In the past, an employer was generally entitled to a deduction for the payment of salary and wages. Likewise, a company could deduct directors’ fees paid to directors, while an entity was able to deduct a payment to a religious practitioner in certain circumstances. A labour hire business could deduct payments it made to individuals employed through its labour hire agreements, and an entity could deduct an amount it paid to another entity for a supply it received from the other entity.
Treasury Laws Amendment (Black Economy Taskforce Measures No 2) Bill 2018 introduced changes in terms of tax deductibility. With the new law, deductions (if any) will not be available if the entity making the payment has failed to comply with its obligations in relation to the payment to withhold or to notify the Commissioner.
A deduction is not allowed in relation to a payment:
• of salary, wages, commissions, bonuses or allowances to an employee;
• of directors’ fees;
• to a religious practitioner;
• under a labour hire arrangement; or
• for a supply of services — excluding supplies of goods and supplies of real property — where the payee has not quoted its ABN
However, there are exceptions to these changes such as exception where ABN was quoted by employee and exception for voluntary notification. It is important to know the details of this new law to find out whether your deductions are allowed or not. Learn about it from Effective PD’s webinar.
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