The government has turned down suggestions that it is considering broadening the GST base, following reports that the ATO had called for GST to be revisited on certain exempt food items.

Reports by The Sydney Morning Herald and The Age have suggested that the ATO was calling for the government to reconsider the GST treatment of certain food items to deal with the different interpretations depending on how they are packaged and marketed.

One example cited from the ATO’s brief includes confusion around brioche burger buns, which are taxed because they are brioche even though hamburger buns are tax-free.

Finance Minister Mathias Cormann has since declared that the government would not consider changes to the GST base.

“We have no plans at all to broaden the base of the GST,” Senator Cormann told reporters in Perth on Saturday.

“If we had such a plan we would have taken it to the Australian people before the election.”

The ATO said the report was based off an internal working brief that never got progressed to Treasury or the government.

“The ATO’s role is to administer the tax and super systems, and not to advise on policy. In this case an internal working brief was initiated within the ATO to consider options for an alternative way to identify foods that are exempt from GST,” said an ATO spokesperson.

“The ATO routinely prepares a range of internal working briefs to consider administrative options, many of which do not progress to Treasury or to government.”

With property markets taking a tumble in recent times, some SMSF clients may need to review the loan arrangements and guarantees they have, particularly where the loan-to-value ratio has significantly dropped, says an industry lawyer.

Speaking in a seminar in Sydney, DBA Lawyers director Daniel Butler said the property market has been under some stress recently, and while it may see a bit of a rebound with Labor’s property tax changes off the table, some SMSFs may be impacted by the recent fall in property values.

Mr Butler said the ATO has previously raised concerns about the amount of property loans held by SMSFs and guaranteed by assets outside of super such as the family home.

“If the market collapses, this is going to affect retirement savings and personal assets,” Mr Butler said.

Mr Butler explained that there were two types of guarantees: unsecured guarantees and secured guarantees.

“We have noticed a movement out there, typically with non-bank institutions, that they want that guarantee to be supported by a security or a charge or mortgage over the home or property owned by that guarantor,” he said.

While the fact that it is a limited recourse loan means that the security including any related guarantees should be limited to the value of the acquirable asset, but often they are not.

“You have to read and check it. I read one the other day that said that any asset you hold on trust is also up for grabs. Some of them also say, well, if it’s interest and cost and damages, we can also claim that back, even default interest,” he said.

SMSF professionals and their clients need to be very mindful of the extent of these guarantees, he cautioned, particularly if the client is entering negative equity.

The documents that deal with the guarantee for the loan arrangements may need to be reviewed for those clients who are in that risk category, he advised.

“That would be those that bought an apartment and it’s now close to negativity equity and the they’re getting light on the loan-to-value ratio (LVR) because the property value has sunk but the loan is still there and they’re no longer over their 70 per cent threshold,” he said.

This also needs to be looked at with related-party loans, because if the LVR is no longer under the 70 per cent, then they may need to restructure.

SMSF practitioners should offset their liability by encouraging their clients to get these documents reviewed.

Prime Minister Scott Morrison has signalled that getting his tax changes through parliament will be a top priority for his re-elected government.

As per Treasurer Josh Frydenberg’s announcement in the April federal budget, the Liberal Party plans on introducing the biggest round of income tax cuts since the era of John Howard and Peter Costello.

Headline tax measures from the Liberal Party include:

• From 1 July 2018, the federal government increased the top threshold of the 32.5 per cent tax bracket from $87,000 to $90,000.
• From 1 July 2022, the top threshold of the 32.5 per cent tax bracket will be increased from $90,000 to $120,000.
• From 1 July 2024, the government will increase the top threshold of the 32.5 per cent tax bracket from $120,000 to $200,000, removing the 37 per cent tax bracket completely.
• From this tax time, those earning up to $126,000 per year would get $1,080 back at tax time. That plan also promised to flatten tax brackets by 2024 so all taxpayers earning between $45,000 and $200,000 would have their tax rate reduced to 30 per cent.

However, as per the continual calls of the tax profession, firms like BDO are calling on the Prime Minister to not confuse tax cuts with tax reform.

“Changes to tax rates should not, on their own, be seen as tax reform,” said BDO tax partner Mark Molesworth.

“The government needs to look at reigniting the debate on holistic tax reform for all taxes in both the federal and state tax systems.”

Valuations of Victorian properties are now undertaken annually instead of every two years.

When you review the council rate notices for Victorian properties, the valuation is likely to be higher for Melbourne properties.  No so, in the country.

Thereafter a benefit to the revenue of each Melbourne based council.

Since this change seems to be driven by State budget efforts to increase revenue from land tax (and council rates) earlier, will this work in reverse when properties are falling in value?

If the valuation appears too high, owners can appeal the valuation, but it must be done promptly or wait another year.

The ATO expects that 200,000 people could miss out on a tax refund this year because they haven’t lodged a tax return.

Many salary and wage earners end up with a tax refund, but some are missing out because they fail to lodge on time.

Taxpayers had until 31 October to either lodge their own return, or ensure they are on an agent’s books. Failing to lodge by the deadline can attract a penalty of $210 for every 28 days that the return is overdue, up to a maximum of $1,050.

Have you run out of time to sort out your tax return this year? We’re here to help – get in touch to talk about your options.