Overview of presentation Previous years budget announcement Federal - - PowerPoint PPT Presentation

Overview of presentation

• Previous years budget announcement
• Federal Budget overview
• Tax divide between political parties
• Division 7A
• SMSF Audit
• Image rights
• WRE
• Black economy
• Have we heard all this before

Main Residence exemption – foreign Residents 2017 Budget announcement to deny foreign residents access to the CGT main resident exemption from 9th May 2017 Only Australian residents can access main residence exemption

• No exempt portion of any future capital gain on a disposal (all or nothing)
• Transitional measure, properties held at 9th May 2017 will continue

to qualify for the exemption if sold by a foreign resident on or before 30th June 2019

Main Residence exemption – foreign Residents

If you a non-resident on the date your contract of sale is signed (as opposed to settlement date), you will be subject to CGT on 100% of the capital gain

• Vicki acquired a dwelling on 10 September 2010, moving into it and establishing it as her main

residence On 1 July 2018 Vicki vacated the dwelling and moved to New York. Vicki rented the dwelling out while she tried to sell it. On 15 October 2019 Vicki finally signs a contract to sell the dwelling with settlement occurring on 13 November 2019. Vicki was a foreign resident for taxation purposes on 15 October 2019

• The time of the CGT event A1 for the sale of the dwelling is the time the contract for sale was

signed, that is 15 October 2019. As Vicki was a foreign resident at that time she is not entitled to the main residence exemption in respect of her ownership interest in the dwelling Note: This outcome is not affected by

• Vicki previously using the dwelling as her main residence; and
• the absence rule in section 118 - 145 that could otherwise have applied to treat the dwelling as Vicki’s main

residence from 1 July 2018 to 15 October 2019 (assuming all of the requirements were satisfied) Note : Note that if Vicki returned to Australia and re-established her Australian residency status for tax purposes before 15 October 2019, she would be entitled to the full main residence exemption

Main Residence exemption – foreign Residents

Implications

• Foreign residents may consider selling their main residence before

30th June 2019 to benefit from transitional rule

• Individuals who are becoming non-residents of Australia may want to

consider whether they should enter into a contract to dispose of their former Australian residence before they permanently depart Australia

• Exploring ways to remain a resident of Australia for tax purposes,

however, this may have other, negative tax implications as they may then become taxable on their non-Australian sourced income

Changes to small ll busin iness CGT Concessions

As part of its 2017-18 Budget, on 9 May 2017, the Government announced proposed amendments which would limit the application

• f the small business CGT concessions (SBCGT Concessions).
• ‘improve the integrity of the tax system’

Note: The breadth of the changes proposed raise a question as to whether the Bill will result in an integrity improvement or a broader shift away from the policy intentions which have underpinned the SBCGT Concessions since their introduction in 1999

Changes to small ll busin iness CGT Concessions

Current SBCGT Rules Proposed new SBCGT Rules The current SBCGT Concession rules apply the following additional basic conditions for capital gains relating to shares in a company or interests in a trust:

• if the relevant taxpayer is an individual, either the

taxpayer or their spouse must be a ‘CGT concession stakeholder’ in the Object Entity or

• if the relevant taxpayer is a company or trust, CGT

concession stakeholders in the Object Entity must together hold (directly or indirectly) at least 90% of the interests in the taxpayer. The Bill proposes that additional basic conditions will apply for capital gains relating to shares in a company or interests in a trust (Object Entity) as follows:

• either the taxpayer must be a CGT concession

stakeholder in the Object Entity, or CGT concession stakeholders in the Object Entity must hold at least 90% of the interests in the taxpayer

• unless the taxpayer satisfies the maximum net asset

value test (MNAVT), the taxpayer must have carried

• n a business just prior to the CGT event
• the Object Entity must either be a CGT small

business entity for the income year or satisfy the MNAVT and

• the shares or interests in the Object Entity must

satisfy a modified active asset test.

