Employees vs. contractors

As part of its ongoing compliance program, the ATO will be checking that employees and contractors have been correctly classified as such, from an employer as well as service provider/employee perspective. The ATO is of the view that persons inappropriately classified as contractors may be under-reporting income, but may also be missing out on entitlements such as superannuation, leave and workers compensation.

Specific industries being watched by the ATO include:

• Building and construction
• Call centres
• Cleaning
• Security
• Logistics
• Retail
• Tourism and hospitality
• Education
• Aged care
• Health
• Telecommunications

Super guarantee

The ATO is also concentrating on the following industries to make sure employers are fulfilling their superannuation guarantee obligations:

• Cafes and restaurants
• Carpentry
• Accommodation
• Real estate
• Computers system design
• Accounting

Work related expenses

The ATO continues to focus on claims for work-related expenses (which continue to climb) and will be especially focusing on workers in the following industries in the coming year:

• Real estate employees
• Earthmoving plant operators
• Carpenters and jointers
• Flight attendants

As work-related expenses are always on the ATO radar, it is important to ensure that your substantiation records are up to scratch so that you can claim the maximum deduction that you are entitled to. Please contact your Ruddicks adviser if unsure what substantiation records are required by the ATO.

Split/Multi-purpose loans

Split loans are those where one loan is used for two or more purposes, especially where at least one purpose is business or work related, and at least one is personal. A mortgage on an investment property that was drawn down to fund a holiday would be an example of a split loan.

Extra care should be taken with split loans as all costs, such as interest and fees, as well as repayments, will have to be apportioned using specific methodology.

If you are considering drawing down on a business-related loan for private purposes, please speak to your Ruddicks adviser prior to making withdrawals about the best way to structure the borrowing so that you can maintain maximum deductibility of costs and minimise administrative costs associated with split loans.

Split loans are again under the ATO microscope, making it essential that if you already have such a loan, you advise your Ruddicks adviser accordingly so that we can make sure that any costs in relation to the loan are apportioned correctly.

Overseas income

The ATO continues to use data-mining techniques to make sure taxpayers are reporting all of their overseas income.

Remember – Australian tax residents are taxed on their worldwide income. Where tax has been paid in a foreign jurisdiction, you will likely get a rebate or offset so that you may not be required to pay top-up tax in relation to your overseas income, but you still need to report it!