1 1 2 3 MYOB Tax Changes Tax - A Practice Perspective PLS - PDF document

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1 2 3 MYOB Tax Changes Tax - A Practice Perspective PLS Review Software changes and What’s ringing the tax bells for Where are we with PLS, what updates in the 2019 tax practitioners in 2019 are the issues and where is it release going 4 5 6 MYOB Practice Single Touch Payroll Compliance Watch Unboxing the MYOB Practice What your practice needs to What the ATO wants us to Online development initiative know about STP to service know, feedback from MYOB for a closer look and advise your clients Support and important dates 1 MYOB Tax Changes Software changes and updates in the 2019 tax release MYOB Tax Changes  Tax Changes affecting Multiple Entity Types  Individual Returns  Company Returns  Self Managed Super Fund Returns  Lapsed Legislation Matters  The good news !  Important Pending Tax Changes  Tax Software - General Release 2

Tax Changes affecting Multiple Entity Types Tax Changes affecting Multiple Entity Types  Instant Asset Write-Off Depreciation Extension Small Business Entities  Small Business Pools  Medium Size Business Entities   International Dealings Schedule  Treasury Laws Amendment (Increasing and Extending the Instant Asset Write-Off) Act 2019 - received Royal Assent 6 April 2019  Extension of the Small Business Entity (SBE) Instant Asset Write-off (IAWO) regime up to 30 June 2020 for assets less than $20,000, $25,000 or $30,000 depending on acquisition date The separate Asset Threshold Values that apply are: Asset Acquisition Date Asset Threshold Value Instant Asset Write- Before 29 Jan 2019 $20,000 Off Depreciation From 30 Jan 2019 and up to 2 April 2019 (7:30 AEDT) $25,000 Extension After 2 April 2019 (7:30 AEDT) and up to 30 June 2020 $30,000 Small Business  SBE Eligibility Criteria - covers over 98% of Australian Businesses Entities Annual turnover less than $10m  Turnover is aggregated   Note these SBE measures:  Limits assets subject to accelerated depreciation that are less than the appropriate $20,000, $25,000 or $30,000 threshold Mandates that all SBE assets be handled under the Simplified Depreciation Rule (subject to  ATO assets exclusions such as Horticultural Plants and Capital Works) Provides for an instant write-off of Small Business Pool balances less than $20,000 for 2015 -  2018 or $30,000 for 2019 - 2020 Forms affected - I P T C F MS (d) 3

 The Instant Asset Write-Off Depreciation regime provides for an instant write-off of Small Business Pool balances  The pool balance is assessed at the end of the financial year The official statement is Closing Pool Balance add back Depreciation  Essentially - Opening Pool Balance plus Asset Additions less Asset Disposals  Then either Depreciate or Write-Off - No Double dipping  Instant Asset Write-  The pool write-off is capped at less than $20,000 for 2015 - 2018 or $30,000 for 2019 - 2020 Off Depreciation  Small Business Entity Pools with a value below the write-off threshold must be written off Extension  Pool treatment after opting out of the Simplified Depreciation Rules Handling Small The resulting ongoing pool is quarantined under the rules  Business Entity Depreciation will continue at 30%  Pools The Pool Closing Balance remains subject to the Instant Write-Off provision  NOTE The SBE Depreciation lock-out rule provision that restricted re-entry for five (5) years was suspended from 12 May 2015 and will remain in place until 30 June 2020 Forms affected - I P T C F MS (d)  Treasury Laws Amendment (Increasing and Extending the Instant Asset Write-Off) Act 2019 - received Royal Assent 6 April 2019  Also extends the Instant Asset Write-off (IAWO) regime to include business’s with an aggregated turnover from $10m up to less than $50m  Applies to both new and secondhand assets acquired after 2 April 2019 (7:30 AEDT) up to 30 June 2020  The turnover threshold extension is expected to make another 22,000 business’s eligible for the scheme Instant Asset Write- Off Depreciation  Notably the government has still refrained from making the instant asset write-off scheme permanent Extension  The scheme revision is expected to cost some $700m through to 2020 - 2021 Medium Size  Estimates also project that it will generate around $300m in extra revenue for the following two (2) years Business Entities after that These increases are expected to result from a boost in Business Activity and Investment   According to the ATO, the average SBE instant write-off claim has only been around $10k The Small Business Ombudsman has raised concerns regarding general scheme awareness   A recent American Express survey indicates that some 47% of small business haven’t heard about instant asset write-off Forms affected - I P T C F MS (d)  There are no changes to the MYOB Tax Depreciation Worksheet  Depreciation processing has been updated to apply the appropriate date driven write-off thresholds and depreciation calculations Instant Write-Off Depreciation Extension Depreciation Worksheet Forms affected - I P T C F MS (d) 4