Changes to small ll busin iness CGT Concessions

• The requirement for the Object Entity to meet the MNAVT or small business entity test will

exclude taxpayers who are presumably outside the integrity concern

• To make matters worse, the Government has retained a retrospective application date of 1 July

2017

• integrity improvement or a broader shift away from the policy intentions which have

underpinned the SBCGT Concessions since their introduction in 1999

• no requirement to test whether an Object Entity satisfied a maximum net asset value
• also proposed a shift from testing the taxpayer only (i.e. the entity disposing of an asset,

share or interest) to a twofold approach which also tests an Object Entity. This is seemingly

• n the basis of a policy intention that an Object Entity must itself be a CGT small business

entity in order for the SBCGT Concession to apply

Purchasers of f new houses – th the new GST coll llectors

The new GST rules which impose a withholding obligation for purchasers will:

• apply from 1 July 2018
• apply to sales of land with new residential premises or potential residential land
• make the purchaser liable to remit GST to the ATO and
• require the vendor to provide a purchaser with a notice

This is another compliance obligation to be imposed on vendors and purchasers (for example, in addition to the foreign resident CGT withholding) that will need to be considered A vendor is required to provide the purchaser with a specific type of notification (relating to GST on the supply) before making the supply. This notification informs the purchaser that they are required to make a GST payment to the ATO and

• utlines the amount of GST owed. Failure to do so may result in 100 penalty units (which is currently $21,000, or up to 5

times that amount for corporations) The amount of GST to be paid is 1/11th of the contract price of the supply. However, where supplies are made under the margin scheme, a statutory rate will apply. The statutory rate of 7% (or greater amount as determined by the Minister in a legislative instrument, but no more than 9%) must be withheld by the purchaser and paid to the ATO The vendor will be entitled to a credit for the amount of any payment made to the ATO by the purchaser Law companion ruling LCR 2018/D1

Federal Budget 2018-19

• Election budget political imperatives versus economic reality
• Windfall - Pay down debt versus tax relief
• Minor tweaks to superannuation seen as a positive
• Progressivity of our tax system
• Black economy long game some interim measures announced

Divergent tax policies

• The next 12 months is “going to be a big year in tax”, as political

parties have started drawing distinct lines in tax policy ahead of the up coming federal election

• Need for tax agents to explain implications of these policy

differences to their clients

Divergent tax policies

Coalition’s current tax policies are:

• A reduced corporate tax rate for all companies eventually with a target rate of 25%;
• A reduction in personal tax rates;
• From 2018-19 to 2021-22 new tax offset for middle and lower income earners
• From 1 July 2018 32.5% tax bracket increased to $90,000
• From 2022-23 increase 19% tax bracket to $41,000 and increasing LITO from $445 to $645 and further

increase 32.5% tax bracket to $120,000

• From 1 July 2024 abolish 37% tax bracket entirely and increasing top marginal tax bracket to $200,000
• No change to current arrangements regarding negative gearing of investment property;
• No change to the CGT discount which currently sits at 50% for individuals;
• No change to the current arrangements regarding trust distributions from discretionary trusts;
• No change to the current arrangements regarding imputation in particular, full refund of excess

imputation credits; and

• No changes in relation to depreciation – the $20,000 immediate asset write-off available to 30

June 2019

Tax Rates Overview

Income Amount Current Rates Post 1 July 2018 Post 1 July 2024 Tax payable

Effective Tax payable Effective Tax Payable Effective Avg Tax Avg Tax Avg tax Rate Rate Rate

$40,000 $4,947 12.37% $4,657 11.64% $4,492 11.23% $60,000 $12,147 20.25% $11,617 19.36% $11,607 19.35% $80,000 $19,147 23.93% $18,617 23.27% $18,607 23.26% $100,000 $26,632 26.63% $26,117 26.12% $25,507 25.51% $120,000 $34,432 28.69% $34,217 28.51% $32,407 27.01% $140,000 $42,232 30.17% $42,097 30.07% $39,307 28.08% $180,000 $57,832 32.13% $57,697 32.05% $53,107 29.50% $200,000 $67,232 33.62% $67,097 33.55% $60,007 30.00% Notes:

• “Total payable" includes the Medicare levy;
• Adjustments have been made to reflect the low income tax offset and low and middle income tax offset where relevant;

Labor Seeking mandate

Labor policies mentioned so far:

• A restoration of the company tax rate to the full 30% coupled with a possible lower rate for smaller corporate entities with

turnover less than $2M;

• Higher personal tax rates at the top end and lower personal tax rates at the lower end;
• An increase in the Medicare levy to 2.5% coupled with a more generous Medicare levy arrangement for lower paid workers than

currently available;

• A prohibition on negatively gearing investment properties other than newly built investment properties;
• A halving of the capital gains tax (CGT) discount to 25% for individuals;
• A minimum tax of 30% on all distributions from discretionary trusts;
• A denial of any refund in respect of excess imputation credits;
• A new deduction (the Australian Investment Guarantee) which will enable a 20% deduction in respect of the purchase of any new

eligible asset worth more than $20,000;

• Capping of deductions for managing tax affairs to a maximum of $3,000;
• Whistle-blower rewards for tax evasion; and
• Superannuation:
• Oppose catch up contributions on concessional contributions and tax deductibility on personal superannuation contributions;
• Lower annual non-concessional contribution cap to $75,000 and further lower high income super contribution threshold to $200,000; and
• Increasing the Superannuation Guarantee to 12% when fiscal circumstances allow

Refunding Excess Franking Credits

Excess Franking Credit

• There are two schools of thought on the principal purpose behind our

company imputation system:

• to avoid double taxation or
• principal purpose is to apply a level of tax that reflects the recipient’s tax

position Unfairly discriminates SMSF and creates a distinction between SMSF and large industry and retail funds, including the Future Fund It seems self-funded retirees who in the main are not a drain on the Government pension system are becoming an easy target

Refunding Excess Franking Credits

Labor’s original proposal was subsequently tweaked to include a “Pensioners Guarantee” by exempting both part and full pensioners and SMSFs with at least

• ne pensioner prior to 28 March 2018
• In addition non-aged pensioners on other allowances such as carers, disability

support pensioners, the unemployed and those on parenting payments will also be exempt

• This arbitrary line in the sand grandfather’s benefits for a certain part of the

population and denies other’s the ability to ever be able to claim a cash franking rebate

• Perverse outcomes result where part pensioners that are able to receive the full

benefit of the franking credit will be better off than retirees with more retirement savings but are ineligible for the age pension

• The differential worsens over time. SMSF members who become eligible for a part pension

after March 28, 2018 will be ineligible for refunds of excess imputation credits

• The proposed tweaking of the policy will contribute to a narrowing of the gap between those

who accumulate a larger pool of funds for retirement and are ineligible for aged pension and those who have a smaller pool of funds but are eligible for age pension

SMSF Audit

• The annual audit requirement for self-managed superannuation funds

(SMSFs) will be extend to a 3-yearly cycle for funds with a history of good record-keeping and compliance

• The measure will apply to SMSF trustees that have a history of 3 consecutive

years of clear audit reports and that have lodged the fund's annual returns in a timely manner

• This measure will start on 1 July 2019. The Government said it will undertake

consultation to ensure a smooth implementation

SMSF Audit Cycle

Integrity of the system if SMSFs are to go unaudited for 3 years The concerns

• On the assumption there will be no audit holiday for a 2-year period, and that the announcement is to

bundle 3 financial years into one audits:

• There will be trustees that may attempt to take advantage of no audit scrutiny for a 2-year period, and

who may attempt to circumvent the SIS compliance requirements applicable to their fund

