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For a business paying your tax on time is, well, fundamental to running it, but what do you know about the ATOs general interest charge (GIC) rate and shortfall interest charge (SIC)? They’re both worth being aware of, especially now as rates for each has recently increased so we thought we’d give you an overview of both while detailing why paying tax on time and in full is pretty much a no-brainer…
The Australian Tax Office (ATO) has two types of interest charges that taxpayers may incur: the general interest charge (GIC) and the shortfall interest charge (SIC). These charges are designed to encourage taxpayers to pay their tax debts on time and in full, as well as to compensate the government for the time in which debts are outstanding. Recently, the ATO has announced an increase in the rates of both the GIC and SIC, which will certainly impact taxpayers who have outstanding tax debts.
A GIC applies to any unpaid tax debts that are not paid by their due date. The rate of GIC is calculated on a daily compounding basis and is based on the Reserve Bank of Australia's cash rate plus a margin. InDecember 2022, the ATO announced an increase in the GIC rate from 7.08% to 7.40%per annum. This increase is significant – especially for those with larger debts – and will impact taxpayers who have outstanding tax debts.
The SIC, is a charge that applies to any tax shortfall, which is the difference between the amount of tax that should have been paid and the amount that was actually paid. The SIC is also calculated on a daily compounding basis and in December 2022, the ATO also announced an increase in the SIC rate from 4.08% to 4.40% per annum.
The ATO has stated that these rate increases are necessary to ensure that taxpayers who have outstanding tax debts are paying their fair share of the tax burden.
The ATO has a number of options available to it to collect unpaid tax debts, including issuing garnishee notices, initiating legal action, and seizing assets. However, the ATO prefers to work with taxpayers to come up with payment arrangements that are manageable and reasonable.
If you have outstanding tax debts you should immediately discuss them with your Attune team contact so we can reach out to the ATO immediately to discuss payment arrangements. The ATO may be willing to enter into a payment plan or offer a hardship variation if you are experiencing financial difficulties.
It is important for all of us to be proactive in addressing tax debts and not to ignore them, as this can lead to further interest charges and even potential legal action if left long enough.
Keep in mind, it’s incredibly important to understand you tax obligations so it’s always worth seeking clarity from the Attune team on your situation if you are in any way unsure of your situation.
Overall, the recent rate increases of both the GIC and SIC serve as a reminder to all taxpayers to pay their tax debts on time and in full.
Once again, reach out to the Attune team if you’re looking for some tailored advice to help you navigate your business or personal tax obligations. Call us on 1300 866 113 or send us an email to start the conversation.
We’re fast approaching the end of yet another financial quarter so we thought we’d put together a timeline of upcoming tax deadlines for both personal and business entities that are worth adding to your calendar.
Many of you are likely across some of the first few of these and you may have already spoken with the Attune team about your March or April deadlines, but let’s take a look and have your calendar ready so you can keep them in your diary …
Lodge tax return for all entities with a lodgement due date of 15 May 2023 if the tax return is not required earlier and both of the following criteria are met:
If you’d like clarity on any of these deadlines or would like tailored advice on meeting your obligations, reach out the Attune team today on 1300 866 113 or send us an email to start the conversation.
Whether you’re in a situation where you may need to wind down a company or not, as a business owner, it’s worth understanding the difference between de-registration and voluntary liquidation.
They are two legal processes that can be used to wind up a business in Australia and while they may appear to be similar, there are some important differences between the two that can impact a company's owners, creditors, and other stakeholders.
De-registration is the process of officially cancelling a company's registration with the Australian Securities and InvestmentsCommission (ASIC). It is typically used for small companies that are no longer active and have no outstanding liabilities or legal disputes. In order to de-register a company, the directors must ensure that all tax obligations have been met, any outstanding debts have been paid, and all assets have been distributed to shareholders or transferred to another entity.
Voluntary liquidation, on the other hand, is a more formal process that involves appointing a liquidator to wind up the company's affairs.This process is typically used when a company is insolvent, meaning it cannot pay its debts as they fall due, or when the directors decide that the company is no longer viable and wish to wind it up. The liquidator is responsible for collecting the company's assets, paying off its creditors, and distributing any remaining funds to shareholders.
One key difference between de-registration and voluntary liquidation is the level of involvement required from ASIC. When a company is de-registered, ASIC is not involved in the process beyond processing the de-registration application. However, in a voluntary liquidation, ASIC must be notified of the appointment of the liquidator and the progress of the liquidation.
Another key difference is the impact on the company's directors. In a de-registration, the directors are responsible for ensuring that all legal requirements have been met before applying for de-registration.Once the company is de-registered, the directors are no longer liable for any outstanding debts or legal disputes. However, in a voluntary liquidation, the liquidator may investigate the conduct of the directors leading up to the liquidation and take action against them if they are found to have breached their duties.
For creditors and other stakeholders, there are also important differences between de-registration and voluntary liquidation. In a de-registration, creditors have no recourse against the company once it has been de-registered, so it is important for them to ensure that all debts are paid before the de-registration takes place. In a voluntary liquidation, creditors may be able to recover some or all of the amounts owed to them through the liquidation process, although this will depend on the value of the company's assets and the number of creditors.
As with any business decision that has such wide reaching implications, it is important to speak with the Attune team before deciding which process is most appropriate for your circumstances. We’re here to helpwith tailored, strategic advice to ensure you take the right path forward. Call the team on 1300 866 113 or send us an email to start the conversation.
If you’re considering up-skilling yourself for your current job or adding to your set of skills so you can improve your income, you’ve generally got the option of deducting the cost to do so.
This kind of deduction is formally called a self-education expense, and the word “generally” is relevant as there are some details to be aware before undertaking such study, which we’ll cover below.
To be eligible to claim a deduction for specific expenses relating to your self-education and study it must first be sufficiently relevant to your employment or earning your income. There are some conditions (direct from the ATOs website) you’ll need to satisfy that would make you eligible, such as:
If however the study you are looking to undertake is only generally related to your employment, then you will not be eligible.
As an example, you are employed as an administrative assistant at a company that sells computers and you choose to study computer science at university. Although the course is generally related to your work, the high-level professional skills you’re learning at university aren’t specifically aligned with your current employment status, leaving you unable to claim the deduction.
If however, you were employed to build computers for the same employer and you selected the same course, you may be able to show that the skills you’re learning will progress your employment, allowing you to potentially even increase your income.
Assuming you meet one of the above eligibility criteria, you’ll be able to claim a deduction for a range of self-education expenses. Including:
And depending on the amount you use your computer for self-education purposes you could also claim a deduction on interest charged to you on any loans used to buy the computer, repairs as well as depreciation of the cost of the computer.
There is a few more details to self-education expenses that are worth understanding if what you see here doesn’t quite sound like you, so reach out and we can assist in clearing it up for you. One of those is the “$250 reduction in expenses” that the ATO applies depending on how you qualify for the deduction, but we won’t go into that detail here either.
We can discuss the finer points with you as part of helping you manage your strategy for studying and guide you through where expenses can be deducted or excluded.
If you’re interested, you can get started with the ATO’s own Self-education Expenses Calculator.
And, if you’re considering studying while you work and looking at how to claim it as a deduction, then speak with the Attune team first. We can help you put the right strategy in place so you’re in the best position you can be at tax-time. Call us on 1300 866 113 or send us an email to start the conversation.
