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NEWS

December 03rd, 2020

3/12/2020

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Improvements to be made to full expensing measure 
The government will expand eligibility for the temporary 'full expensing measure', which temporarily allows certain businesses to deduct the full cost of eligible depreciable assets in the year they are first used or installed. 
The government initially announced in the 2020/21 Budget that businesses with a turnover of up to $5 billion would be able to immediately deduct the full cost of eligible depreciable assets as long as they are first used or installed by 30 June 2022.
The government will also allow businesses to opt out of temporary full expensing and the backing business investment incentive on an asset‑by‑asset basis. This change will provide businesses with more flexibility in respect of these measures, removing a potential disincentive for them to take advantage of these incentives
(Editor: For example, where the automatic application of full expensing might cause the entity to make a loss).
JobMaker Hiring Credit passed
The government has passed legislation to establish the JobMaker Hiring Credit, which is part of the government’s economic response to the COVID-19 pandemic. 
​The JobMaker Hiring Credit is specifically
designed to encourage businesses to take on additional young employees and increase employment.
It does this by providing employers with a fixed amount of $200 per week for an eligible employee
aged 16 to 29 years and $100 per week for an eligible employee aged 30 to 35 years, paid quarterly in arrears by the ATO. 
To be eligible, the employee must have been receiving JobSeeker Payment, Youth Allowance
(Other) or Parenting Payment for at least one of the previous three months, assessed on the date of employment. Employees also need to have worked for a minimum of 20 hours per week of paid work to be eligible, averaged over a quarter, and can only be eligible with one employer at a time. 
The hiring credit is not available to an employer who does not increase their headcount and payroll. 
Employers and employees will be prohibited from entering into contrived schemes in order to gain access to or increase the amount payable. 
Existing rights and safeguards for employees under the Fair Work Act will continue to apply, including protection from unfair dismissal and the full range of general protections.
ATO Visa Data Matching Program
The ATO will acquire visa data from the Department of Home Affairs for 2020/21 through to 2022/23, relating to approximately 10 million individuals for each financial year. The data will be used to identify non-compliance with obligations under taxation and superannuation laws, including registration, lodgment, reporting and payment responsibilities.
How to avoid getting dodgy advice
The ATO is warning taxpayers who may be thinking about pausing, changing or closing their business, due to the current economic conditions, to be wary of untrustworthy advisers who may recommend inappropriate or illegal behaviour. This could include illegal phoenix activity, where businesses intentionally remove their assets prior to winding up so that they can be used in a copy of the original business.
Red flags include: 
 people the taxpayer doesn't know cold calling with advice;
 unsolicited letters, emails or phone calls after the taxpayer has been through court action with a creditor;
 advice to transfer assets to a third party without payment;
 refusal to provide advice in writing;
 advice suggesting they have a sympathetic liquidator who will protect the taxpayer's personal interests and assets;
 advice to withhold certain records from the bankruptcy trustee or liquidator, or provide incorrect information to authorities; and
 advice to deal with the liquidator or trustee on the taxpayer's behalf.
The ATO instead recommends anyone thinking of pausing, changing or closing their business to contact a qualified professional, such as an accountant, lawyer, or registered liquidator.
STP data-sharing with Services Australia
Single Touch Payroll ('STP') allows the ATO to share data in real-time with other government agencies, to "help them deliver government services to the Australian community". As part of the ATO's data-matching program, it has a STP data-sharing arrangement with Services Australia to help them administer Australia's welfare system. This means that people who are on an income support payment from Services Australia and need to report their employment income fortnightly to Centrelink will now see their employer details
are pre-filled.
Proposed FBT exemption — retraining and reskilling
The government has announced it will introduce an exemption from FBT for retraining and reskilling benefits provided by employers to redundant, or soon to be redundant, employees where the benefits may not be related to their current employment.
It is proposed that this exemption will not apply to:
 retraining provided under a salary packaging arrangement;
 training provided through Commonwealth supported places at universities; or
 repayments towards Commonwealth student loans.
If enacted, this proposed measure is intended to
apply from the day it was announced (i.e., 2 October 2020).
Getting the margin scheme right
The margin scheme may allow a property owner to pay less GST when they sell the property — paying GST of 1/11th of their margin on the sale, rather than 1/11th of the total sale price. 
If a property owner wants to use the margin scheme when selling property, they must be eligible before the property is offered for sale.
This may be where they're selling new property as part of their business and they're registered for
GST. 
Importantly, among other criteria, there must be a written agreement before settlement between the
supplier and purchaser to use the margin scheme — this could be part of the contract. 
To avoid the common errors suppliers make when selling property using the margin scheme, the ATO is reminding suppliers that they must also:
 calculate the margin correctly; and 
 report the amount of the margin on the sale on their BAS — not the full amount of payment received.
We can help determine your eligibility and also calculate the margin. 
Also remember that, when someone purchases property using the margin scheme, they:
 can't claim GST credits for the sale; and
 don't report it on their activity statement.
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the
information to practical circumstances should seek professional advice to independently verify their interpretation
and the information’s applicability to their particular circumstances.
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November 2020 Newsletter

5/11/2020

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Tax cuts pass Parliament

Tax cuts pass Parliament The Government announced various tax measures in the 2020 Budget on 6 October 2020, and it was able to secure passage of legislation containing some of the important measures very shortly afterwards, as summarised below. 

Tax relief for individuals 

The Government brought forward 'Stage two' of their Personal Income Tax Plan by two years, so that, from 1 July 2020:
the low income tax offset increased from $445 to $700;
the top threshold of the 19% tax bracket increased from $37,000 to $45,000; and
the top threshold of the 32.5% tax bracket increased from $90,000 to $120,000. In addition, in 2020/21, low and middle-income earners will receive a one-off additional benefit of up to $1,080 from the low and middle income tax offset. Tax relief for business Businesses with a turnover of up to $5 billion are now able to immediately deduct the full cost of eligible depreciable assets as long as they are first used or installed by 30 June 2022. 

To complement this, the Government will also temporarily allow companies with a turnover of up to $5 billion to offset tax losses against previous profits on which tax has been paid. Also, businesses with an aggregated annual turnover between $10 million and $50 million will, for the first time, be able to access up to ten small business tax concessions. Under the changes passed by the Parliament, the Government will also enhance previously announced reforms to invest an additional $2 billion through the Research and Development Tax Incentive.
Employers need to apply recent tax cuts as soon as possible

The ATO has now updated the tax withholding schedules to reflect the 2020/21 income year personal tax cuts — the updated schedules are available at ato.gov.au/taxtables. The ATO has said that employers now need to make adjustments in their payroll processes and systems in order for the tax cuts to be reflected in employees’ take-home pay. Employers must make sure they are withholding the correct amount from salary or wages paid to employees for any pay runs processed in their system from no later than 16 November onwards. Employees should be aware that any withholding on the old scales will be taken into
account in their tax return.
Deferrals of interest due to COVID-19
​

