Hello, my name is Gillian Bowen and this is Small Firm, Big Impact.
Payday super I think is a big deal and I encourage everyone, all our members in public practice to talk to their clients about it.
Our members should be very aware that the ATO as part of this crackdown on fraud has been given the ability to extend the time it can retain activity statement refunds.
It's the podcast giving Chartered Accountants the up to date information they need to do their jobs. Each episode, I share resources, tools and expert advice provided by Chartered Accountants Australia and New Zealand and a range of people across our profession. So get following the pod in your favourite podcast app. Let's start a conversation. Today we have Susan Franks, our Senior Tax Advocate, and
Tony Negline, our Superannuation and Financial Services Leader. The topic, the Federal Budget and how it impacts you, your clients and the community. Susan and Tony, welcome to Small Firm, Big Impact.
Thank you. Gill.
Hi, Gill.
Okay, so Susan, Tony and Michael Croker, who's not joining us on this podcast, but many of you will know him well, myself as well as Lisa Lintern, our Group Executive for Public Affairs, recently joined the CA ANZ team in Canberra for Federal Budget Night. Now, Tony and Susan headed into the budget lockup, where journalists and interest groups such as CA ANZ get to have a look at the budget under embargo. So they have it, uh, um,
ready for them to read. But they're only allowed to do that if they hand in all their internet connected devices. So their phones, etc. and only then can they read through everything. And then as the Treasurer takes to his feet at 7:30 p.m. in the House of Representatives, Susan and Tony and everyone else is let free and can finally talk about the content. So the two of you have now had a few days to digest the material. Let's start with a bit of an overall reaction from
both of you before drilling down into specific areas. Susan, why don't you go first?
This is a strange budget. In some ways it's a nothing budget. We had a few announcements about announced, but unenacted measures. We had another extension of the instant asset write off and more money for the ATO to combat fraud. And more talk about the stage three tax cuts, which were made a while ago. Yet we've also seen an announcement of over $13 billion for production tax incentives for critical minerals and hydrogen, which will kick in between 2027
and 2041. And this this is a measure that the opposition has already indicated it will oppose and will be a hot election topic. So it's a mixture of sort of clearing the decks for the upcoming election, but also making a stance on one policy issue that will be highly contested in the upcoming election.
Um, Tony, what do you think?
Um, well, I think it's no secret, Gil, that, um, on a superannuation and financial advice aspect, it was, uh, reasonably thin on the ground. Um, uh, and so it was, it was, it was a relatively quiet lock up. And
it was also a quiet time, relatively quiet time after that. Um, they're obviously, uh, one thing the government obviously, uh, wanted to do was to, uh, send more money in ASIC's direction, uh, and, uh, with, with an idea that some of those additional, uh, money that will be allocated to, uh, ASIC will be coming via increased ASIC levies. So, um, that's going to be shared across the various, uh, levy areas such as financial advice and insolvency and so on and so forth. So
that's one thing. But there was a lot of things left, left on the cutting room floor that we kind of thought may have been in the budget. Um, maybe they're going to get special announcements in their own right or, or be left until, um, in the government, you know, the government's obviously hoping for a second term, so maybe they might leave some of the things that we expected to see until, uh, until after the election.
Um, okay. All right. So let's, um, then get a little bit further into the detail. Susan, let's get, um, into your space. Now, uh, look, there's lots to cover off, and we're not going to be able to get through it all, but how about we just go with three things? You want our members to know what might be point one.
Point one is combating fraud. It was been the centre point of the Federal Budget from a tax perspective. The Australian Tax Office is once again the big winner. It has received over $2 billion to revamp its IT systems and to combat fraud. And this comes on the back of its losing billions of dollars through Operation Protego and a scathing report by the Inspector General of Taxation. So as part of um, this extra funding, there is some funding going to um, digital ID, myGov ID and authorization
of government business services. And our members are just being crying out about how hard client agent linking is so we don't know for certain, but we're really hoping that, um, that funding is actually going to go towards fixing up client agent linking, which will be of a huge benefit for our members.
That'll be something you'll be keeping an eye on to see where and how that is going to be spent. When do you usually get all those details?
