Business Tax – November

THE UPDATED FEDERAL BUDGET 2022–23

The Treasurer, the Hon Dr Jim Chalmers MP, handed down his (and the Albanese Government’s) first Budget on 25 October 2022.

There were few tax measures in the Budget. What measures there were mostly affect multinationals. You can read about the tax measures further below.

Final Budget Outcome for 2021–22

The underlying cash balance (deficit) for 2021–22 was $32.0 billion (1.4% of GDP). The Final Budget Outcome for 2021–22 represents a reduction in the underlying cash balance of $47.9 billion compared with that estimated in the Federal Budget 2022–23 released on 29 March 2022. This was a result of higher receipts of $27.7 billion and lower payments of $20.1 billion.

Gross debt was $895.3 billion (39.0% of GDP) at the end of 2021–22, $10.7 billion lower than estimated in the Federal Budget 2022–23 in March. Net debt was $515.6 billion (22.5% of GDP), $115.8 billion lower than estimated.

What’s the Government’s plan?

In the Government’s own words, the Budget is intended to:

‘provide responsible cost-of-living relief that delivers an economic dividend’ — this includes making child care more affordable for more than 1.2 million families, cutting the cost of medicines for around 3.6 million Australians, expanding the Paid Parental Leave scheme to reach 26 weeks in 2026, delivering more affordable housing, and getting wages moving again (by ‘making it easier for employees and businesses to come together and reach agreement on wages and conditions’);
‘build a stronger, more resilient and more modern economy’ by lifting ‘the speed limit on the economy by better utilising Australians’ talents, building their skills, broadening Australia’s economic base and creating the industries of the future’; and
‘begin the hard task of budget repair to pay for what is important’ — as a first step, the Budget makes significant savings from ‘redirecting spending to priorities, unwinding wasteful spending to support budget repair, better aligning infrastructure investment with market capacity, and improving the fairness and integrity of the tax system’.

The Government expects to save $22 billion in spending reductions and reprioritising expenditure, $3.7 billion from improving the integrity of the tax system and $952.8 million through action to enforce the payment of tax by multinationals.

Specific measure

Specific spending measures announced in the Budget include:

$4.6 billion to increase Child Care Subsidy rates to make early childhood education and child care more affordable for eligible families;
$531.6 million to expand the Paid Parental Leave Scheme — the number of weeks available to families will increase from 20 weeks to 26 weeks by 1 July 2026;
$350 million to build 10,000 homes under a new Housing Accord, which sets an ‘aspirational target’ of 1 million new, well-located homes over 5 years from mid-2024;
$324.6 million over 4 years for the Help to Buy scheme, which will give eligible home buyers an equity contribution to buy a home with a smaller deposit and mortgage;
an additional $491.8 million over 4 years on 20,000 new government supported university places for under-represented people, prioritising areas of skills shortages such as teaching, nursing and engineering;
$270.8 million over 2 years to prioritise construction and new equipment at primary and secondary schools;
$1.4 billion over 4 years to expand and amend Pharmaceutical Benefits Scheme (PBS) listings to include new medicines, such as treatments for COVID-19 and cancer;$787 million over 4 years on reducing PBS patient co-payments from $42.50 to $30 on 1 January 2023 (an ongoing annual cost of $233.4 million);$235 million over 4 years for urgent care clinics that will provide an option for 24/7 care outside hospital emergency departments;
$2.4 billion to extend full-fibre access to 1.5 million additional premises, including over 600,000 in regional Australia
$1.9 billion to support the transition of regional industries to net zero emissions;
$3 billion to meet disaster recovery costs from this year’s floods;
$262.6 million to establish and support the proposed National Anti-Corruption Commission.

Helping small business

The Government will provide $15.1 million over two calendar years from 1 January 2023 to 31 December 2024 to extend the Small Business Debt Helpline and the NewAccess for Small Business Owners programs to support the financial and mental wellbeing of small business owners.

This measure will redirect partial funding from the Australian Small Business and Family Enterprise Ombudsman component of the measure in the Federal Budget 2022–23 in March titled Small Business Support Package, and savings identified as part of the Spending Audit.

Increased penalties

The Government will increase penalties for breaches of competition and consumer law to deter conduct that stifles competition and increases costs to consumers. Maximum penalties for corporations will increase from $10 million to $50 million per breach, and from 10% of annual turnover to 30% of turnover (whichever is greater) during the period the breach took place.

Pensioners

Pensioners will receive a one-off credit of $4,000 to their work bonus income bank, to support those who want to work or work more hours, without losing their pension. In addition, the Government will increase the income threshold for the Commonwealth Seniors Health Card from $61,284 to $90,000 for singles and from $98,054 to $144,000 (combined) for couples.

The Government will not proceed with the Pension Supplement changes announced in the Mid-Year Economic and Fiscal Outlook (MYEFO) 2016–17 in relation to permanent departures overseas and temporary absences.

Want to read more?

More information can be found in the Budget papers at budget.gov.au.

BUDGET TAX MEASURES

The tax measures announced for the first time in the Budget are outlined below.

Intangible depreciating assets

The Government will not proceed with the measure to allow taxpayers to self-assess the effective life of intangible depreciating assets, previously announced in the Federal Budget 2021–22. This measure was due to apply to assets acquired on or after 1 July 2023.

This means that the effective life of intangible depreciating assets, such as patents, registered designs, copyrights and in-house software, will continue to be set by legislation.

Share buy-backs

The Government will improve the integrity of the tax system by aligning the tax treatment of off-market share buy-backs undertaken by listed public companies with the treatment of on-market share buy-backs.

This measure will result in no amount of the purchase price received from these particular off-market share buy-backs being treated as a dividend.

This measure will apply from the time of the announcement on Budget night (7:30pm AEDT on 25 October 2022).

Thin capitalisation changes

The Government will strengthen Australia’s thin capitalisation rules to address risks to the corporate tax base arising from the use of excessive debt deductions. This measure will apply to income years commencing on or after 1 July 2023.

The current thin capitalisation regime limits debt deductions up to the maximum of three different tests: a safe harbour (debt to asset ratio) test; an arm’s length debt test; and a worldwide gearing (debt to equity ratio) test. The Government will replace the safe harbour and worldwide gearing tests with earnings-based tests to limit debt deductions in line with an entity’s activities (profits).

This measure includes changes to:

limit an entity’s debt-related deductions to 30% of profits (using EBITDA — earnings before interest, taxes, depreciation, and amortisation — as the measure of profit). This new earnings-based test will replace the safe harbour test;
allow deductions denied under the entity-level EBITDA test (interest expense amounts exceeding the 30% EBITDA ratio) to be carried forward and claimed in a subsequent income year (up to 15 years);
allow an entity in a group to claim debt-related deductions up to the level of the worldwide group’s net interest expense as a share of earnings (which may exceed the 30% EBITDA ratio). This new earnings-based group ratio will replace the worldwide gearing ratio;
retain an arm’s length debt test as a substitute test which will apply only to an entity’s external (third party) debt, disallowing deductions for related party debt under this test.

The changes will apply to multinational entities operating in Australia and any inward or outward investor, in line with the existing thin capitalisation regime. Financial entities will continue to be subject to the existing thin capitalisation rules.

Other multinational tax integrity measures

The Government will introduce:

an anti-avoidance rule to prevent significant global entities (entities with global revenue of at least $1 billion) from claiming tax deductions for payments made (on or after 1 July 2023) directly or indirectly to related parties in relation to intangibles held in low- or no-tax jurisdictions (a jurisdiction with a tax rate of less than 15% or a tax preferential patent box regime without sufficient economic substance); and
reporting requirements for relevant companies to enhance the tax information they disclose to the public, for income years commencing from 1 July 2023.

Under the new reporting requirements:

significant global entities will be required to prepare for public release certain tax information on a country by country (CbC) basis and a statement on their approach to taxation;
Australian public companies (listed and unlisted) will be required to disclose information on the number of subsidiaries and their country of tax domicile; and
tenderers for Australian Government contracts worth more than $200,000 will be required to disclose their country of tax domicile (by supplying their ultimate head entity’s country of tax residence).

ATO tax avoidance taskforces

The Government will extend the existing ATO’s Shadow Economy Program for a further 3 years from 1 July 2023. This will enable the ATO to continue a strong and co-ordinated response to target shadow economy activity, protect revenue and level the playing field for those businesses that are following the rules.

The Government has also boosted funding for the ATO’s Tax Avoidance Taskforce by around $200 million per year over 4 years from 1 July 2022, in addition to extending this Taskforce for a further year from 1 July 2025. This will support the ATO to pursue new priority areas of observed business tax risks, complementing the ongoing focus on multinational enterprises and large public and private businesses.

These measures are estimated to increase receipts by $4.9 billion and increase payments by $1.785 billion over the 4 years from 2022–23.

The Government will also provide $80.3 million to the ATO to extend the Personal Income Taxation Compliance Program for 2 years from 1 July 2023.

Legacy measures dropped

The Government has reviewed and will not proceed with the following legacy tax and superannuation measures that were announced but not legislated by the previous Government:

the MYEFO 2013–14 measure that proposed to amend the debt/equity tax rules;
the Federal Budget 2016–17 measure that proposed changes to the taxation of financial arrangements (TOFA) rules (a delayed start date was announced in the Federal Budget 2018–19);
the Federal Budget 2016–17 measure that proposed changes to the taxation of asset-backed financing arrangements;
the Federal Budget 2016–17 measure that proposed to introduce a new tax and regulatory framework for limited partnership collective investment vehicles;
the Federal Budget 2018–19 measure that proposed to change the annual audit requirement for certain self-managed superannuation funds (SMSFs);
the Federal Budget 2018–19 measure that proposed to introduce a limit of $10,000 for cash payments made to businesses for goods and services;
the Federal Budget 2018–19 measure that proposed to introduce a requirement for retirement income product providers to report standardised metrics in product disclosure statements; and
the MYEFO 2021–22 measure that proposed establishing a deductible gift recipient category for providers of pastoral care and analogous well-being services in schools.

Legacy measures – start dates deferred

The Government will defer the start dates of the following legacy tax and superannuation measures to allow sufficient time for policies to be legislated and implemented:

the MYEFO 2019–20 measure proposing a sharing economy reporting regime will be deferred from:
1 July 2022 to 1 July 2023 for transactions relating to the supply of ride sourcing and short-term accommodation; and
1 July 2023 to 1 July 2024 for all other reportable transactions (including but not limited to asset sharing, food delivery and tasking-based services);
the Federal Budget 2021–22 measure proposing to relax the residency requirements for SMSFs and APRA-regulated small superannuation funds will be deferred from 1 July 2022 to the income year commencing on or after the date the enabling legislation receives Royal Assent; and
the Federal Budget 2021–22 measure making technical amendments to the TOFA rules will be deferred from 1 July 2022 to the income year commencing on or after the date the enabling legislation receives Royal Assent.

Other measures

The Government announced a number of non-business related measures:

the maximum financial penalties for breaches relating to residential land under the foreign investment framework will double on 1 January 2023 (fees for all applications made under the foreign investment framework doubled on 29 July 2022);
the value of a penalty unit will increase from $222 to $275 for offences committed on or after 1 January 2023;
the minimum eligibility age for making super downsizer contributions will be lowered from 60 to 55 (this measure was announced before the Budget and is contained in a bill currently before Parliament)
donations made from 1 July 2022 to 30 June 2025 to Australians for Indigenous Constitutional Recognition will be tax deductible; and
the listing of Australian Women Donors Network as an entity eligible to receive tax deductible donations (as a DGR) will be extended for 5 years, for gifts made from 9 March 2023 to 8 March 2028.

Personal tax rates – no changes

There were no changes in the Budget to personal income tax rates. This means that the Government:

has committed (for the time being) with the Stage 3 income tax cuts that are already legislated to come into effect from the 2024–25 income year (from 1 July 2024); and
did not extend the Low and Middle Income tax offset (LMITO) (which ended on 30 June 2022) to the 2022–23 income year – this means that taxpayers earning up to $126,000 will pay more tax this year than for 2021–22 (an additional $1,500 if taxable income is between $48,000 and $90,000).

Tip! Talk to your tax adviser about any of the Budget measures that might affect your business.

WHAT’S NEW?

COVID-related grants

Payments made before 1 July 2022 to businesses affected by the COVID-19 pandemic under various State and Territory programs are not taxable. At the end of August, the Government added a number of Victorian and ACT programs to the scheme. This means that payments under these additional programs are non-assessable non-exempt income (tax-free). The Victorian programs are:

Business Costs Assistance Program Four – Construction;
Licenced Hospitality Venue Fund 2021 – Top Up Payments;
Business Costs Assistance Program Round Two – Top Up;
Business Costs Assistance Program Round Three;
Business Costs Assistance Program Round Four;
Business Costs Assistance Program Round Five;
Impacted Public Events Support Program Round Two;
Live Performance Support Program (Presenters) Round Two;
Live Performance Support Program (Suppliers) Round Two;
Commercial Landlord Hardship Fund 3.

The additional ACT program is ACT HOMEFRONT 3.

FROM THE ATO

Director ID – time is running out

Time is running out for directors of companies in Australia to apply for their director identification number (director ID), with the 30 November deadline less than a month away.

A director ID is required for the director or alternate director of:

a company, registered Australian body, or registered foreign company under the Corporations Act 2001;
an Aboriginal and Torres Strait Islander corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act).

To check if a director ID is required, you can search ABN Lookup with the ABN or business name. If an ASIC Registration — ACN or ARBN or ARSN or ARFN — is showing against the record, the director of the company will need to apply for a director ID.

Directors under the CATSI Act have a different timeframe in which to apply.

All CATSI Act directors can apply for a director ID now and must apply by 30 November 2023. New directors must apply for their director ID prior to appointment from 1 November 2022.

To apply

The fastest way to apply for a director ID is online, using the myGovID app to log in to the Australian Business Registry Services (ABRS) website. It’s free to apply and directors must apply themselves to verify their identity. A myGovID with at least a Standard identity strength is required.

In addition to your myGovID, you will need:

a tax file number (TFN);
the residential address as held by the ATO; and
information from 2 documents to verify your identity.

Documents that can be used include:

bank account details;
an ATO notice of assessment;
APRA fund account details;
a dividend statement;
a Centrelink payment summary; and
a PAYG payment summary (this is different from an income statement or PAYG instalment activity statement).

Business income and expenses

If you are running a business, most income received by the business is assessable for income tax purposes. The total gross amount is referred to as ‘assessable income’.

You need to report assessable income in your business’ tax return. It includes:

cash income and income from online transactions;
commissions and investment earnings;
recovered bad debts for which your business previously claimed a tax deduction;
most government payments;
capital gains and losses;
increases in the value of trading stock;
stock taken for personal use; and
payments from an insurance claim related to your business.

Make sure to also check what income you can exclude – for example, some COVID-19 government support payments are not assessable if you meet the eligibility criteria.

Remember you can reduce your business’s taxable income by claiming business tax deductions, as long as:

the expense directly relates to earning your business’ assessable income;
you claim only the business-use portion if the expense is for a mix of business and private use; and
you have records to substantiate your claims.

Expenses may include:

motor vehicle and travel expenses;
items related to protecting staff from COVID-19;
employee superannuation contributions; and
payments you make to workers (including their wages) as long as you’ve complied with the Pay as you go (PAYG) withholding and reporting obligations for each payment.

Tip! Your tax adviser can help you with your tax.

Using a motor vehicle for business?

Here are 4 things to keep in mind when claiming motor vehicle expenses — such as fuel, oil, servicing and registration — for your business.

If you operate your business as a sole trader or partnership (where at least one partner is an individual), the method you must use to calculate your deduction depends on the type of vehicle. For cars, you must use either the cents per kilometre or logbook method. For all other vehicles, you must use the actual costs method, where you claim the actual costs of expenses you incurred based on receipts.

If you use the logbook or actual costs method, remember you can only claim the business-use portion of your motor vehicle expenses.

If you operate your business through a company or trust, you must use the actual costs method to work out the deductions you are entitled to, regardless of the type of motor vehicle you use.

If you use the logbook or actual costs method, you can claim depreciation or decline in value only for the business-use portion of the motor vehicle. The maximum you can claim as a deduction for the depreciation of your car is $64,741 for the 2022–23 income year or the cost of the vehicle (whichever is less). You may be eligible to claim depreciation under the temporary full expensing rules.

Tip! Talk to your tax adviser about the best way to calculate the deductions and the record-keeping requirements.

How’s your record keeping?

The ATO has reminded businesses about the importance of keeping correct records. For one thing, good record-keeping makes things easier at tax time.

When it comes to record-keeping, there are 5 rules. You need to:

keep all records related to starting, running, changing, and selling or closing your business that are relevant to your tax and superannuation affairs;
store records safely to prevent damage and protect information from being changed (you must not change relevant information in records);
keep most records for 5 years (for example, you need to keep records of losses for up to 5 years after you’ve fully claimed the loss);
be able to show the ATO your records if they ask for them; and
ensure your records are in English or easily converted to English.

Tip! Talk to your tax adviser about what records to keep and how to keep them.

Using business stock for private purposes?

If you are a sole trader or a partner in a partnership and take goods from your business for your private use, make sure you accurately record this in your stock on hand.

Accessing your trading stock for private use is fine from a tax perspective, but you need to account for the stock correctly:

each time you use it (as you would if you sold it); and
at the end of each income year.

If you do not adjust the actual cost of goods sold to reflect the goods you used for private consumption, you could be incorrectly claiming expenses you’re not entitled to.

A good plan is to set up regular reconciliation processes to help you keep track of each time you take stock for private use. Keep a record which shows:

the date;
a description of what was taken;
the reason stock was taken; and
the cost or market value of the item (excluding GST).

At the end of the income year, any goods taken for your own use should not be accounted for as stock on hand.

Certain businesses can use the amounts that the ATO will accept as estimates of the value of goods taken from trading stock for private use. The ATO recently published the accepted estimates for 2022–23. They are reproduced below.

Type of business	Amount (excluding GST) for adult/child over 16	Amount (excluding GST) for child aged 4-16
Bakery	$1,360	$680
Butcher	$990	$495
Restaurant/café (licensed)	$4,830	$1,950
Restaurant/café (unlicensed)	$3,900	$1,950
Caterer	$4,120	$2,060
Delicatessen	$3,900	$1,950
Fruiterer/greengrocer	$1,010	$505
Takeaway food shop	$4,030	$2,015
Mixed business (includes milk bar, general store and convenience store)	$4,870	$2,435

Entertaining your employees?

With summer and Christmas just around the corner, you may be planning a party or similar event (e.g. a bowls day) for your employees.

The ATO has reminded employers to make sure they consider the fringe benefits tax (FBT) implications of the party or other event.

These will depend on:

the amount you spend on each employee;
when and where the event is held;
the value and type of gifts you provide; and
who attends – is it just employees, or are partners, clients or suppliers also invited?

Don’t forget to keep all records relating to the entertainment-related fringe benefits you provide, including how you worked out the taxable value of benefits.

Tip! Talk to your tax adviser to discuss any FBT implications.

Superannuation for holiday work

From 1 July 2022, you need to pay superannuation guarantee (SG) for employees at the rate of 10.5%, regardless of how much you pay them. This is because the former $450-per-month income threshold for SG eligibility has been removed.

Take Jane for instance. She is a 22-year-old employee working a short-term job at a restaurant over the holiday season. She works 23 hours in a month, earning $430 before tax.

In the past, holiday employees such as Jane would not be paid superannuation as they earned below the $450 income threshold. Now, Jane will be eligible for superannuation paid on her ordinary time earnings at the rate of 10.5%.