Many lenders have recently allowed borrowers with investment property loans to defer repayments for a period of time. While repayments are being deferred, interest (and fees) will usually be added to the loan
balance (i.e., the deferred interest will be 'capitalised'). However, it is important to recognise in such situations that, while repayments are not being made during the relevant period, borrowers continue to ‘incur’ the interest during that time. Further, interest will continue to be calculated
and will accrue on both the unpaid principal sum of the loan and the unpaid (i.e., capitalised) interest. The interest that accrues on the unpaid or capitalised interest is referred to as ‘compound interest’. Importantly, the ATO has previously acknowledged that, if the underlying, or ordinary, interest is deductible, then the compound interest will also be deductible. Accordingly, interest expenses (including any compound interest) will generally be deductible to the extent the borrowed monies are used for income producing purposes (such as where the borrowed funds are used to purchase a rental property). However, interest on a loan will not be deductible to the extent to which the borrowed 
funds are used for private purposes (e.g., to purchase a home, a private boat, or to pay for a holiday). Note that, despite the name, "penalty interest" is not always "in the nature of interest" and, in some cases, may not be deductible (e.g., due to the expense being capital in nature).
Simplified home office expense
​

deduction claims due to COVID-19 Given that many Australians continue to work from home due to COVID-19, the ATO has updated its Practical Compliance Guideline which allows taxpayers working from home to claim a rate of 80 cents per hour, by keeping a record of the number of hours they have worked
from home, rather than needing to calculate specific running expenses. The application of the Guideline has been extended so that it now applies from 1 March 2020 until 31 December 2020. This determination is intended to be in effect until (and will be repealed from) 22 March 2021, unless the Government determines otherwise. Note that the Government has also released exposure draft legislation to make these reforms (in respect of virtual meetings and electronic document execution) permanent.
COVID-19 and loss utilisation
​

The ATO understands the way some businesses operate has been impacted as a result of COVID-19. Some of these impacts may have resulted in changes that affect whether they are able to utilise their carried-forward losses in the current or a future income year. For companies to utilise their carried-forward losses in a particular year, they need to satisfy the continuity of ownership test or, if they fail that test, they need to satisfy the business continuity test ('BCT'). Whether a company can utilise carried-forward losses requires a consideration of its facts and circumstances. Generally, a company that has completely closed its business with no intention to resume will fail the BCT. However, a company that has temporarily closed its business may still be able to satisfy the BCT. Importantly, the mere receipt of JobKeeper payments will not cause a company to fail the BCT.
Employees on JobKeeper can satisfy the ‘work test’

The Australian Prudential Regulation Authority ('APRA') has confirmed that, where an employer is receiving the JobKeeper wage subsidy for an individual, superannuation funds should consider the individual to be ‘gainfully employed’ for the purpose of the ‘work test', even if that individual has been fully stood down and is not actually performing work. As such, superannuation funds can assume that all members in receipt of the JobKeeper subsidy satisfy the ‘work test’ when determining whether they can make voluntary superannuation contributions.
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
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key changes in the Federal Budget

30/10/2020

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We summarise the below key changes announced in the Federal Budget that was delivered on 6 October 2020.  This is for informational purposes and does not take the place of advice suited to your circumstances.   Should you require any further information or explanation please contact your accountant at SH Tait & Co.
INDIVIDUAL TAXPAYERS:

Changes to personal income tax rates

The Government has legislated to bring forward changes to the personal income tax rates that were due to apply from 1 July 2022, so that these changes now apply from 1 July 2020 (i.e., from the 2021 income year). These changes include: 
  • increasing the upper threshold of the 19% personal income tax bracket from $37,000 to $45,000; and 
  • increasing the upper threshold of the 32.5% personal income tax bracket from $90,000 to $120,000.
 The current and proposed tax brackets are summarised below (excludes the Medicare Levy). 
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​Employers are to reduce the tax withheld from 13 October 2020.

Changes to the Low Income Tax Offset ('LITO')

The Government announced that it will also bring forward the changes that were proposed to the LITO from 1 July 2022, so that they will now apply from 1 July 2020 (i.e., from the 2021 income year), as follows:
  • The maximum LITO will be increased from $445 to $700.
  • The increased (maximum) LITO will be reduced at a rate of 5 cents per dollar, for taxable incomes between $37,500 and $45,000.
  • The LITO will be reduced at a rate of 1.5 cents per dollar, for taxable incomes between $45,000 and $66,667.
The current and proposed LITO are summarised below:  

Note that, the Government also announced that the current Low and Middle Income Tax Offset (‘LAMITO’) would continue to apply for the 2021 income year (which is available in addition to the LITO for eligible taxpayers). For example, the maximum LAMITO of $1,080 will be available to taxpayers with taxable incomes of between $48,000 and $90,000 in the 2021 income year.  
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BUSINESS TAXPAYERS:
Expanding access to Small Business Tax Concessions
The Government has announced that it will expand the concessions available to Medium Sized Entities to provide access to up to ten Small Business Concessions.   

For this purpose, a Medium Sized Entity is an entity with an aggregated annual turnover of at least $10 million and (less than) $50 million.   

The expanded concessions will apply in three phases, as follows:
  1. From 1 July 2020, eligible businesses will be able to immediately deduct certain start-up expenses and certain prepaid expenditure.
  2. From 1 April 2021, eligible businesses will be exempt from FBT on car parking and multiple work-related portable electronic devices, such as phones or laptops, provided to employees.
  3. From 1 July 2021:
    • Eligible businesses will be able to access the simplified trading stock rules, remit pay as you go (PAYG) instalments based on GDP adjusted notional tax and settle excise duty and excise-equivalent customs duty monthly on eligible goods.
    • Eligible businesses will generally have a two-year amendment period apply to income tax assessments for income years starting from 1 July 2021.
    • The Commissioner of Taxation’s power to create a simplified accounting method determination for GST purposes will be expanded to apply to businesses below the $50 million aggregated annual turnover threshold. 
JobMaker Hiring Credit
The Government will introduce a JobMaker Hiring Credit to incentivise businesses to take on additional young job seekers.   

From 7 October 2020, eligible employers will be able to claim $200 a week for each additional eligible employee they hire aged 16 to 29 years old and $100 a week for each additional eligible employee aged 30 to 35 years old. New jobs created until 6 October 2021 will attract the credit for up to 12 months from the date the new position is created. 

The JobMaker Hiring Credit will be claimed quarterly in arrears by the employer from the ATO from 1 February 2021. Employers will need to report quarterly that they meet the eligibility criteria. 

The amount of the credit is capped at $10,400 for each additional new position created.  Furthermore, the total credit claimed by an employer cannot exceed the amount of the increase in payroll for the reporting period in question (see employer eligibility requirements below). 
Who is an eligible employee?
Employees may be employed on a permanent, casual or fixed term basis.  To be an ‘eligible employee’, the employee must:
  • be aged (i.e., at the time their employment started) either:
    • 16 to 29 years old, to attract the payment of $200 per week; or
    • 30 to 35 years old to attract the payment of $100 per week;
  • have worked at least 20 paid hours per week on average for the full weeks they were employed over the reporting period;
  • have commenced their employment during the period from 7 October 2020 to 6 October 2021;
  • have received the JobSeeker Payment, Youth Allowance (Other), or Parenting Payment for at least one month within the past three months before they were hired; and
  • be in their first year of employment with this employer and must be employed for the period that the employer is claiming for them. 
Certain exclusions apply, including employees for whom the employer is also receiving a wage subsidy under another Commonwealth program.  
Who is an eligible employer?
An employer is able to access the JobMaker Hiring Credit if the employer: 
  • has an ABN
  • is up to date with tax lodgment obligations;
  • is registered for Pay As You Go withholding;
  • is reporting through Single Touch Payroll;
  • is claiming in respect of an 'eligible employee'
  • has kept adequate records of the paid hours worked by the employee they are claiming the hiring credit in respect of; and
  • is able to demonstrate that the credit is claimed in respect of an additional job that has been created. Broadly, there must be an increase in the business’ total employee headcount and also in the payroll of the business for the reporting period (based on a comparison over a specified reference period). 
Employers do not need to satisfy a fall in turnover test to access the JobMaker Hiring Credit. Certain employers are excluded, including those who are claiming the JobKeeper payment.   New employers created after 30 September 2020 are not eligible for the first employee hired but are (potentially) eligible for the second and subsequent eligible hires. 
Uncapped immediate write-off for depreciable assets

