Over 70,000 new reporting entities are to be regulated under the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Amendment Bill 2024 recently passed in November 2024.
The AML/CTF Amendment Bill aims to effectively deter, detect and disrupt money laundering and terrorism financing and strengthen the existing frameworks to better address these evolving threats.
The Australian Transaction Reports and Analysis Centre (AUSTRAC) notes the reforms modernise the regime to reflect changing business structures, technology and illicit financing methodologies. The amendments aim to bring Australia in line with international standards set by the Financial Action Task Force (FATF).
Who is affected?
AML/CTF compliance has been expanded to include:
- lawyers
- accountants
- real estate professionals and
- dealers in precious metals and stones.
If you are an entity already covered by AML/CTF requirements you will need to review and update your program and related processes and procedures.
What are the obligations?
Entities who now are regulated under AML/CTF must ensure they are:
- enrolling with AUSTRAC
- developing an AML/CTF program and risk assessment tailored to your business
- conducting customer due diligence
- reviewing transactions
- reporting on suspicious activity and
- ongoing employee training.
What do you need to do?
Entities under the expansion will need to enrol with AUSTRAC by 31 March 2026 and be compliant with AML/CTF obligations by 1 July 2026. Reforms to tipping-off offence will commence on 31 March 2025.
AUSTRAC can take enforcement action for non-compliance with AML/CTF legislation including civil penalty orders, enforceable undertakings, infringement notices and remedial directions.
How SW can help
We are committed to working with clients to ensure they are prepared for and understand the new requirements.
Get in touch and our team can help with:
- helping you understand the recent AML/CTF reform
- development of a tailored AML/TF program
- AML/CTF review to meet AUSTRAC requirements.
Contributors
The ATO has introduced a Supplementary annual GST return as part of its engagement with the Top 100 and Top 1,000 taxpayers.
The returns will be used to assess the confidence level of a taxpayer’s compliance with GST law, and their investments placed into GST governance.
The Supplementary annual GST return will first apply to the 2024-25 financial year for those Top 100 and Top 1,000 taxpayers who received a GST assurance rating on or before 30 June 2024. The ATO will notify taxpayers if they are required to complete the return and provide the submission deadline. In the meantime, the ATO has published the form and detailed instructions so taxpayers can begin their preparation.
What information does the GST return contain?
The return contains several questions for impacted taxpayers and their advisors, including:
- how the taxpayer has actioned ATO recommendations, areas of low assurance or red flags raised as part of the most recent review
- how the taxpayer has maintained or increased its level of GST governance, and whether there have been any material business or systems changes that impact its GST control framework since the last review
- whether the taxpayer has undertaken any reconciliation between its audited financial statements and its annualised business activity statements
- whether the taxpayer has taken any material uncertain GST positions; and
- whether the taxpayer has identified any material GST errors in the period and how these have been rectified, and whether the taxpayer claimed any material amounts of credits in the period that were referrable to earlier periods.
Who needs to lodge?
Taxpayers who received one of the following on or prior to 30 June 2024 must lodge the annual return:
- Top 100 GST Assurance Report
- Top 1,000 Combined Assurance Review Report with a GST assurance rating
- Top 1,000 GST Streamlined Assurance Review
Due dates
Taxpayers who received a GST assurance report on or prior to 30 June 2024 must lodge the return annually from the 2024-25 financial year. The following table sets out the relevant due dates:
How SW can help
Reach out to our GST experts for help reviewing your GST governance and ensure your annual GST return is completed accurately.
Taxpayers should also review their progress on implementing action items from their last ATO assurance review as part of the process of completing the return. By executing action items, this will reinforces the ATO’s confidence in their compliance and reduces the risk of future challenges for your business.
Contributors
The introduction of a new accounting standard, AASB 18, represents a major change for financial reporting, particularly in the profit and loss statement for listed companies and Tier 1 reporters.
AASB 18 Presentation and Disclosure in Financial Statements has been introduced to enhance the presentation of financial statement as well as for transparency and comparability in reporting a company’s operating results.
This new standard will significantly impact financial reporting for listed companies and other Tier 1 reporters. However, AASB 18 also provides management an opportunity to more closely align how they measure, and view performance compared to how is presented on the face of the statement of profit or loss.