This change doesn’t affect other eligibility requirements for SG. Workers who are aged under 18 years still need to work more than 30 hours in a week to be eligible.

For example, Anish is a 17-year-old employee working a job at a hotel over the holiday season. Anish works 32 hours in a week at the hotel and earns $800 before tax. He also works 5 hours at his local café, earning $150.

As Anish worked more than 30 hours in one week at the hotel, his employer will need to pay superannuation on the $800 he earned.

As Anish works less than 30 hours a week at the café, he is not entitled to superannuation from this employer. Likewise, Anish is not entitled to superannuation for any weeks he works less than 30 hours at the hotel.

Check your payroll and accounting systems are up to date so you are correctly calculating your employees’ SG payments.

Get new workers onboard faster

Did you know your employees can complete a tax file number (TFN) declaration through ATO online services? This is an easy way for them to provide you and the ATO with the required information. If your new employee has a myGov account linked to the ATO, once they are logged in they can:

access ATO online services;
go to the ‘Employment’ menu;
select ‘New employment’ and complete the form.

Your employees will need your ABN to complete the form. When they submit it, their TFN declaration details are sent straight to the ATO, so you don’t have to. The form will then enable them to print and give you the summary of their tax details. You’ll need the summary so you can input the data into your system.

If your payroll software can link to the online commencement forms, it will automatically receive your new employees’ information from the ATO, saving you time spent entering the information manually. Check with your software provider to find out if they offer this service.

The New employment form can also be used to collect a range of information. Employees can use it to authorise variations to the amount you withhold from their pay for tax or the Medicare levy, or to advise you of their choice of superannuation fund. They can also use it to update their tax circumstances with you, for example, if:

their residency status has changed;
they no longer have a government study and training loan; or
they are claiming the tax-free threshold from another employer.

You can continue to use your current processes when preferred, including providing a paper TFN declaration where the employee can’t create a myGov account or doesn’t have access to the internet.

Stapled superannuation funds for employers

A stapled superannuation fund is an existing superannuation account linked, or ‘stapled’, to an individual employee so it follows them as they change jobs.

Stapled funds avoid the need to open a new superannuation account every time an employee starts a new job, thus reducing account fees. Note that if choice of superannuation fund obligations are not met, additional penalties may apply.

You need to request stapled superannuation fund details for your business’ new employees when:

you need to make superannuation guarantee (SG) payments for that employee;
they are eligible to choose a superannuation fund but don’t, including contractors for whom you pay mainly for their labour but who are employees for SG purposes.

You may need to request stapled superannuation fund details for some employees who aren’t eligible to choose their own superannuation fund. This includes employees who are:

temporary residents; or
covered by an enterprise agreement or workplace determination made before 1 January 2021.

For employees who started working for your business on or after 1 November 2021 and have not provided a valid choice of superannuation fund, you should make contributions into:

the employee’s stapled superannuation fund; or
the employer nominated account (if the ATO advises you that they do not have a stapled superannuation fund).

If an employee later nominates their choice of superannuation fund, you have 2 months to start paying contributions into that fund.

Steps to requesting stapled superannuation fund details

Before you can request stapled superannuation fund details, you need to have offered all eligible employees a choice of superannuation fund.

You or your authorised representatives can request stapled superannuation fund details using ATO online services. Check and update the access levels of your authorised representatives in ATO online services. (Your tax adviser may also be able to make a request on your behalf.)

You must also establish an employment relationship. You can request your employee’s stapled superannuation fund details after you submit a TFN declaration or Single Touch Payroll (STP) pay event, which identifies that you have an employment relationship or link to your employee.

Choice shortfall penalty

You may have to pay the choice shortfall penalty, which is the additional SG charge (SGC), if you contributed to your default fund without making a stapled superannuation fund request.

To avoid the choice shortfall penalty, make sure you:

request the stapled superannuation fund details for your employee as soon as possible if they have not provided you with their choice of fund;
pay the employee’s full SG contribution to the stapled superannuation fund we return to you in the request; and
pay the contribution to the stapled superannuation fund by the quarterly due date.

Tip! Your tax adviser may be able to help your business meet its superannuation obligations.

SUCCESSFUL PROSECUTIONS

Brothers busted for fake document scheme

Two brothers (YB and AB) who ran an accounting firm (Halifax Business Consulting) have received criminal convictions for a scheme to falsify Commonwealth documents, including business activity statements (BAS) and notices of assessment (NOA), in order to obtain bank loans for their business and a number of clients.

The ATO uncovered the scheme after auditing another matter and launching a subsequent investigation that saw search warrants executed at Halifax’s office and an employee’s home.

The ATO found evidence that the brothers had paid employees and others to create false BAS and NOAs that inflated sales or earnings, which would then be passed off as genuine to banks and other lenders. In several cases, they had commissioned the firm’s graphic designer (Mr V) to alter documents at their request.

The brothers would make handwritten amendments to the documents – sometimes doubling their clients’ actual earnings – before sending them on to Mr V to digitally manipulate. Mr V went to great lengths to make the documents look legitimate. In one email, he reminded his boss (YB) to provide only one of the doctored documents by facsimile or hard copy, to avoid someone noticing he had edited the original document’s security stamp.

Mr V was convicted for the part he played in the offending. He was sentenced to a 12-month Community Correction Order requiring him to complete 200 hours of unpaid community work.

YB was convicted and sentenced to 10 months imprisonment while his brother (AB) was convicted and sentenced to 6 months imprisonment. Both were released immediately on a $1,000 recognisance release order requiring them to be of good behaviour for 18-months.

Restaurateur served with jail term

A McLaren Vale restaurateur (Mr R) has been sentenced to 5 years and 3 months imprisonment after being found guilty of fraudulently obtaining $613,262 in GST refunds and attempting to obtain a further $210,333 that was stopped by the ATO.

Between September 2016 and November 2017, Mr R submitted 19 false business activity statements (BAS), which considerably overstated the total sales and acquisitions of the restaurant and gift shop business that he operated with his wife.

Several documents provided by Mr R throughout the audit contained inconsistencies, including a sales summary from a point-of-sale (POS) system that was created in Microsoft Word, and a POS report claiming to cover the dates of 1 June to 31 June, despite there being only 30 days in June.

During the ATO’s audit, Mr R also supplied a forged medical document advising his wife was receiving treatment for cancer. The ATO later checked with the doctor listed on the document, who confirmed she didn’t write the letter and wasn’t treating anyone by that name.

In sentencing, Her Honour Judge Kudelka described Mr R’s offending as ‘persistent and deliberate’, and that his false claims about his wife’s health were ‘despicable’. Mr R was sentenced to 5 years, 3 months and 2 days imprisonment, with a non-parole period of 3 years. He has also been ordered to pay $599,122 in reparations.

5 years jail for serial GST fraudster

A Queensland woman (Ms B) has been sentenced to 5 years imprisonment, with a non-parole period of 20 months, for attempting to fraudulently obtain more than $650,000 in GST refunds, as well as other offences.

Ms B used ABNs that weren’t linked to active businesses to submit a series of false claims for GST input tax credits.

While some of Ms B’s earlier claims were paid, ATO audits found she could supply no evidence to prove she was running a business. As a result, the ATO disallowed her claims and cancelled her GST registration.

Despite this Ms B repeatedly reactivated her GST registration and continued to make a series of fictitious claims. On each occasion, ATO checks confirmed she could not provide any supporting documentation that she was actually running a business, and each time her claim was disallowed.

In total, Ms B obtained a financial benefit of over $150,000 and attempted to claim a further $500,000.

Tip! If you know or suspect phoenix, tax evasion or shadow economy activity, the ATO would like you to report to it by completing the tip-off form on the ATO website or phoning them on 1800 060 062.

Key tax dates

Date	Obligation
21 Nov 2022	October monthly BAS due date
28 Nov 2022	Lodge SG statement and pay September quarterly SGC (if required)
1 Dec 2022	Full self-assessment companies — pay 2021–22 income tax
21 Dec 2022	Lodge and pay November monthly BAS
21 Jan 2023*	Lodge and pay December monthly BAS
28 Jan 2023*	Superannuation guarantee payment due date for December quarter
31 Jan 2023	Closely held trust — lodge December quarterly TFN report
21 Feb 2023	Lodge and pay January monthly BAS
28 Feb 2023	· Lodge and pay December quarterly BAS · Pay second quarterly PAYG instalment for 2022–23 · Lodge annual GST return (if no tax return due) · Lodge SG statement and pay December quarterly SGC (if required) · Lodge and pay SMSF annual return for new SMSFs (unless otherwise advised)

Note! Talk to your tax agent to confirm the correct due dates for your own tax obligations. For example, you may have more time to lodge and pay if impacted by COVID-19 or a natural disaster.

Disclaimer

TaxWise® News is distributed by professional tax practitioners to provide information of general interest to their clients. The content of this newsletter does not constitute specific advice. Readers are encouraged to consult their tax adviser for advice on specific matters.

November 9th, 2022|

What's new? – Tax changes from 1 July 2022

A number of income tax and superannuation changes relevant to businesses took effect from 1 July 2022, including:

temporary full expensing (allows an immediate deduction for the cost of a depreciating asset) was extended by 12 months to 30 June 2023;
the loss carry back (allows companies to carry tax losses back as far as the 2018–19 income year) was extended by 12 months to 30 June 2023;
the cessation of employment as a taxing point for ESS interests that are subject to deferred taxation was removed;
the superannuation guarantee rate increased from 10% to 10.5%;
the $450 monthly salary and wages threshold for superannuation guarantee purposes was abolished.

Tax thresholds and rates

Various tax thresholds and rates have increased for the 2022–23 income year. These are listed below.

Item	Threshold/rate from 1 July 2022
CGT improvements	$162,899
Div 7A benchmark interest rate	4.77%
Car limit (depreciation)	$64,741
Car expenses – cents per kilometre method	78 cents/km
Reasonable meal expenses – employee truck drivers	Breakfast – $26.80 Lunch – $30.60 Dinner – $52.75
Reasonable meal expenses – other employees	See the tables in Taxation Determination TD 2022/10 (in the ATO’s Legal Database)
Overtime meal allowance – reasonable amount	$33.25
Luxury car tax – fuel efficient cars	$84,916
Luxury car tax – other	$71,849

GDP adjustment for 2022–23

The GST and PAYG instalment amounts are usually adjusted every year by the ‘GDP adjustment factor’. This is either calculated on the basis of changes in the GDP (gross domestic product) over a 2-year period or is a percentage set by law.

For 2020–21 and 2021–22, the GDP adjustment factor was reduced by legislative amendment to nil. For 2022–23, the GDP adjustment factor has been reduced by legislative amendment to 2% (instead of the usual 10% uplift).

Tip! Contact your tax adviser to find out about any changes that might affect your business.

FBT exemption for electric vehicles

Legislation has been introduced into Parliament that will provide a fringe benefits tax (FBT) exemption for electric and other low emission cars used by employees for private use.

To be eligible for this FBT exemption:

the car must be a ‘zero or low emissions’ car – for example, a battery electric vehicle, a hydrogen fuel cell electric vehicle or a plug-in hybrid electric vehicle; and
the value of the car at the first retail sale must be below the luxury car tax threshold for fuel efficient cars ($84,916 for 2022–23).

A car that has an internal combustion engine will not be eligible for the FBT exemption unless it is able to be fuelled by a battery that can be recharged by an off-vehicle power source (i.e. a plug-in hybrid car).

The FBT exemption will apply to fringe benefits provided on or after 1 July 2022 for eligible electric cars (including second hand ones) first held and used on or after 1 July 2022. The operation of the amendment will be reviewed after three years in light of electric car take up.

Tip! Talk to your tax adviser for more details about this FBT exemption.

Corporate tax transparency – resident private companies

The corporate tax transparency income threshold for Australian-owned resident private companies has been reduced from $200 million to $100 million.

Each year, the ATO is required to publish corporate tax transparency reports which contain information reported by large corporations. The corporate tax transparency population refers to the entities that are included in the reports.

From the 2022–23 income year onwards, the ATO will include in its corporate tax transparency reports, information reported by Australian-owned resident private companies with an income of $100 million or more.

Sharing economy

Legislation has been introduced into Parliament that will extend the reporting of data to the ATO. The measure, once legislated, will require electronic platform operators to provide information on transactions made through the platform to the ATO.

It is proposed that transactions relating to the supply of taxi travel and short-term accommodation will need to be reported from 1 July 2022, and all other transactions from 1 July 2023.

It's tax time again!

Your business’ income tax return for the 2021–22 income year must be lodged by 31 October, unless you have a substituted accounting period. If your business’ tax return is lodged through a registered tax agent, the due date for lodgment is likely to be later than 31 October, possibly even as late as May next year.

Lodging a tax return

Are you a sole trader?

Even if your taxable income is below the tax-free threshold ($18,200), you still need to lodge a tax return.
Do you pay PAYG instalments? Lodge your activity statements and pay all your PAYG instalments before you lodge your tax return so your income tax assessment takes into account the instalments you’ve paid throughout the year.

Are you a partnership?

If you operate your business in a partnership:

the partnership lodges the partnership tax return, reporting the partnership’s net income or loss (assessable income less allowable deductions).

As an individual partner, you report on your individual tax return:

your share of any partnership net income or loss
any other assessable income, such as salary and wages, dividends and rental income.

The partnership doesn’t pay income tax on the income it earns. Instead, you and each of the partners pay tax on the share of net partnership income (if any) you receive.

Are you a trust?

If you operate your business through a trust, the trust reports its net income or loss (this is the trust’s assessable income less allowable deductions).
The trustee is required to lodge a trust tax return.
As a trust beneficiary, you report on your individual tax return your share of the trust’s net income based on your share of the income of the trust to which you are presently entitled from the trust.

Are you a company?

If you operate your business through a company, you need to lodge a company tax return.
The company reports its taxable income, tax offsets and credits, PAYG instalments and the amount of tax it is liable to pay on that income or the amount of tax that is refundable to the company.

The company’s income is separate from your personal income.

Tip! Registered tax and BAS agents can help you with your tax.

Tax losses

A tax loss is when the total deductions you can claim, excluding gifts, donations and personal superannuation contributions, exceed your total income for an income year.

If your business makes a tax loss, you may be able to:

offset the loss in the same tax year against other assessable income;
carry forward the loss and claim it as a business deduction in a later year; or
carry the loss back to an earlier year (but not before 2018–19) in which the business has an income tax liability and receive a refundable tax offset – this is available only to companies.

If your business has made more than one tax loss in a year, you will need to consider each tax loss separately.

If you’re a sole trader or in a partnership and want to offset a tax loss, first check if the business activity meets at least one of the tests under the non-commercial loss rules. (Those rules do not apply to losses made by primary producers and professional artists whose income from other sources is less than $40,000.)

If you do meet one of the tests, then you can offset the loss against other assessable income (such as salary or investment income) in the same income year.

If you don’t meet the tests, you can defer the loss or carry it forward to future years. For example, you can offset it when you next make a profit. You may also be entitled to an exercise of the Commissioner’s discretion to use the loss, depending on your circumstances.

Non-commercial losses made by an individual with an adjusted taxable income exceeding $250,000 are quarantined.

The rules for record-keeping still apply in relation to business losses. You need to keep records for 5 years for most transactions. However, if you fully deduct a tax loss in a single income year, you need to keep records only for 4 years from that income year.

Tip! Talk to your tax adviser about the best way to utilise tax losses.

Personal services income

If you operate your business through a company or a trust, income earned by the company or trust from the provision of your personal services (personal services income or PSI) will be attributed to you unless:

the company or trust is conducting a personal services business (PSB); or
the PSI was promptly paid to you as salary or wages.

The company or trust will be conducting a PSB if at least one of four tests are satisfied. These are:

the results test (the most important test) – this is based on common law criteria for characterising an independent contractor (in contrast to an employee/employer relationship);
the unrelated clients test – this requires the PSI to be earned from at least two unrelated clients who contract your services as a direct result of an advertisement or other public offer of your services;
the employment test – this requires at least 20% (by market value) of your work to be performed by employees;
the business premises test – this requires you to use business premises that meet certain conditions (e.g. you have exclusive use of the premises and the premises must be physically separate from any premises you use for private purposes).

If 80% or more of your PSI (with certain exceptions) is income from one client (or the client and their associate(s)) and the results test is not met, the company or trust will only be able to be treated as conducting a PSB if it obtains a PSB determination from the ATO.

If a company or trust is not conducting a PSB and the PSI was not promptly paid to you as salary or wages, the PSI is attributed to you, the company or trust has PAYG withholding obligations and there are limitations on certain deductions. The company or trust cannot deduct amounts that relate to gaining or producing your PSI, unless you could have deducted the amount as an individual or the company or trust received the PSI in the course of conducting a PSB.

Even if you don’t use a company or trust to derive your PSI, there are limitations on the deductions that you may claim against your PSI. For example, you may not be able to deduct certain home office expenses, for example, occupancy expenses such as mortgage interest or rent.

Tip! The PSI rules are complicated so talk to your tax adviser if you provide your services through a company or trust.

Home office

A lot more people are working from home because of the COVID-19 pandemic. If you operate your business from a home office, you may be able to deduct the expenses of running that office. A home office is a room in your home that is used exclusively (or almost exclusively) for business activities.

Expenses you can claim a deduction for include:

occupancy expenses – these include rent, mortgage interest, water rates, land taxes and house insurance premiums. Occupancy expenses are usually calculated by apportioning the expenses between the home office and the rest of the property on a floor area basis;
running expenses – these are the increased costs from using your home for your business, including electricity or gas charges for heating, cooling and lighting, cleaning costs and the decline in value and the cost of repairs of deprecating assets such as furniture, furnishings and equipment; and
work related phone and internet expenses, including the decline in value of the handset – an apportionment will be required if the phone or computer is not used exclusively for work.

If you are entitled to claim occupancy expenses in relation to your home, you may have a capital gains tax (CGT) liability when you sell your home, due to the possible partial loss of the main residence exemption. The CGT issue arises when you are entitled to claim occupancy expenses, not whether you actually do claim them.

If you work from home but don’t have a home office as such, you can still claim deductions for ‘running expenses’. To simplify matters, the ATO allowed a rate of 80 cents per hour for running expenses incurred in the 2021–22 income year. Of course, you can still make a claim based on your actual running expenses if it produces a larger deduction. But remember that those expenses will need to be apportioned between work and private use and substantiation of the expenses you have incurred will be required.

Tip! If you have a home office, talk to your tax adviser about how to calculate your deduction and the records you must keep.

Company tax rate

The standard company tax rate is 30%.

The tax rate for the 2021–22 income year for companies whose aggregated annual turnover is under $50 million and where no more than 80% of a company’s assessable income is ‘base rate entity passive income’ (e.g. dividends, rent, interest, royalties and net capital gains) — called ‘base rate entities’ — is 25%. This is also the rate for the 2022–23 and later income years.

If more than 80% of a company’s assessable income is ‘base rate entity passive income’, or the company’s aggregated turnover is $50 million or more, the company will be taxed at the standard 30% rate.

Small business tax offset

If you are a sole trader, an individual who is a partner in a business partnership or an individual who is a beneficiary of a trust that carries on a business, you may qualify for the small business tax offset if the business’ aggregated turnover is less than $5 million (yes, $5 million and not the general $10 million small business aggregated turnover threshold). The offset is not available to an individual acting as a trustee.

The offset for the 2021–22 income year (and also for the 2022–23 income year) is equal to 16% of the income tax payable on the sole trader’s or other individual’s taxable income that qualifies as their net small business income. The offset is capped at $1,000.