The Government has announced it will introduce the following changes to the Capital Allowance provisions:
  1. Businesses with an aggregated annual turnover of less than $5 billion will be able to claim an immediate deduction (what the Budget terms as ‘full expensing’) for the full (uncapped) cost of an eligible depreciable asset, in the year the asset is first used or is installed ready for use, where the following requirements are satisfied:
    • The asset was acquired from 7:30pm AEDT on 6 October 2020 (i.e., Budget night).
    • The asset was first used or installed ready for use by 30 June 2022.
    • The asset is a new depreciable asset or is the cost of an improvement to an existing eligible asset, unless the taxpayer qualifies as a small or medium sized business (i.e., for these purposes, a business with an aggregated annual turnover of less than $50 million), in which case the asset can be second-hand.
·  As is currently legislated, businesses with aggregated annual turnover between $50 million and $500 million can still deduct the cost of eligible second-hand assets costing less than $150,000 that are purchased from 2 April 2019 and first used or installed ready for use between 12 March 2020 and 31 December 2020 under the enhanced instant asset write-off. The Government has announced that it will extend the period in which such assets must first be used or installed ready for use by 6 months, until 30 June 2021.
  1. Small businesses (i.e., with aggregated annual turnover of less than $10 million) can deduct the balance of their simplified depreciation pool at the end of the income year while full expensing applies (i.e., up to 30 June 2022). Furthermore, the provisions which prevent small businesses from re-entering the simplified depreciation regime for five years if they opt-out will continue to be suspended.  
 
CORPORATE TAX PAYERS INCLUDING PTY LTD COMPANIES:

Temporary loss carry back for eligible companies

The Government has announced that it will introduce measures to allow companies with a turnover of less than $5 billion to carry back losses from the 2020, 2021 or 2022 income years to offset previously taxed profits made in or after the 2019 income year.
   
This will allow such companies to generate a refundable tax offset in the year in which the loss is made. The tax refund is limited by requiring that the amount carried back is not more than the 
earlier taxed profits and that the carry back does not generate a franking account deficit.

The tax refund will be available on election by eligible companies when they lodge their tax returns for the 2021 and 2022 income years. Note that, companies that do not elect to carry back losses under this measure can still carry losses forward as normal. 
The application of these new measures to our corporate business clients will be considered during tax planning work performed in April / May 2021.

OTHER BUDGET ANNOUNCEMENTS:
Supporting apprentices and trainees
The Australian Government is extending and expanding the Supporting Apprentices and Trainees wage subsidy, to include medium-sized business who had an apprentice in place on 1 July 2020.  Eligible employers can apply for a wage subsidy of 50% of an eligible apprentice or trainee’s wages paid until 31 March 2021.
·        Your small business may be eligible if:
·        you employ fewer than 20 people; or
·        you are a small business with fewer than 20 people, using a Group Training Organisation; and
·        the apprentice or trainee was undertaking an Australian Apprenticeship with you on 1 July 2020 for claims after this date. Claims prior to 1 July 2020, will continue to be based on the 1 March 2020 eligibility date.
·        Your medium-sized business may be eligible if:
·        you employ fewer than 200 people; or
·        you are a medium business with fewer than 200 people, using a Group Training Organisation; and
·        the apprentice or trainee was undertaking an Australian Apprenticeship with you on 1 July 2020.
Any employer (including all small, medium or large businesses and Group Training Organisations) who re-engages an apprentice or trainee displaced from an eligible small or medium business may also be eligible for the subsidy. Further information is available at https://www.australianapprenticeships.gov.au/search-aasn
  
Small business COVID-19 Adaption Grant Program
The objective of this program is to support small businesses subject to closure or highly impacted by the coronavirus (COVID-19) shutdown restrictions announced by the Queensland Government, to adapt and sustain their operations, and build resilience.  The first round of funding for this program is 100% subscribed, however round two is currently open specifically to regional businesses, noting that subscription is nearing capacity.  To be a 'regional business', your principal place of business must be in a local government area within Queensland that is not identified as a South East Queensland (SEQ) location.
To be eligible, your business must:
  • have been subject to closure or otherwise highly impacted by current shutdown restrictions announced by Queensland's Chief Health Officer on 23 March 2020
  • have experienced a minimum 30% decline since 23 March 2020, over a minimum 1-month period due to the onset and management of COVID-19
  • employ staff and have fewer than 20 employees at the time of applying for the grant (employees must be on your payroll and does not include the business owner(s))
  • have a valid Australian Business Number (ABN) active as at 23 March 2020
  • be registered for GST
  • have a Queensland headquarters
  • have an annual turnover over $75,000 for the 2018–19 or 2019–20 financial year, or you can provide financial records that show this will be met for recently started small businesses
  • have a payroll of less than $1.3 million
  • not be insolvent or have owners or directors that are an undischarged bankrupt.
The available grant amount is a minimum of $2,000 and up to a maximum of $10,000 per eligible small or micro business.
In recognition of the significant impacts of COVID-19 on small businesses, the funding can be used towards meeting a variety of ongoing costs, including the following:
  • financial, legal or other professional advice to support business sustainability and diversification
  • continuing to meet business operational costs including utilities, council rates, rent, telecommunication charges, insurance fees, licensing or franchise fees
  • strategic planning, financial counselling or business coaching aligned to business development and diversification
  • building the business through marketing and communications activities (e.g. content development – web pages, mobile apps, visual and audio media etc.)
  • digital/technological strategy development
 
Modern Manufacturing Initiative
This Modern Manufacturing Strategy (the Strategy) is led by industry, for industry, to help our manufacturers to scale-up, become more competitive and build more resilient supply chains. The Australian Government will be a strategic investor in this, in order to drive productivity and create jobs for Australians, both now and for generations to come.  Key initiatives will deliver immediate and long-term economic benefits.
  • $1.3 billion Modern Manufacturing Initiative – The MMI will transform manufacturing businesses and help them to scale-up, translate ideas into commercial successes and integrate into local and international value chains.
  • $107.2 million Supply Chain Resilience Initiative – The Supply Chain Resilience Initiative will help Australia address identified gaps in critical supply chains.
  • $52.8 million Manufacturing Modernisation Fund round two – The Manufacturing Modernisation Fund round two will deliver quick action to unlock business investment on shovel ready projects.
 
The program is targeted at growth opportunities in the following areas:
 
  • Resources Technology & Critical Minerals Processing
  • Food & Beverage
  • Medical Products
  • Recycling & Clean Energy
  • Defence
  • Space  
This funding is targeted at substantially large businesses who are looking to further ‘scale up’ their operations.  More information on the funding available is at https://www.industry.gov.au/news-media/modern-manufacturing-initiative-and-national-manufacturing-priorities-announced
Insolvency reforms to support small business

The Government will implement certain insolvency reforms, effective from 1 January 2021 (subject to the passing of legislation) to support small business, including the following:   
  • The introduction of a new streamlined process to enable eligible incorporated small businesses (broadly, those with liabilities of less than $1 million) in financial distress to restructure their debt.
  • Simplifying the liquidation process for eligible incorporated small businesses (to allow faster and lower-cost liquidations, increasing returns for creditors and employees).
  • Support for the insolvency sector (to ensure it can respond effectively to increased demand and to the needs of small business).  
Currently, the insolvency system faces a number of challenges. These include an increase in the number of businesses in financial distress due to COVID-19, a ‘one-size-fits-all’ system, and high costs and lengthy processes that can prevent distressed small businesses from engaging with the insolvency system early thereby reducing their opportunity to restructure and survive. Temporary insolvency and bankruptcy protections that were introduced in March 2020 to provide relief for businesses impacted by COVID-19 are due to expire on 31 December 2020 (e.g., under these measures, directors are temporarily relieved from personal liability for trading while insolvent). However, the number of companies being put into external administration is expected to increase significantly, putting additional stress on the system. Therefore, the above proposed reforms will help more businesses to successfully get to the other side of the crisis.  If your business is in significant financial distress, please contact our office before 31 December 2020 so that we can discuss these provisions in further detail.
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OCTOBER NEWSLETTER

