THERE ARE two significant changes this year that may delay the time when your tax return can be processed and assessed.
If you are anticipating a tax refund, then be prepared for the refund to hit your bank account later than you may be expecting.
The Impact of Single Touch Payroll Reporting (STP)
Commencing July 1 , 2018 , employers with 20 or more employees have been required to report their payroll details to the ATO on a real time basis each pay period.
Employers with less than 20 employees may have voluntarily elected to adopt this real time reporting system.
Employers will have until July 31, 2019 to finalise their STP data for the 2018/19 financial year, with that date to change back to July 14 each year subsequently.
So how might this change affect you?
If your employer has been reporting under STP you will no longer receive a Payment Summary (also previously known as a Group Certificate) but instead will be replaced by an Income Statement that you will need to access through your myGov account or your tax agent.
For the current year only, you may not be able to access this information until as late as July 31. Furthermore, consistent with prior
years, other pre-fill data including dividends, interest, share disposals, and private health insurance cover details are progressively uploaded on to the ATO systems and may take time to be finalised.
If you receive income from trust funds this information is often not available until late September.
From July 1, 2019 STP reporting will be extended to include all businesses with employees other than family businesses comprising only family members as employees, who may report on a quarterly basis together with the lodgment of their quarterly BAS.
Furthermore, if proposed measures announced in the 2019/20 Federal Budget become law, from July 1, 2020, STP data collected by the ATO will be expanded and shared with other Commonwealth agencies to ensure individuals receiving Government benefits are paid their
The Low and Middle Income Tax Offset (LAMITO)
Taxpayers with taxable incomes below $37,000 have for many years been entitled to a non-refundable Low Income Tax Offset (LITO) of $445 phasing out to zero at a taxable income of $66,666.
In the April 2019 Federal Budget t h e C o a l i t i o n G o v e r n m e n t foreshadowed the introduction of a new additional tax offset (LAMITO) to provide additional temporary nonrefundable tax relief to low income earners and also encompassing a new level of temporary tax relief to middle income earners to be available for the 2019 to 2022 income years.
At the time of writing this column, this foreshadowed legislation is yet to go before Parliament, but current undertakings from the Opposition suggest that the legislation will be supported.
N e v e r t h e l e s s , t h e b u d g e t proposal could be subject to some amendments in order to pass through both Houses of Parliament.
Should the legislation as outlined in the budget pass unchanged then individuals with a taxable income under $37,000 can expect an additional non-refundable LAMITO of $255 making a total LITO and LAMITO of $700.
The amount of the L AMITO increases for taxable incomes above $37,000 to reach a maximum of $1080 at a taxable income of $90,000, thereafter reducing at the rate of 3% of the excess taxable income over $90,000.
If your tax return is processed and assessed prior to the proposed LAMITO legislation passing through both Houses and receiving Royal Assent, your tax return would subsequently need to be amended by the ATO to accommodate the impact of the LAMITO on your 2019 assessment.
This therefore is the second reason you may choose to delay lodging your tax return until after July 31 or later until the LAMITO tax offset becomes law and ATO systems are updated to accommodate any changes from the proposed legislation as outlined in the Budget.
Please remember both of the tax offsets explained above are nonrefundable.
This means that you must have incurred a tax liability and either paid PAYG tax instalments through the year or your employer has withheld PAYG tax from your wage or salary during the year.
If not, then the tax offsets will be an offset against your unpaid tax liability reducing the tax payable on your tax assessment.
If your employer has withheld tax sufficient to cover your tax liability, the tax offsets will reduce (offset) your tax liability thus producing a tax refund.
If you use a tax agent to prepare your tax return, the above factors may explain why your tax agent chooses to delay lodging your tax return this year until all relevant pre-fill tax information is available to download into your tax return and thus avoid the added expense of having to lodge an amended return.