Taxable payments annual report

Businesses that pay contractors or sub-contractors for certain services may need to lodge a taxable payments annual report (TPAR) with the ATO. These services are:

building and construction services;
cleaning services;
courier or road freight services;
IT services; and
security, investigation, or surveillance services.

The TPAR for 2021–22 should have been lodged by 28 August 2022.

From the ATO

Claiming tax deductions

A business can generally claim a tax deduction for most expenses it incurs, as long as:

the expense relates directly to earning the business’ assessable income;
only the business-use portion of an expense that’s for a mix of business and private use is claimed;
the business has records to substantiate the claims.

Note that apportionment of an expense that has a mix of business and private use is required only by sole traders and partnerships where at least one partner is an individual. If there is a non-business portion of an expense incurred by a company or a trust, the full expense is still claimed as an income tax deduction by the company or trust but the fringe benefits tax (FBT) rules or the rules in Division 7A may separately apply to the non-business use.

A business can claim deductions for:

day-to-day operating expenses, such as office stationery and salaries and wages – salaries and wages are deductible only if the business complies with its PAYG withholding and reporting obligations;
capital expenditure, such as machinery and equipment, which typically provide a long-term benefit. This expenditure can be depreciated over the term of the asset’s effective life. Alternatively, the business may be able to claim an immediate deduction through temporary full expensing (available until 30 June 2023).

Business expenses may include motor vehicle, travel, legal, digital product and home-based business expenses, and items related to protecting staff from COVID-19 at work such as hand sanitiser and sneeze or cough guards.

A business can claim deductions for superannuation contributions made on behalf of employees.

Keep in mind some expenses are not deductible, such as private expenses, entertainment expenses (unless they are provided as a fringe benefit), traffic fines and expenses that relate to earning tax-free income. Taxpayers who carry on a business are required to keep complete records of expenses incurred throughout the income year.

Tip! Your tax adviser can help your business maximise its tax deductions.

Division 7A – unpaid present entitlements

The ATO has published its final view on how Division 7A (which taxes certain amounts as deemed dividends) applies to trust entitlements of private company beneficiaries, for entitlements arising on or after 1 July 2022.

Division 7A can apply to an unpaid trust entitlement if it results in a private company providing financial accommodation to its shareholders or their associates (including the trust). This can occur where a private company beneficiary is made presently entitled to trust income and either the:

entitlement remains unpaid (an unpaid present entitlement) and the private company beneficiary knows it can demand payment but does not do so; or
the trustee holds the income amount on a separate trust (sub-trust) for the sole benefit of the private company beneficiary, and the private company beneficiary knows that the sub-trust fund is being used by the private company beneficiary’s shareholder or their associate.

In those circumstances, the private company is treated as having made a loan to the trust, or its shareholder or their associate (i.e. the trust or the entity using the income amount). If Division 7A applies, the loan will be treated as an unfranked dividend to the trustee of the trust, or that shareholder or associate.

Entitlements arising on or after 1 July 2022

No deemed dividend for the trust entitlement will arise if, before the earlier of when the private company’s tax return is lodged or is due to be lodged, any of the following occur:

trustee pays the private company its entitlement;
the entity that uses the funds enters into a complying loan agreement with the private company; or
the entity that uses the funds repays the funds in full (no interest is required to be charged in this case).

Entitlements that arose before 1 July 2022

Although the ATO has revised its views on the application of Division 7A to unpaid present entitlements, taxpayers can continue to rely on the ATO’s previous views where trust entitlements arose before 1 July 2022. This including managing existing sub-trust arrangements where the trust entitlements arose before 1 July 2022.

Tip! If an unpaid present entitlement (or other amount) is treated as a Division 7A deemed dividend, there may be adverse tax consequences. Talk to your tax adviser if your private company is the beneficiary of a related trust.

Partnerships – assigning interests

If you operate your business through a partnership, you may assign your interest in the partnership to an individual or other entity (the assignee). The assignee may be an individual or an entity related to you. These assignments are commonly known as ‘Everett assignments’, after the taxpayer in a 1980 High Court case.

The effect of this type of assignment is that you hold your assigned partnership interest on trust for the assignee.

The assignment does not make the assignee a partner in the partnership or give the assignee any entitlement to the assets, management or administration of the partnership or the right to inspection of books and accounts.

The ATO has a new risk assessment framework for these arrangements (they are set out in a Practical Compliance Guideline). The risk assessment framework is available only to taxpayers if their arrangements are commercially sound and do not exhibit high risk features.

An arrangement may be high risk where:

it purports to admit an individual, who is not an owner or equity holder in the partnership, as a partner of the partnership;
a partner’s relationship with the partnership has characteristics indicating that the relationship is akin to a contractor or employee of the partnership.

The ATO also considers a partner undertaking an Everett assignment as high risk if they:

do not have rights to full participation in management and the benefits of partnership;
receive a fixed draw or salary when they have limited or no exposure to the risks and benefits associated with the performance of the partnership to that draw or salary;
are indemnified by partners for any professional liability in respect of actions against the partnership.

If your Everett assignment has high risk features, the ATO is likely to give closer attention to the individual facts and circumstances of the arrangement. This includes a deeper consideration of whether anti-avoidance provisions, such as Part IVA, apply.

Small business CGT concessions

If a partnership interest is assigned, the small business CGT concessions are available only for capital gains arising from CGT events that relate to rights or interests that entitle an entity to income or capital of a partnership by making that entity a partner of the partnership.

Tip! Talk to your tax adviser if you are unsure whether your arrangement has high risk features.

The latest scam

The ATO is concerned about a high volume of SMS scams pretending to be from the ATO.

These scams tell you that you’re owed an income tax repayment and ask you to click a hyperlink and complete a form.

Clicking the link takes you to a fake ATO webpage that asks for your personal identifying information, including your credit card details.

The real ATO will never send you an SMS with a link to log in to their online services and will never ask for your credit card details.

If you’re ever unsure whether an SMS or email is really from the ATO, don’t reply. Phone the ATO on 1800 008 540 to check.

Tip!

Check out the ACCC’s Scamwatch website for helpful tips and resources.

Fraudulent GST refunds halted

The ATO has reported that the Serious Financial Crime Taskforce has undertaken further enforcement action in respect of 40,000 individuals suspected of being involved in a major GST fraud involving fake businesses to claim false refunds. Search warrants were executed in relation to 5 suspected offenders located in Sydney as part of Operation Protego. This follows earlier action where raids were executed against 19 individuals.

The ATO wants anyone who has given their myGov details to a criminal to contact the ATO so it can assist to protect the individual’s identity from being used to commit further crimes in their name. Any individual who believes their identity has been compromised should contact the ATO on 1800 467 033.

The ATO noted that social media has played a key role in promoting this type of GST fraud, with reports of people offering to buy and sell myGov details in order to access these refunds. Since investigations were commenced in May 2022, the ATO said it has stopped over $1 billion in fraudulent refunds from issuing.

Tipped off: ATO reveals most dobbed-in industries

Demanding cash from customers, paying workers ‘cash in hand’ or not declaring all sales are the most common examples of the 43,000 tip-offs received by the ATO in the last financial year (2021–22). The ATO is using intelligence from tip-offs as part of its approach to dealing with the shadow economy.

The shadow economy (previously referred to as the ‘black economy’) refers to activities that take place outside of the tax and other regulatory systems. The ATO estimates that the community misses out on around $11 billion in taxes each year as a result of the shadow economy.

Topping the list of industries the ATO was tipped off about in the past year were building and construction, hairdressing and beauty services, cafés and restaurants, management advice and related consulting services and road freight transport. Tip-offs from NSW topped the ATO’s list with over 13,400, followed closely by Victoria (over 11,500) and Queensland (over 9,200).

An ATO Assistant Commissioner explained that tip-offs helped the ATO shine a light on tax avoidance and protect honest businesses.

Other information

Tendering for Commonwealth Government procurements?

Businesses tendering for Commonwealth Government procurements that are undertaken through open tenders are subject to the Commonwealth Procurement Rules. Where the procurement has an estimated total value of over $4 million (including GST), the entity must obtain a statement of tax record (STR) showing satisfactory engagement with the tax system.

The satisfactory STR needs to be valid at the time of the tender closing.

The ATO recommends that entities requiring an STR:

refer to the tender request documents to clarify the requirements;
refer to the Black Economy Procurement Connected Policy to understand how the rules affect them (it is available on the Treasury website here);
apply for an STR early to allow time for processing before the tender closing date; and
keep their tax obligations (registration, lodgment, payment) up to date, to ensure they receive a satisfactory STR.

Tip! Your tax adviser can help you apply for an STR.

JobMaker Hiring Credit

The seventh claim period for JobMaker Hiring Credit payments is now open; it ends on 31 October 2022. The scheme is now closed to new entrants.

Eligible businesses can claim the JobMaker Hiring Credit for up to a year for each eligible employee hired between 7 October 2020 and 6 October 2021.

If your business is eligible, you can:

nominate your additional eligible employees – run payroll events through your Single Touch Payroll-enabled software;
claim – use ATO online services, Online services for business or a registered tax or BAS agent.

Tip! Your tax adviser can help you claim the JobMaker Hiring Credit.

Healthcare practices and payroll tax

A recent NSW Tribunal decision, Thomas and Naaz Pty Ltd (ACN 101 491 703) v Chief Commissioner of State Revenue [2022] NSWCATAP 220, confirmed that payments from a healthcare practice, such as a medical centre, to a healthcare practitioner may attract payroll tax under the contractor provisions in the payroll tax legislation.

The taxpayer in the case operated three medical centres. The Tribunal concluded that where the services provided by the doctors were a necessary part of the taxpayer’s business, the doctors provided them to the taxpayer as well as to the patients. This brought the payments within the scope of the payroll tax legislation.

The NSW decision followed the position taken by the Victorian Court of Appeal in 2019.

Tip! If your business is a medical centre or other healthcare practice, talk to your tax adviser about your potential payroll tax liability.

Disclaimer

September 15th, 2022|

Flood Support

Disaster recovery payments

If your business was affected by the recent floods in NSW and Queensland, you may receive a recovery payment from a local, state or federal government agency. The ATO website advises that the income tax treatment of these support payments is as follows:

Australian Government Disaster Recovery Payment (one off payment of $1,000 per adult and $400 for each child younger than 16) and Australian Government Disaster Recovery Payment – Special Supplement (a total of $2,000 per adult and $800 for each child under 16, paid in 2 instalments) — you don’t pay income tax on these payments.
Disaster Recovery Allowance (a short-term allowance for up to 13 weeks – the amount varies) — this payment is generally taxable.
Natural Disaster Relief and Recovery Arrangements — payments under this scheme are generally taxable.
Ex gratia recovery payments — whether you pay tax on these payments depends on the specific circumstances of the payments and whether the Commonwealth Government has determined to exempt such payments from tax.

Even if a disaster relief payment is not taxable, you may have to include it in your tax return.

If you provide emergency assistance to employees, you can claim a tax deduction for the payments. However, you are not required to withhold tax from the payments as the employee does not pay tax on them.

Tip! Talk to your tax adviser if you are uncertain whether a disaster recovery payment is taxable and whether you need to disclose it in your tax return.

ATO help

The ATO can help businesses affected by the recent floods, including businesses not directly impacted.

Activity statements and instalment notices

Small businesses in affected local government areas (LGAs) in Queensland and NSW who need to lodge business activity statements and instalment notices with an original due date of 28 February 2022 or 21 March 2022 can lodge relevant returns up until 28 March 2022. They do not need to request a lodgment deferral if they are able to lodge by that date.

This does not apply to significant global entities or large businesses, who will need to contact the ATO to work through any lodgment concerns.

Lists of affected LGAs in Queensland and NSW can be found on the Services Australia website.

Be aware that:

ATO systems will still reflect the original lodgment due date of these documents until they are lodged. The due date will only update after the lodgment has been received.
You may see a penalty on your account until the ATO can complete the process of remitting associated penalties.
The payment due date for these lodgments will not change. However the ATO will take an empathetic approach to your situation. General interest charge (GIC) will still apply if payment is not made by the original payment due date. If you are not able to pay by the due date, you should contact the ATO to discuss payment options and request a remission of GIC.

If you were not able to lodge by 28 March 2022, you can apply for a deferral on a case-by-case basis. If you already have a deferral, it will remain in place.

Other ATO assistance

If you are affected by the floods, the ATO will fast track any GST refunds you are owed. In addition, the ATO may:

give you extra time to pay a debt;
set up a payment plan tailored to your particular circumstances, including an interest-free period;
help you find your lost tax file number (TFN) after verifying your identity;
re-issue tax returns, activity statements and notices of assessment;
help you re-construct lost or damaged tax records; and
remit penalties or interest charged during the time you have been affected.

You can also vary your PAYG instalments, as well as claim a credit at label 5B on your activity statement for previous instalments paid. The ATO has said that it will not apply penalties or charge interest on variations for the 2021–22 income year if you have taken reasonable care to estimate your end of year income tax liability.

Tip! Your tax adviser can also liaise with the ATO on your behalf.

What is new?

Pre-Budget announcements

The Treasurer announced that the following measures will form part of the Federal Budget 2022–23:

the GDP uplift rate that applies to PAYG instalments and GST instalments will be set at 2% for the 2022–23 income year;
PAYG instalment payments will be aligned with financial performance. Thus, if financial performance declines, companies may be able to get refunds of instalments paid automatically (the implementation date is 1 January 2024);
the Government will facilitate sharing of Single Touch Payroll data with the State and Territory Governments on an ongoing basis to cater for pre-filling payroll tax returns;
eligible businesses will have the option of reporting taxable payments at the same time as activity statements (the implementation date is 1 January 2024) — this will remove the requirement to lodge a yearly Taxable Payments Annual Report (TPAR);
the Government will develop systems to ensure all trusts will have the option to lodge income tax returns electronically (the implementation date is 1 July 2024); and
manufacturers, importers and distributors in the alcohol and fuel sectors with an annual turnover of less than $50 million will be able to lodge and pay excise and excise-equivalent customs duty on a quarterly basis (from 1 July 2023).

If the Federal Budget 2022–23 contains more information on these measures, we will report it in the special Federal Budget edition of TaxWise® News due out on Tuesday 5^th April 2022

Changes approved by Parliament

The following changes are now law:

the extension of temporary full expensing (for depreciating assets) by 12 months to 30 June 2023 — so your business will be able to claim an outright deduction for the cost of depreciating assets you acquire (and install ready for use) before 1 July 2023 (this includes second hand assets if your business has an aggregated turnover of less than $50 million);
the extension of the loss carry back for companies to include the 2022–23 income year (a loss can be carried back as far as 2018–19);
a change to the taxation of employee share scheme interests subject to deferred taxation;
removing the Superannuation Guarantee $450 monthly income threshold (from 1 July 2022).

Changes in the pipeline

Bills currently before Parliament will:

allow a small business to apply to the Small Business Taxation Division of the Administrative Appeals Tribunal (AAT) for an order staying, or otherwise affecting, the operation of an ATO decision being reviewed by the AAT. For example, the AAT may direct the ATO not to take steps to collect a disputed debt that is being reviewed;
make disaster recovery grants paid to small businesses and farmers in relation to Cyclone Seroja tax-free;
reduce from 32.5% to 15% the effective tax rate on the first $45,000 of net income (i.e. salary, wages, bonuses etc less deductions) earned (from 1 March 2022) by foreign resident workers participating in the Australian Agriculture Worker Program or the Pacific Australia Labour Mobility scheme — this will affect the amounts withheld by employers (it is likely that the ATO will make new withholding schedules available for employers);
allow the ATO to require a taxpayer to complete an approved record-keeping course where the ATO reasonably believes the taxpayer has failed to comply with laws governing tax records — this will be an alternative to paying an administrative penalty; and
allow a business to self-assess, for depreciation purposes, the effective life of most intangible assets, e.g. copyright (other than copyright in a film), patents and in-house software, but not for assets held before 1 July 2023.

Of course, these measures may not be passed by the Parliament before the next Federal election (which will be held in May). If that happens, it is reasonable to assume they will be re-introduced in the next Parliament since they are uncontroversial and should receive bi-partisan support regardless of which party forms government.

Deduction for COVID-19 tests

The Government has announced that legislation will be introduced to make it clear that work-related COVID-19 test expenses incurred by individuals will be tax deductible. This will include Polymerase Chain Reaction (‘PCR’) tests and Rapid Antigen Tests (‘RATs’).

If you provide COVID-19 testing to your employees, FBT will not be payable.

From the ATO

Tax losses

Before you claim a tax loss, make sure you have correctly claimed expenses that you are entitled to. Overclaiming expenses can put your business in an incorrect tax loss situation.

Keeping accurate and complete records will help you keep track of your tax losses. It can help you avoid incorrectly carrying back a tax loss or carrying forward tax losses to deduct in future years.

If your business makes a tax loss in the current year, you can generally carry forward that loss and claim a deduction for your business in a future year (subject to satisfying either the continuity of ownership or the business continuity test).

Companies and entities taxed as companies (e.g. corporate limited partnerships) may be able to claim the loss carry back tax offset. You can carry back losses made in the 2019–20, 2020–21, 2021–22 and 2022–23 income years to an earlier income year (but no further back than 2018-19) and claim an income tax offset in the company’s 2021, 2022 or 2023 income tax return.

If you’re carrying on a non-commercial business activity as an individual, either alone or in a partnership, and your business makes a loss, you must check to see how the non-commercial loss rules apply to you.

Tip! Talk to your tax adviser about how to best utilise a tax loss.

Changing loss carry back choice

If your company has chosen to carry back a loss from one year to an earlier year (but not before 2018–19), it may want to change how much of the tax loss it carries back. This needs to be done on the approved ATO form and within the time limit for amending the relevant tax assessment.

The change will take effect from the day your company made the original loss carry back choice.

The ATO provides this example.

XYZ Co made a loss carry back choice in its Company tax return 2021 to carry back $5,000 of the $10,000 tax loss it made in that income year to the 2019–20 income year. Later it decides that it wants to carry back all the $10,000 tax loss to the 2019–20 income year.

XYZ Co notifies the ATO of its change in loss carry back choice using the approved form within the time limit for amending its tax assessment for the 2020–21 income year.

The time limit for amending an assessment is generally 2 years if your company is a small business entity (aggregated turnover of less than $10 million) or, if the income year starts on or after 1 July 2021, a medium business (aggregated turnover of less than $50 million). Otherwise the time limit is generally 4 years.

For a company balancing at 30 June, the first income year starting on 1 July 2021 is the 2021–22 income year.

Using business money for private purposes

There may be tax consequences if you take or use money or assets from your company or trust for private purposes.

For example, it is quite common for the company or trust to make a loan to a shareholder or an associate of a shareholder (e.g. the shareholder’s spouse or child). When a company lends money or assets to a shareholder, the shareholder may be taken to have received a Division 7A deemed dividend if certain conditions are not met.

If this happens, the shareholder will need to report an unfranked dividend in their individual tax return. A deemed dividend has no impact on the company’s balance sheet or income tax return.

To avoid a Division 7A deemed dividend, before the company tax return is due or lodged (whichever comes first), the loan must:

be repaid in full; or
put on Division 7A complying terms.

To put a loan on Division 7A complying terms, the loan must:

be in a written agreement and signed and dated by the lender;
have an interest rate for each year of the loan that at least equals the benchmark interest rate (4.52% for 2021–22);
not exceed the maximum term of 7 years, or 25 years in certain circumstances when the loan is secured by a registered mortgage over real property.

The company must include any interest earned from the loan in its tax return.

You (the shareholder or associate of the shareholder):

must make the minimum yearly repayment each year (the ATO publishes a Division 7A calculator to work this out);
cannot borrow money from the company to make the minimum yearly repayment;
can make payments on the loan using a dividend declared by the company. This dividend must still be reported in your individual tax return as assessable income.