• There will be no cost savings (as suggested) with the bundling of 3 audit years. Undertaking 3 financial

year audits at the one time will derive minimal economies of scale, and in fact, it is predicted that audit costs will increase as a result of this proposed measure

• Based on our experience, trustee retention of information will be poor, and attempting to obtain historical documentation

will add time and therefore cost to any audit undertaken

• Trustee recollections to explain transactions or events possibly 4 years earlier will be problematic
• Attempting to source historical information on asset valuations will be time consuming, adding to the cost of the audit
• Auditing prior year financials (that of course will still be required to comply with SIS and enable the tax return to be

prepared and lodged) will inevitably identify errors, resulting in time spent preparing and lodging amended tax returns and other superannuation reporting

• Practice overheads for auditors will somehow need to be maintained to ensure adequate staffing levels, to ensure CPD is

achieved and mandatory insurance is maintained

SMSF Audit Cycle

Integrity of the system if SMSFs are to go unaudited for 3 years The concerns (cont’d)

• Where an auditor identifies a compliance issue in say year one, the auditor may be required to bring this to the attention to the

ATO, however in many instances, this matter is only required to be addressed with the trustee directly. A bundled audit cycle will mean that these communications are not done in a timely manner and would create the following issues:

• There will be increased reporting to the ATO in year 2 and year 3 (and year 4) as prior year and ongoing issues remain unidentified and

unrectified by the trustee

• Increased ATO reporting will result in increased audit time, and therefore costs in connection with the year 2 and subsequent year
• audits. Additional ATO resources will therefore be required to review a greater number of auditor contravention reports.
• Trustees are at a greater risk of being penalised by the ATO for maintaining compliance issues in their fund, even if these matters are

inadvertent

• Auditors play a key role in trustee education. To delay the annual audit waters down this key relationship.
• Safeguarding of assets (via a review of asset titles) is a key audit check. Delaying this audit check for a 3-year period introduces

the real risk that superannuation assets may be unprotected from administration or bankruptcy proceedings

• Fraud risk will increase for SMSF trustees. An audit can, and does, identify fraud in an SMSF. Delaying the audit for a 3-year

period will clearly delay the identification of fraudulent activity

• The risk of elder abuse is amplified where the audit is delayed

SMSF Member Number

More members allowed Increase in the maximum number of members of an SMSF from four to six will provide greater flexibility Also, increasing member numbers in an SMSF may provide some protection if changes to franking credits refunds were to be introduced

• By adding new members in accumulation phase, extra franking

credits could be absorbed within the fund and offset against non- franked income and taxable contributions As the clear majority of SMSFs – around 90% according to the ATO – have only one or two members

Image Rights

Image rights Targeted at high profile people using their name, fame or brand image via a family trust or company. Also captures anyone with an exploitable personal brand or image

• Anti-income diversion measure to ensure income taxed at top

marginal tax rate rather than lower company tax rate

• Not uncommon for personalities to use companies to receive fees from

entities who used their images for promotional purposes

• Not unlike treatment of PSI companies where income paid to the company

is attributed back to individual

Income diversion now under ATO focus – Allocation of profits for professional firms

Image Rights

Image rights The Australian Taxation Office recently released Draft Practical Compliance Guideline 2017/D11

• The Guideline provided a ‘safe harbour’ approach and percentage

for working out the payment for a sportsperson’s Image Rights

• The ‘safe harbour’ is 10% of the total payment made to the player

for personal services, image rights and anything else

Self Assessment – Not always

ATO factsheet – “Check your clients’ income data before lodging” When we receive a tax return and deem income is missing, we will adjust the return before issuing the notice of assessment. This means the assessment may differ from what your client expected

• ATO using pre-filling service to cross-check the data on your clients

return

• Can use portal to message ATO of incorrect pre-fill information
• MyTax has real time deduction prompt

Division 7A still unresolved

Division 7A

• 1 July 2019 is the proposed start date of the consolidated package of

Division 7A amendments

• Expect changes regarding UPEs may have retrospective effect so that

UPE’s will have always come within Division 7A

• Pre-December 2009 UPEs status uncertain
• Period of review expired ?
• Also expect to see amendments to deal with transitional measures

required for UPEs that have been placed on complying sub-trust arrangements as part of the ATO’s administrative measures

Work Related Deductions

Despite claims of Taxpayers over-claiming work related expenses, the government has refrained from making any ad hoc changes to the eligibility rules

• Australia has one of most generous tax regimes when it comes to claiming work

related deductions.

