:
- be part of the governing document of your organisation
- have their own rules or constitutions.
A separate ABN is not needed for the gift fund. For more information about gift funds, refer to gift fund requirements.
Winding up provisions
Changes to your governing document may be required if the winding-up provisions of the public fund refer to transferring any surplus assets to a fund, authority, or institution in the register of environmental organisations or harm prevention charities.
Income tax cuts and the end of some concessions
From 1 July 2024, the stage 3 tax cuts that radically simplify the personal income tax brackets come into effect. The tax cuts collapse the 2.5% and 37% tax brackets into a single 30% rate for those earning between $45,001 and $200,000 – this is assuming the May Federal Budget does not postpone or scrap them!
The superannuation guarantee rate will rise again on 1 July 2024 to 11.5%.
For small and medium businesses with a group turnover of less than $50m, a series of concessions are set to end or reduce back to conventional levels:
- The Skills and Training Boost ends on 3 June 2024. The boost provides a bonus deduction equal to 20% of eligible expenditures on external training for your workers for costs incurred between 29 March 2022 and 30 June 2024.
- The Small Business Energy Incentive will expire on 30 June 2024, although legislation to introduce this concession still hasn’t passed Parliament. The incentive is intended to provide an additional 20% deduction on the cost of eligible depreciating assets that support electrification and more efficient energy use.
From July 2024, the instant asset write-off for businesses with group turnover of less than $10m will be reduced to $1,000. The cost threshold is meant to be $20,000 for the 2024 financial year, but legislation relating to this measure has yet to go through Parliament.
New rules for fixed-term contracts
Starting on 6 December 2023, new regulations surrounding fixed-term contracts will be in place, and every employer in Australia should be aware of them. Fixed-term contracts are employment agreements with a predetermined end date, such as contracts based on specific periods or seasons.
One key change is that employers must provide employees entering new fixed-term contracts with a Fixed Term Contract Information Statement (FTCIS). This statement offers essential details about fixed-term employment and clarifies the circumstances under which fixed-term agreements are permitted. Both employers and employees must ensure compliance with this requirement.
Additionally, there are restrictions on using fixed-term contracts, although some exceptions apply. These limitations do not tend to affect employees. These changes aim to enhance transparency and fairness in employment agreements, benefiting employers and employees.
Limitations on Fixed-Term Contracts
Specific rules govern the use of fixed-term contracts, commonly called imitations. These regulations apply to fixed-term contracts established on or after 6 December 2023 unless certain exceptions apply.
Protections for employees
Employers can’t take scan’tic actions to avoid these rules purposely.
These are called anti-avoidance protections. These protections include:
- ending employment or not re-employing the employee for a period of time
- not re-engaging the employee and employing someone else to do the same or substantially similar work instead, or
- changing the type of work or tasks an employee does or the employment relationship.
If an employer does any of these things, it may also take any adverse action. Find out more about adverse action at Protections at Work.
Tax on super balances above $3m hits Parliament
Legislation enabling an extra 15% tax on earnings on super balances above $3m is before Parliament.
While not a concern for the average worker, those with significant property or other illiquid assets in their superannuation fund are most at risk if enacted. Farmers and business operators who own their business property in their self-managed superannuation fund (SMSF) are among the most at risk.
The issue is how the tax is calculated. The tax captures a member’s superannuation bamember’sowth over the financial year (allowing for contributions and withdrawals). It captures both:
- Realised gains from the sale of assets, and
- Unrealised gains triggered by an increase in the value of superannuation assets. For example, if the value of a property increases.
If the member’s total super balanmember’secreased – the loss can be offset against future years.
The ATO calculates the tax each year. Members with an inexceexcessivece of $3 million will be tested for the first time on 30 June 2026. The first notice of assessment is expected to be issued to those impacted in the 2026-27 financial year.
If you are likely to be impacted by the impending new tax, speaking to your financial adviser is essential. While keeping assets within superannuation will remain the best option for many from a tax and planning perspective, ensuring that you’re in the best possiblyou’retion is essential.