It is important to keep accurate records of any such transactions and ensure they are reported correctly for tax purposes. This may require a transaction to be reported in both the company’s or trust’s tax return and your individual tax return.

Unpaid present entitlement

An unpaid present entitlement (UPE) arises where a beneficiary of a trust is presently entitled to a share of trust income but it remains unpaid. If the beneficiary is a private company and the trust is a shareholder in the company (or an associate of a shareholder), the ATO considers that the unpaid amount is a loan from the company to the shareholder (or associate) and therefore subject to the operation of Division 7A.

The ATO has recently issued a draft taxation determination, revising its views on the application of Division 7A where there is a UPE for arrangements arising on or after 1 July 2022. For example, the ATO now considers that Division 7A may apply where a private company beneficiary has knowledge of a UPE and does not demand payment of that amount.

Tip! Division 7A is very complex – particularly the UPE rules – so talk to your tax adviser to make sure you don’t take steps that result in a Division 7A deemed dividend.

Check your business’ PAYG instalments

Now is a good time to check that your business’ PAYG instalments still reflect its expected end of year income tax liability.

If the business’ circumstances have changed and you think it will pay too much (or too little) in instalments for the year, the instalments can be varied on the next activity statement.

Instalments can be varied multiple times throughout the year. The varied amount or rate will apply for the remaining instalments for the tax year or until another variation is made.

If your business is affected by COVID-19 or a natural disaster, the ATO has said it will not apply penalties or charge interest to varied instalments if the business has made its best attempt to estimate its end of year income tax liability.

If an amount or rate is varied online, paper activity statements and instalment notices will no longer be issued. These will be issued electronically. Your business will need to consider this when deciding how to lodge, revise and vary future activity statements and instalment amounts.

Tip! Your tax adviser or BAS agent can help you with your business’ activity statements and tax returns.

Digital record keeping

The ATO has highlighted the advantages of keeping business records digitally. If, for example, your business uses a commercially-available software package, it may help the business:

keep track of business income, expenses and assets as well as calculate depreciation;
streamline its accounting practices and save time so you can focus on the business;
automatically calculate wages, tax, superannuation and other amounts for activity statement and other purposes;
meet Single Touch Payroll (STP) reporting obligations;
back up records using cloud storage to keep records safe from flood, fire or theft.

Digital storage of paper records

Paper records (or hard copies) can be stored digitally. The ATO accepts images of business paper records saved on a digital storage medium, provided the digital copies are true and clear reproductions of the original paper records and meet its five rules for record-keeping.

Once an image of the original paper records is saved, there is no need to keep the paper records unless required by a particular law or regulation.

However, if information (for example, supplier information, date, amount and GST) is entered into accounting software from digital or paper records, the business may still need to keep a copy of the actual record, either digitally or on paper. Some accounting software packages may do both accounting and record keeping.

The ATO website gives tips on how to choose suitable record-keeping software.

Providing the ATO with copies of records

If the ATO asks to see copies of records that are kept digitally, you can provide either digital or printed copies. The ATO may also request documentation about the record-keeping system (for example, information about regular back-up and record destruction procedures) or ask for paper copies.

Cloud storage

If your business uses cloud storage, either through accounting software or a separate service provider, for example, Google Drive, Microsoft OneDrive or Dropbox, you should ensure:

the record storage meets the record-keeping requirements;
you download a complete copy of any records stored in the cloud before you change software provider and lose access to them.

eInvoicing storage

Regardless of your business’ eInvoicing software or system, you are responsible for determining the best option for storing business transaction data. You should:

ensure that the process meets the record-keeping requirements
discuss the options with your software provider
talk to your business adviser, if necessary.

Don’t get burned by a phoenix

The ATO has warned small businesses about phoenixing. That happens when (to quote the ATO) a ‘dodgy’ business shuts down to avoid paying its debts, but then pops up under a different company name without any debt.

The ATO is working, through the Phoenix Taskforce, with other federal, state and territory agencies to detect, deter and disrupt illegal phoenix businesses.

Here are 5 red flags to look out for when working with a company:

unusually low quotes or tenders can suggest that the company isn’t taking superannuation or PAYG instalments into account;
the company directors have previously been involved with liquidated entities;
the company’s name and directors have changed, but the manager and staff remain the same;
the company is requesting payments to a new company;
you’re told that your last contract won’t be paid unless you sign a new contract, often with a different company name from the one you first dealt with.

If you suspect illegal phoenix activity, you can contact the ATO by phoning 1800 060 062 or by emailing phoenixreferrals@ato.gov.au.

Employee or independent contractor?

It is an age old question. Is the individual providing services to your business an employee or an independent contractor?

The High Court recently considered this issue in two separate cases and agreed in both that it is the ‘totality of the relationship between the parties’ that should be considered. However, instead of adopting a ‘multifactorial’ approach, considering factors such as the degree of control, who bears the commercial risk and who provides the equipment, the High Court focused on the contractual relationship between the parties.

This is not the place to analyse the High Court’s decisions in detail. However, it is worth noting that the High Court observed that where the terms of the parties’ relationship are comprehensively committed to a written contract (that is not a sham), the terms of the contract should determine the character of the relationship. On that basis, the High Court held that the relevant individuals were employees in one case (CFMEU v Personnel Contracting), but not in the other (ZG Operations v Jamsek).

These cases are relevant for tax (e.g. PAYG withholding obligations) and the Superannuation Guarantee (SG) scheme. Of course, the SG picture is complicated by rules treating certain individuals as employees for SG purposes, even if they are not employees at common law.

Tip! Talk to your tax adviser if you have any concerns about the status of your relationship with individuals who provide services to your business.

FBT issues

FBT return time

The 2022 Fringe benefits tax (FBT) year ends on 31 March 2022, so it’s a good time to start considering what you need to do to lodge your business’ FBT return and pay FBT.

You’ll need to work out if the business has an FBT liability for any fringe benefits provided to employees (or their associates) between 1 April 2021 and 31 March 2022. An associate includes a spouse, child, parent, sibling and most other relatives (but not cousins).

If your business has an FBT liability for the 2022 FBT year, the FBT return and payment is due by 23 May 2022. This date applies as the statutory due date of 21 May falls on a weekend this year. The due date may differ if your business uses a tax agent.

If your business does not have an FBT liability, and it is registered for FBT, you still need to inform the ATO. You can do this by completing a Notice of non-lodgment – Fringe benefits tax form by the date your return would have been due.

Don’t forget to keep all records relating to the fringe benefits that have been provided, including how the taxable value of the benefits was calculated.

Tip! If your business provides fringe benefits to employees (or their associates), your tax adviser can help you prepare your FBT return and work out if you have an FBT liability.

FBT thresholds and rates for 2022–23

Normally by the time the April edition of TaxWise is prepared, the ATO has released the various thresholds for the new FBT year (the FBT year commences on 1 April). But not this year. The 2022–23 FBT thresholds had not been released by the time we prepared this edition of TaxWise.

However, we have used the rules specified in the FBT legislation to work out:

the statutory (or benchmark) interest rate (e.g. for loan fringe benefits) — this should be 4.52% for 2022–23 (the same as for 2021–22); and
the record keeping exemption (also relevant for eligibility to use the base rate method to calculate FBT) — this should be $9,181 for 2022–23 (up from $8,923 for 2021–22).

Taxation determinations will be issued specifying:

the cents per kilometre rates for motor vehicles (other than a car); and
the reasonable food and drink amounts for employees living away from home.

The car parking threshold for the 2022–23 FBT year can be calculated once the All Groups CPI number (weighted average of the eight capital cities) for March this year is available.

Disclaimer

April 13th, 2022|

Helping businesses recover

Tax depreciation incentives to help businesses recover

In 2020, the Government introduced tax depreciation incentives to help businesses recover from the impact of the COVID-19 pandemic.

To help eligible business entities understand which tax depreciation incentives are available, the ATO published a useful snapshot to explain the depreciation incentives that may apply and when businesses could consider using them.

What incentives are available?

The tax depreciation incentives that are available to eligible businesses are:

Temporary full expensing;
Instant asset write-off; and
Accelerated depreciation (“Backing business investment”).

These have been discussed in previous issues of TaxWise® News, including:

Key points to note:

The instant asset write-off and accelerated depreciation (i.e. the Backing Business Investment measure) are available only where the asset is first used, or installed ready for use, by 30 June 2021, noting that for the instant asset write-off, the asset must have been acquired by 31 December 2020;
Temporary full expensing is currently available until 30 June 2022, but the Government announced in the Federal Budget 2021–22 that it proposes to extend this by 12 months by 30 June 2023;
Temporary full expensing is available to businesses with an aggregated turnover of less than $5 billion a year. The instant asset write-off and accelerated depreciation are available only to businesses with an aggregated turnover of less than $500 million a year. The instant asset write-off is not available to small businesses entities (aggregated turnover of less than $10 million a year) that do not choose to use the simplified depreciation rules;
Accelerated depreciation applies only to new assets. Temporary full expensing is available for second-hand assets only where the aggregated turnover is less than $50 million. The instant asset write-off can be used for second-hand assets as well as new assets;
Under the instant asset write-off, the asset must cost less than $150,000 – there is no cost restriction under temporary full expensing or accelerated depreciation;
Businesses can opt out of temporary full expensing and accelerated depreciation (but not the instant asset write-off) on an asset-by-asset basis. However, small business entities (aggregated turnover of less than $10 million) cannot choose not to fully expense their general small business pool balance on 30 June 2021.

So, if you are contemplating buying a depreciating asset and you want an immediate deduction for the full cost of the asset in the 2020–21 income year, you will need to consider:

your eligibility for the instant asset write-off rules;
the accelerated depreciation measure;
the temporary full expensing measure;
the date the asset is acquired and first used or installed ready for use;
the asset’s cost; and
the aggregated turnover of the business.

Assuming the proposed extension to the temporary full expensing to 30 June 2023 is legislated, assets acquired or first used or installed ready for use from 1 July 2023 will be depreciated under the uniform capital allowance system, or the simplified depreciation rules if the taxpayer is a small business entity and chooses to apply these rules.

Tip! Talk to your adviser.

Small business tax time errors

It is almost the end of the current tax year (2020–21) and the start of a new one (2021–22). It may not be long before you start thinking about lodging your 2020–21 tax return.

If you anticipate a tax refund, the quicker you lodge the return the quicker you will get that refund. But if you believe you will have to pay more tax (i.e. in addition to the PAYG instalments you have paid), then it might be worth delaying the return as long as possible.

If you don’t use a tax adviser to lodge your return, you will have to do it by 1 November 2021 (you get an extra day this year because 31 October is a Sunday). Of course, if you use your tax adviser to lodge your return, you may have until May 2022 to complete it.

The ATO has identified the most common errors small businesses make when completing their tax returns. They are failing to:

declare all income – this includes cash and online sales, dividends, interest, capital gains and one-off transactions such as selling equipment or other capital items;
account for private use of business funds or assets, such as trading stock taken for private use and shareholder loans; and
keep all required records or have adequate record keeping systems.

Tip! If your tax adviser prepares and lodges your return on your behalf, find out when it is due under their lodgment program; and make sure they have all relevant information.

How to work out PAYG instalments

When you pre-pay your income tax using pay as you go (PAYG) instalments, you can usually choose between 2 options to work out how much you pay:

Option 1 – Using the instalment amount: The ATO calculates the amount of each instalment from information reported on your latest tax return. This is the simplest option as you don’t need to work anything out.
Option 2 – Using the instalment rate: You work out your instalment amount yourself using the instalment rate the ATO provides and your instalment income.

Option 1 – Using the instalment amount

You can use the instalment amount option if you are an individual (including sole traders), a trust or a super fund that:

is an annual payer; or
has business and/or investment income of $2 million or less.

A company can use the instalment amount option if it:

is an annual payer;
has business and/or investment income of $2 million or less; or
is a small business entity with an aggregated turnover of less than $10 million a year.

From 1 July 2021, business entities with an aggregated turnover of more than $10 million but less than $50 million a year will also be able to use the instalment amount option to pay PAYG instalments.

Option 2 – Using the instalment rate

All taxpayers can use this option, although some taxpayers must use it (your tax adviser will know).

The advantage of using the instalment rate option is that your payments are based on your income as you earn it (e.g. in the quarter or month just gone). This helps with your cash flow management. For example, if your income decreases in a quarter, you apply the instalment rate to that lower income and therefore pay a lower instalment amount.

Varying PAYG instalments

Remember, as discussed in the February 2021 Business edition of TaxWise® News, you can vary your instalments multiple times throughout the year.

Be careful not to underestimate your PAYG instalment amount, income or rate as you could be subject to interest (the GIC) and penalties if the varied instalment turns out to be too low (although the ATO will not apply penalties or charge interest to varied instalments relating to the 2020–21 financial year if you have made your best attempt to estimate your end of year tax liability).

Tip! Talk to your tax adviser before varying a PAYG instalment or if you are thinking of switching from one payment option to the other.

Simplified trading stock rules

Under the simplified trading stock rules, you don’t have to:

conduct a formal stocktake;
account for the changes in your trading stock’s value.

You can use the simplified trading stock rules if you:

are a small business with an aggregated turnover of less than $10 million a year (or from 1 July 2021, with an aggregated turnover of at least $10 million but less than $50 million a year); and
reasonably estimate that the value of your trading stock changed by less than $5,000 in the year.

Electronic invoicing

As reported in the May 2021 Special Budget edition of TaxWise® News, the Government will spend $15.3 million to enhance the value of electronic invoicing to help businesses reduce costs and increase productivity. This is part of the Government’s Digital Economy Strategy.

According to the ATO website, the Australian Peppol Authority (ATO) and Treasury will deliver activities, including:

pilots to gain insights into the use of e-invoicing and e-procurement;
educational activities to raise business awareness;
working with payment providers (for example, EFTPOS, Visa, Mastercard, NPP Australia) to explore opportunities on how e-invoicing can complement the payment experience for business; and
further consultation on potential regulatory and non-regulatory ways to accelerate e-invoicing adoption.

R&D applications – new online portal

A new customer portal has been launched to make it easier for companies to manage their applications for the Research and Development (R&D) tax incentive.

Applications can be submitted via the portal from 5 July 2021, but you can log in now to become familiar with the new portal and start drafting your application.

The portal’s web address is https://incentives.business.gov.au.

In the future, you’ll also be able to use the portal to apply for and manage your Advance and Overseas Finding applications, request to withdraw or vary your R&D tax incentive application, apply for an extension of time, and even check the status of your submitted applications.

FBT: Do you provide car parking for employees?

If you provide car parking for your employees, you may have to pay fringe benefits tax (FBT) on those benefits.

A car parking fringe benefit will generally arise if an employer provides car parking to an employee and various conditions are satisfied, including:

the car is parked at premises owned or leased by, or otherwise under the control of, the provider (usually the employer);
the car is parked for a total of more than 4 hours between 7am and 7pm on any day of the week;
the car is parked at or near the employee’s primary place of employment on that day;
the car is used by the employee to travel between home and work (or work and home) at least once on that day;
there is a commercial parking station that charges a fee for all-day parking within one kilometre of the premises on which the car is parked;
at the beginning of the FBT year (1 April 2021 for the current FBT year), the commercial parking station fee for all-day parking was more than the car parking threshold ($9.25 for the current FBT year) – provided the fee is not substantially greater or less than the average (over a 4-week period) of the lowest fee charged to members of the public for all-day parking.

A recent court case decided that Virgin Airlines did not have to pay FBT on car parking provided at airports to its flight and cabin crew, primarily because their primary place of employment was the aircraft they flew on – and clearly an employee’s car was not parked at or near the aircraft.

Exemptions

Car parking benefits are exempt from FBT where the benefits are provided:

by employers who meet the conditions of the small business car parking benefits exemption (see below);
by certain research, education, religious and charitable institutions; and
for employees with a disability (irrespective of the type of employer).

Small business car parking benefits exemption

The small business car parking benefits exemption applies if the following conditions are satisfied:

the parking is not provided in a commercial car park; and
for the last income year before the relevant FBT year, either the employer’s
gross total income was less than $10 million or their turnover was less than $10 million (less than $50 million for benefits provided on or after 1 April 2021).

This exemption is not available to government bodies, listed public companies, or subsidiaries of listed public companies.

Tip! In 2019, the ATO changed its views on aspects of the car parking fringe benefits rules, especially in relation to what qualifies as a commercial car parking station. The changed views will not apply until 1 April 2022. But talk to your tax adviser before then if you provide car parking for employees.

FBT rates and thresholds

Various rates and thresholds relevant for calculating FBT are updated on 1 April each year. Updated figures for the current FBT year (i.e. 2021–22) include:

record-keeping exemption threshold – $8,923 (previously $8,853);
statutory or benchmark interest rate – 4.52% (previously 4.80%);
car parking threshold – $9.25 (previously $9.15).

The cents-per-km rates (for motor vehicles other than cars) for the 2021-22 FBT year are:

0-2500cc	Over 2500cc	Motor cycles
56c	67c	17c

These are unchanged from the 2020–21 FBT year.

Weekly food and drink expenses

The weekly food and drink expenses for the 2021–22 FBT year that the ATO accepts as reasonable for a living-away-from-home allowance (LAFHA) paid to employees living away from home within Australia are:

	Per week $
1 adult*	283
2 adults	425
3 adults	567
1 adult and 1 child	354
2 adults and 1 child	496
2 adults and 2 children	567
2 adults and 3 children	638
3 adults and 1 child	638
3 adults and 2 children	709
4 adults	709
Each additional adult	142
Each additional child	71

*A person is considered an adult for LAFHA purposes if they were 12 years or older before the beginning of the FBT year.

Year-end tax tips

Reduce your tax bill

If you are a sole trader or a partner in a partnership, or your business is carried on through a trust and you are a beneficiary, here are some key amounts:

$37,501 – the low income tax offset (maximum $700) starts to phase out;
$45,001 – the 19% tax rate increases to 32.5%;
$90,001 – the maximum low and middle income tax offset ($1,080) starts to phase out;
$120,001 – the 32.5% tax rate increases to 37%;
$180,001 – the 37% tax rate increases to 45%.

$90,001 (singles) and $180,001 (families) are also relevant if working out if you qualify for the private health insurance tax offset (or insurance premium reduction) or are liable for the Medicare levy surcharge – but add $1,500 for each dependent child after the first one.

Defer assessable income

If your taxable income for the income year is approaching any of those thresholds, you might want to consider deferring assessable income so your taxable income for the year will remain below the relevant threshold.

For example, you could delay issuing an invoice so you won’t be paid until after 30 June – that way, the income will be taxed next year. This won’t work if you account for income on an accruals basis – in that case, delay issuing the invoice. Of course, cash flow issues might mean you want to be paid asap.

If you are in the process of selling property and the profit will be taxable as a capital gain, you could defer the sale until the next income year – but remember that the liability to pay CGT arises when you exchange contracts and not on settlement.

Increase deductions

Another way to keep taxable income below a relevant threshold is to increase deductions. For example, you could bring forward the purchase of one or more depreciating assets (new assets are deductible outright under temporary full expensing). An immediate deduction is also available for start-up costs and certain prepaid expenses.

Charitable donations are a good way to increase your deductions. If you are not sure if a donation will be deductible, you can check the deductibility status of charities. In certain circumstances, you can claim a deduction if you donate trading stock. Don’t forget to ask for a receipt.

Private company loans

Shareholders of private companies operating businesses may dip into the company’s coffers to fund their lifestyle or other business interests. If you have done this, or are contemplating doing it, you need to be aware of what is known as a “Division 7A deemed dividend”.

