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March 2003 Newsletter

Changes have been made to payroll tax legislation for New South Wales that will apply to employers who make the following payments:

• Trust distribution in lieu of wages;
• Lump sum payments made in lieu of unused annual leave entitlements (where the leave accrued before 1 January 1990);
• Fringe Benefits - The fringe benefits taxable amount of a benefit will now be taxed as wages;
• Principle contractors may be liable for unpaid payroll tax that is payable in connection with work done by employees of their sub contractors in certain circumstances.

If you think that any of these may apply to you and your total wages in a financial year will exceed $600,000, please contact your Wearne & Co partner for further advice.

From the 1/7/2002 the rate of payroll tax has also increased from 6.0% to 6.2%.

The ATO advised that "the annual FBT return mail out to all FBT clients is underway. The pack will contain a paper return form, a covering letter with payment slip and reply-paid envelope, a notice of non-lodgment and a guide for completing the return."

The ATO in a media release indicated a former company manager has been gaoled for four years for tax fraud involving fraudulent bookkeeping of $1.5 million and false claims made in Business Activity Statements.  He pleaded guilty to a charge of defrauding the Commonwealth, after his company failed to pay almost $520,000 in GST from July 2000 to March 2001.

The ATO have indicated that it's officers will be visiting the premises of businesses registered for GST without prior appointment.  The ATO advised that the business operators will have an opportunity to contact their tax agent, and that if the timing is inconvenient for business operations it may be possible to arrange another time for the visit.  The reason given appears innocent, however if you should be visited by the ATO, we would suggest that you contact your Wearne & Co partner if the ATO should become interested in any more than the most simplest of details as set out below.

Background

The GST Business Line is currently rolling out nationally a new work type called Registration Integrity Checks.  These  are very brief checks of an entity's registration details.  They are not an in-depth review of the entity.

Procedures

The process followed is basically:

• The officer visits the business premises without a prior appointment.
• They introduce themselves, ask to speak to the owner/manager and explain the reason for the visit. 
• The owner/manager can contact their tax agent if they wish.

The officer checks and takes a note of:

• ABN (Do they have an ABN?);
• GST (Are they registered for GST? Are they charging GST?);
• PAYG Withholding (Do they have employees, etc);
• BAS Lodgement (Are they up to date with their lodgement/s?);
• The officer asks if the entity has any questions as to their taxation obligations or if they require any help.
• The officer leaves a business card.
• Upon return to the office the information collected is verified.  The officer may be back in touch if there are any discrepancies.

Why Do These Checks?

They are a quick & easy check of system integrity;

They can identify "dissociated" entities;

They provide an additional opportunity for people to interact with the ATO (ask questions, etc)