20/10/2020

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Special COVID-19 Superannuation Condition of Release Extended

Regulations  that  extend  the  time  frame  of  the special  condition  of  release  to  access  
$10,000 from superannuation for individuals experiencing financial difficulties due to COVID-19 
have been formally registered.
The   ability   to   withdraw   up   to   $10,000   from superannuation (if certain conditions are 
met) was initially set to expire on 24 September 2020.
The newly registered Regulations to the SIS Act will now enable an eligible individual to withdraw 
up to $10,000 from superannuation (which is not assessable to the individual) until 31 December 
2020.

To be eligible, a citizen or permanent resident of Australia  (and  New  Zealand)  must  require  
the COVID-19 early release of super to assist them to deal with the adverse economic effects of 
COVID- 19.
In  addition,  one  of  the  following  circumstances must apply:
θ    The individual is unemployed;
θ    The individual is eligible to receive one of the following;
–      JobSeeker payment;
–      Youth Allowance for job seekers (unless they are undertaking full-time study or are a new 
apprentice);
–      Parenting payment (which includes the single and partnered payments);
–      Special Benefit; or
–      Farm Household Allowance;
θ    On or after 1 January 2020 either;
–     they were made redundant;
–     their working hours were reduced by 20% or more (including to zero); or
–     they were a sole trader and their business was suspended or there was a reduction in turnover 
of 20% or more (partners in a partnership are not eligible unless the partner satisfies any other 
eligibility criteria).


Tax treatment of JobKeeper Payments

Broadly,  JobKeeper  Payments  received  by  an employer are assessable income to the employer.
Likewise,      the      payments      an      employer subsequently  makes  to  an  employee  that  
are funded  (in  whole  or  in  part  by  the  JobKeeper Payment)  are  generally  allowable  
deductions  to the employer.
The ATO has recently issued some guidance for employers in receipt of JobKeeper Payments.
For  sole  traders,  they  will  need  to  include  the payments as business income in their 
individual tax return.
For  partnerships or  trusts, JobKeeper  payments should  be  reported  as  business  income  in  
the relevant partnership or trust tax return.
For  a  company,  report  JobKeeper  payments  as income in the company tax return.
For a taxpayer that has repaid (or is in the process of repaying) any of their JobKeeper payments 
to the  ATO,  these  amounts  do  not  need  to  be included in their tax return.

Note  a business would be  refunding JobKeeper payments to the ATO if it had been discovered that 
the business had incorrectly claimed JobKeeper payments,  and  had  either  voluntarily  disclosed 
this   to   the   ATO,   or   the   ATO   made   this determination as a result of audit activity.


The normal rules for deductibility apply in respect of   the   amounts   a   taxpayer   pays   to   
their employees,   even   where   those   amounts   are subsidised by the JobKeeper payment.
That is, if the underlying salary is deductible, then it is still deductible to the employer where 
it has been subsidised by a JobKeeper payment.
For  employees  who  have  received  JobKeeper payments,  these  will  be  included  as  salary and 
wages (or an allowance) in their income statement (or   payment   summary)   as   provided   by   
their employer.
If  you  have  any  queries  about  the  JobKeeper Payment scheme, please contact our office.


Deduction for work-related vehicle expenses disallowed

In   a   decision   of   the   Administrative   Appeals Tribunal,  a  taxpayer,  Mr  Bell,  was  a  
denied  a deduction for $21,565.73 of work-related vehicle expenses for the 2016 income year.
Mr    Bell,    was    a    construction    worker    who predominantly worked on a construction 
site in an eastern    suburb    of    Melbourne    and    lived approximately  100  kilometres  
away  from   that worksite.
Mr  Bell  owned  a  ute  that  had  a  load  carrying capacity of more than one tonne – so it fell 
outside the definition of a 'car' for the purposes of the ITAA 1997.
Mr Bell claimed a total deduction for $24,865.73 for  motor  vehicle  expenses   and  received  an 
allowance    under    his    Enterprise    Bargaining Agreement.
This  allowance  did  not  vary with  the  amount  of travel  undertaken  and  totalled  $15,221  
for  the year.
Mr Bell contended that he was required to use his vehicle  to  transport  heavy/bulky  goods  
(tools) between  his  home  and  his  workplace  and  to collect  supplies  and  equipment  from  
hardware stores while travelling between his workplace and his home.
Ordinarily,  travel  from  home-to-work  (and  back again) is considered non-deductible.  However, 
if an employee is required to carry heavy/bulky
equipment   for   which   there   are   no   secure storage  facilities  at  work,  the  travel  
between home and work  with the heavy/bulky equipment can be considered deductible.
Unfortunately  for  Mr  Bell,  evidence  before  the Tribunal indicated that there were safe and 
secure storage  facilities  for  his  tools  (the  bulky/heavy equipment) at the worksite.
Accordingly, Mr Bell was unable to rely upon the ‘bulky goods’ exception to recharacterise home- 
to-work   travel   as   being   a   deductible   work expense.
Instead, it  retained its ordinary private and non- deductible status.
Mr   Bell   was   unsuccessful   in   advancing   the argument that he was entitled  to a deduction 
in relation to the motor vehicle expenses because he was in receipt of an allowance.
However, Mr Bell was able to convince the ATO that he had undertaken at least some work-related 
travel using his vehicle.  The ATO allowed Mr Bell a   deduction   under   the   'cents   per   
kilometre method'  up  to  the  maximum  dollar  amount  for 5,000  kilometres  for  the  2016  
income  year  of
$3,300.

Editor:   This decision provides a timely reminder that  simply  carrying  bulky  equipment  
between home   and   work   will   not   make   these   trips deductible, where there is a secure 
place for the equipment   to   be   stored   at   the   employee’s worksite.  The decision also 
highlights the fallacy of assuming that being in receipt of an allowance somehow  entitles  the  
taxpayer  to  an  offsetting deduction.
The taxpayer was technically 'lucky' that he was allowed    the    'cents    per    kilometre    
method' deduction  for  work-related  travel,  given  that  his motor vehicle fell outside the 
definition of a 'car'.
This is because the cents per kilometre method only applies to 'cars', so it could be said that the 
ATO  was  generous  to  the  taxpayer  in  these circumstances.

Please contact our office if you have any queries as to the deductibility of work-related travel.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.

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SEPTEMBER 2020 NEWSLETTER

5/9/2020

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Superannuation guarantee rate increase update
​
Recently, arguments both for and against increasing the rate of compulsory superannuation
guarantee ('SG') have continued to be tossed around!

The SG is the compulsory amount of superannuation an employer must pay into an eligible employee’s chosen super fund.

The rate of SG has been frozen at 9.5% of an employee’s ordinary wages since July 2014, but from 1 July 2021 it is due to incrementally increase (by 0.5% each financial year) until it ultimately reaches 12% in July 2025.

​As a result, the superannuation guarantee rate is currently set to increase to 10% from 1 July 2021.

