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Practice Update - December 2024

Practice Update

December 2024

🔶 STAY VIGILANT: AVOID SCAMS EXPLOITING THE

myGovID REBRANDING 🔶

The Australian Tax Office (ATO) has issued a scam alert concerning the rebranding of myGovID to myID, a transition that scammers are exploiting to steal personal information. Fraudsters create fake emails, websites, and text messages, urging individuals to update their information under the guise of the rebranding process. The ATO reassures users that no action is required to update myGovID and urges caution to avoid falling victim to scams.

To stay safe, the ATO advises these tips to avoid scams:

Be Cautious of Unsolicited Messages: Do not click links or provide information in emails or texts from unknown sources.
Verify App Downloads: Only download myGovID or myID apps from official app stores.
Access ATO Services Securely: Always use the official ATO website or myGov portal to log in or manage your account.
Protect Your Information: Be vigilant when sharing personal details, ensuring you communicate only with verified organizations.

If you suspect a scam or receive suspicious messages, report them to the ATO. For more guidance, visit the ATO scam alert page.

🔶 IS YOUR STAFF CELEBRATION SUBJECT TO

FRINGE BENEFITS TAX (FBT)? 🔶

With the holiday season in full swing, many businesses are planning celebrations to thank their staff. But before finalizing your plans, it’s crucial to consider whether your event or gifts might attract Fringe Benefits Tax (FBT). Failing to account for FBT could leave you with an unexpected tax liability.

Here are key factors to consider:

Spending per Employee Determine how much you plan to spend on each staff member, as this may impact the FBT liability.
Location and Timing The venue and timing of your celebration (e.g., during work hours or after hours) can influence whether FBT applies.
Guest List Consider who will attend: Is the event strictly for employees, or will partners, clients, and suppliers also join? This distinction affects FBT obligations.
Gifts and Their Value If you’re providing gifts alongside or instead of an event, assess their type and value to see if they’re subject to FBT.

If your celebration or gifts qualify as entertainment-related fringe benefits, ensure you maintain accurate records. These will be essential for calculating the taxable value of the benefits provided.

Understanding FBT rules in advance is key to avoiding surprises. Take the time to assess your plans now and stay on top of your obligations to ensure your holiday celebrations remain stress-free for you and your team.

🔶 THINK TWICE BEFORE USING YOUR SMSF THIS CHRISTMAS 🔶

Thinking about using your SMSF to pay bills or buy Christmas presents? Here's why you shouldn't:

Accessing super early is strictly limited. You can generally only access your super if:

You reach preservation age and retire, or
You turn 65, even if still working.

Early access requires meeting specific conditions of release. Paying bills or buying gifts doesn’t qualify.

Illegal access can lead to serious consequences. As an SMSF member, accessing your super unlawfully may result in:

Additional income tax,
Penalties, or
Disqualification as a trustee.

If you’ve accessed your super illegally, contact the SMSF Voluntary Disclosure Service immediately. Returning funds could also affect your contribution caps and attract excess contribution tax.

Beware of early access scams. Protect yourself if approached:

Stop any involvement,
Don’t sign documents or share personal details, like your TFN or passwords.

Keep your super safe and stick to the rules this holiday season!

🔶 REMINDER: DECEMBER 2024 QUARTER

SUPERANNUATION GUARANTEE (SG) 🔶

Employers, please note that superannuation contributions for employees, covering the quarter ending 31 December 2024, must be received by the respective super funds no later than 28 January 2025.

Failure to make the required SG contributions on time will result in liability for the SG charge, which includes penalties and interest.

For the 2025 income year, the SG rate is 11.5%. Ensure timely and accurate payments to avoid additional charges.

🔶 NEXT 5,000: TIPS FOR A SUCCESSFUL TAX LODGMENT 🔶

If you're part of a Next 5,000 privately owned or wealthy group preparing to lodge your company income tax return in early 2025, ATO’s Next 5,000 Findings Report is here to help. It offers key recommendations to streamline the process and avoid common pitfalls.

Here are some practical tips to get you started:

Use a Lodgment Calendar: Incorporate a lodgment calendar into your tax return procedures. This ensures all related entities' lodgments are organized and tracked throughout the year, minimizing the risk of missed deadlines.
Establish a Strong Review Process: Create a robust process for reviewing draft returns to catch errors early. Consider separating responsibilities so the preparer and reviewer are distinct roles, enhancing accuracy and accountability.
For Those Using a Tax Agent:
Engagement Letters or Scope Documents: Have an annual engagement letter or scope of work document in place. Include any out-of-scope items relevant to the lodgment to avoid missing critical information. Our reviews have found that groups lacking this often overlook material items.
Documented Procedures and Checklists: Review and refine your documented processes, such as checklists, to ensure all necessary data and schedules are provided to your tax agent. This helps maintain accuracy and completeness in your tax return.

These are just a few strategies from ATO’s Next 5,000 Findings Report. For more detailed guidance, the report is an essential resource for Next 5,000 groups and their advisers. Don't miss out on insights that can make your lodgment process smoother and more effective!

🔶 KEEP YOUR OFFICE SAFE THIS HOLIDAY SEASON 🔶

As the holiday season approaches, it’s a good time to ensure your office and client information remain secure, especially if you're planning to close for the break.

We’ve compiled a quick checklist to help you safeguard your business, both on-site and online:

🔒 Secure Physical Files

Store all hard copies of client records in locked storage units or dispose of them securely (e.g., shredding). Thieves can easily photograph sensitive information in just moments.

💻 Log Out and Lock Down

Log out of all devices, ensuring unauthorized access is prevented.
Store devices like laptops and tablets in a secure location.

📲 Keep Devices Updated

Install the latest software updates on all work devices. Cybercriminals often exploit outdated systems to gain access. Turn on automatic updates to stay ahead.

📌 Additional Precautions

Remember, this is not an exhaustive list. Take every step necessary to protect your clients' sensitive information and your business's security.

For more holiday security tips, check out the Cyber Security Holiday Guide from the Australian Taxation Office—packed with practical advice to bolster your digital defences while spreading holiday cheer!

Stay safe and enjoy a worry-free holiday season!