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ASIC warns SMEs of dodgy foreign exchange firm
The Australian Securities and Investments Commission (ASIC) has pinpointed an online foreign exchange scam snagging Australian businesses. ASIC named a website advertising First Forex, a foreign exchange broker, at the centre of the scam.
Businesses visiting www.fifx.com are told First Forex, and related entities Fifx and FiFX Global, operate “under the regulation of Australia (Regulation No. 290600)”. ASIC commissioner Greg Tanzer said in a statement none of the companies are registered in Australia, and their services are not regulated by Australian law.
“The website, www.fifx.com appears to be operated overseas and refers to an Australian company that is no way associated with First Forex,” Tanzer said. “Licensed companies and individuals are required to meet stringent requirements under Australian law, the purpose of which is to protect consumers.”
Janine Cox, senior analyst for financial solutions firm Wealth Within, saidsimilar scams, where dodgy companies “almost clone” the name of another company, are rife at the moment. “The issue is that people are often looking for where they can save money or do things cheaper and they are the ones who can get caught up in these scams,” Cox said.
Cox urged businesses to search both ASIC’s website for scam warning notices and the Australian Competition and Consumer Commission website Scamwatch. As a rule of thumb, a company’s ABN and Australian financial services licence details should be displayed at the bottom of their website pages.
Government enacts new law to prevent dividend washing
A new tax integrity rule has been enacted by the government to limit a taxpayer’s ability to obtain a benefit from “dividend washing”. This occurs when a taxpayer attempts to claim two sets of franking credits.
Basically, a dividend washing arrangement occurs where a taxpayer sells shares in an ASX-listed company after the company’s shares trade ‘ex-dividend’. As a result of having sold the shares ex-dividend, the individual retains the entitlement to the franked dividend payable on the share.
Then, within days of the sale, the individual buys back shares in the same company on the ASX special market, and the individual also becomes entitled to a second franked dividend payable on the newly acquired shares. The end result is that the individual receives two sets of franked dividends on effectively one parcel of shares in relation to the same dividend event.
The Tax Office announced recently that its anti-avoidance legislation applied to these arrangements on the basis that dividend washing is a scheme entered into for the purpose of obtaining franking credit benefits. It
said the new integrity rule was enacted to help taxpayers understand and comply with the relevant legislation.
The Tax Office said that the new dividend integrity rule:
Where distributions have been received before July 1, 2013, the Tax Office said it may apply section 177EA of the Income Tax Assessment Act 1936 to deny franking credit benefits received through dividend washing arrangements.
Its view on the application of general anti-avoidance rules to dividend washing arrangements is explained in Tax Determination TD2014/10 and subsequent media releases on the subject.
Tax Office launches voice authentication to help streamline calls
With eight million telephone calls each year to cope with, it’s understandable staff at the Tax Office would be keen to get all the help they need — especially as the sometimes sensitive nature of the information dealt with over the telephone connection generally requires verification of the caller’s identity.
The Tax Office said about 75% of its millions of calls require confirmation of the bona fide identity of the person on the other end of the line.
A new automated voice authentication system is being introduced for Tax Office calls, which it said should trim about 45 seconds off each call. The new system, dubbed “voiceprint” by the Tax Office, has already seen about 30,000 taxpayers sign up to the service.
Taxpayers who contact the Tax Office by phone will be given the choice to record a short “voiceprint” recording that can be used to verify their identity for future calls. It is not a “recording” however in the traditional sense of the word, but rather a digital representation of the sound, rhythm, physical characteristics and patterns in a voice.
From then on, the system can verify that the voice matches the original recording enrolled against a particular tax file number. It also checks what was said as an added layer of security.
The Tax Office said to properly identify all the callers that its call centre staff take would require a collective 3,125 days, or 75,000 hours, each year. As well as saving time, it said the new system will also reduce the need for clients to quote details from previous correspondence, and so cut the number of taxpayers who fail proof of identity checks because they do not have a document with them when they call.
Treasurer calls on the Tax Office to target “Australia tax”
Treasurer Joe Hockey, in a speech made this month just prior to the G20 meeting in Cairns, said he will direct the Tax Office to target multinational businesses that charge Australians more for technology and ship the profits offshore to avoid tax.
Hockey outlined the ways the government plans to tighten up Australia’s tax structure – particularly highlighting the higher prices paid by Australians for technology hardware and software. The price discrepancies – known widely as the “Australia tax” – were the subject of a parliamentary inquiry in 2013, which found that Australians pay on average 50% more for technology products than their American counterparts.
Changes to PAYG instalment thresholds
From July 1, 2014, PAYG instalment entry and exit thresholds have changed. The Tax Office said that if your
business doesn’t meet the entry rules, you don’t need to do anything, as it will automatically make the change and notify you.
If you still want to pay instalments towards your end-of-year tax liability, you can voluntarily re-enter the PAYG instalment system.
PAYG instalment entry and exit thresholds are now:
Entities with less than $2 million gross business or investment income and registered for GST are no longer required to remain in the system if they have a zero instalment rate.
The Tax Office said these changes will reduce compliance costs for the community by approximately $56 million per year, and that it is expected that 372,500 small businesses will benefit from these changes.
SMSF trustees: Beware the in-house asset ‘trap’
Members of self-managed superannuation funds (SMSFs) should probably take a refresher course on their understanding of the in-house asset rules, according to the SMSF Professionals’ Association of Australia (SPAA), as these represent one of the “biggest pitfalls” for trustees.
The “in-house asset” rule basically states that no more than 5% of the fund’s assets may be in-house assets, which are loans to, investments in, and assets leased from, related parties. There are exemptions for real property used wholly for business purposes.
SPAA’s director of technical and professional standards, Graeme Colley, said the association is concerned that the in-house asset regulations are the cause of a “significant number” of breaches of the legalisation.
Colley said a consequence of this is that the rules are exposing SMSF trustees to significant penalties, serious risks of being found non-compliant, and sometimes facing potential disqualification from acting as a trustee.
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