• “Other countries have either removed this entitlement, or have stricter eligibility

requirements or alternatively introduced a standard deduction regime

• Those skirting their obligations and deliberately over claiming should not rejoice

as the ATO will be provided with an additional $130 million to increase compliance activities targeting individual taxpayers and their tax agents

• The funding will go towards new compliance activities, including additional audits

and prosecutions, improving education and guidance materials, pre-filling of income tax returns and improving real time messaging to tax agents and taxpayers to deter over-claiming of deductions

• Tax Gap for individuals not in business to be released shortly

SBCGT & Vacant Land

Concessions in relation to partnerships This announcement provides that from Budget night, partners that alienate their income by creating, assigning or otherwise dealing in rights to the future income of a partnership, will no longer be able to access the small business CGT concessions in relation to those rights Deny deductions for vacant land Taxpayers will not be allowed a deduction for expenses associated with holding vacant land from 1 July 2019. The measures are expected to impact a large number of taxpayers and will apply to residential and commercial land. Disallowed deductions may not be carried forward to future years when the land may no longer be

• vacant. Where the denied deduction would ordinarily form part of the cost base of a capital gains

tax asset, it may still be included in the cost base of the asset. However, items such as interest, that would not ordinarily form part of cost base, will not be deductible or included in cost base

• There are exceptions where:
• A property has been constructed and has received approval to be occupied and is available to rent; or
• the owner is using the land to carry on a business.

This is an integrity measure to stop taxpayers claiming deductions where they are not holding the land for the purpose of earning assessable income

… and it’s more than simply a ‘tax problem’

Policy considerations

… We estimate it is up to 50% larger than the 2012 ABS estimate

Why do we think it’s growing?

Margin pressures New business models and forms of work Increased sophistication

• f criminal

enterprise Perceptions

• f risk

(lack of enforcement) Tax and compliance burdens Multinationals not paying fair share Migrant communities and social norms

The non-cash trend…

… But where are the $100 notes?

Observations and opportunities…

The role of tax professionals and stopping the black economy…

Black Economy

Black Economy

• From 1 July 2019, businesses will not be able to claim deductions for

payments to their employees (e.g. wages) where Pay As You Go withholding (PAYG) has not been withheld

• Will the new measure apply to businesses that inadvertently classify a worker as an

independent contractor rather than an employee, and do not withhold PAYG. In addition to non-deductibility for payments such as wages, the business would also be exposed to existing implications under the PAYG penalty regime and Superannuation Guarantee Charge

• In addition, no deduction will be available for payments made by

businesses to contractors where the contractor does not provide an Australian Business Number (ABN) and the business does not withhold any amount of PAYG despite the withholding requirement applying

Black Economy

Black Economy Other measures -A suite of measures in response to the Black Economy Taskforce, including:

• Introduction of an economy-wide limit of $10,000 for cash payments made to businesses for

goods and services from 1 July 2019

• Further expansion of taxable payments reporting system (TPRS) by extending coverage to security

providers and investigation services, road freight transport, and computer system design and related services to a stage where businesses will need to ensure that they collect information from 1 July 2019, with the first annual report required in August 2020

• New and enhanced ATO enforcement against the Black Economy by creating:
• A new enforcement strategy featuring mobile strike teams and an increased audit presence, a Black Economy

