Minor tax changes came into effect this year off the back of the Coalition Government’s re-election, so is there anything on the horizon for 2020?

We do not anticipate any major tax reform in 2020. There may be some tinkering around the edges such as the recently announced change in Capital Gains Tax for non-residents. Here’s what we do think will happen…

Audit activity

We are already experiencing an intensification of audit activity for both small business and individuals not in business. This is likely to continue.

Small businesses account for a tax gap of $8.76 billion and client records are being scrutinised. Detailed record keeping is the key. Cloud accounting software such as Xero will make your life easier because you can file your records in real-time. Triple check the ABN of every supplier and ensure your GST agreement is legitimate.

Individuals not in business will also be audited for overclaimed expenses. On the ATO’s watch list is:

• Claims for work-related clothing
• Deductions for home office use
• Overtime meals claim
• Union fees and subscriptions
• Mobile phone and internet costs
• Motor vehicle claims where taxpayers take advantage of the 68 cent per km flat rate for up to 5,000km
• $300 dollar or less deductions without receipts

Last year, other items such as unexplained wealth, cash-only businesses and unpaid superannuation were also matters of priority for the Tax Office.

Instant Asset Write-Off for Small Business

The tax relief for small business in the form of the $30,000 instant asset write-off may have a shelf-life of 30 June 2020. There is nothing in writing to suggest this is guaranteed beyond that date. If this figure is adjusted in the new financial year, it will come as an unwelcome surprise to small businesses. Ensure you are prepared with your accountant, and have your options plotted on the most advantageous calendar possible.

Capital Gains Tax for Expats

Earlier this month, the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Bill 2019 was passed by the Senate. The bill will deny non-residents the CGT main residence exemption for CGT events. Those who have lived and worked overseas since 9 May 2017 will now be subject to Capital Gains Tax. An exemption is still available for special circumstances.