In announcing the government’s fourth Federal budget before elections likely to take place in May, Treasurer Josh Frydenberg has introduced new tax measures seemingly aimed at streamlining the tax return process and making it easier for taxpayers to meet their tax payment obligations.
The budget indicates that as of 1 July 2024, an estimated one million trusts in Australia will be able to lodge their income tax returns electronically. It is hoped that digitalising trust income reports will help reduce errors and processing times. It is also expected to create capacity for beneficiaries’ tax returns to be pre-filled and help the Australian Tax Office (ATO) in automating some assurance processes. Trust reporting has thus far not been as digitised as individual and company tax returns.
Another of the proposals is to have small and medium businesses with less than $50 million annual aggregated turnover for Pay As You Go (PAYG) instalments and up to $10 million in annual aggregated turnover for (GST) instalments calculate their PAYG and GST instalments with an assumed GDP uplift rate of 2%, down from the current 10% uplift rate that has seen many pay more than their actual liability. This adjustment is expected to help improve the cash flow in this sector by as much as $1.85 billion from the 2022-2023 income year if enacted.
As of 1 January 2024, businesses are also expected to benefit from having the option to have their PAYG instalments calculated based on their current financial performance, as determined by accounting software. This is also being predicted to help businesses improve their cash flows by aligning their tax PAYG instalment obligations to business profitability and cash flow.
Businesses that undertake certain payments to contractors that are expected to be lodged in their Taxable Payments Annual Report, will from 1 January 2024 be allowed to report these payments on the same lodgement cycle as their business activity statements (BAS), via their accounting software. This measure is expected to reduce the administrative burden for as many as 190,000 businesses that use contractors for services.
The government is also intending to put $6.6 million towards developing IT infrastructure that will enable the ATO to provide access to single touch payroll (STP) data to state and territory revenue offices. It has however been noted by Access Group APAC president, Kerry Agiasotis, that businesses must digitise with appropriate compliant payroll software to derive the benefits of the STP reporting system. He acknowledged that this investment was problematic given the financial challenges many SMEs have faced over the last two years.
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