Why the changes?
Users of financial statements, especially investors, have raised concerns about the usefulness and comparability of information from financial statements.
Some common issues impacting the quality of information in financial reporting include:
- lack of clear definitions or guidance on how entities present their operating performance under previous standards
- divergence in practice regarding communication of alternative performance measures, commonly known as Non-IFRS measures or adjusted earnings
- material items being labelled as “other” in financial statements.
- AASB 18 was introduced to provide additional transparency and comparability for users of financial statements.
What are the changes?
There are three major changes under the new requirements:
1. New structure for presentation of profit or loss
The standard mandates that the profit or loss statement be structured into three categories:
- operating
- investing and
- financing.
It also introduces two new required subtotals:
- operating profit and
- profit before financing and income taxes.
AASB18 clarifies the definitions of the operating category and operating profit, ensuring consistency in how the company’s results are presented. There are new requirements for categorising and disclosing expenses, allowing for a more flexible presentation compared to the current binary classification based on function and nature.
2. Disclosure of how management views the performance
Many companies, especially listed entities, choose to report alternative performance measures, also referred to as “non-IFRS”, such as adjusted earnings, EBITDA, or adjusted EBITDA. Some of those measures will become Management-defined Performance Measures (MPMs) and will be subject to the new standard’s disclosure requirements.
If a company reports MPMs in other areas of reporting, such as the directors’ report, it must bring that information into the notes of the financial statements and reconcile it back to the nearest subtotal in the profit or loss statement. The tax and non-controlling interest (NCI) impacts of those reconciliation items must also be disclosed.
Management must explain in the notes the reasons for selecting the MPMs and any changes to these measures. All the MPMs and related disclosures will be subject to audit as they form part of the notes.
3. Grouping and labelling of information
There are enhanced requirements regarding the grouping of information and the disclosure of items labelled “other”. Further guidance is now available on how and when to aggregate or disaggregate information.
Although AASB 18 primarily impacts the profit or loss statement, the new aggregate and disaggregated requirements may also impact on other areas of the financial statements.
Companies are also now required to present interest and dividends received under ‘investing cash flows’, while payments must be recorded under financing. Previous accounting policy choices regarding such presentations have been removed.
What will be the impact?
The adoption of the new standards is expected to have a major impact across all Tier 1 financial reports. Management will need to consider whether any of its contracts and remuneration, often linked to profit or loss, will be affected. Loan covenants linked to profit or loss may also need to be clarified.
Depending on existing systems and reporting processes, the financial reporting impact ranges from remapping the chart of accounts to requiring changes in systems and processes. For example, properly categorising foreign exchange transactions could be complex.
Companies will need to train internal staff involved in financial reporting and communicate changes to various internal and external stakeholders, as these changes may also impact on budgeting and forecasting tools and reports.
When to take action?
The new standard will be mandatory for the first time on 1 January 2027. For entities with a December year-end, this means it will apply to the year ending 31 December 2027. Comparative information will also be required.
Many listed companies report interim financial reports; AASB 18 will be applicable for any interim reporting starting 1 January 2027.
Early adoption of the new requirement is permitted by the standard.
What about NFP and Tier 2 reporters?
For Tier 1 not-for-profit entities, the mandatory effective date is 1 January 2028, which is one year later compared to their for-profit counterparts.
At this stage, AASB 18 does not apply to those preparing financial reports under the Simplified Disclosures Standard, commonly known as “Tier 2”. AASB is currently working on strategies for Tier 2 entities.
How SW can help
Our team of audit and assurance experts are fully informed of the requirements of the new accounting standard and can assist with providing guidance for your business, as well as keeping you abreast of developments from an Australian reporting context.
We can:
- provide additional information and training for staff
- conduct an impact assessment and provide recommendations.
Reach out to your SW contacts or the key contacts here for a conversation.
Contributor
Both houses of the Australian Parliament have now passed mandatory climate reporting legislation, with a new bill that will require large companies to prepare annual sustainability reports. With the aim to enhance the transparency and comparability of climate-related information.
Introduction
To enhance the transparency and accountability of climate-related matters, on 9 September 2024, the Australian Parliament passed Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024.
