February 2024 Newsletter

Please click on the following link to view this month's newsletter for February 2024. We would like to highlight the following articles:-

Proposed changes to stage 3 tax cuts announced

On 25 January 2024, the government announced proposed changes to Individual income tax rates and thresholds from 1 July 2024. Please note that the proposed changes are not yet law.

From 1 July 2024, the proposed tax cuts will:

reduce the 19 per cent tax rate to 16 per cent (for taxable income between $18,201 and $45,000).
reduce the 32.5 per cent tax rate to 30 per cent (for taxable income between $45,001 and the new $135,000 threshold).
increase the threshold at which the 37 per cent tax rate applies from $120,000 to $135,000.
increase the threshold at which the 45 per cent tax rate applies from $180,000 to $190,000.

Employees versus contractors: new rules

Following two prominent High Court decisions which dealt with the distinction between employees and independent contractors, the ATO has sought to provide guidance to businesses in the form of a taxation ruling.

The ATO’s Taxation Ruling 2023/4 now states that whether an individual worker is an employee of an entity under the term's ordinary meaning is a question of fact to be determined by reference to an objective assessment of the totality of the relationship between the parties, having regard only to the legal rights and obligations which constitute that relationship.

In addition, where the worker and the engaging entity have comprehensively committed the terms of their relationship to a valid written contract, it is the legal rights and obligations in the contract alone that are relevant in determining whether the worker is an employee of an engaging entity.

The ruling notes that evidence of how the contract was performed, including subsequent conduct and work practices, cannot be considered for the purpose of determining the nature of the legal relationship between the parties. However, this evidence can be considered to establish the contractual terms or to challenge the validity of a written contract with general contract law principles.

It is important for the business to ensure that the agreed contract accurately reflects the intended nature of the relationship.

Please do not hesitate to contact us if you have any queries in relation to your tax and accounting matters.