Division 7A of the Income Tax Assessment Act 1936 contains the rules dealing with loans and and other payments by private companies to shareholders.

Under the rules in Division 7A, a cash advance to a shareholder will be treated as a taxable dividend in the hands of the shareholder, unless it is documented by a written loan agreement specifying certain matters, including the maximum term (e.g. 7 years if the loan is unsecured) and the minimum interest rate, which cannot be less than the benchmark rate. The benchmark rate for the current tax year (2020–21) is 4.52%.

Division 7A may also apply where a private company forgives a debt owed by a shareholder or certain benefits are provided to shareholders from trusts where a private company has an unpaid present entitlement (UPE) to the profits of the trust.

Payments, etc, to an associate of a shareholder (e.g. their spouse, child, sibling or parent) are treated the same as payments, etc, to the shareholder.

Division 7A does not apply to payments made to a shareholder (or an associate) in their capacity as an employee. FBT may apply instead.

Online services for sole traders

Sole traders with an ABN who use the ATO’s online services for individuals now have access to improved functionality, making it easier for them to interact with the ATO online.

Useful new features now available include:

requesting a refund or fund transfers between accounts;
lodging super guarantee charge statements;
sending secure messages;
submitting STP (Single Touch Payroll) deferrals and exemptions; and
lodging private ruling, objection and further information forms.

If you are managing other entity ABNs as well as your sole trader ABN, you should continue to use Online services for business when interacting with the ATO.

The black economy

The black economy is a complex, multi-faceted phenomenon operating across Australia’s workplace relations, financial, welfare, procurement and migration systems.

Black economy behaviours include:

demanding or paying for work cash-in-hand to avoid obligations;
not reporting or under-reporting income;
underpayment of wages;
identity fraud;
visa fraud and bypassing visa restrictions;
ABN, GST, and duty fraud;
dealing in illegal drugs and tobacco;
sham contracting – presenting an employment relationship as a contracting arrangement;
illegal phoenixing – liquidating and re-forming a business to avoid obligations (the ATO now has the discretion to retain tax refunds in relation to taxpayers engaging in phoenixing);
money laundering; and
dealing in counterfeit goods.

The ATO uses a range of education, engagement and enhanced enforcement activities to address the tax and superannuation aspects of the black economy.

The ATO’s data and analytic systems, strategies and targeted approaches help it to:

combat black economy behaviours – including under-reporting income and overclaiming expenses;
ensure businesses meet their employer obligations when paying employees or contractors;
address employers paying cash-in-hand, underpaying wages, failing to withhold tax or not contributing to super;
address illegal phoenix activity – businesses liquidating and re-forming to avoid obligations;
prevent tax fraud;
deal with illicit tobacco, duty and excise evasion;
target intermediaries and agents who enable behaviour; and
prosecute the worst offenders.

myGov email scam

The ATO and Services Australia are warning the community about a new email impersonation scam that is doing the rounds. The fake emails claim to be from “myGov” and include screen shots of the myGovID app.

The email asks people to click a link to verify their identity using a “secure form” which takes them to a fake myGov page requesting personal identifying information and banking details.

ATO Assistant Commissioner Ben Foster said this new phishing scam contains classic warning signs that it is not legitimate, for example, asking people to click a link to confirm their details and spelling errors.

Affected by a natural disaster?

The ATO has reminded businesses and individuals affected by the NSW and South-East Queensland floods in March, and by bushfires in Western Australia and Cyclone Seroja, that it can help if they are having trouble meeting tax and super obligations. Depending on the particular circumstances, the ATO may:

give extra time to pay a debt or lodge tax forms such as activity statements;
help re-construct tax records that are lost or damaged;
fast track refunds;
set up a payment plan tailored to individual circumstances, including interest free periods;
remit penalties or interest.

For more information about support available, visit ato.gov.au/disasters or phone 1800 806 218.

Note! Disaster recovery grant payments in relation to the storms and floods that occurred in February and March 2021 will be exempt from tax once the enabling legislation (presently in Parliament) becomes law.

Tip! If you have been affected by floods, bushfires or other natural disasters, you can discuss your options with your tax adviser.

COVID-19 and permanent establishments

Are you a foreign company with employees in Australia? The ATO has updated its guidance on whether the presence of employees in Australia, due to the impacts of COVID-19, may create a permanent establishment (PE) for tax purposes.

The ATO says that it will not apply compliance resources to determine if you have a PE in Australia if:

you did not otherwise have a PE in Australia before the effects of COVID-19;
the temporary presence of employees in Australia continues to solely be as a result of COVID-19 related travel restrictions;
those employees temporarily in Australia will relocate overseas as soon as practicable following the relaxation of international travel restrictions; and
you have not recognised those employees as creating a PE or generating Australian source income in Australia for the purpose of the tax laws of another jurisdiction.

This approach will apply until 31 December 2021.

Tip! Talk to your tax adviser if you are uncertain whether you have a PE in Australia. Your adviser can also let you know the tax consequences if you have a PE here.

What has Parliament been up to?

A recent Bill contains amendments that will:

exempt employers from FBT if they provide training or education to a redundant, or soon to be redundant, employee in order to assist that employee gain new employment (this was announced in last year’s Budget) – applies to benefits provided on or after 2 October 2021;
extend the low and middle income tax offset for 12 months (this was announced in this year’s Budget);
exempt from CGT a granny flat arrangement if certain requirements are met, including that the individual having the granny flat interest has reached pension age or has a disability, and that the arrangement is in writing and is not of a commercial nature (this was announced in last year’s Budget) – if the Bill becomes law by the end of June, the change will take effect on 1 July 2021, otherwise it will take effect on 1 July 2022;
extend the operation of the junior minerals exploration incentive for a further 4 years (this was announced in this year’s Budget); and
ensure that New Zealand retains exclusive taxing rights over income derived by NZ sportspersons (and support staff) playing in cross-border-leagues where, due to COVID-19, they spend more than 183 days in Australia in a 12-month period.

Tip! Talk to your tax adviser if you think any of these measures may affect you.

Disclaimer

June 20th, 2021|

COVID-19 measures: how your business might be affected

JobKeeper scheme

The JobKeeper scheme ended on 28 March 2021. Your business does not have to do anything, but it will need to complete the March monthly business declaration by 14 April 2021. The final payment will be processed in April.

Your business must keep all relevant records for five years in case the ATO decides to look at its JobKeeper claims in detail.

Don’t forget that JobKeeper payments are assessable and should be included in your business’ tax return as income.

If your business has employees and their wages were effectively subsidised by JobKeeper payments, the full wages are still deductible.

If your business decides voluntarily to repay any JobKeeper payments it did not actually need, it will only get a tax deduction if the repayment is appropriate to achieve, or directed at achieving, the objectives of the business. According to the ATO, examples would include where a payment is made to:

prevent reduction in business; or
publicise and promote a business in the short-term.

Of course, as pointed out by the ATO, if your business deducts from the repayment the amount of tax paid on the payment, the tax outcome will be neutral.

If your business wishes to make a voluntary repayment, it should contact the ATO first as voluntary repayments cannot be made through usual ATO payment channels and require a special Payment Reference Number (PRN).

JobMaker hiring credit scheme

Don’t overlook the JobMaker Hiring Credit scheme (JobMaker) which was discussed in the February 2021 Business edition of TaxWise® News. Just to remind you, under JobMaker, the Government may pay your business up to $200 per week if it hires a new employee aged 16 to 29 and up to $100 a week if it hires a new employee aged 30 to 35. The new employee must commence employment between 7 October 2020 and 6 October 2021.

Your business must register with the ATO by 30 April 2021 if it wants to make a claim for the first JobMaker period (1 February to 30 April 2021).

To qualify, the employee headcount and payroll must genuinely increase. Your business cannot claim JobMaker if it merely replaces an employee aged over 35 with one aged between 16 and 35.

JobMaker cannot be claimed for certain new employees, including:

relatives, partners if your business is operated through a partnership;
directors and shareholders if your business is operated through a company; and
certain contractors and subcontractors your business engaged at any time between 6 April 2020 and 6 October 2020.

Tip! The JobMaker scheme is complicated. Contact your tax adviser if you think your business may qualify for JobMaker or if your business is thinking of hiring one or more new employees.

Stimulus vouchers: How to report this in your tax

Most States and Territories are providing assistance to help boost local economies affected by COVID-19. Many governments are doing this by issuing vouchers to eligible customers to pay towards purchases from eligible businesses for dining out, entertainment or accommodation.

If your business accepts stimulus vouchers from customers, you may be wondering how to deal with this for tax purposes.

When your business accepts a voucher, it needs to:

treat the amount the voucher covers and the customer’s payment as income;
report GST on the total of payments received.

SME loan guarantee scheme

The Government has announced an extension of the SME Recovery Loan Scheme, as well as various changes to the Scheme. Phase 1 operated until 30 September 2020 and Phase 2 is due to end on 30 June 2021.

As a result of the changes, the Scheme will be open only to businesses (including self‑employed individuals and non-profit businesses) with up to $250 million turnover which received the JobKeeper payment between 4 January 2021 and 28 March 2021. Participating lenders will be offering guaranteed loans on the following terms:

the Government guarantee will be 80% of the loan amount (up from 50%);
lenders are allowed to offer borrowers a repayment holiday of up to 24 months (the time was previously unspecified);
loans can be used for a broad range of business purposes, including to support investment (see below);
borrowers can access up to $5 million in total, in addition to the Phase 1 and Phase 2 loan limits;
loans are for terms of up to 10 years (up from 5 years);
loans can be either unsecured or secured (excluding residential property); and
the interest rate on loans will be determined by lenders, but will be capped at around 7.5%, with some flexibility for interest rates on variable rate loans to increase if market interest rates rise over time (previously capped at 10%).

Lenders can offer any product suitable to the borrower – with the exception of credit cards, charge cards, debit cards or business cards. Loans issued under the Scheme may take any other form of credit, provided the Scheme’s eligibility criteria are met.

Loans will be available from 1 April 2021 and must be approved prior to 31 December 2021.

Loans backed by the Scheme will be available through participating commercial lenders. The decision on whether to extend credit, and management of the loan, will remain with the lender.

Eligible loan uses

Loans may be used to refinance any pre-existing debt of an eligible borrower, including those from Phase 1. Loans that are more than 30 days in arrears cannot be refinanced and borrowers who have entered external administration, or are insolvent, cannot refinance debts.

Loans can be used to purchase non-residential real property (such as commercial property) or for the acquisition of another business.

Loans issued under the Scheme can be used to refinance existing loans or for a broad range of businesses purposes (including to support investment) but cannot be used to purchase residential property or financial products and cannot be lent to an associated entity. Loans also cannot be used to lease, rent, hire or hire purchase existing assets that are more than half way into their effective life.

FBT issues

New FBT thresholds and rates for 2021–22

The ATO has released new thresholds and rates for the 2021–22 fringe benefits tax (FBT) year (the year commencing on 1 April this year):

statutory or benchmark interest rate (e.g. for loan fringe benefits) – 4.52%; and
record keeping exemption (also relevant for eligibility to use the base rate method to calculate FBT) – $8,923.

The cents-per-kilometre rates (for where a motor vehicle other than a car is used privately) are:

vehicles with an engine capacity of up to 2,500cc – 56 cents/km;
vehicles with an engine capacity of over 2,500cc – 67 cents/km; and
motorcycles – 17 cents/km.

The car parking threshold for 2021–22 will be announced once the relevant CPI figure is available.

Living-away-from-home allowances

The ATO has issued the weekly amounts of food and drink expenses incurred by employees receiving a living-away-from-home allowance (LAFHA) fringe benefit that it treats as being reasonable for the 2021–22 FBT year. These amounts may be relevant in working out the FBT payable on the LAFHA benefits.

The reasonable weekly amounts for employees in Australia are set out in the table below.

See Taxation Determination TD 2021/3 for the 2021–22 reasonable weekly amounts for employees outside Australia.

Amounts of reasonable food and drink – within Australia

	Per week $
1 adult*	283
2 adults	425
3 adults	567
1 adult and 1 child	354
2 adults and 1 child	496
2 adults and 2 children	567
2 adults and 3 children	638
3 adults and 1 child	638
3 adults and 2 children	709
4 adults**	709

*An adult is a person who attained the age of 12 years before 1 April 2021.

** For larger family groupings, add $142 for each additional adult and $71 for each additional child.

Tip! If your business provides LAFHA fringe benefits to employees, talk to your tax adviser if uncertain whether the food and drink expenses need to be substantiated, or if uncertain how to work out the amount of FBT that is payable.

FBT exemptions

If your business provides fringe benefits to employees, there are a number of FBT exemptions that are likely to be more significant during the COVID-19 pandemic.

Work laptop, other portable electronic device and tools of trade

Your business may have given or loaned certain eligible work-related items to employees to facilitate them working at home, or may have reimbursed them for expenditure they incurred on such items.

An eligible work-related item is exempt from FBT (including where the cost is reimbursed) if it is:

primarily for use in the employee’s employment; and
not a duplicate of something with a substantially identical function that has already been provided to the employee in the FBT year (unless it is a replacement). There is an exception for small and medium businesses (see below).

An eligible work-related item is:

a portable electronic device – e.g. a laptop, tablet, smart phone and calculator, but not a desktop computer;
computer software;
protective clothing;
a briefcase; and
a tool of trade.

A small business (aggregated annual turnover less than $10 million) can provide multiple portable electronic devices to an employee and claim the exemption for each item, even where the items have substantially identical functions.

This exemption for multiple devices will be extended from 1 April 2021 to businesses that have an aggregated annual turnover of at least $10 million but less than $50 million.

General office equipment

If your business lends general office equipment (e.g. desks, chairs, cabinets, stationery and computer monitors) to employees during temporary working from home arrangements due to COVID-19, the relevant fringe benefit is exempt from FBT if:

the equipment is ordinarily located on business premises; and
is wholly or principally used directly in connection with business operations.

The ATO considers that office equipment that your business loans to an employee to support a working from home arrangement that will continue on a long-term basis is unlikely to be exempt.

However, a fringe benefit may be exempt if your business makes a “no-private-use declaration” that covers all office equipment loaned to employees to support their working from home arrangements where:

the equipment is subject to a consistently enforced policy in relation to its use; and
this use means the benefits would have a taxable value of nil.

The exemption is not lost just because there is some incidental use of the equipment outside of work hours while it is located at an employee’s home.

Counselling and health care

Counselling services provided to support an employee’s working from home arrangement may be exempt from FBT under the rules for work-related counselling. Similarly, health care provided to an employee to support their working from home arrangement may also be exempt from FBT if it is the provision of work-related preventative health care.

Minor benefits

Where the taxable value of an item (or the amount reimbursed) is less than $300 (including GST), the benefit will be exempt if it qualifies a minor benefit. This depends on the frequency and regularity with which similar or identical benefits are provided.

Tip! If you are uncertain whether any fringe benefits your business provides to employees are exempt, e.g. as a minor benefit, or how to calculate the taxable value of any benefits that are not exempt, talk to your tax adviser. For example, the otherwise deductible rule may apply to reduce the taxable value of a fringe benefit.

FBT return

Don’t forget that your business must lodge its FBT return for 2020–21, and pay any FBT liability, by 21 May 2021. This date may differ if the return is lodged through a tax agent.

The ATO may grant an extension of time to lodge and pay if your business is experiencing difficulties because of COVID-19 or floods.

Do you use trading stock for private purposes?

It is common for certain business owners (e.g. sole traders, individuals and partnerships, etc.) to use trading stock for private purposes. If you do this, you are treated as having sold it for its cost just before you use it and as having bought it back for the same amount.

Because it is difficult in many cases to keep accurate records of transactions involving goods taken from stock for private use, the ATO publishes each year standard values (excluding GST) that can be used by proprietors of certain businesses. The latest amounts (for the current tax year ending on 30 June 2021) were published in early January (in Taxation Determination TD 2021/1).

TYPE OF BUSINESS	AMOUNT (EXCLUDING GST) FOR ADULT/CHILD OVER 16 YEARS	AMOUNT (EXCLUDING GST) FOR CHILD 4 to16 YEARS OLD
Bakery	$1,350	$675
Butcher	$900	$450
Restaurant/café (licensed)	$4,640	$1,810
Restaurant/café (unlicensed)	$3,620	$1,810
Caterer	$3,830	$1,915
Delicatessen	$3,620	$1,810
Fruiterer/greengrocer	$930	$465
Takeaway food shop	$3,670	$1,835
Mixed business (includes milk bar, general store and convenience store)	$4,460	$2,230

Do you operate your business through a company or trust?

It is fairly common for professionals, such as IT specialists, engineers and business consultants, to operate their business through a company or a trust. If you are in this position, you need to be aware of the rules that will treat the income earned by the company or trust from the provision of your own services (personal services income or PSI) as your personal income. These rules (the PSI rules) also deny a deduction for certain types of expenditure.

We discussed the PSI rules in the September 2020 Individual edition of TaxWise® News. Since then, the ATO has issued a draft ruling (TR 2021/D2) providing general guidance on the operation of the rules. The draft ruling considers a number of issues including:

the meaning of PSI and income that does not qualify as PSI;
determining whose PSI it is;
the effect of the PSI rules; and
the various tests to determine if a PSB is being carried on (the results, unrelated clients, employment and business premises tests).

Even if the PSI rules do not apply where your services are hired out through a company or trust, the ATO points out that the general anti-avoidance rules may still apply to the arrangement.

Tip! The PSI rules (and the general anti-avoidance rules) are complicated. Talk to your tax adviser if you provide your services through a company or trust or are thinking of doing it.

From the ATO

Easier to pay your tax bill

The ATO has improved how your business can use and manage its credit or debit card details in Online services for business, making it easier to pay a tax or super bill.

The new payment features allow your business to:

add and manage up to three credit or debit cards in its account profile;
set up a payment plan with automatic direct debits from a card;
make one-off payments using a card.

Online services for business offers a simplified process to make it easier to create a payment plan if your business owes less than $100,000.

If you’re worried your business will have difficulty paying on time, or are having trouble setting up a payment plan online, you can contact the ATO on 13 11 42 for help (or talk to your tax adviser).

Check your business’ PAYG instalments

Now is a good time to check your business’ pay as you go (PAYG) instalments still reflect its expected end of year tax liability.

If the business’ circumstances have changed and you think it will pay too much (or too little) in instalments for the year, the instalments can be varied on the next activity statement.

Instalments can be varied multiple times throughout the year. The varied amount or rate will apply for the remaining instalments for the tax year or until another variation is made.

If your business is affected by COVID-19, the ATO has said it will not apply penalties or charge interest to varied instalments relating to the 2020–21 tax year. This applies when the business has made its best attempt to estimate its end of year tax liability.

Tip! Registered tax agents and BAS agents can help you with your business’ activity statements and tax returns.

STP reporting: Changes from 1 July 2021

If your business has employees, it should be reporting through Single Touch Payroll (STP) unless it only employs closely held payees or is covered by a deferral or exemption.

There are some changes to STP reporting from 1 July 2021:

small employers (less than 20 employees) with closely held payees must report their closely held payees through STP. You can choose to report these payees each pay day, monthly or quarterly;
the STP quarterly reporting concessions for micro employers (less than 5 employees) will only be available to employers who meet certain eligibility requirements, including the need for exceptional circumstances to exist. Employers can apply for this concession through the online deferral tool from 1 July 2021.

A closely held payee is an individual directly related to the entity from which they receive payments, e.g.:

family members of a family business;
directors or shareholders of a company;
beneficiaries of a trust.

Further changes will start on 1 January 2022. We will advise you of those nearer the date.