This highly anticipated bill mandates that large entities adhere to the new sustainability reporting standards issued by the AASB, which align with international standards. The first group of entities will be required to submit their sustainability reports from annual reporting periods beginning 1 January 2025, with smaller entities being phased in over the following years.
New reporting requirements
A new sustainability reporting requirement has been introduced for disclosing information on climate-related matters. When applicable, the sustainability report must be prepared alongside the annual report. This report will adhere to sustainability reporting standards issued by the Australian Accounting Standards Board, which are closely aligned with international standards.
This alignment will ensure much-needed comparability across companies. The Australian equivalent standards propose making climate reporting mandatory, while other sustainability topics, such as biodiversity and human capital, remain optional.
Additionally, the final bill mandates further scenario analysis based on feedback from Parliament. Entities must disclose scenario analysis using at least both of the following scenarios:
- Low warming scenario: global average temperature increase is limited to no more than 1.5 degrees and
- High warming scenario: global average temperature increase exceeds 2.5 degrees
Who has to prepare annual sustainability reports and when
The government proposes a phased approach based on the size of the entities. The table below sets out the details of the threshold and date for the implementation.
The above Table is summarised from Explanatory memorandum of the bill
Group 3 entities are required to make climate disclosure if they have material risks or opportunities.
What happens to the sustainability standards?
Following the consultation feedback, the AASB has decided to revise the titles and numbering of the sustainability standards to align with IFRS S1 and S2. The new titles will be AASB S1 General Requirements for Disclosure of Sustainability-related Financial Information and AASB S2 Climate-related Disclosures. AASB S1, which covers broader sustainability topics, will be a voluntary standard, while AASB S2, focusing on climate, will be mandatory. The standards are expected to be issued in the coming weeks.
What do companies need to report?
The disclosures will need to follow the stainability standards issued by the AASB. The key areas of disclosure include:
- governance and strategies for climate-related matters
- risks and opportunities associated with climate change
- metrics and targets associated with emissions. This includes direct emissions by the company and from energy consumption (Scope 1 and 2 emissions) and emissions in the value chain (known as Scope 3 emission).
In addition to a qualitative description of the risks and opportunities, the company is also required to disclose quantitative scenario analysis. There are several reliefs proposed by the government in relation to more complex disclosure of Scope 3 emission and quantitative analysis.
The above disclosure will need to be included in a new annual sustainability report. The structure and content of the sustainability report consists:
- the climate statements for the year
- any notes to the climate statements
- any statements required by other legislative instruments to include matters concerning environmental sustainability.
- the directors’ declaration about the statements and the notes.
The annual sustainability report will be presented together with the financial report.
Audit requirements
The company’s financial auditor will audit the sustainability report. The auditing standards setter, AuASB, is currently consulting with stakeholders to determine the required level of assurance for climate-related disclosures.
Based on the most recent exposure draft, we understand the proposed audit requirement will also be phased in. We expect that in the first year of reporting, different content will be subject to different assurance requirements as below:
- limited assurance over scope 1 and 2 emissions for the first year and moving to reasonable assurance thereafter
- Other area’s disclosures will be gradually subject to review or audit from the second year onwards.
What are the next steps?
- Start preparing now!
- Familiarise yourself with the content of the proposed standards and how it affects you
- Perform a gap analysis to identify data/capability requirements
- reach out to your SW contact to help you get started
How SW can help
We can conduct gap analysis and prepare a road map to guide you on your journey.
Our team of audit and advisory experts are fully informed of the requirements of the sustainability accounting standards and can assist with providing guidance for your business, as well as keeping you abreast of developments from an Australian reporting context.
Keep an eye out for further alerts from us in respect of the finalisation of the sustainability standards by the AASB which is expected in the next few weeks, the sustainability reporting assurance standard under development by the AuASB and any announcements from ASIC on this new area.
Contributors
NSW Bulk billing GP clinics afforded payroll tax concessions in the 2024/25 State Budget, to reduce costs to businesses and families across NSW to help with cost of living pressures.
