The Law Handbook 2024

Chapter 5.5: Taxation 405 ATO deal with objections and applications for time to pay, these two matters should be kept separate. You should write two letters, one for the objection and one for the time-to-pay application. The ATO’s discretion to remit further tax is limited to situations where the inability to pay was caused by circumstances outside your control or where ‘special circumstances’ exist. If further tax is to be remitted, some proof of your ‘innocence’ needs to be shown. Relief from payment In particular circumstances, the ATOmay grant relief from tax liability either totally or partially, where it is of the opinion that the collection of the full amount would entail you suffering serious hardship. This might be because of any loss you have suffered, your financial circumstances, or your circumstances if you are a dependant of a deceased taxpayer. You should make your application for relief to the ATO before the due date for payment, with details of your income, expenditure, assets and liabilities. It generally takes some time for the ATO to act, but in the interim the ATO should take no further legal steps to force payment. You can download the ‘application for release from payment of some taxation liabilities’ form from the ATO’s website and mail it to the ATO, or send your complete form using the online tax agent portal or the business portal. Fringe Benefits Tax Fringe benefits are non-cash benefits provided by employers as a reward to employees or their associates. These benefits include providing interest- free loans, low-cost accommodation, and motor vehicles for employees’ private use. It also generally covers any ‘arrangement’ involving a third party. If you are an employer, you are liable to pay Fringe Benefits Tax ( FBT ) if you provide employees with a fringe benefit during 1 April to 31 March. As with most areas involving tax, the operation of the FBT system contains several complexities and exceptions. However, you will most likely be required to pay FBT at a rate of 47 per cent for the year ending 31 March 2022, plus the Medicare levy, on the value of the benefit provided. Because you pay the tax, the value of the benefit is not taxable in the hands of your employees, although the cost is often treated as part of the employee’s remuneration package. More information about the FBT is available on the ATO’s website or business infoline (13 28 66). Goods and Services Tax What is the GST? The Goods and Services Tax ( GST ) is a broad- based consumption tax that aims to tax ‘private final consumption expenditure’. It is added to the price of goods and services and paid by their final consumers (i.e. the individuals who buy the final good or service). Businesses are responsible for administering the tax and remitting amounts to the ATO. The principal legislation in relation to the GST is the A New Tax System (Goods and Services Tax) Act 1999 (Cth). For more information about GST- related legislation, see the ATO’s website. Mechanics of the GST The GST is imposed on taxable supplies . You will have made a taxable supply where: • you supplied goods, services, advice or infor- mation, including dealings with real property or rights; • you made the supply in return for some payment or other form of consideration; • you made the supply in the course of an enterprise you are carrying on; • the supply has some connection with Australia; • you are registered, or are required to be registered, for GST purposes. The current rate of GST is 10 per cent. As the GST taxes the final consumer of a good or service (not intermediate businesses), if you are carrying on an enterprise, you are entitled to be reimbursed for the GST you pay on your business inputs (e.g. trading stock). This reimbursement comes in the form of input tax credits . You must charge GST on the goods and services you supply to your customers. You are liable to remit the amount of GST you charged to the ATO. Effectively, you are the collecting tax on behalf of the ATO. If your GST liability exceeds your input tax credit entitlements, you need only pay the difference of these