In its final sitting for 2024, the Senate has passed a number of tax measures. In addition, the ATO has released its focus areas for small businesses and private groups, including a focus on tax advisors and professional firms.

LEGISLATION UPDATE

Legislation passed

The Senate has passed a number of tax related measures on a busy final sitting day of the year:

• Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024—contains rules relating to concessions for Build to Rent developments; medicare levy exemption for lump sum payments; and country-by-country reporting. The schedule to extend the $20,000 instant asset write off was removed from the Bill and will be re-introduced at a later time.
• Treasury Laws Amendment (2024 Tax and Other Measures No 1) Bill 2024 - contains measures to increase the foreign resident capital gains withholding rate from 12.5% to 15% and remove the $750,000 threshold; and extend the self-amendment period for small and medium businesses to 4 years. The WHT changes will apply to acquisitions made from 1 January 2025.
• Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 - expands the AML/ CTF regime to higher risk services provided by professional service providers such as lawyers, conveyancers and accountants. These obligations will apply from 1 July 2026.

Division 296 - $3m superannuation tax measure

The legislation to impose an additional 15% tax on earnings for superannuation balances above $3m has failed to pass due to opposition in the Senate. Although Labor has stated that it remains their policy, this is likely to be reconsidered as they prepare for the next election.  

HELP Debts

The government has announced changes applying from 1 July 2025 to the Higher Education Loan Program (HELP) and other student loan schemes:

• Minimum earning threshold before the requirement to commence repayment of loans proposed to change from $54,435 in 2024-25 to $67,000 in 2025-26
• Introduce a system where HELP repayments are calculated only on the income above the new $67,000 threshold rather than repayments being based on the total annual income.
• One-off 20% reduction, applied before indexation, to outstanding HELP balances on 1 June 2025.

Cryptocurrency

Treasury has released a consultation paper on options for Australia’s approach to implementing the OECD developed rules for the Crypto-Asset Reporting Framework (CARF). The CARF is a tax transparency framework which provides an international standard for the automatic exchange of crypto related account information between tax authorities.

The consultation paper considers whether to adopt the OECD CARF Model into Australian tax law or implement a bespoke set of rules.

CASE LAW UPDATE

Trustee for Peter Hatfield Trust v FCofT—Superannuation Guarantee Charge (SGC)

The Commissioner has appealed against the AAT’s decision that a plumber who had worked over 10 years for an entity was not an employee for superannuation guarantee purposes. The plumber carried on his own business and performed work independently of the entity. Despite being paid on an hourly basis it was found that the plumber was engaged to produce a result (refer Tax Bulletin—October 2024).

 ATO ACTIVITY & FOCUS

Focus Areas for Private Groups 2024-25 & Small Business

The ATO has released it s areas of focus for “Private Wealth” groups for the 2024-25 income year.
https://www.ato.gov.au/businesses-and-organisations/corporate-tax-measures-and-assurance/privately-owned-and-wealthy-groups/what-attracts-our-attention/areas-of-focus-2024-25#ato-Targetedfocusareas

These covers a number of foundational issues, emerging risk and issues and targeted focus areas, including a focus on tax advisers and professional firms:

• Failure to lodge own tax returns, BAS, partnership returns or statements of distributions.
• Failure to pay own tax debts on time.
• Inappropriate allocation of professional firm profits (refer PCG 2021/4).
• Encouraging aggressive tax arrangements or promoting tax avoidance or exploitation schemes.

The ATO has also issued its current focus areas for small businesses (annual turnover of less than $10m).
https://www.ato.gov.au/businesses-and-organisations/corporate-tax-measures-and-assurance/our-focus-areas-for-small-business/small-business-focus-areas

STATE TAXES UPDATES

Vacant Residential Land Tax (VLRT) —Important Reminder

From 1 January 2025, the VRLT applies to all Victorian homes that are unoccupied for more than 6 months in a calendar year, unless an exemption applies. VRLT also applies to homes under construction, and those that are under renovation or uninhabitable, for more than 2 years. (Refer Tax Bulletin – February 2024). The use of a property in 2024 will determine if a landowner is liable for VRLT in 2025.

An exemption applies for holiday homes owned by individuals and occupied for at least 4 weeks, with transitional rules for certain homes owned by a trust or company. (Refer Tax Bulletin – May 2024).

Landowners must notify the SRO by 15 January 2025 if they own a home that has been unoccupied for more than 6 months. If they believe their property is exempt, they still need to notify the SRO and apply for an exemption via the online notification portal. For example, a client with a holiday home that satisfies the 4 week requirement but has been occupied for less than 6 months will need to notify the SRO via its online portal https://www.e-business.sro.vic.gov.au/vacantlandtax/identity

Short-stay levy

Legislation to introduce a short-stay levy is now law. A 7.5% levy on accommodation bookings of less than 28 days will apply from 1 January 2025. The levy will not apply to a homeowner leasing out all or part of their principal place of residence for a short stay; a homeowner leasing out their residence temporarily while on holiday; or to hotels, motels and caravan parks.

Owners that accept short stay bookings without a booking platform will need to register with the SRO.

CONTACT US

For further information on any of these updates, or for general assistance, please contact Our Directors, Jacci Mandersloot or Natalie Claughton.

The information contained in this bulletin is intended to provide general information only and is not intended to serve as tax advice. Specific advice should always be sought regarding a taxpayers’ particular circumstances. Please contact MC Tax
Advisors if you would like assistance with the issues identified in this bulletin.