Bulk-billing support initiative
To counteract the increased cost of living pressures, the NSW government has introduced an exemption and rebate on payroll tax liabilities for payments to contractor general practitioners (GPs) by medical practices meeting the relevant bulk-billing threshold. The relevant bulk-billing thresholds for Sydney and the rest of NSW is 80% and 70% respectively.
In addition, historical unpaid payroll tax liabilities for pre-4 September 2024 payments made to contractor GPs will be exempt from payroll tax. After the 4th of September 2024, medical practices meeting the bulk-billing threshold requirements will be eligible to receive a complete rebate for payroll tax associated with the payments made to contractor GPs.
The aim of this measure is to support accessibility and affordability of health-care by incentivising medical practices to increase bulk-billing to gain eligibility to the rebate. It was projected that this measure is expected to reduce payroll tax revenue for NSW by roughly $180.8 million over the next four years, though the actual impact is likely to be less as medical practices restructure affairs such that the payroll tax obligation does not arise in the first instance.
How SW can help
Medical practices operating in NSW should carefully consider the above changes and how they might take advantage of the upcoming relief initiative. For instance, GP clinics may like to consider the structure of their arrangements with GPs where they meet the threshold requirements, particularly where GPs are engaged as employees.
Some important things to consider are whether the practice is eligible under the bulk-billing threshold requirement as well as reviewing contracts with GPs and the overall billing practices to ensure everything all information is accurately taken into consideration.
For those practices where the measures do not apply, it is worth considering whether and how contractor arrangements may be restructured to reduce adverse payroll tax implications. In addition, it may be worth considering which payments at or around the cut off time may be eligible for the exemption.
Contributors
SW is delighted to announce the appointment of Matt Birrell, Director, to the SW Executive Board, effective 1 July 2024.
Says Chair of SW, Mr Stephen O’Flynn, “As the leader of the Property & Infrastructure Group and the Business Development Tax Partner, Matt has demonstrated exceptional leadership and expertise. He is also well-known for hosting our Federal Budget webinars, providing insightful analysis and guidance.
Matt’s strong focus on commercial and advisory support for his clients reflects his strategic capabilities, which will be a tremendous asset to our Board. His experience and insights will be crucial as we navigate our key priorities and continue to drive the firm’s success. We look forward to the valuable contributions Matt will make in his new role.”
Matt fills the vacancy created by Partner Hayley Underwood, who steps down from the Executive Board after 3 years’ service to take on leading the Assurance & Advisory division.
“I would like to thank Hayley for the important contribution that she has made to the Executive Board during a period of significant growth of the firm. She has demonstrated exceptional leadership on our Quality and Risk Committee that has ensured that we have built on some great foundations to elevate a whole of firm approach to this important area. I wish her all the best in her knew role as the Divisional Head of Assurance and Advisory” said Mr O’Flynn.
Mr Matt Birrell stated: “I’m truly honoured to be voted onto the board by my Partner colleagues and I’m genuinely excited to take an active role in upholding our firm’s governance and strategy. We have an outstanding commitment to quality and risk management, and I’m looking forward to working with my fellow board members to continue driving our success in these areas as we grow.”
Hayley reflects on her time on the SW Board: “Reflecting on my service, I am proud of the progress we’ve made together on our strategic priorities, particularly the investment we have made in our system of quality management. Our continued commitment to quality has been crucial in supporting our growth.”
Over the next four years, SW will strategically focus on Growth, People, and Digital, with leadership, governance, and culture serving as the foundational pillars for our success. Ranked 22nd in the 2024 Australian Financial Review Top 100 Accounting Firms*, SW remains an attractive choice for clients and practitioners seeking a firm with a solid financial foundation and a forward-looking vision.
Matt Birrell will work closely with board member Greg Will, Duane Rogers as CEO, Bessie Zhang, Stephen O’Flynn (Chair) and independent director, Sangeeta Venkatesan.
SW congratulates Matt on his appointment and thanks Hayley for her significant contribution during her tenure.
*Of all national accounting practices, SW ranks 9th
Supporting the firm’s brand awareness campaign: Australia’s best kept accounting secret
On 18 June 2024, the New South Wales Government released its 2024-25 budget with plans to increase the foreign purchaser duty surcharge and foreign owner land tax surcharge.