Tip! Talk to your tax adviser if your business has employees and it has not started reporting through STP but does not have a deferral or exemption. It needs to start reporting now.

Bad debts

Your business may be able to claim a deduction for income that cannot be recovered from a customer or debtor. This unrecoverable income is known as a “bad debt”.

If your business accounts for assessable income on an accruals basis, an amount your business earns may be included in assessable income before payment is received (this cannot happen if your business accounts for assessable income on a cash basis). If your business determines there is no or little likelihood that an amount included in assessable income will be recovered from the debtor, that amount may be deductible as a bad debt.

To claim a deduction for the assessable income that cannot be recovered, your business needs to write off the unpaid amount as a bad debt (see below).

If your business subsequently recovers an amount that it wrote off as a bad debt and claimed as a tax deduction, the amount recovered must be included in its assessable income when it receives it.

Writing off a debt as bad is not the same as waiving or forgiving a debt. There are different tax consequences for debt forgiveness or waiver and there may also be tax consequences for the debtor.

How to write off a debt as bad

To claim a bad debt deduction for an amount included in your business’ assessable income that has not been recovered, it must:

include the income in a tax return (whether in the current tax year or an earlier year);
determine the debt is bad – there must be a debt owing to your business and it must be genuinely bad (i.e. it is unlikely to be recovered through any reasonable and commercial attempts); and
write off the debt – this means that your business must have made the decision to write off the debt and recorded that decision in writing before the end of the tax year in which deduction is claimed.

If your business is a company, it must also satisfy the continuity of ownership or continuity of business test, as appropriate.

GST consequences

If your business has made a taxable sale and has paid GST to the ATO for that sale, but it has not received the consideration, either in whole or in part, and the debt is written off as bad, your business can claim a decreasing adjustment for the bad debt.

Tip! Talk to your tax adviser if your business is owed money – you may be able to claim a tax deduction.

Other matters to consider

Company tax rate

The tax rate for companies with an aggregated turnover under $50 million will reduce from 26% to 25% from 1 July 2021. The tax rate for other companies will remain at 30%.

Employees now have more choice with super

Changes to the law mean new workplace determinations and enterprise agreements made on or after 1 January 2021 must offer employees the right to choose the super fund to which your business pays their compulsory super contributions.

Once a new determination or agreement is in place, your business will need to offer choice of super fund to:

existing employees who request to choose their super fund;
all new employees;

Employees can nominate their chosen fund by completing the standard choice form through ATO online services linked to their myGov account.

Alternatively, your business can give its employees a Superannuation standard choice form to complete. Your business must then pay the employee’s compulsory super to their nominated fund.

If an employee doesn’t nominate a fund, your business can continue to pay their super to the same fund it previously contributed to, or into the default fund.

Disclaimer

April 13th, 2021|

JobMaker hiring credit

The JobMaker Hiring Credit scheme (“JobMaker”) is a new government incentive in response to the COVID-19 economic crisis. Eligible employers can access JobMaker for each eligible additional employee aged 16 to 35 they hire between 7 October 2020 and 6 October 2021. The program will last for 2 years until 6 October 2022.

Are you eligible?

To be eligible for JobMaker, you must:

operate a business in Australia (not-for-profit organisations operating in Australia and certain deductible gift recipients (DGRs) are also eligible);
hold an active ABN;
be registered for PAYG withholding;
satisfy the payroll increase and the headcount increase conditions – see below;
not have claimed JobKeeper payments for a fortnight that started during the JobMaker period (see the table below for the JobMaker periods);
be up to date with income tax and GST returns for the 2 years up to the end of the JobMaker period for which you are claiming (this requirement is adjusted for new businesses);
be registered with the ATO for the scheme – see below; and
satisfy reporting requirements, including up to date Single Touch Payroll (STP) reporting (see the table below).

Certain categories of employer are not eligible, for example, companies in liquidation or provisional liquidation, individuals who have entered bankruptcy, major banks and Australian government agencies.

Payroll and headcount conditions

You must employ one or more eligible additional employees, resulting in a genuine increase in both:

your total employee headcount from 30 September 2020 (a different reference point applies for the last 4 JobMaker periods); and
your payroll for the JobMaker period, compared to the 3 months up to 6 October 2020.

An individual is an “eligible additional employee” if they:

were employed by you at any time during the JobMaker period;
commenced employment between 7 October 2020 and 6 October 2021;
were aged between 16 and 35 years at the time they commenced employment;
worked or were paid for an average of 20 hours a week for each whole week they were employed by you during the JobMaker period; and
received certain income support payments, e.g. JobSeeker or Parenting Payment, for at least 28 consecutive days (or 2 fortnights) within the 84 days (or 6 fortnights) before being hired.

The employee must also provide you with a notice containing relevant information.

Certain individuals cannot qualify as an eligible additional employee, including:

relatives;
partners if your business is operated through a partnership;
directors and shareholders if your business is operated through a company; and
anyone who, at any time between 6 April 2020 and 6 October 2020, you engaged as a contractor or a subcontractor and who performed substantially similar duties to those performed by the individual as an employee.

Registration and claims

You must register before the end of the first JobMaker period you are claiming for (see the key dates below). For example, if you want to make a claim for the first JobMaker period (7 October 2020 to 6 January 2021), you must register by 30 April 2021.

You can claim JobMaker from 1 February 2021. You can only claim JobMaker for each additional eligible employee for up to 12 months from the time they commence employment.

You will need to provide certain information to the ATO about each additional eligible employee, including their full name, date of birth and tax file number. You will also need to provide certain information about your business, such as headcount and payroll expenses.

How much do you receive?

The amount of JobMaker you receive depends on the age of the eligible additional employee when they commence employment with you.

You may receive up to $200 per week for each eligible additional employee aged 16 to 29 and up to $100 per week for each eligible additional employee aged 30 to 35.

Key dates

Dates for JobMaker periods, STP reporting and claim periods
Period	JobMaker period	STP reporting due date	Claim period
1	7 October 2020 – 6 January 2021	27 April 2021	1 February 2021 – 30 April 2021
2	7 January 2021 – 6 April 2021	28 July 2021	1 May 2021 – 31 July 2021
3	7 April 2021 – 6 July 2021	28 October 2021	1 August 2021 – 31 October 2021
4	7 July 2021 – 6 October 2021	28 January 2022	1 November 2021 – 31 January 2022
5	7 October 2021 – 6 January 2022	27 April 2022	1 February 2022 – 30 April 2022
6	7 January 2022 – 6 April 2022	28 July 2022	1 May 2022 – 31 July 2022
7	7 April 2022 – 6 July 2022	28 October 2022	1 August 2022 – 31 October 2022
8	7 July 2022 – 6 October 2022	28 January 2023	1 November 2022 – 31 January 2023

(Table from the ATO website)

Integrity measures

You will not be eligible for JobMaker if you enter into an arrangement to artificially inflate your headcount or payroll, by terminating or reducing the hours of an existing employee in an attempt to access JobMaker or increase payments.

If you claim JobMaker, you will not be able to claim other Australian Government wage subsidies, such as the Supporting Apprentices and Trainees Wage subsidy and the Australian Apprentice Wage subsidy.

Tax consequences

All JobMaker payments are assessable as ordinary income. Salary and wages paid to employees that are subsidised by JobMaker continue to be deductible.

JobMaker is:

not subject to GST; and
does not need to be included in your business activity statements (BAS).

Tip! Talk to your tax adviser if you think you may qualify for JobMaker.

JobKeeper

Don’t forget that the JobKeeper scheme ends on 28 March 2021.

The second JobKeeper extension has started and covers the JobKeeper fortnights between Monday 4 January and Sunday 28 March 2021.

If eligible, you can enrol for the second JobKeeper extension until the end of the program. To be eligible you will need to show that your actual GST turnover declined in the December 2020 quarter relative to a comparable period (generally the December 2019 quarter).

You might be eligible for the second JobKeeper extension even if you weren’t eligible for the first extension.

The payment rates for your eligible employees in the second extension period are:

Tier 1 – $1,000 per fortnight (before tax)
Tier 2 – $650 per fortnight (before tax).

Investment incentives

We have previously told you about 2 temporary measures to encourage business investment:

full expensing for the cost of new depreciating assets acquired from 7:30pm (AEDT) on 6 October 2020 (i.e. 2020–21 Budget night) and first used or installed by 30 June 2022 (see the October 2020 Special Budget Edition of TaxWise News); and
an accelerated rate of depreciation for new depreciating assets first held on or after 12 March 2020 and first used or installed ready for use on or after 12 March 2020 and before 1 July 2021 (see the April 2020 edition of TaxWise News).

The law has been changed so that you can now choose not to apply full expensing or accelerated depreciation to particular depreciating assets. But once you make that choice, you are locked in (i.e. you cannot reverse it).

Tip! Talk to your tax adviser if you are contemplating buying new assets for your business.

Victorian business support

Just before Christmas, the Federal Government declared that various COVID-19 related business grants provided by the Victorian Government are not taxable (technically, they are non-assessable non-exempt income). These are:

Alpine Business Fund;
Business Support Fund 3;
Licensed Hospitality Venue Fund;
Melbourne City Recovery Fund – Small business reactivation grants;
Outdoor Eating and Entertainment Package; and
Sole Trader Support Fund.

Varying your PAYG instalments

To assist taxpayers experiencing financial difficulty as a result of COVID-19, the ATO is providing added flexibility to manage your instalments to suit your circumstances. If you are a PAYG instalment payer, you can vary your PAYG instalments on your activity statement.

You can vary your instalments if you think using the current amount or rate will result in you paying too much by instalments when compared to your estimated tax for the year.

The ATO has said that it will not apply penalties or charge interest to varied instalments that relate to the 2020–21 income year (including if you have a substituted accounting period) when you have made your best attempt to estimate your end of year tax liability.

You should review your tax position regularly. You can vary your instalments multiple times throughout the year. Your varied amount or rate will apply for all your remaining instalments for the income year or until you make another variation.

If you realise you’ve made a mistake working out your PAYG instalment, you can correct it by lodging a revised activity statement or varying a subsequent instalment.

Tip! Talk to your tax adviser if you think you may need to vary your PAYG instalments or if you have made a mistake working out your instalments.

What has the ATO been doing?

Trading stock taken for private use

It is common in a number of industries for trading stock to be used for private purposes. If you do this, you are treated as having sold it for its cost just before you use it and as having bought it back for the same amount.

Because it is difficult in many cases to keep accurate records of transactions involving goods taken from stock for private use, the ATO publishes each year standard values (excluding GST) that can be used by proprietors of certain businesses. The latest amounts (for the 2020–21 tax year) were published in early January.

Type of Business	Amount (excluding GST) for Adult/Child over 16 years	Amount (excluding GST) for Child 4 to 16 years old
Bakery	$1,350	$675
Butcher	$900	$450
Restaurant/café (licensed)	$4,640	$1,810
Restaurant/café (unlicensed)	$3,620	$1,810
Caterer	$3,830	$1,915
Delicatessen	$3,620	$1,810
Fruiterer/ greengrocer	$930	$465
Takeaway food shop	$3,670	$1,835
Mixed business (includes milk bar, general store and convenience store)	$4,460	$2,230

(Table taken from Taxation Determination TD 2021/1)

Property sales

The ATO regularly receives data relating to the purchase and sale of properties from State and Territory revenue offices around Australia.

Where property transfers are made by businesses, they are potentially taxable, and the ATO matches this information against what has been reported on activity statements. If you sold property and did not include it in your activity statement, the ATO may contact you. You will be asked to review your records and revise the relevant activity statement, without penalty, by a specified date.

Tip! Talk to your tax adviser if you have sold property.

Online sales – data-matching

The ATO will acquire data on Australian sales made through online selling platforms through to 2022–23. The collected data may include business names, ABNs, addresses (e.g. business, postal and email), contact details, account names, account registration information and the number and value of monthly and yearly sales transactions.

The ATO estimates the total number of account records obtained will be between 20,000 and 30,000 each financial year. It expects around half of the matched accounts will relate to individuals.

These records will be electronically matched with ATO data holdings to identify non-compliance with registration, lodgment, reporting and payment obligations under taxation laws.

Tip! If you have online sales transactions, talk to your tax adviser to make sure you are complying with all your taxation obligations.

Vehicle registrations – data-matching

The ATO will acquire motor vehicle registry data from State and Territory motor vehicle registry authorities through to 2021–22. The collected data may include identification details (e.g. names, addresses and ABNs) and transaction details (e.g. date and type of transaction, sale price of the vehicle and market value of the vehicle).

The ATO estimates that records relating to approximately 1.5 million individuals will be obtained each financial year.

The data will be acquired and matched to the ATO’s internal data holdings to identify relevant cases for administrative action. For example, the data may be used to identify taxpayers buying, selling or acquiring motor vehicles who are at risk of not complying with their taxation obligations. That could be a licensed motor vehicle dealer who may not be complying with luxury car tax obligations or a business with little reported income buying a very expensive vehicle.

Don’t forget that if you are contemplating buying a new car for your business (e.g. to take advantage of full expensing), your deduction cannot exceed the car limit ($59,136 for 2020–21).

Tip! Buying a car for your business can have various tax implications, e.g. depreciation, GST and FBT. If you are contemplating buying a car, discuss the potential tax implications with your tax adviser.

ATO prosecutions

The ATO has publicised a number of successful prosecutions for tax fraud, presumably to remind taxpayers that dishonesty does not pay.

In one case, a concreter from New South Wales was fined for making false and misleading statements.

The concreter originally lodged his 2017 income tax return via a tax agent, but he lodged an amendment via myGov four months later. In the amendment, he falsely claimed he had worked for a second employer, where he received wages and had tax withheld. He also reported additional amounts for work-related expenses and the cost of managing tax affairs.

The false claims would have given the concreter a $7,974 refund, but an ATO audit revealed the truth.

He was fined $2,000 and ordered to pay a further $5,000 directly to the ATO. He was also placed on a 2-year good behaviour bond.

In another case, a Queensland bricklayer was sentenced to 2 years and 6 months in jail for evading nearly $100,000 in tax.

Over the course of a year, the bricklayer reported sales of $85,359 in his quarterly business activity statements (BAS). But an audit found he had actually received more than 4 times this amount, resulting in a GST shortfall of $26,570.

Data from the taxable payments reporting scheme (TPRS) also showed that he had quoted the ABN of his bricklaying trust to a number of entities, despite telling ATO officers it was no longer trading.

In addition to this, the bricklayer understated income on his income tax return, which caused a tax shortfall of $70,441.

Other News

Insolvency reforms

Important changes to Australia’s insolvency laws commenced on 1 January 2021. The Assistant Treasurer has said that they are the most important changes to Australia’s insolvency framework in 30 years.

The changes introduce a new, simplified debt restructuring process for eligible small businesses. The process allows financially distressed small businesses to access a single, streamlined process to restructure their debts, while allowing the owners to remain in control of their business. According to a Treasury fact sheet, this will support more small businesses to survive, meaning better outcomes for businesses, creditors, employees and the economy.

Link to fact sheet

Simplified debt restructuring process

To be eligible to access this new process, your company must:

be incorporated under the Corporations Act (so the new rules do not apply to partnerships and sole traders);
have total liabilities (excluding employee entitlements) that do not exceed $1 million on the day the company enters the process;
resolve that it is insolvent or likely to become insolvent at some future time and that a small business restructuring practitioner should be appointed; and
appoint a small business restructuring practitioner to oversee the restructuring process, including working with you to develop your debt restructuring plan.

A list of restructuring practitioners that can undertake this work is available on ASIC’s website.

The debt restructuring plan

The debt restructuring plan sets out how a company’s creditors are to be repaid. For example, the plan could specify how creditors will be repaid as a proportion of the debt owing to them, or what “cents in the dollar” they will receive.

The company must put the debt restructuring plan to its creditors for a vote within 20 business days of entering the process (an extension of up to 10 business days may be allowed if reasonable). Once the plan is put to creditors, they have 15 business days to vote to accept or reject the plan.

A plan is accepted if more than 50% of the creditors by value that vote, vote to accept the plan. Once a plan is made, payments must be disbursed to a company’s creditors in accordance with the terms set out in the plan.

All admissible debts and claims rank equally upon repayment of the plan. That means that all creditors are paid the same “cents in the dollar” and all are paid at the same time.

If the restructuring plan is not accepted, the restructuring process ends.

Giving you time

The Government recognises you may need some time to find a small business restructuring practitioner and has therefore extended the temporary insolvency relief (including relief from liability for trading while insolvent) for up to 3 months.

To access this relief, you can declare your intention to access the restructuring process by publishing the declaration on the published notices website from 1 January 2021. Your company’s period of temporary restructuring relief begins on the day the declaration is published.

You also need to notify ASIC within 5 business days that you’ve made this declaration. The appropriate form is available on the ASIC website.

Staying in control

Once your company enters the restructuring process, it remains in control of the process and may undertake transactions that are in the ordinary course of business.

$10,000 + cash transactions

Do you remember the Government’s proposal to ban cash transactions in excess of $10,000? It was contained in a Bill – the Currency (Restrictions on the Use of Cash) Bill 2019 – which we discussed in the November 2019 edition of TaxWise. The Bill had been passed by the House of Representatives, but it was stuck in the Senate.

The Bill would have made it a criminal offence for businesses to make or accept cash payments of $10,000 or more. Fines would have applied up to 60 penalty units (300 penalty units for corporations), and 120 penalty units or a 2-year prison for offences involving a greater level of culpability. The measures would not have applied to consumer-to-consumer transactions.

Well it seems that the Government has decided to scrap the proposal, as the Bill has been discharged from the Senate Notice Paper. Of course, the measures could be re-introduced at a later date, but it is probably safe to assume this will not happen during the current Parliament.

Disclaimer

February 9th, 2021|

JobKeeper

The JobKeeper scheme is the most significant measure to assist businesses during the COVID-19 crisis – even if it is going to cost a lot less than initially thought. Although we told you about the scheme in the Special April Edition of the Business TaxWise, there have been a few changes and clarifications – so it seems a good idea to remind you of some of the key points of the scheme.

Fall in turnover – basic test

JobKeeper is available to employers and other “business participants” (eg sole traders, partnerships, beneficiaries of a trust and shareholders) that anticipate a significant fall in turnover – at least a 30% fall if annual turnover is $1bn or less (otherwise at least 50% or, for most registered charities, at least 15%).

GST turnover is used to measure the fall in turnover, but the test is modified in certain circumstances – e.g. if a business entity is part of a GST group, GST turnover is calculated as if it wasn’t part of the group.

The ATO expects entities to use the GST accounting method (cash or accruals) they usually use in working out turnover.

The fall in turnover is measured by comparing anticipated GST turnover for a month or quarter in this year (the test period) with actual GST turnover for the same period in 2019 (the comparison period), e.g. June 2020 with June 2019 or the July-September 2020 quarter with the same quarter in 2019.

Most non-profit organisations that are registered charities have to show a 15% fall in turnover.

Alternative fall in turnover tests

There is an alternative fall in turnover test where it is not appropriate to compare the test period with the comparison period. This includes where:

you did not commence business until after the comparison period;
the business is not the same now as in the comparison period, e.g. because of a business restructure, acquisition or disposal;
your turnover for the comparison period was unusually low (e.g. because of drought) – and not because of cyclical or regular seasonal variance; or
turnover has increased significantly in the period before the test period (e.g. by 25% or more if looking at the 6-month period immediately before the test period).

There is also an alternative fall in turnover test where a special purpose service entity provides employee labour to other members of a group and the service entity does not satisfy the basic fall in turnover test.