Superannuation guarantee amnesty ends 7 September 2020
Speaking of the superannuation guarantee, time is rapidly running out for employers to apply for the SG amnesty and catch up on past unpaid super without incurring a penalty.

The ATO encourages employers to apply for the amnesty and make payments as early as they can.

Importantly, eligible amnesty amounts paid by 7 September 2020 are tax deductible! The ATO must receive amnesty applications by 11:59 pm (local time) on 7 September 2020. Broadly, to be eligible for the amnesty:
  • the unpaid super must be for a quarter between 1 July 1992 and 31 March 2018;
  • the shortfall cannot have already been disclosed to the ATO; and
  • the ATO cannot already be examining the shortfall.
If an employer cannot pay in full, the ATO will work with them to set up a flexible payment plan. Superannuation guarantee payments and PRNs.

Applicants will need their payment reference number (‘PRN’) to make SG amnesty payments. The ATO has been sending employers their PRN within 14 business days of receiving their application, however, if an amnesty application has not been lodged by mid-August, they can get their PRN:
  • from a super guarantee charge related statement issued for the same Australian Business Number; or
  • by phoning the ATO on 1800 815 886 between 8.00am and 6.00pm from Monday to Friday.
If you wish to discuss the implications of the SG amnesty and any related payment plans (or indeed anything else with respect to SG obligations and liabilities) please contact our office to discuss.

​Ref: SG amnesty ends 7 September 2020, ATO website, August 3 2020

Expanded eligible employee definition for JobKeeper
Additional recently implemented JobKeeper changes mean more employees will qualify for JobKeeper payments from 3 August 2020. This is primarily because:
  • the eligible employee test has been extended from 3 August 2020 to include eligible employees who were employed on 1 July 2020 (in addition to the original 1 March 2020 employment date) who are not currently nominated for the JKP by another entity; and
  • from the fortnights commencing on 3 August 2020 and 17 August 2020 (i.e., JobKeeper fortnights 10 and 11) employers will have had until 31 August 2020 to meet the ‘wage condition’ for all new eligible employees included in the JobKeeper scheme under the 1 July eligibility test.
Importantly, as a result of these recent tweaks to the JobKeeper scheme, participating employers should have provided any new eligible employees with an employee nomination form.

The onus is on employers to ensure all of their employees now eligible for JKPs as a result of the new 1 July test are given the opportunity to be included.

Ref: More employees now able to access JobKeeper, ATO media release, 19 August 2020.
JobKeeper 2.0 - tweaks to the 'Decline in Turnover' Tests
On 21 July 2020, the Government announced that the JobKeeper Payment (‘JKP’) would be extended until 28 March 2021 (i.e., for a further six months beyond its original end date of 27 September 2020).

As a result, JKPs will now be made over two separate extension periods, being:
  • Extension period 1 – which covers the seven new JobKeeper fortnights that commence on 28 September 2020 and end on 3 January 2021; and
  • Extension period 2 – which covers the six new JobKeeper fortnights that commence on 4 January 2021 and end on 28 March 2021.
Furthermore, on 7 August 2020, the Government announced adjustments to JobKeeper 2.0 to expand the eligibility criteria for JKP, primarily in the wake of the tougher COVID-19 restrictions recently imposed in Victoria.

These adjustments will apply nationwide, and the crucial amendments include adjustments to the proposed new ‘Decline in Turnover’ tests applicable from 28 September 2020.

More specifically, to qualify for the JKP in the two new extension periods (outlined above), businesses will now only have to demonstrate that their actual GST turnovers have decreased (in accordance with the applicable rates) in the previous quarter.

For these purposes, the applicable rate of decline in turnover required to qualify for the JKP is determined in accordance with the existing rules (e.g., 30% for entities with an aggregated turnover of $1 billion or less).

Specifically, to be eligible for the JKP Extension Period 1 (i.e., from 28 September 2020 to 3 January 2021), businesses only need to demonstrate an applicable decline in turnover in the September 2020 quarter.

This differs from the previously announced JobKeeper 2.0, where they would have been required to show that they had suffered an applicable decline in turnover in both the June and September 2020 quarters.

To be eligible for the JKP Extension Period 2 (i.e., from 4 January 2021 to 28 March 2021) businesses only need to demonstrate an applicable decline in turnover in the December 2020 quarter.

Whereas under the previously announced JobKeeper 2.0, they would have been required to show that they had suffered an applicable decline in turnover in each of the June, September and December 2020 quarters.

Importantly, the dual payment rate system originally proposed in JobKeeper 2.0 will remain, with the full rate of payment decreasing from $1,500 to $1,200 per fortnight from 28 September 2020 and then to $1,000 per fortnight from 4 January 2021.

The proposed reduced rates (being $750 from 28 September 2020 and $650 from 4 January 2021) will also remain for employees and business participants who worked fewer than 20 hours per week in the relevant period.

Ref: Extension of the JobKeeper Payment, Treasury fact sheet, 7 August 2020

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
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August 2020 Newsletter

5/8/2020

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Extension of the JobKeeper Payment
Sadly, many Australian businesses are a long way from trending back to 'normal' as we approach 27 September 2020, the original date that JobKeeper was set to end. Thankfully the government has announced an extension of the JobKeeper Payment, with additional turnover qualifications.

The JobKeeper Payment, which was originally due to run until 27 September 2020, will now continue to be available to eligible businesses (including the self-employed) and not-for-profits until 28 March 2021.

The payment rate of $1,500 per fortnight for eligible employees and business participants will be reduced to $1,200 per fortnight from 28 September 2020 and to $1,000 per fortnight from 4 January 2021. From 28 September 2020, lower payment rates will also apply for employees and eligible business participants that worked fewer than 20 hours per week.

From 28 September 2020, businesses and not-for-profits seeking to claim the JobKeeper Payment will be required to demonstrate that they have suffered an ongoing significant decline in turnover using actual GST turnover (rather than projected GST turnover). Businesses and not-for-profits will be required to reassess their eligibility with reference to their actual GST turnover in the June and September 2020 quarters. They will need to demonstrate that they have met the relevant decline in turnover test in both of those quarters to be eligible for the JobKeeper Payment from 28 September 2020 to 3 January 2021.

From 4 January 2021, businesses and not-for-profits
will need to further reassess their turnover to be eligible for the JobKeeper Payment. They will need to demonstrate that they have met the relevant decline in turnover test with reference to their actual GST turnover in each of the June, September and December 2020 quarters to remain eligible for the JobKeeper Payment from 4 January 2021 to 28 March 2021.

To be eligible for JobKeeper Payments under the extension, businesses and not-for-profits will still need to demonstrate that they have experienced a decline in turnover of at least:
  • 50 per cent for those with an aggregated turnover of more than $1 billion;
  • 30 per cent for those with an aggregated turnover of $1 billion or less;
  • 15 per cent for Australian Charities and not-for-profits Commission-registered charities (excluding schools and universities).
If a business or not-for-profit does not meet the additional turnover tests for the extension period, this does not affect their eligibility prior to 28 September 2020.

The JobKeeper Payment will continue to remain open to new recipients, provided they meet the existing eligibility requirements and the additional turnover tests during the extension period.

The Extended JobKeeper Payment Rates
From 28 September 2020 to 3 January 2021, the JobKeeper Payment rates will be:
  • $1,200 per fortnight for all eligible employees who, in the four weeks of pay periods before 1 March 2020, were working in the business or not-for-profit for 20 hours or more a week on average, and for eligible business participants who were actively engaged in the business for 20 hours or more per week on average in the month of February 2020; and
  • $750 per fortnight for other eligible employees and business participants.

