A number of additional measures were also announced by the Government as part of the 2022-23 Federal Budget.
Tax technology compliance reducing reforms
Technology reforms heavily featured in this Federal Budget. In addition to the proposal for the pre-filling of payroll tax returns with the use of single touch payroll data and to report taxable payments reporting system data via software, the Government also announced the following measures which rely on better use of technology and data to assist in reducing taxpayer compliance burdens:
- The Government will leverage new technology and update systems to automate tax reporting requirements. This will allow companies to calculate their Pay-As-You-Go (PAYG) instalments based on current financial performance, extracted from business accounting software, with some tax adjustments. Not only will this be a boost to reducing compliance burdens, but in some cases, this may mean that companies may be able to get an automatic refund of PAYG instalments where financial performance declines.
- New systems will also be developed to ensure all trusts have the option to lodge their income tax returns electronically, which will reduce errors and processing time and create capacity to pre-fill beneficiaries’ tax returns. New systems are expected to be in place by 1 July 2024.
Cashflow support measures
The GDP uplift rate that applies to PAYG and Goods and Services Tax (GST) instalments will be reduced from 10 per cent to 2 per cent for the 2022-23 year. This will result in lower instalments for 2.3 million small to medium businesses and sole-traders (up to $10 million annual aggregated turnover for GST instalments and $50 million annual aggregated turnover for PAYG instalments) and individuals with passive income that are eligible to use the GDP adjusted instalment amount method. The new GDP uplift rate will apply to instalments that fall due after the enabling legislation receives Royal Assent.
ATO’s Tax Avoidance Taskforce extended
The Australian Taxation Office’s (ATO) Tax Avoidance Taskforce will be extended to continue for another two years beyond 30 June 2023 through to 30 June 2025 with additional funding of more than $650 million. It is estimated that the extension of these compliance activities targeting multinationals, large public and private groups, trusts and high wealth individuals will increase receipts by $2.1 billion over the forward estimates period.
Strengthening the ABN system
The start date for the previously announced measure to strengthen the Australian Business Number (ABN) system will be deferred by 12 months. This measure, which was announced in the 2019-20 Budget as part of a range of measures targeting the black economy, will require ABN holders:
- with an income tax return obligation, to lodge their income tax return (from 1 July 2022), and
- to confirm the accuracy of their details on the Australian Business Register annually (from 1 July 2023).