Employers – eligible employees

An employer can only JobKeeper for eligible employees only. They must be employed for each fortnight for which you claim JobKeeper (including those who are stood down or re-hired).

An employee is an eligible employee is they are full-time, part-time or fixed term, or a long-term casual (someone employed on a regular and systematic basis for at least the previous 12 months). They must 18 or older and an Australian citizen or the holder of a specified class of visa (working holiday makers are not eligible employees).

If a person has more than one job, only one of their employers can claim JobKeeper for that person.

If you decide to participate in the JobKeeper scheme, you should nominate all eligible employees who have chosen to participate.

Sole traders etc

If you are a sole trader or other business participant (e.g. a company director or a partner), you cannot claim JobKeeper unless you are actively engaged in operating a business. You cannot be an employee of the particular business entity or a permanent employee of any other entity.

In addition, you must be 16 or older at 1 March 2020 (18 or older if a beneficiary of a trust) and either an Australian citizen or the holder of a specified class of visa.

The relevant business entity must:

have had an ABN on 12 March 2020; and
have disclosed either assessable business income in the 2018-19 tax return or a supply in a BAS or GST return for any tax period between 1 July 2018 and 12 March 2020. The supply can be a GST-free or input taxed supply.

In limited circumstances, the ATO has a discretion to treat those 2 requirements as being satisfied even if they are not.

Only one payment per entity can be claimed. For example, in the case of a partnership, only one partner can claim JobKeeper.

Amount of JobKeeper

The amount of the JobKeeper payment is $1,500 a fortnight for each eligible employee or business participant. Employers must pay each eligible employee at least $1,500 per fortnight before tax.

The 2 fortnightly periods beginning in June are 8 June to 21 June and 22 June to 5 July. The last fortnightly period will be from 14 September to 27 September (this year).

If you usually pay your employees less frequently than fortnightly, the payment can be allocated between fortnights in a reasonable manner. For example, if you pay your employees on a monthly pay cycle, your employees must have received the monthly equivalent of $1,500 per fortnight ($1,500 x 26/12 = $3,250).

You may lose the JobKeeper payment if you enter into a scheme designed to create an entitlement to JobKeeper or to increase the amount paid. The ATO has issued guidelines on how it may apply this rule in certain situations – e.g. where a business uses a service entity to employ workers.

Claiming JobKeeper

You have to enrol with the ATO to participate in the JobKeeper scheme. You can do this online. You had to enrol by 31 May 2020 if claiming for payments in April and May 2020.

If you are an employer, the process differs depending on whether you report through Single Touch Payroll.

You have to identify each person for whom you will claim the JobKeeper payment. You only need to identify eligible employees or the eligible business participant once.

If you are an employer, you have to notify all eligible employees they are receiving JobKeeper.

Monthly declaration

You will have to provide a monthly declaration to the ATO – this can be done from the 1st to the 14th day of each month, to receive reimbursements for the payments you have made to your employees in the previous month.

The declaration requires you to reconfirm your eligible employees and provide information on your current and projected GST turnover. You will also need to notify the ATO if your eligible employees change or leave your employment.

Tax consequences

JobKeeper payments form part of the business entity’s assessable income. Of course, an employer can claim a deduction for wages paid to employees even if subsidised by JobKeeper.

Tip! The JobKeeper scheme is complicated, so talk to your tax adviser to see if you qualify. Your tax adviser can also enrol you for JobKeeper on your behalf.

Cash flow support for employers

Don’t forget the temporary cash flow support (the cash flow boost) for eligible small and medium businesses during COVID-19 crisis. Eligible businesses will receive between $20,000 and $100,000 in cash flow boost amounts by lodging their activity statements up to the month or quarter of September 2020.

You do not need to apply for the cash flow boost. All you need to do is lodge your upcoming activity statements.

If you’re eligible, the cash flow boost will be automatically credited to your activity statement account.

If you’re lodging online through our Business Portal, you now need to log in using your myGovID.

The cash flow boost is not taxable.

Tip! Talk to your tax agent or BAS agent for more information about the cash flow boost, e.g. the amount you will be credited.

Tax breaks for the 2020 tax return

Businesses can claim an immediate deduction (the instant asset write-off) and reduce the tax payable when buying business assets such as machinery, cars, delivery vehicles, office furniture and display cabinets. The instant asset write-off is also available for second-hand assets (but not where you dispose of an existing asset and then buy it back).

Cost caps apply depending on when the asset is first used or installed ready for use – see below.

For businesses claiming GST, the tax write-off cost excludes GST.

For businesses not claiming GST, the tax write-off cost includes GST.

Small businesses (total turnover less than $10 million)

The cost caps for a small business are:

Date asset first used or installed ready for use	Cap (asset must cost less than)
1 July 2019 – 11 March 2020	$30,000
12 March – 30 June 2020	$150,000

Other businesses

If you are a medium business with total turnover of $10 million or more but less than $50 million, the instant asset write-off is available for assets costing less than $30,000 if first used, or installed ready for use, for a taxable purpose before 12 March 2020.

If an asset is first used, or installed ready for use, for a taxable purpose between 12 March and 30 June 2020, the instant asset-write off threshold increases from $30,000 to $150,000. In other words, the instant asset write-off is available where the asset costs less than $150,000.

If you are a business with total turnover of $50 million or more but less than $500 million, the instant asset write-off is available for assets costing less than $150,000 where the asset is first used, or installed ready for use, for a taxable purpose between 12 March and 30 June 2020.

Note! If the asset is a car, the instant asset write-off is limited to the business portion of $57,581 (the car depreciation limit – this will increase to $59,136 from 1 July 2020).

Tip! Always talk with your tax adviser before buying any business assets. In particular, the timing of when you first used an asset, of first install it ready for use, is important.

Example

Jane owns a café which is a small business. In January 2020 she bought a new fridge freezer for $7,500 and a new espresso machine for $3,400. They are installed ready for use on 24 January.

Jane can take advantage of the instant asset write off for both items because each one costs less than $30,000.

In April 2020 Jane buys a new van for $43,650, which she immediately starts to use in the business. She can take advantage of the instant asset write off for the van because it cost less than $150,000. If she had bought and started using the van before 12 March 2020, the instant asset write-off would not have been available.

Note!

You can use the instant asset write-off multiple times. However, each asset must cost less than the relevant cap.
If you are thinking of buying assets for your business, you should do so before 1 July this year when the instant asset write-off threshold is due to revert to $1,000. Although no one will be surprised if the Government extends the higher threshold (e.g. $30,000) beyond 1 July, you cannot rely on that happening.

Accelerated depreciation

As we discussed in the Special April Edition of the Business TaxWise, an accelerated rate of depreciation is available for new business assets first held on or after 12 March 2020 and first used or installed ready for use for a taxable purpose on or after 12 March 2020 and before 1 July 2021. The asset must be used principally in a business in Australia or located in Australia.

The accelerated rate of depreciation is not available:

for assets written off immediately under the instant asset write-off rules;
for second-hand assets (with certain exceptions, e.g. trading stock);
for assets used in a primary production business (e.g. fencing, fodder storage assets or horticultural plants); or
if you were committed before 12 March to acquiring or constructing the asset – you cannot restructure an existing contract to try to get around this rule.

You cannot split an asset or merge assets to try to qualify for the accelerated depreciation.

The rules for working out the accelerated depreciation vary depending on whether or not you use the simplified depreciation rules. We explained them in the Special April Edition.

In all cases, you cannot deduct more than what you pay for the asset.

From the ATO

Affected by bushfire or COVID-19?

If you live in one of the identified postcodes impacted by the bushfires, the ATO automatically deferred any lodgments or payments you have due. For example, the 2019-20 FBT return is not due until 25 June 2020.

You, or your agent, don’t need to apply for these deferrals.

If you use a tax professional to lodge on your behalf, you may have a different deferred due date.

The ATO will also consider lodgment and payment deferrals for businesses affected by COVID-19. However, deferrals are not automatic so you or your tax or BAS agent will need to contact the ATO.

Tip! Contact your tax or BAS agent to check your due date for lodgment or payment. If necessary, they can contact the ATO to seek a deferral.

Employee super contributions – claiming a deduction

The ATO has reminded employers that super contributions are only considered to be paid for the purpose of claiming a tax deduction once they have been received by the super fund, not the date the Small Business Superannuation Clearing House (SBSCH) accepts them (if the employer uses the SBSCH).

To ensure you can claim a deduction for the 2019–20 income year, you need to allow processing time for your super payments to be received by your employees’ super funds before the end of the 2019-20 income year. The ATO says that payments need to be accepted by the SBSCH by 23 June 2020.

Remember to check with your employees if you need to update their super fund details in your SBSCH account, including a change of ownership of a superannuation product.

There is no change to when SG quarterly payments are due – the next quarterly due date is 28 July 2020.

Note! From 1 January this year, you cannot use an employee’s salary sacrificed super contributions to satisfy your super guarantee obligations. Talk to your tax adviser about your super guarantee obligations.

STP exemption for small employers

If you are a small employer (19 or fewer employees), the ATO has extended to 1 July 2021 the Single Touch Payroll (STP) exemption in relation to closely-held payees. A closely held (related) payee is someone who is directly related to the business, company or trust that pays them, such as family members of a family business, directors or shareholders of a company or beneficiaries of a trust.

This STP exemption for closely-held payees applies automatically and you do not need to apply to the ATO to access it. However, you should keep records to support your decision to apply the concession. Alternatively, you can notify the ATO and apply for the exemption through the Business Portal. Your registered tax agent can also apply for an exemption on your behalf.

If you have any other employees (also known as arm’s length employees), they must be reported through STP on or before each payday, unless you are eligible for a micro employer (1-4 employees) reporting concession.

Micro employers who need more time to move to STP reporting can ask their registered tax or BAS agent to report on their behalf on a quarterly basis. This can continue until 30 June 2021.

End-of-year finalisation through STP

The ATO has reminded employers that they need to make a finalisation declaration.

The declaration generally has to be made by 14 July each year. However, if you started reporting through STP in the 2019-20 financial year and have 19 or fewer employees, you have until 31 July 2020 to make the finalisation declaration.

If you have 20 or more employees, you should be reporting closely held payees each pay day along with arms-length employees. The finalisation due date for closely held payees is 30 September 2020.

If you have 19 or fewer employees and are voluntarily reporting your closely held payees, you can also finalise by 30 September 2020 for the 2019-20 financial year.

Benefits of e-invoicing

The ATO has been promoting the benefits of e-invoicing – by simplifying and automating the exchange and processing of invoices.

According to the ATO the benefits for business include cost savings, fewer errors and reduced payment times. In addition:

a business will save time by not having to re-key or scan invoices, or chase missing information; and
the e-invoicing network provides a safer and more secure channel than email.

E-invoicing is also environmentally friendly.

The ATO recommends that you keep an eye out for digital service providers rolling out e-invoicing solutions in the second half of 2020.

Applying for a government contract?

Businesses and their first-tier subcontractors tendering for Commonwealth Government contracts over $4 million (including GST) must supply a statement of tax record (STR) provided by the ATO. If you received one last year, you may need to apply for a new one.

The STR must show satisfactory engagement with the tax system, so it’s important to keep your tax obligations up to date, including registration, lodgment and payment.

Apply early to allow time for processing before the tender closing date. The ATO generally takes 4 business days to process applications.

Your tax agent can apply on your behalf.

An STR is valid for 6 or 12 months depending on if you have an Australian tax record of less or more than 4 years.

Company directors beware

Company directors can be liable for unpaid PAYG withholding amounts – both where the company fails to deduct PAYG amounts from salaries and wages and where, if it makes deductions, it fails to pay those amounts to the ATO. This is known as the director penalty regime. It also applies to unpaid superannuation guarantee charge.

The director penalty regime has now been extended to unpaid GST, luxury car tax and wine equalisation tax. This applies in relation to GST instalments, net amounts and assessed net amounts for GST instalment quarters and tax periods (as appropriate) that start on or after 1 April 2020.

Tip! If you are running a company and it is experiencing difficulties in meeting its tax obligations, talk to your tax adviser without delay. They can discuss the matter with the ATO and may be able to arrange for additional time to pay.

Are you ready for tax time? Quick tips to help you this EOFY

The end of the financial year is looming – it really is that time of year again. Tax time is always busy so we’re sharing a few quick tips to help you sail through lodgment season.

Some tax time tips…

Gather and sort your business records now, including cash, online, EFTPOS, bank statements, credit or debit card transactions covering:
- sales and other business income
- expenses you can claim as a business deduction such as staff wages, contractor expenses, operating expenses and business travel expenses.
If you changed your record keeping software during the year, check that all your information has transferred over correctly.

Are you a sole trader?

Even if your income is below the tax-free threshold, you still need to lodge a tax return.
Do you pay PAYG instalments? Lodge your activity statements and pay all your PAYG instalments before you lodge your tax return, so your income tax assessment takes into account the instalments you’ve paid throughout the year.

Are you a partnership?

If you operate your business in a partnership:

the partnership lodges a partnership tax return, reporting the partnership’s net income (assessable income less allowable expenses and deductions)

As an individual partner, you report on your individual tax return:

your share of any partnership net income or loss
any other assessable income, such as salary and wages (shown on a Payment Summary), dividends and rental income.

The partnership doesn’t pay income tax on the income it earns. Instead, you and each of the partners pay tax on the share of net partnership income you receive.

Are you a trust?

If you operate your business through a trust, the trust reports its net income or loss (this is the trust’s income less expenses and deductions) and the trustee is required to lodge a trust tax return.

As a trust beneficiary, you report on your individual tax return any income you receive from the trust.

Are you a company?

If you operate your business through a company, you need to lodge a company tax return.

The company reports its taxable income, tax offsets and credits, PAYG instalments and the amount of tax it is liable to pay on that income or the amount that is refundable.

The company’s income is separate from your personal income.

Tip! Registered tax and BAS agents can help you with your tax.

Not-so-small list of small business concessions…

Here is a list of small business tax concessions that may be available to you.

Tip! Speak to your tax adviser to find out which concessions you can tap into.

Income tax

Lower company tax rate – 27% for 2019-20 and 26% for 2020-21
Small business income tax offset – 8% rate for 2019-20 and 13% rate for 2020-21
PAYG instalment concession

Deductions

Simplified depreciation rules – instant asset write-off
Accelerated depreciation for primary producers
Deductions for professional expenses for start-ups
Immediate deductions for prepaid expenses

Simplified record-keeping

Simplified trading stock rules
Two-year amendment period

GST, BAS and excise

Simpler BAS
Accounting for GST on a cash basis
Annual apportionment of GST input tax credits
Paying GST by instalments
Excise concession

Capital gains tax (CGT)

Small business restructure rollover
CGT 15-year asset exemption
CGT 50% active asset reduction
CGT Retirement exemption
CGT Rollover
Contributions of small business CGT concession amounts to your super fund

Fringe benefits tax (FBT)

FBT car parking exemption
FBT work-related devices exemption

Superannuation

Superannuation clearing house
Contributions of small business CGT concession amounts to your super fund.

Disclaimer

June 10th, 2020|

COVID-19stimulus measures

The main tax measures are:

enhancing the instant asset write-off;
an accelerated depreciation rate; and
boosting cash flow for employers.

Other measures include relief for financially stressed businesses and a guarantee of lending to SMEs.

We will look at these measures in more detail but contact your tax agent if you have any questions.

Instant asset write-off changes

There are 2 changes:

the instant asset write-off threshold has been increased from $30,000 to $150,000 for the period from 12 March to 30 June 2020; and
the turnover threshold has also been extended to $500 million – see below.

This means that a small business with an aggregated turnover of less than $10 million can write-off in the current income year the total cost of a depreciating asset costing less than $150,000, provided the asset is first used or installed ready for use in the business on or after 12 March 2020 and before 1 July 2020.

The increased threshold also applies to assets a small business (but not a medium business) acquired before 12 March but had not used, or installed ready for use, by that date.

Remember that if you purchase a car for your business, the instant asset write-off is limited to the business portion of the car limit of $57,581.

You cannot claim the instant asset write-off for an asset costing between $30,000 and $150,000 if you had used it, or installed it ready for use, before 12 March. For example, if you sell an asset you are already using and buy it back (for between $30,000 and $150,000) you won’t be able to claim the instant asset write-off for the re-purchase.

Small and medium businesses may also be able to claim a deduction for an amount included in the second element of the cost of a depreciating asset. The amount of the cost must be less than $150,000 and the cost must be incurred on or after 12 March 2020, but before 1 July 2020.

If you are a small business, only assets costing $150,000 or more, and costs of $150,000 or more relating to depreciating assets, need be allocated to the general small business pool. If the balance of the pool falls below $150,000 at the end of the current income year, the entire balance of the pool can be deducted.

Instant asset write-off – medium businesses

The instant asset write-off turnover threshold has been extended from $50 million to $500 million.

This means that a medium sized business that has an aggregated turnover of $10 million or more but less than $500 million can immediately deduct the cost of an asset if the asset:

has a cost of less than $150,000; and
was first used or installed ready for use for a taxable purpose on or after 12 March 2020 and on or before 30 June 2020.

If a medium sized business that has an aggregated turnover of $10 million or more but less than $50 million has depreciating assets that do not meet the timing requirements for the $150,000 threshold, the earlier $30,000 threshold continues to apply prior to 12 March 2020. Note also that you can’t claim the instant access write-off if you sell an asset you already use in your business and buy it back.

Tip! If you are planning to buy a depreciating asset for use in your business, talk to your tax agent first. There is only a 3-month window of opportunity – to 30 June this year – to take advantage of the increased thresholds.

https://www.ato.gov.au/Business/Depreciation-and-capital-expenses-and-allowances/Simpler-depreciation-for-small-business/Instant-asset-write-off/

Accelerated depreciation

Another COVID-19 measure is an accelerated rate of depreciation for businesses with an aggregated turnover less than $500m. To be eligible for the accelerated depreciation, the depreciating asset must:

be new and not previously held by another entity (other than as trading stock);
be first held on or after 12 March 2020; and
be first used or first installed ready for use for a taxable purpose on or after 12 March 2020 and before 1 July 2021 (yes – 2021 – it is not a typo!).

A depreciating asset will not qualify for the accelerated depreciation if:

depreciation deductions have already been applied to the asset or the asset is written off immediately under the instant asset write-off rules;
it will not be used principally in a business in Australia or located in Australia;
it is used in a primary production business (e.g. fencing, fodder storage assets or horticultural plants); or
you were committed before 12 March to acquiring or constructing the asset – you cannot restructure existing contracts to try to get around this rule.

You cannot split an asset or merge assets to try to qualify for the accelerated depreciation.

The rules for working out the accelerated depreciation vary depending on whether or not you use the simplified depreciation rules.

In all cases, you cannot deduct more than what you pay for the asset.

Small business using simplified rules

If you are a small business and you use the simplified depreciation rules, those assets over the instant asset threshold which are eligible for the accelerated depreciation are added to the general small business pool. You can deduct an amount equal to 57.5% (rather than 15%) of the business portion of a new depreciating asset in the year you add it to the pool. In later years the asset will be depreciated as part of the general small business pool rules.

Other businesses

Other businesses with an aggregated turnover less than $500m – including small businesses that do not use the simplified depreciation rules – will be able to deduct in the income year the asset is first used or installed ready for use:

50% of the cost (or adjustable value where applicable) of the depreciating asset; plus
the amount of the usual depreciation deduction that would otherwise apply but calculated after first offsetting a decline in value of 50%.