Hotline, improved Government data analytics and educational activities

• Support for the new Black Economy Standing Taskforce to ensure a more coordinated approach to combatting

the black economy

• Consulting on a new regulatory framework for issuing ABNs in 2018-19
• Combatting illicit tobacco

Black Economy

Black Economy Other measures -:

• Creating a new Implementation team in the Department of Treasury

to manage a whole-of-government response to the Black Economy Taskforce Report

• Increasing the integrity of the Commonwealth procurement process

whereby businesses seeking to tender for Australian Government procurement contracts over $4 million (including GST) will be required to provide a statement from the ATO indicating that they are generally compliant with their tax obligations

• Creating a Standing Taskforce to share information, knowledge and

experience across taskforce agencies

Black Economy

Black Economy Taskforce recommendation 3.2 — Mandating the payment of salary and wages into bank

• The Government agrees in principle that the payment of salary and

wages into bank accounts is preferable to the payment of cash. Consultation will be held with industry on options to encourage the electronic payment of salary and wages, noting the particular impact on small business

Black Economy

Black Economy Taskforce recommendation 3.5 — Incentives to move to a non-cash business model. The Government should offer incentives to small businesses to adopt entirely non-cash business models, including tax instalment timing relief and preferential treatment as trusted taxpayers if they are prepared to take prescribed steps to reduce the compliance risk they represent

• The Government agrees in principle with supporting small

businesses moving to a non-cash model where appropriate for their

• business. The Small Business Digital Taskforce report has looked at

how to make it easier for businesses to adopt digital technologies

Black Economy

Black Economy Taskforce recommendation 3.7 — ABN verification in electronic payments Verified ABNs should be included in the data attached to all electronic payments, starting with the New Payments Platform

• The Government agrees in principle with this recommendation. The

Government’s first priority is to look at potential reforms to the ABN system (refer to the Government’s response to recommendation 4.2). Further consideration will then be given to whether ABN data can be incorporated in other processes such as the New Payments Platform

Black Economy

Black Economy Taskforce recommendation 4.1 — An identity solution for the modern economy To counter the rising risk of identity theft, the Government should introduce a standardised identity framework that enables businesses and individuals to prove their digital identity quickly and securely. This will allow individuals, through the use of a biometrically secured digital credential, to use their proven digital identity in all interactions with the Commonwealth Government and the private sector

• The Government agrees in principle with this recommendation. The

Government’s Digital Transformation Agency (DTA) is currently developing a Trusted Digital Identity Framework, which includes the Government’s digital identity program, Govpass. Govpass will make it easier for people to access government services and offer quick and simple options to prove who they are

Black Economy

Black Economy Taskforce recommendation 4.2 — ABN reforms The Government should strengthen the integrity of the ABN system to provide confidence in the identity and legitimacy of Australian businesses. Action should be through a number of immediate measures to improve the integrity of the current ABN system, including provision of TFN on application; removing entitlement from specific groups since they are not entitled to carry on an enterprise (as required for eligibility); periodic renewal; more timely cancellations; and better data matching. A number of medium term reforms should then be progressed, such as

• introducing an ABN renewal fee and ensuring that there is a single issuer of ABNs and
• ne consolidated business registry

The Government agrees that the ABN system needs to be as robust as possible in order to ensure the integrity of the tax system. The Government will consult with stakeholders

• n the Taskforce’s recommendation to inform the scope of reforms to the ABN system.