From the 2025 land tax year (1 January 2025), the NSW Government will increase the rate of the foreign purchaser duty surcharge from 8% to 9%.
The foreign resident duty surcharge is levied on foreign buyers of residential property in NSW, with various exemptions available. This includes Australian incorporated property developers (and trustee companies) being able to seek a refund of the surcharge paid within 12 months of a sale of a home on residential land or sale of a residential lot, if the land has been held for less than 10 years.
From January 2025, the NSW Government will also increase the surcharge rate of land tax applied in addition to land tax rates for foreign persons, foreign companies, trustees of foreign trusts, from 4% to 5%.
Existing exemptions continue to be available from the land tax surcharge, including Australian developers being able to seek a refund (where eligibility requirements are met).
For further information we have released a summary about the different state foreign owner surcharge land taxes and duties.
How can SW help?
SW has considerable experience in assisting foreign investors to determine the most favourable state or territory to invest in property developments. This includes advising on refunds or exemptions for property developers, build-to-rent concessions, the availability of exemptions and ex gratia relief from surcharges, and the specific advantages and disadvantages of different property assets.
If you would like any further information, please contact a member of the SW tax team.
Contributors
SW Accountants & Advisors (SW) is excited to announce the promotion of Luke Fernandes to partner effective 1 July 2024. This expansion of the national partner network reflects the firm’s ongoing dedication to growth and client support.
Mr. Duane Rogers, CEO and Partner of SW congratulates Luke on his appointment, stating, “Luke’s dedication and commitment to our clients and team have been exemplary. His involvement in mentoring, training, and participation in our Financial Services, Agribusiness, and Automotive industry groups showcases his leadership. Completing his Master of Tax Law recently further underscores his expertise in his field.”
National Head of Tax, Ms. Sam Morris adds, “Luke is recognised for his ability to navigate complex and technical issues with a personable approach that leads to excellent results. He is a problem solver and has significantly contributed to staff engagement, retention, and development.”
Since joining the firm in 2012 from BDO, Luke has moved from the Business and Private Client Advisory division to the Tax division. With 16 years of experience, he has built a strong reputation as a trusted advisor in Funds, Agribusiness, Automotive, and private family groups. As Manager of the Financial Services Industry Group, Luke has led property tax and accounting webinars and delivered technical training to the Property Council of Australia’s members. He regularly presents at the Property Funds Association Next Gen networking sessions in Melbourne and Sydney.
Luke is also an active member of the Agribusiness group and the firm’s Community Opportunities Together Committee, where he leads the Movember initiatives. He is dedicated to developing junior team members, mentoring many to achieve manager roles.
SW’s commitment to growth is demonstrated by our focus on senior leaders, creating pathways and an environment for their success. Mr. Rogers notes, “We invest in supporting great talent, equipping them with the tools to provide exceptional advice and support to clients and staff, and to become long-term leaders in the firm. I am confident Luke will add significant value in his new role.”
Luke’s promotion follows the appointments of Trent Godden-Minette, Kirsty McDonnell, Vanessa Priest, and Christine Krause earlier this year. SW now boasts 41 partners across Brisbane, Melbourne, Sydney, and Perth.
On 11 June 2024, the Queensland Government released its 2024-25 budget with plans to increase the additional foreign acquirer duty and foreign owner land tax surcharge.
The Queensland Government will increase the rate of the additional foreign acquirer duty (AFAD) from 7% to 8% from 1 July 2024,
AFAD is levied on foreign buyers of residential property in Queensland, with ex gratia relief offered to Australian-based foreign entities whose commercial activities involve significant developments by adding to the supply of housing stock in Queensland (subject to eligibility requirements).
From July 2024, the Queensland Government will also increase the surcharge rate of land tax applied in addition to land tax rates for foreign companies, trustees of foreign trusts and absentees, from 2 %to 3%.
Ex gratia relief from the land tax surcharge will continue to be offered for Australian-based foreign entities whose commercial activities make a significant contribution to the Queensland economy and community (subject to eligibility requirements).
For further information we have released a summary about the different state foreign owner surcharge land taxes and duties.