Small Business Entities and Medium Sized Business Depreciation Worksheet Changes  Treasury Laws Amendment (Tax Integrity and Other Measures No 2) Act 2018 - received Royal Assent 24 August 2018  There have been significant changes to the International Dealings Schedule for 2019 IDS imposes disclosure obligations about wide ranging international related-party dealings   Applies when an entity has international dealings with related parties exceeding $2m  These changes also implement the OECD Base Erosion and Profit Shifting (BEPS) Action 2 This action focuses on Neutralising the Effect of Hybrid Mismatch Arrangements  Specifically applies to entities lodging returns for income years beginning 1 January 2019  International Further amendments to Subdivision 768-A and certain franking rules apply to payments made  between 1 January 2019 and 30 June 2019 Dealings Schedule The primary objective is elimination of double non taxation outcomes that use hybrid  (IDS) arrangements to exploit tax differences between jurisdictions  Changes will neutralise such arrangements by denying deductions or including additional assessable income  Measure applies to payments between both, related and unrelated parties, and is intended to catch wide ranging transactions such as interest, royalties and payments for services The ATO has advised affected entities should be carefully reviewing all their arrangements  under these new Hybrid Mismatch rules  A new Section G has been added to the schedule Existing Taxpayers Declaration has been pushed down to make Section H  Forms affected - P T C (ids)  Additional changes affect:  Section A (International Related Parties Dealings) Section B (Financial Arrangements)  Section C (Interest in Foreign Entities)  Section E (Financial Services Entitles)   The International Dealings Schedule is probably the most complex schedule in any tax year and has been the subject of significant ongoing ATO revision and extension  Practitioner’s required to complete such returns are especially advised to undertake appropriate International research and familiarisation prior to preparation Dealings Schedule  The workbook contains a comprehensive list of the IDS changes and the ATO Website provides detailed schedule preparation instructions (IDS) Forms affected - P T C (ids) 5

Tax Changes for Individual Returns Tax Changes for Individual Returns  Granular Data for Deductions  Low and Middle Income Tax Offset  Tax Rate Changes - Bracket Creep Relief Resident   Working Holiday Makers and Foreign Resident  Medicare Low Income Threshold Increase  Private Health Insurance Rebate  Study Related Repayment Thresholds  Higher Education Loan Program Changes  Other Income - First Home Super Saver  The ATO are introducing requirements for detailed granular data to further substantiate return labels  For 2019 returns this will add a new mandatory Deductions Schedule (DDCTNS) for items D1 through D10 and D12 through D15 Note that D11 is not part of the Deductions Schedule   The granular concept will be further expanded in coming tax years to encompass other labels Tax 2020 is currently slated to have this concept being applied to income data   Essentially data that was previously managed in worksheets and data grids will now become Granular Data for schedule details Deductions Each Deduction label has a specified data matrix designed to accommodate reasonably  expected data values Overview Access to the detail data matrix is through the Deduction label on the main return  The existing Interest and Dividends Deductions Schedule (BJ) has been removed with details  now incorporated at Items D7 Interest Deductions and D8 Dividend Deductions Due to the dynamic nature of the deductions schedule additional validation rules have been  added to ensure correct preparation  No deduction detail line data (RSD) will be rolled forward for 2019 This affects formatting of Deduction Descriptions (and Amounts)  This restriction is a result of the underlying tax system data changes required with moving to  schedules Motor Vehicle and Depreciation details are retained and processed as normal  This will have an impact on tax preparation workflows for 2019  Forms affected - I (DDCTNS) 6