They'll usually be coming out, um, from the ATO during stakeholder meetings over the next couple of weeks as we go and meet with them and ask them questions about the funding and how it's actually going to be applied. Um, but of course, when the ATO gets funding, the government actually expects a return on that funding as well. So there is an expectation that the ATO will deliver $4.7
billion after getting $2 billion given to it. But most of that, um, seems to be coming from the extension of the Tax Avoidance Taskforce and the Shadow Economy Compliance Program. But so that's where most of the money is going
to be coming from. But if you've got, um, individual taxpayers, um, there's the budget papers have actually called out that, um, deductions relating to short term rental properties will be a particular area of focus, um, when it comes to the personal income tax compliance program.
Um hum, um hum. What's on your mind in regards to point two and what our members should know about?
Our members should be very aware that the ATO, as part of this crackdown on fraud, has been given the ability to extend the time it can retain an activity statement refund. So currently, the ATO can hang on to a BAS refund for 14 days. The budget proposes that the ATO will be able to withhold or retain that refund for 30 days, so businesses who are struggling with cash
flow at the moment may find this a challenge. But the upside is that if it is a legitimate refund and the ATO has held onto this refund for more than 14 days, they will be entitled to interest.
Well, that is that that is good news. Yes, indeed. All right. Um, point three, before we, um, flip over to Tony.
Well, international tax base is once again a focus of the government. This time, they're trying to target foreign residents in relation to capital gains tax. The details on this are pretty sketchy at the moment. We know that, um, they're probably trying to, um, ensure that capital gains tax
is paid on economic connections with Australian land. The details are very vague, but we do know that, um, they're going to clarify and broaden the type of assets that foreign residents are subject to CGT, um, they're going to amend the point in time principles test to a 365 day testing period, and they're going to require foreign residents disposing of shares and membership interests with more than $20
million to notify the ATO before the disposal occurs. And I think it's probably that latter point, which is going to make the most impact, um, for the ATO to be able to collect the capital gains tax.
Mhm. Mhm. Okay. So there's a bit there. And obviously we've got articles and information on our website in regards to these measures that have been announced in the Budget that impact our members. And as the time goes on and we get more information, we'll continue to update you through our usual processes. Tony, now, do you, uh, either what was announced or even potentially what wasn't announced, touching on what you already, uh, um, mentioned that you were expecting some
things that didn't happen, um, on Tuesday night. What are some, some things that you want our members to know about?
Well, I think, Gill, um, just very quickly, um, obviously in the Budget, one of the things that was, uh, paid parental leave or superannuation on paid parental leave. So the Government's going to fund that. So that'll be for any child born or adopted, uh, from July 2025 onwards. It's going to cost the Budget around about $1 billion until for about five years, and then around about $600
million after that. So on one July 25th, that's when, um, the super guarantee rate will tip into the maximum rate of 12%. So that's why I think the Government have selected that date, uh, as a good date to start small business. They're going to get a small allocation to
help them administer that payment. Um, because the way paid parental leave works is that the Government sends that money in, in an employer's direction, uh, payroll, that payroll provider for the or payroll people at the employer then deal with that paid parental leave through the payroll system, including obviously super payments and then they they forward that on. Um, so that's the that's the first item I think. Yes. Really.
Yep yep. Yep. It's a good one. Yep.
Indeed it is indeed. Okay. So, um, I suppose one thing that was not in the Budget was was any further detail about payday Super.
Yeah.
And that's aligned with, with uh, with with paid parental leave. So if you've got to pay super every time you do payday, um, then that's obviously something that's going to have to, you know, the ducks are going to have to line up in relation to that. Now, there's a lot of detail in relation to payday Super that, uh, Treasury is trying to, uh, sift through. And we expected some announcements about that in the Budget. Now, at the moment the Government's played a silent, silent, uh,
hand in relation to that. So we'll have to wait for that for another day. Time is ticking very quickly on the start date of that from 1st July 2026. And I think any member who is, um, working in the finance area or whatever in a corporation or is working, uh, in public practice, will need to help their employer clients deal with this particular matter and, and should be trying to help them understand what it actually means, because it's going to be a big change. Um, uh, based on
compared to current practice. And it's going to take employers, you're not going to be able to move from current practice to the new setup. Um, you're not going to have a lot of time to, to adjust. So the sooner you start working, working through all of the issues, the sooner you'll be able to work that, fix that up. So Payday super I think is a big deal. And I encourage everyone, all clients in all our members in public practice to talk to their clients about it.