​From 4 January 2021 to 28 March 2021, the JobKeeper Payment rates will be:
  • $1,000 per fortnight for all eligible employees who, in the four weeks of pay periods before 1 March 2020, were working in the business or not-for-profit for 20 hours or more a week on average and for business participants who were actively engaged in the business for 20 hours or more per week on average in the month of February 2020; and
  • $650 per fortnight for other eligible employees and business participants.
Businesses and not-for-profits will be required to nominate which payment rate they are claiming for each of their eligible employees (or business participants).

The JobKeeper Payment will continue to be made by the ATO to employers in arrears. Employers will continue to be required to make payments to employees equal to, or greater than, the amount of the JobKeeper Payment (before tax), based on the payment rate that applies to each employee.

This is referred to as the wage condition. The eligibility rules for employees remain unchanged.
Additional New Turnover Tests
In order to be eligible for the JobKeeper Payment after 27 September 2020, businesses and not-for-profits will have to meet a further decline in turnover test for each of the two periods of extension, as well as meeting the other existing eligibility requirements for the JobKeeper Payment. In order to be eligible for the first JobKeeper Payment extension period of 28 September 2020 to 3 January 2021, businesses and not-for-profits will need to demonstrate that their actual GST turnover has significantly fallen in the both the June quarter 2020 (April, May and June) and the September quarter 2020 (July, August, September) relative to comparable periods (generally the corresponding quarters in 2019).

In order to be eligible for the second JobKeeper Payment extension period of 4 January 2021 to 28 March 2021, businesses and not-for-profits will again need to demonstrate that their actual GST turnover has significantly fallen in each of the June, September and December 2020 quarters relative to comparable periods (generally the corresponding quarters in 2019).

​Businesses and not-for-profits will generally be able to assess eligibility based on details reported in the Business Activity Statement (BAS).

80 Cents Per Hour 'Shortcut' Method For Home Office Expenses Has Been Extended
Back in April 2020 the ATO announced that a 'shortcut' method was to be made available to use
from 1 March 2020 until 30 June 2020 for individuals claiming home office expenses due to COVID-19. The ATO has recently announced an extension of this shortcut method to also include 1 July 2020 to 30 September 2020.

​In summary, a taxpayer can claim a deduction of 80 cents for each hour they work from home due to COVID-19 as long as the individual is:
  • working from home to fulfil their employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls; and
  • incurring additional deductible running expenses as a result of working from home.

A taxpayer does not have to have a separate or dedicated area of their home set aside for working, such as a private study.

The shortcut method rate covers all deductible running expenses such as: electricity and gas used for heating/cooling and running electronic items used for work purposes; depreciation and repair of assets used for work purposes; work-related phone and internet costs.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
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JULY 2020 NEWSLETTER

3/7/2020

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​​Treasury Laws Amendment (2020 Measures No 3) Bill 2020 
Treasury Laws Amendment (2020 Measures No 3) Bill 2020 has passed both Houses of Parliament and is now law.

Extending the Instant Asset Write-Off
This legislation amends the income tax law to allow a business with an aggregated turnover for the income year of less than $500 million to immediately deduct the cost of a depreciating asset (instant asset write-off). The asset must cost less than a threshold of $150,000 and be first used or installed ready for use for a taxable purpose by 31 December 2020. Without these amendments the $150,000 instant asset write-off would have ended on 30 June 2020.

By extending the previous end date of 30 June 2020 to 31 December 2020, the amendments give businesses additional time to access the $150,000 instant asset write-off for their acquisitions of depreciating assets, including those purchases that have been delayed by supply chain disruptions. Further, the amendments extend cash flow support to businesses through the early stages of the recovery from the economic conditions caused by COVID-19.

It will be interesting to see if this timeframe is further extended at some later point. Note that, come 1 January 2021, if there is no further extension, the $150,000 threshold for the instant asset write-off for depreciating assets will collapse to $1,000 and the turnover threshold for eligibility for the outright deduction of less than $500 million will fall to a turnover of less than $10 million.
​
Please contact our office if you are considering purchasing a depreciating asset for your business and want to know if you will be eligible for the instant asset write-off. 

​ Treasury Laws Amendment (2019 Measures No 3) Bill 2019 
Treasury Laws Amendment (2019 Measures No 3) Bill 2019 has passed both Houses of Parliament and is now law.

Testamentary trusts and minors 
This legislation contains amendments to ensure the tax concessions available to minors in relation to income from a testamentary trust only apply in respect of income generated from assets of the deceased estate that are transferred to the testamentary trust (or the proceeds of the disposal or investment of those assets).

Broadly speaking, when a trustee distributes income to a minor it is taxed at the highest marginal rate (plus Medicare levy). However, there are certain exceptions to this rule. One such exception is where the trust is a testamentary trust – being a trust that was established as a result of the will of a deceased individual. Income from a testamentary trust is a type of ‘excepted trust income’ that is generally taxed at ordinary rates.
​
Prior to this legislation being passed, the previously existing law did not specify that the assessable income of the testamentary trust be derived from assets of the deceased estate (or assets representing assets of the deceased estate). As a result, assets unrelated to a deceased estate that were injected into a testamentary trust may, subject to anti-avoidance rules, generate excepted trust income that was not subject to the higher tax rates on minors. This was an unintended consequence, which allowed some taxpayers to inappropriately obtain the benefit of concessional tax treatment.

​This legislation clarifies that excepted trust income of the testamentary trust must be derived from assets transferred to the testamentary trust from the deceased estate or from the accumulation of such income.
​
This change will apply in relation to assets acquired by or transferred to the trustee of a testamentary trust on or after 1 July 2019.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
Regulations confirm no SG obligation on JobKeeper payments where work is not performed
The federal government has registered the Superannuation Guarantee (Administration) Amendment (Jobkeeper) Payment Regulations 2020.

These regulations ensure that amounts of salary or wages that do not relate to the performance of work and are only paid to an employee to satisfy the wage condition for getting the JobKeeper payment are prescribed by the Regulations as excluded salary or wages.

The effect is that these amounts are excluded from the calculations of an employer’s superannuation guarantee shortfall and the minimum compulsory superannuation contribution an employer is required to make in respect of an employee to avoid a superannuation guarantee charge liability.

Likewise, the Regulations recognise that an employer is only entitled to a JobKeeper payment for its employees if the business has suffered a substantial decline in turnover. In these circumstances, it is appropriate to require employers to only make minimum superannuation contributions in respect of amounts that are required to be paid to an employee for the performance of work.

Employers would not be required to make contributions in relation to additional amounts paid to satisfy the wage condition (for example, the amount by which $1,500 exceeds an employee’s normal pay).
​
If you are concerned about the calculation of compulsory superannuation for any employees supported by JobKeeper, please contact our office. ​

COVID-19 and Division 7A relief
The ATO has announced some limited relief for private companies that have loans to their shareholders or related parties that are governed by what are referred to as “complying loan agreements”.

A complying loan agreement is entered into to avoid triggering an assessable deemed dividend that could potentially be equal to the amount of the loan from the private company.

When there is a complying loan agreement between a private company and a borrower, the borrower must make the minimum yearly repayment (MYR) by the end of the private company’s income year. This avoids the borrower being considered to have received an unfranked dividend, generally equal to the amount of any MYR shortfall.

As a result of the COVID-19 situation, the ATO understands that some borrowers are facing circumstances beyond their control. To offer more support, the ATO will allow an extension of the repayment period for those borrowers who are unable to make their MYR by the end of the lender’s 2019–20 income year (generally 30 June).

Requesting the extension
A request for a 12-month extension can be made through the completion of an online application. Borrowers will be asked to confirm the shortfall, that the COVID-19 situation has affected them and that they are unable to pay the MYR as a result.