Concluding remarks
While the increased rate of the AFAD will bring Queensland in line with Victoria and New South Wales’ foreign owner transfer duty surcharge rates, Queensland’s increased foreign owner land tax surcharge will still be more generous than other states.
How can SW help?
SW has considerable experience in assisting foreign investors to determine the most favourable state or territory to invest in property developments. Given foreign owner transfer duty surcharge rates are becoming more uniform across Australia, it may become less clear what are the specific advantages in investing in specific states and territories. However, other drivers that are still relevant to structuring foreign investments in specific states and territories include build-to-rent concessions, the availability of exemptions and ex gratia relief from surcharges, and the types of property assets that will be invested in.
If you would like any further information, please contact a member of the SW tax team.
Contributors
The ATO recently issued a Decision Impact Statement on the employee or contractor matter in the JMC case, clarifying the contractual elements necessary to distinguish between independent contractors and employees under the Superannuation Guarantee (Administration) Act 1992 (SGAA).
The ATO’s Decision Impact Statement regarding the Full Federal Court’s decision in JMC Pty Ltd v FC of T [2023] FCAFC 76 highlights the importance of including genuine rights to subcontract, delegate or assign services in contracts between independent contractors and engaging entities if this aligns with commercial objectives.
Employers should review current contractual arrangements to ensure certainty over the application of extended meaning of employee under section 12(3) of the SGAA.
The Commissioner stated that if a contract includes such a right, the contract is not considered to be wholly or principally for the labour of the worker. This is not within the extended definition of “employee” under section 12(3) of the SGAA provided the contractual right is not challenged as being a sham, having been varied by the parties or unenforceable. Where the contract does not make it clear the ATO will form its position based on the available evidence of the contractual arrangement.
While the ATO Decision Impact Statement does not have the same force of law as a public ruling, it marks the first time since the JMC Case that the ATO has stated explicitly that the existence of a right to delegate, subcontract or assign will exclude a worker from the extended definition of “employee” under section 12(3) of the Superannuation Guarantee (Administration) Act 1992 (SGAA).
The JMC Pty Ltd Case
In this case the appellant (JMC), a provider of higher education programs, engaged Mr H under a number of short-term contracts between 1 April 2013 and 30 June 2016 as well as between 1 July 2017 and 31 March 2018 to provide teaching services.
The contracts between JMC and Mr H included the following terms and conditions:
- Mr H would be paid an hourly rate for delivering lectures and marking exams
- Mr H would submit invoices specifying the teaching services provided along with timesheets and signed weekly lesson plans
- JMC would have a degree of oversight / control over Mr H (through JMC’s managing academic officer)
- Mr H was given the ability to subcontract or assign performance of services under the contracts, subject to written approval from JMC and
- JMC would have a right to deduct costs associated with a failure to give a timetabled lecture.
The Full Federal Court held that Mr H was not an employee of JMC within the ordinary meaning of the term or the extended definition in section 12(3) of the SGAAon the basis that there was a real right to subcontract, delegate or assign performance of services under the contracts despite the fact that the right was subject to written consent.
The ATO’s View
The Commissioner stated that if a contract includes such a right, even subject to consent from the engaging entity, the contract will not be considered to be wholly or principally for the labour of the worker. Therefore, a worker in these circumstances would not fall within the extended definition of “employee” under section 12(3) of the SGAA provided the contractual right is not challenged as being a sham, having been varied by the parties or unenforceable.
The ATO has confirmed that where the contract does not make it clear whether the worker has a right to delegate, subcontract, or assign their work, or is found to be a sham, the ATO will form its position as to the application of section 12(3) of the SGAA 1992 based on the available evidence of the contractual arrangement.
How we can help
The ATO’s Decision Impact Statement on the JMC case highlights the importance of including genuine rights to subcontract, delegate or assign services in contracts between independent contractors and engaging entities if this aligns with commercial objectives.
We suggest employers review current contractual arrangements in place to ensure you have certainty over the application of extended meaning of employee under section 12(3) of the SGAA.
We can assist in ensuring you have appropriate measures in place and make suitable disclosures regarding employment tax obligations where necessary. Get in touch with your SW contact to discuss what this decision and subsequent ATO decision impact statement means for your business.