Um, that is a very good call out. Um, and what about point three?
So point three, I think, um, is is probably two items in one. And that's probably sort of legislation that is currently before the before Parliament. And one of them is obviously non-arm's length income, which impacts self-managed super funds more so than anywhere else. There were developments, uh, in the House and also in the Senate during this recent sitting period for the budget. The, the the Senate wanted some amendments about unrelated measures. The House said, no, you
can't have those amendments. It then went back to the Senate, and all the other senators ganged up, ganged up on the current government and said, no, we actually we actually like the amendments that are in the bill. So they're basically, you know, um, uh, poked their tongue out at the, at the house and said, no, no, you've got to accept our accept our amendments. So there is a danger
that Nali won't actually come in. Um, right on the the changes that are, that are before the parliament won't come in in uh, July 2024 and that's a, that's a, that's a real problem. Um, especially for self-managed super funds. It's actually a problem for APRA funds as well. Um, if it doesn't come in, but that's uh, you know, that's uh, that's a separate issue. I think. Now the other issue is, is what is known as Division 296. Now that's a section of the income tax, the 1997
Income Tax Assessment Act. Now, um, that is currently before the House. And that's obviously the, you know, the tax that the high tax you pay on $3 million super account balances or above. Uh, and so we're just waiting for all of that to be finalized. Um, and so that's still a very controversial measure. We're not entirely sure how the Senate will deal with that. So that's probably the that's probably the I know it's two items in one. So no.
But that's it. Look there's a bit on there. There's a few things that are up in the air.
They are, they are. And it's um, you know, it's a constant. No one really knows where all of this is going to land. So, um, uh, many years ago, there was an item that was stuck in the legislation, stuck in Parliament for a long time called Craft beer. And Nali might be joining that, joining that infamous list of items that, uh, never seem to be able to get through the Parliament for one reason or another. So who would have put Nali and craft beer in the same sentence? But there you go.
Uh, look, Susan, um, a final thought then, before we go.
It's going to be an interesting year. The government has got a lot of, um, legislation to clear up, a lot of announced and unenacted measures which need clarification before they roll into an election. And then an election campaign is likely to be, um, part of the next budget. So we're in for an interesting ride.
Um, Tony.
Well, I reckon, uh, Susan has hit the nail on the head, to be honest with you. You know, both in both in tax and also in super and financial advice. There's the, um, the floor is littered with things that, you know, are unannounced, but but we're still waiting for or even things that are in the pipeline. We're still
waiting for them. So. It is going to be a very interesting ride over the next 12 months as the government, you know, the timing of the election and, you know, you know what the focus of that is, is going to be. So, you know, we are in for a bit of a wild ride. Um, over the next, I think over the next 12 months.
Um. And we will be there helping our members understand and interpret it all. That is all we have time for the advocacy team here at CA ANZ has written up many useful articles for you on topics relevant to the profession and ones that are beyond what we've discussed here today, which has just been a little bit of a taste in regards to tax and superannuation and financial services. I will put a link to the Federal Budget landing page on our website, as everything you need is accessible there.
And you'll also be able to watch the post-Budget webinar, which involves Susan, Tony and Michael Croker. If you missed it on the day after the Budget, I highly recommend that, it was a very good session. I'll put a link to it in the show notes so it's easy to find. And of course you'll see a link to the podcast in the newsletters you receive from CA ANZ, and you can
get in touch with the podcast team. Email us at [email protected] and follow the pod in your favourite podcast app. Let's start a conversation! Thank you Susan and Tony for being my guests on Small Firm, Big Impact.
Thanks, Gill.
Um, pleasure, Gill. Thank you very much.
Bye bye.