When the ATO approves an application, it will let the borrower know they will not be considered to have received an unfranked dividend. This is subject to the shortfall being paid by 30 June 2021. It will not be necessary to submit further evidence with the application.

This particular streamlined process established by the ATO only applies to applications for an extension of up to twelve months for COVID-19 affected borrowers. It is still open to a borrower to apply to obtain a longer extension of time outside the streamlined process.
​
If you have been affected by the COVID-19 situation and need more time to make your minimum yearly repayment (MYR) in relation to complying loans from private companies, contact our office for assistance. ​
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JUNE 2020 NEWSLETTER

9/6/2020

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​JobKeeper declaration due 14 June 
Businesses that have enrolled in the JobKeeper Scheme and identified their eligible employees are reminded that they will need to make a monthly declaration to the ATO to ensure they continue to receive JobKeeper payments.
​
The monthly declaration must be made by the 14th day of each month to claim JobKeeper payments for the previous month. 
As part of the declaration, businesses will need to: 
  • ensure they have paid their eligible employees at least $1,500 (before tax) in each JobKeeper fortnight they are claiming for;
  • re-confirm their eligible employees, including notifying if an eligible employee has changed or left employment; and
  • provide the current and projected GST turnover of the business – note, this is not a retest of the eligibility of the business. 
For example, to claim JobKeeper payments for the May 2020 JobKeeper fortnights, businesses must report their GST turnover for the month of May 2020 as well as their projected GST turnover for the month of June 2020 by 14 June 2020.

The monthly declaration can be lodged through the ATO business portal or through STP-enabled software. Alternatively, tax agents can assist clients by lodging the monthly declaration on behalf of registered clients. 

​ATO reminder for employers – Finalise STP data for 2020 
The ATO has issued a reminder to employers who report through Single Touch Payroll (‘STP’) – which should be all employers, unless an exemption or deferral applies – that they will need to finalise payroll information for the 2020 income year by making a declaration.

The due date for making finalisation declarations is:
  • 14 July 2020 for employers with 20 or more employees; and
  • 31 July 2020 for employers with 19 or fewer employees. 
Employers that finalise through STP are not required to provide payment summaries to employees and lodge a payment summary annual report to the ATO.
​
Instead, employees will be able to access their payroll information (for preparation of their 2020 tax return) through a registered tax agent or via ATO online services. 

COVID-19 and tax depreciation reports – are physical inspections necessary?
Property investors and businesses will often engage a specialist quantity surveyor to prepare a tax report on capital works and depreciation deductions available to them under the tax law in respect of their income-producing properties – for example, a rental property, office building or factory.

A thorough physical inspection of the property by a quantity surveyor plays a vital role in this process in order to, amongst other things:
  • identify all possible deductions available under the tax law;
  • provide accurate valuations of qualifying plant and building works;
  • provide supporting documentation of a taxpayer’s claims for depreciation and capital works deductions, which is prudent in the event of an ATO audit.
We have become aware that some quantity surveyors are promoting tax depreciation reports that do not include a physical inspection of the property due to COVID-19 precautions.

Usually the reports are provided, with an offer to do an inspection at a later time when it is possible to do so.

However, in some cases, no offer of a site inspection is made at all.
​
Where a physical inspection of premises is not performed, this increases the risk of deductions being missed or errors being made. This could result in costly adjustments if a taxpayer has to subsequently amend their tax return or is audited.
Guidance on JobKeeper reporting via STP 
The ATO has issued guidance to help employers reporting eligible employees and JobKeeper top-up payments through Single Touch Payroll (‘STP’).

For each eligible employee, employers must notify the ATO:
  • when an eligible employee started being paid JobKeeper payments;
  • top-up payments to employees earning less than $1500 per fortnight; and
  • when an employee is no longer eligible and JobKeeper payments need to be stopped.
The ATO says this process will be managed through the 'STP Pay Event' by entering the relevant JobKeeper description (as outlined below) in the 'Other Allowances' field.

To report the JobKeeper start fortnight for an eligible employee:
Use the description ‘JOBKEEPER-START-FNXX’ where ‘XX’ represents the JobKeeper fortnight from which the first payment is made.

Report the amount as ‘zero’, or as $0.01 if the software does not support reporting ‘zero’.

To report a top-up payment for an eligible employee ordinarily earning less than $1,500 per fortnight:
Use the description 'JOBKEEPER-TOPUP' for the top-up amount.

To report the first full JobKeeper fortnight an employee became ineligible:
Use the description ‘JOBKEEPER-FINISH-FNXX’ where ‘XX’ represents the JobKeeper fortnight in which the last payment is made.

For example, an employee resigns, and their last payment was on 13 May 2020. As this falls in JobKeeper fortnight 04 (being 11/05/2020 – 24/05/2020), the description 'JOBKEEPER-FINISH-FN04' should be used to notify the ATO that the employee is not eligible for JobKeeper from FN05.

Making corrections to (previously reported) JobKeeper start and finish information
The ATO’s guidance identifies several situations where errors made in reporting the JobKeeper start or finish information may need correction and sets out options for doing so.

In particular, guidance is provided for making corrections where:
  • the wrong employee was reported as starting or finishing;
  • a later start or finish fortnight is incorrectly reported;
  • an earlier start or finish fortnight is incorrectly reported; or
  • ​a future-dated start or finish fortnight is reported.
The ATO is urging employers to exercise extreme caution to ensure the accuracy of originally reported information as multiple corrections cannot be made through the STP Pay Event, 'Other Allowances' field.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
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May 2020 Newsletter

12/5/2020

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Coronavirus: Government’s JobKeeper Payment 
A major part of the Government’s response to the Coronavirus (or 'COVID-19') pandemic is the ‘JobKeeper Payment’ Scheme.

The JobKeeper Payment is a wage subsidy that will be paid through the tax system (i.e., it will be administered by the ATO) to eligible businesses impacted by COVID-19.

Under the scheme, eligible businesses will receive a payment of $1,500 per fortnight per eligible employee and/or for one eligible business participant (i.e., an eligible sole trader, partner, company director or shareholder, or trust beneficiary).

The subsidy will be paid for a maximum period of six months (i.e., from 30 March 2020 up until 27 September 2020). It will be paid to eligible businesses monthly in arrears, with the first payments to employers commencing from the first week of May 2020.

The JobKeeper Payment will ensure that eligible employees (and, where applicable, eligible business participants) receive a gross payment (i.e., before tax) of at least $1,500 per fortnight for the duration of the scheme.

An employer will only be eligible to receive a JobKeeper Payment in respect of an ‘eligible employee’ if, at the time of applying:
  • for employers with an aggregated annual turnover of $1 billion or less - the employer estimates that their projected GST turnover has fallen (or is likely to fall) by 30% or more; or
  • for employers with an aggregated annual turnover of more than $1 billion - the employer estimates that their projected GST turnover has fallen (or is likely to fall) by 50% or more; and
  • the employer is not specifically excluded from the scheme (e.g., one that is subject to the Major Bank Levy, one that is in liquidation, etc.). 
For an employer that is registered as a charity with the Australian Charities and Not-for-Profits Commission (excluding universities and non-government schools registered as charities, which are subject to the 30% or 50% decline in turnover tests, as outlined above), a 15% decline in turnover test applies.