This will include issues such as regular renewals of an ABN, when an ABN should be revoked and the potential for a registration and renewal fee

Black Economy

Black Economy Taskforce recommendation 4.3 — Creation of a single business register The Government should integrate the Companies Register, Australian Business Register (ABR) and Business Names Register into a single register maintained by a single agency. In the interim, agencies must continue their efforts to improve the integrity of the separate registers The Government agrees and is currently exploring delivery approaches to modernise business registers, including establishing a whole-of-government registry platform that will deliver modernised business registration and licensing services for the Australian community. A detailed business case to modernise and combine the business registers administered by the Australian Securities and Investments Commission and the Australian Business Registrar will be developed in 2018-19. Modernising the business registers will make it easier for businesses to interact with government, and forms part of the National Business Simplification Initiative. The Government is also developing a Director Identification Number (DIN) as part of the Modernising Business Registers program

Black Economy

Black Economy Taskforce recommendation 6.2 — A sharing economy reporting regime. Operators of designated sharing (‘gig’) economy websites should be required to report payments made to their users to the ATO, DSS and other government agencies as appropriate. The Government should also continue to raise users’ awareness about the potential tax obligations from participation in sharing economy activities

• The Government agrees that there needs to be greater transparency of

payments made through sharing economy websites and will consult with stakeholders on how this recommendation could be implemented. Given the potential for growth in this area of the economy, it is important that participants in the sharing economy and the gig economy are complying with their obligations at this early stage of a growing industry

Black Economy

Black Economy Taskforce recommendation 7.3 — Amnesty for business. The Government should offer time-limited and targeted amnesties for small businesses. An amnesty should be followed by an enforcement blitz

• The Government does not support this recommendation. Instead,

the Government will make it harder for people to operate within the black economy. It will be in their best interests to voluntarily come forward to the relevant regulators before being identified and potentially subject to significant civil or administrative penalties or criminal prosecution

Black Economy

Black Economy Taskforce recommendation 7.4 — A strategy for tax practitioners. The Government should

• take action against implicated advisers and promoters;
• take more visible action against egregious tax practitioners and make

clearer their ethical responsibility to report suspected illegal activities and tax evasion; and

• increase the capacity of the Tax Practitioners Board (TPB) to take

sufficient effective action against egregious tax practitioners by increasing its resources and interactions with the ATO The Government agrees that the Tax Practitioners Board (TPB) plays an important role in combatting the black economy. The TPB will receive additional funding to allow it to receive a greater number of black economy referrals arising from increased compliance on black economy activity.

Black Economy

Black Economy Taskforce recommendation 8.2 — More effective prosecution processes Prosecution processes should be made more effective by designating the ATO as a criminal law enforcement agency; giving the ATO powers to obtain bank information; and reviewing the evidence gathering powers of other

• regulators. A specialist tax tribunal should be created as part of the Federal

Court

• The Government agrees to conduct a review of the current provisions

that provide civil, criminal and administrative penalties for black economy activity. As part of this process, consideration will be given to developing more effective prosecution processes and introducing new criminal offences, civil penalties or administrative penalties. The Government will consider the expansion of the jurisdiction of the federal courts to deal

Black Economy

Black Economy Taskforce recommendation 8.3 — Reverse onus of proof The Government should consider reversing the onus of proof for all/some elements of a small number of serious black economy

• ffences and harmonising the various unexplained wealth provisions.
• The Government notes this recommendation and will consider this

as part of a review of existing offences (refer to the Government’s response to recommendation 8.2).A national cooperative scheme

• n unexplained wealth is currently being progressed

Black Economy

Black Economy Taskforce recommendation 10.2 — Change the Alienation of Personal Services Income rules

• review the Alienation of Personal Services Income rules, and reconsider the
• ptions for reform canvassed by the Board of Taxation;• require taxpayers as part
• f the ABN application (and renewal) process to indicate that they are an

independent contractor. The ATO should subsequently scrutinise a sample of cases where taxpayers self-assess against the ‘results test’ and ‘unrelated clients test’; and• the ATO should undertake a test case to resolve uncertainty and contention about how the APSI rules work. The Government does not support a review of the Alienation of Personal Services Income rules at this time. The Government will consult on options to require taxpayers to indicate they are an independent contractor as part of the Australian Business Number application (and renewal) process. The Australian Taxation Office is preparing updated guidance on the application of the PSI rules based on cases since the commencement of the rules.