Importantly, eligible employers must actually elect to participate in the JobKeeper Scheme via an application to the ATO. In making such an application, an employer will also need to:
  • Provide information to the ATO on all eligible employees (i.e., confirming the eligible employees were engaged as at 1 March 2020 and are currently employed by the business, including those who have been stood-down or re-hired). Treasury has indicated that, for most businesses, the ATO will use Single Touch Payroll (‘STP’) to pre-populate these details.
  • Continue to provide information to the ATO on a monthly basis, including the number of eligible employees employed by the business and details of its turnover. 
The ATO has available on its website an online form which can be used by employers to register their interest in the JobKeeper Payment Scheme. 

Shortcut method to claim deductions if working from home
As the situation around COVID-19 continues to develop, the ATO understands many employees are now working from home. To make it easier when claiming a deduction for additional running costs you incur as a result of working from home, special arrangements have been announced.

A simplified method has been introduced that allows you to claim a rate of 80 cents per hour for all your running expenses, rather than having to calculate the additional amount you incurred for specific running expenses.

This simplified method will be available to use from 1 March 2020 until 30 June 2020. You may still use one of the existing methods to calculate your running expenses if you would prefer to.

You can claim a deduction of 80 cents for each hour you work from home due to COVID-19 as long as you are:
  • Working from home to fulfil your employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls; and
  • Incurring additional deductible running expenses as a result of working from home.
You do not have to have a separate or dedicated area of your home set aside for working, such as a private study.
​
Editor: Please contact our office if you need more information about this deduction. ​
SMSFs may be able to offer rental relief to related party tenants
As a result of the financial effects of the COVID-19 pandemic, some self-managed superannuation funds (‘SMSFs’) which own real property may want to give a tenant – who is a related party – a reduction in rent because the related party tenant has had a collapse in revenue.

Charging a related party a price that is less than market value is usually a contravention of the strict legislative rules SMSFs and their trustees are required to follow.

The ATO has recently advised that its approach for the 2019–20 and 2020–21 financial years is that it will not take action if an SMSF gives a tenant – even one who is also a related party – a temporary rent reduction, waiver or deferral because of the financial effects of COVID-19 during this period.
​
If there are temporary changes to the terms of the lease agreement in response to COVID-19, it is important that the parties to the agreement document the changes and the reasons for the change. You can do this with a minute or a renewed lease agreement or other contemporaneous document.

ATO reminder about salary packaged super
The ATO has provided employers with a recent reminder that, from 1 January 2020, there has been a legislative change to ensure that when an employee sacrifices pre-tax salary in return for an additional concessional contribution into superannuation, it will not result in a reduction in the 9.5% Superannuation Guarantee (‘SG’) obligation their employer has even though doing so reduced their Ordinary Time Earnings.

The ATO has provided information for employers, payroll software providers and intermediaries who may need to change the way they calculate SG.

The ATO advises that, from 1 January 2020, you calculate the minimum amount of SG on the employee's ‘OTE base’. This is the sum of the employee's OTE and any OTE amounts they sacrifice in return for super contributions.
​
Additionally, super contributions to an employee's fund under an effective salary sacrifice arrangement no longer count towards an employer’ super guarantee obligations.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
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April 2020 Newsletter

8/4/2020

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​​Coronavirus: Government announces new tax measures 
The Government has announced a number of economic responses to the Coronavirus (or 'COVID-19') pandemic, including economic stimulus packages worth billions of dollars.

Some of the key tax measures include: 
  • From Thursday 12 March 2020, the instant asset write-off threshold has been increased from $30,000 (for businesses with an aggregated turnover of less than $50 million) to $150,000 (for businesses with an aggregated turnover of less than $500 million) until 30 June 2020.
  • A time-limited 15-month investment incentive (through to 30 June 2021) which will operate to accelerate certain depreciation deductions. 
  • This measure will also be available to businesses with a turnover of less than $500 million, which will be able to immediately deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.
  • Small and medium-sized businesses (and not-for-profit entities), with an aggregated annual turnover of less than $50 million that employ people, may be eligible to receive a total payment of up to $100,000 (with a minimum total payment of $20,000), based on their PAYG withholding obligations.
  • A new 'JobKeeper Payment' will be available to assist eligible employers (and self-employed individuals) who have been impacted by the Coronavirus pandemic to continue to pay their workers.
  • Eligible employers will be able to claim a subsidy of $1,500 per fortnight, per eligible employee, from 30 March 2020 (with payments commencing from the first week of May 2020), for a maximum period of six months. 

​ATO's support measures to assist those affected by COVID-19 
The ATO will also implement a series of administrative measures to assist Australians experiencing financial difficulty as a result of the COVID-19 outbreak.

Options available to assist businesses impacted by COVID-19 include: 
  • Deferring the due dates for income tax payments, Fringe Benefits Tax payments ('FBT') and excise payments up to 12 September 2020 for businesses in financial difficulty; and
  • Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities. 
However, note that employers will still need to meet their ongoing super guarantee obligations for their employees. 

​New laws can make directors personally liable for GST 
The government recently passed new legislation designed to strengthen laws to "crack down on illegal phoenixing activity by dodgy business operators who try to avoid their obligations to their customers, employees and creditors."

In particular, the changes allow the ATO to collect estimates of anticipated GST liabilities, and make company directors personally liable for their company’s GST liabilities in certain circumstances (basically by including these liabilities in the director penalty notice regime).
​
Importantly, the expansion of the director penalty notice regime to include GST liabilities will commence from 1 April 2020.
New super guarantee amnesty
On 6 March 2020, the government introduced a superannuation guarantee ('SG') amnesty.

This amnesty allows employers to disclose and pay previously unpaid super guarantee charge ('SGC'), including nominal interest, that they owe their employees, for quarter(s) starting from 1 July 1992 to 31 March 2018, without incurring the administration component ($20 per employee per quarter) or Part 7 (double SGC) penalty.

In addition, payments of SGC made to the ATO after 24 May 2018 and before 7 September 2020 will be tax deductible.

Employers who have already disclosed unpaid SGC to the ATO between 24 May 2018 and 6 March 2020 don’t need to apply or lodge again.

Employers who come forward from 6 March 2020 need to apply for the amnesty.
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The ATO will continue to conduct reviews and audits to identify employers not paying their employees SG.

New vacant land tax measures
A new ‘vacant land’ measure limits the deductibility of costs incurred on or after 1 July 2019 (i.e., from the 2020 income year) that relate to holding vacant land, even if the land in question was first held before that date.

Importantly, however, the new provisions include (amongst other exceptions) a ‘carrying on a business’ exception. This exception means that the limitations will not apply to the extent that the ‘vacant land’ is used, or available for use in carrying on a business, including a business carried on by either the taxpayer (i.e., the owner of the land) or by a specified related entity.

Further, an additional business exception also applies where ‘vacant land’ is leased at arm’s length for use in any business (i.e., not just a business of the taxpayer or of a related entity).
​
In addition, land is considered to be “available for use” if it is held for future use in a business currently carried on by the taxpayer or is made available to a specified related entity for future use in a business that entity currently carries on.

ATO on property investments
The ATO has reminded taxpayers in a property business or thinking about investing in property that there are things they should know, such as:
  • they need a clearance certificate from the supplier when buying property over $750,000;
  • they may have to pay the GST on the sale of brand new residential property separately to the ATO; and
  • income from property activities could increase their total business turnover.

The ATO says taxpayers with property should keep accurate and complete records where they:
  • rent it out as a residential property (even short-term through the sharing economy);
  • flip houses; and/or
  • build a new house to sell for a profit.

In addition, when it's time to lodge, taxpayers should remember:
  • Some expenses need to be claimed over time.
  • It is only possible to claim expenses for:
– periods when the property is genuinely available for rent; and
– travel related to renting property, if the taxpayer is in the business of letting properties.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
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