Tip! The rules for working out the accelerated depreciation are fairly complicated so speak to your tax agent before investing in new depreciating assets.

https://www.ato.gov.au/Business/Depreciation-and-capital-expenses-and-allowances/Backing-business-investment—accelerated-depreciation/

Boosting cash flow for employers

The ATO will provide temporary cash flow support (called the cash flow boost) to small and medium businesses and not-for-profit organisations that employ staff during the economic downturn associated with the COVID-19.

Cash flow boosts are tax free and not subject to GST. You will still be entitled to a deduction for PAYG withholding paid. There is no effect on tax paid by employees in respect of their salary and wages.

Cash flow boosts will not have to be repaid once times improve (although if you are overpaid, the excess will have to be repaid).

How does the cash flow boost work?

Eligibility requirements

You will be eligible to receive the cash flow boost if you are a small or medium business (whether a sole trader, company, partnership or trust) that:

held an ABN on 12 March 2020 and continues to be active;
has an aggregated annual turnover under $50 million – this is generally based on the most recent prior year income tax assessment, but if you do not have any prior year assessments, you may still be eligible if the ATO is satisfied that you are in business and would have an aggregated annual turnover under $50 million; and
made eligible payments you are required to withhold from (even if the amount you need to withhold is zero).

Eligible payments include:

salary and wages;
director fees;
eligible retirement or termination payments;
compensation payments;
voluntary withholding from payments to contractors.

In addition, you must also have either:

derived business income in the 2018-19 income year and lodged your 2019 tax return on or before 12 March 2020; or
made GST taxable, GST-free or input-taxed sales in a previous tax period (since 1 July 2018) and lodged the relevant activity statement on or before 12 March 2020.

To be eligible, not-for-profit organisations (excluding charities) must have all of the following:

held an active ABN on 12 March 2020;
have an aggregate annual turnover of less than $50 million; and
made payments to employees.

Charities registered with the Australian Charities and Not-for-profits Commission are eligible, regardless of when they were registered, if they meet the other eligibility requirements.

Initial cash flow boost

You will receive a credit equal to 100% of the amount withheld, up to a maximum of $50,000. The minimum credit will be $10,000, even if the amount required to be withheld is zero. However, you will not be eligible to receive any more cash flow boosts until your PAYG withholding exceeds $10,000 over the relevant periods.

Monthly lodgers will receive a credit that is calculated at three times the rate (300%) in the March 2020 activity statement, to align with quarterly lodgers.

The total of all initial cash flow boosts across all of the relevant periods cannot exceed $50,000.

The initial cash flow boost will be delivered as a credit in the activity statement system from 28 April 2020. If you lodge early (i.e. before 28 April 2020), you will not receive the cash flow boost before that date.

If you lodge quarterly, you will be eligible to receive the credit for:

quarter 3, March 2020 (lodgment due date 28 April 2020); and
quarter 4, June 2020 (lodgment due date 28 July 2020).

If you lodge monthly, you will be eligible to receive the credit for the March, April, May and June lodgment periods.

As the cash flow boost is generated on lodgment of an eligible activity statement, if the ATO has granted a lodgment deferral, the cash flow boost will generally be made at the time of the deferred lodgment.

Additional cash flow boosts

If you receive an initial cash flow boost, you will receive additional cash flow boosts, for the periods June to September 2020. The amount received will be equal to the total amount of the initial cash flow boost.

The additional cash flow boosts will be delivered in 2 or 4 instalments, depending on your reporting period. If you report quarterly, you will receive 50% of the initial cash flow boost for each BAS.

Delivery of the cash flow boost

You do not need to apply for the cash flow boosts. If you are eligible, the cash flow boosts will be automatically applied to your account when you lodge your BAS for the relevant period. The cash flow boosts will be applied to reduce liabilities arising from the same BAS. This will result in eligible entities being required to pay less to the ATO.

The ATO has said that if you do not need to lodge a BAS in respect of your PAYG withholding, it is working through a solution and will update its website with more information on what you need to do.

Where a credit exceeds your other tax liabilities, the excess amount will be refunded.

You may also receive a refund if you overpay because your system was unable to take the cash flow boost into consideration when working out how much was payable.

The ATO has said that it will generally deliver any refund within 14 days.

Warning

You will not be eligible for cash flow boosts if you (or a representative) take steps to make you eligible for cash flow boosts, or to increase the amount of your cash flow boosts.

This may include restructuring your business or the way you usually pay your workers, as well as increasing wages paid in a particular month to maximise the cash flow boost amount.

Tip! Talk to your tax agent before restructuring your business. There will be other tax issues you need to know about, such as capital gains tax.

https://www.ato.gov.au/Business/Business-activity-statements-(BAS)/In-detail/Boosting-cash-flow-for-employers/

JobKeeper payment

If your business has been significantly impacted by the Coronavirus you will be able to access a wages subsidy to continue paying your employees. Under the JobKeeper program, you will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum of 6 months.

Employers will be eligible for the subsidy if:

their turnover is less than $1 billion and it will be reduced by more than 30%; or
their turnover is $1 billion or more and it will be reduced by more than 50%.

The reduction in turnover is relative to a comparable period a year ago (of at least a month).

Not-for-profit organisations are eligible for the JobKeeper payment, but not the major banks.

You will have to apply to the ATO to participate in the scheme. You will need to demonstrate the appropriate downturn and you will have to report the number of eligible employees on a monthly basis.

If you are an eligible employer, you will receive the payment for each eligible employee that was on your books on 1 March 2020 and you continue to employ. Part-time employees, stood down employees and long-term casuals are all eligible, as well as full-time employees.

A long-term casual is one employed on a regular basis for at least the previous 12 months as at 1 March 2020.

An employee must be an Australian citizen or the holder of a specified class of visa. Working holiday makers are not covered.

https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet_supporting_businesses_4.pdf

Other Federal government measures

Other government measures to assist financially distressed individuals and businesses include:

temporarily increasing from $5,000 to $20,000 in the minimum amount of debt required to be owed before a creditor can initiate involuntary bankruptcy proceedings against a debtor;
temporarily extending the time for a debtor to respond to a bankruptcy notice from 21 days to 6 months; and
temporarily extending from 21 days to 6 months the timeframe in which a debtor is protected from enforcement action by a creditor following presentation of a declaration of intention to present a debtor’s petition.

The government will also enter into risk-sharing agreements with financial institutions to ensure that credit continues to flow to small and medium enterprises so they can continue to meet their immediate financing needs during the uncertain economic conditions caused by COVID-19.

The government also announced that individuals may access their super if adversely affected by COVID-19 (up to a maximum of $20,000 in 2 instalments) and a reduction by 50% in the minimum annual payment required for certain pensions and annuities.

What is the ATO doing?

The ATO will allow businesses impacted by COVID-19 to vary PAYG instalment amounts as from the March 2020 quarter.

A quarterly PAYG instalments payer can vary their PAYG instalments on their BAS for the March 2020 quarter. This can be done by lodging a revised BAS before an instalment is due, and before the business lodges its income tax return for the year.

Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters.

Changing to monthly reporting

The ATO will allow businesses on a quarterly reporting cycle to opt into monthly GST reporting to get quicker access to any GST refunds. Changing the GST reporting cycle to monthly doesn’t mean that a business has to change its PAYG withholding reporting cycle. Rather, business can manage this by specifying the roles it is changing.

Once a business chooses to report and pay GST monthly, the ATO says it must keep reporting monthly for 12 months before it can elect to revert to quarterly reporting.

Other measures

Other ATO administrative measures to assist businesses impacted by COVID-19 are:

deferring by up to 4 months the payment of BAS amounts (including PAYG instalments), income tax, FBT and excise;
remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities; and
allowing affected businesses to enter into low-interest payment plans for their existing and ongoing tax liabilities.

These assistance measures will not be implemented automatically by the ATO (unlike the relief measures for the 2019-20 bushfires – see below). Therefore, if you are an individual, sole trader, small or medium business and you need further assistance managing your tax and super obligations, contact the ATO Emergency Support Infoline (tel: 1800 806 218) or talk to your tax agent. Once you or your agent contacts the ATO, a support plan will be tailored for you.

The ATO has set up a “one stop shop” on its website for essential tax and super info on Coronavirus stimulus measures.

https://www.ato.gov.au/Individuals/Dealing-with-disasters/In-detail/Specific-disasters/COVID-19/

State and Territory Coronavirus measures

The States and Territories have also announced various measures to help people and businesses during the COVID-19 epidemic, including waiving various government fees and charges, providing grants and interest-free loans and providing rent relief for tenants in government owned properties.

Various revenue related measures are listed below. For full details, however, talk to your tax agent or visit the relevant government website.

NSW

Waiver of payroll tax for businesses with payrolls of up to $10 million for 3 months (the rest of 2019-20).
Deferral of payroll tax for business with payrolls over $10 million for six months.
The $1m payroll tax threshold will be brought forward 12 months to 1 July this year.
Deferral of gaming tax for clubs, pubs and hotels, and lotteries tax for 6 months, conditional on these funds being used to retain staff.
Deferral of the parking space levy for 6 months.

Victoria

SMEs with a payroll of less than $3 million – full payroll tax refunds for the 2019-20 financial year and deferral of payroll tax for the first 3 months of the 2020-21 financial year until 1 January 2021.
Deferral of 2020 land tax payments for eligible small businesses.

Queensland

Small and medium businesses (payroll up to $6.5M) – a 2-month refund of payroll tax, a 3-month payroll tax holiday and deferral of all payroll tax payments for the rest of 2020.
Larger businesses (payroll over $6.5M) affected by COVID-19 – 2-month payroll tax refund and deferral extended for all of 2020.
$500 rebate on electricity bills for all Queensland small and medium sized businesses that consume less than 100,000 kilowatt hours.

South Australia

A 6-month payroll tax waiver for all businesses with an annual payroll up to $4 million.
Employers with grouped annual wages above $4m can defer payroll tax for 6 months.
Land tax payment deferral for 6 months for those with outstanding quarterly bills for 2019-20.

Western Australia

Businesses with a payroll between $1 million and $4 million will receive a one-off grant of $17,500.
The $1 million payroll tax threshold is brought forward by six months to 1 July 2020.
Small and medium sized businesses affected by COVID-19 can apply to defer payment of their 2019-20 payroll tax until 21 July 2020.

Tasmania

Payroll tax liabilities will be waived for hospitality, tourism and seafood industry businesses for the last 4 months of 2019-20.
Other businesses with payrolls of up to $5 million will be able to apply, based on the impact of virus, to have their payroll tax waived for April to June 2020.

ACT

Interest free deferrals of payroll tax commencing 1 July 2020 for all businesses up to a payroll threshold of $10 million.

Super guarantee amnesty

The super guarantee (SG) amnesty is now official. Under the amnesty, employers have a 6-month window until 7 September this year to disclose, lodge and pay unpaid SG amounts for their employees.

To be eligible for the amnesty, you must declare and pay your SG shortfalls and interest charges. Payments made during the amnesty can be claimed as tax deductions.

SG shortfalls for any quarter between 1 July 1992 and 31 March 2018 may be eligible for the amnesty if they haven’t been disclosed previously or aren’t subject to a current or previous audit.

Applications for the amnesty close at 11.59pm on 7 September 2020. The closing date cannot be changed, even if you are impacted by bushfires or COVID-19.

After the amnesty ends, the ATO’s ability to remit penalties applied as a result of an audit is limited by law. This means shortfalls will have a minimum penalty of 100% applied but can be as much as 200%.

The ATO has also said that its audit program will continue during the amnesty period.

How to apply for the amnesty

To apply for the amnesty, you must:

lodge one approved SG amnesty form (XLS 613KB);
complete one form per quarter using the instructions contained in the form;
check amounts are correct and there are no errors on the forms;
complete the declaration to confirm you are applying for the amnesty;
save the form as an .xls file.

Do not use the SGC calculator in the Business Portal if you want to apply for the amnesty.

To ensure the correct calculation of the amount of SGC you owe and efficient processing of your amnesty application you need to:

use the Mail function in the Business Portal;
select New message;
type Topic: Superannuation;
type Subject: Lodge SG amnesty;
attach the completed SG amnesty form (XLS 613KB) for each quarter to the secure mail message. You can attach up to 6 forms totalling no more than 4MB.

The ATO will tell you which quarters are eligible for the amnesty once they receive the forms.

If you are eligible for the amnesty, you:

will be informed in writing within 14 business days of the ATO receiving your application;
won’t be charged the administration component ($20 per employee per quarter) or part 7 penalty;
will need to pay or set up a payment plan to pay the total amount of SGC you owe. We will send you your payment reference number (PRN).

Payment plan

The ATO has said that it will work with employers to establish a payment plan that is flexible to help them to continue making payments. These arrangements include:

flexible payment terms and amounts which the ATO will adjust if circumstances change;
the ability to extend the payment plan to beyond 7 September 2020, the end of the amnesty period – only payments made by 7 September 2020 will be deductible.

It is important to note that if you agree a payment plan with the ATO, but you are unable to maintain payments, you will be disqualified from the amnesty and the amnesty benefits will be removed. The disqualification will only apply to any unpaid quarters – the administration component of $20 per employee will be re-applied. The ATO will take your circumstances into account when deciding whether a Part 7 penalty should be applied.

If you previously lodged an SGC statement

If you previously disclosed unpaid SG to the ATO in anticipation of the SG amnesty, you don’t need to lodge again or apply on the SG amnesty form.

The ATO will review all disclosures received between 24 May 2018 and 6 March 2020 and advise you of your eligibility. The $20 per employee per quarter administration charge will be refunded if you meet the amnesty criteria.

If you have made payments of SGC or contributions to employee super funds in 2017-18 or 2018-19 that are eligible for income tax deductions, you should include this deduction in your tax return for the relevant year. Once the ATO has amended your return it will pay any refund due as soon as possible (generally within 14 days).

Tip! Your professional advisor can provide further advice on participating in the amnesty, based upon your particular circumstances.

https://www.ato.gov.au/Business/Super-for-employers/Superannuation-guarantee-amnesty/

Disclaimer

April 5th, 2020|

What the ATO is doing to support small businesses

On 17 October 2019, Second Commissioner, Andrew Mills, addressed the Tax Institute’s 2019 Tasmanian State Convention outlining what the ATO is doing to help support small businesses manage their competing demands. Some initiatives include:

a new program of work at the ATO called ‘Better as usual’ – an ATO-wide initiative to continually provide a better level of service
improvements to the ATO’s dispute resolution process, including the small business independent review pilot
the Dispute Assist program, specifically designed to support taxpayers going through exceptional circumstances, for example sudden illness or family breakdown.

3 attributes in a successful small business

The ATO sees 3 key attributes in successful businesses:

Effective cash flow management
Digital readiness
Having a professional adviser.

As a regulator, the ATO helps businesses maintain those behaviours.

Have you missed the STP start date?

Small employers had until 30 September to start reporting through Single Touch Payroll (STP). There are 3 options if you missed the deadline:

1. Start reporting

If you already use accounting or payroll software, check whether it offers STP reporting. If it does, enable the STP function and start reporting straight away. If you need new software or an upgrade, the ATO has a list of providers that offer STP reporting products.

2. Apply for a reporting concession if one exists

Micro-employers (1–4 employees) who need more time to move to STP reporting can ask their registered tax or BAS agent to report on their behalf on a quarterly basis. This can continue until 30 June 2021.

3. Ask for more time by applying for a deferral or exemption

For employers with 19 or less employees, you or your registered agent can ask the ATO for a deferral by logging into the ATO Business Portal or phoning the ATO.

For employers with 20 or more employees, your software provider may have applied to the ATO for a later start date for STP reporting. This deferral would cover you as an existing client.

The option you choose will depend on your circumstances but it’s important to start reporting or get in touch with the ATO as soon as possible.

Get your PAYG withholding obligations right

All businesses, including not-for-profits, are now required to meet their PAYG withholding obligations before they can claim deductions for payments to workers – for example, salary, wages, bonuses, directors’ fees and payments under a labour hire agreement.

Payments to contractors where the contractor does not provide their ABN are also covered by these new rules.

Note! These new rules took effect from 1 July 2019 and apply to income tax returns lodged for the 2020 income year onwards.

What you must do to claim a deduction

In order to claim a deduction, you need to:

withhold the required amount (if applicable) before you pay your worker
report that amount to the ATO.

If you make a mistake and withhold or report an incorrect amount, you won’t lose your deduction. You will need to correct your mistake as soon as possible to minimise penalties.

Tip! If you are uncertain about the impact of these new rules, please speak with your tax adviser.

Using contractors – PAYG obligations

The ATO has published a useful checklist about your PAYG obligations if you hire a contractor.

If the contractor doesn’t provide you with their ABN:

you generally need to withhold 47% from payments to them
give a completed PAYG payment summary – withholding where ABN not quoted to the contractor with their net payment, or as soon as practicable afterwards
include the payments in your PAYG withholding where ABN not quoted – annual report and lodge the report with the ATO by 31 October.

If the contractor is an individual who has a PAYG withholding voluntary agreement with you:

work out the PAYG amount to withhold from payments to the contractor – use the tax withheld calculator or tax tables online (take into account any information provided by the contractor in a withholding variation or withholding declaration
by 14 July, provide a PAYG payment summary – business and personal services income to the contractor showing the total amounts paid and withheld
include the payments in your PAYG payment summary annual report and lodge the report with the ATO by 14 August.

If you have to withhold PAYG amounts for any reason:

if you haven’t withheld before, you need to register for PAYG withholding straightaway

report and pay the PAYG withholding amounts to the ATO in your BAS which is usually quarterly or monthly for most businesses. A business withholding more than $1 million per year reports and pays more often.

Withholding for employee shares

Does your company have an employee share scheme (ESS)? If it does, you will have withholding obligations.

When does withholding apply?

Withholding will apply if:

you provide a discounted ESS interest to your employee
that employee has not given you their TFN or ABN by the end of the relevant income year – so there is no withholding if your employee has provided their TFN.

If your employee has given you a TFN declaration for their employment, no withholding is payable.

How is withholding calculated?

Withholding is calculated on the discount your employee should include in their assessable income under the ESS rules.

If you have engaged the services of a third party to administer your ESS, you may give them your employee’s TFN. In these circumstances, no withholding is payable.

The rate of withholding is the highest individual marginal tax rate plus the Medicare levy, ie 47% for the current tax year. Under no circumstances can you withhold in excess of this rate.

Pay the amounts withheld

You must pay amounts you withheld to the ATO within 21 days after the end of the income year your employee is taxed on the discount.

If you pay amounts withheld to the ATO, you can recover these amounts from your employee. You can do this by offsetting the amount of withholding paid against any amount you owe to your employee, such as salary and wage income.

Are you changing your business structure?

If you are changing your business structure (eg from a sole trader to a company), you will need to apply for a new ABN.

Examples of when you need to cancel your ABN and apply for a new ABN under the new structure include moving from either:

individual/sole trader to partnership or trust
individual/sole trader to company or trust
partnership to company or trust.

You must ensure that your ABN details are updated on your tax invoices. This is essential as your ABN is used to:

identify your business identity to others when ordering and invoicing
claim GST credits.

Other businesses and entities must withhold payment at the top tax rate if the ABN quoted on the invoice is incorrect or the details do not match up.

Tip! Ensure that you update your GST registration details whenever you get a new ABN.

To do! Contact your tax adviser if you are considering changing your business structure. There are also likely to be tax issues.

Did you know that you can lose your ABN?

The ATO will cancel your ABN if your business is no longer operating. Not keeping lodgments up to date is a key indication of this. So that they get it right, the ATO uses information from:

your tax return
other lodgments
third party information.

What happens if the ATO cancels your ABN?

If the ATO cancels your ABN and you want to start your business again, or the ATO gets it wrong, you can reapply and get the same ABN back (as long as your business structure remains the same).

If the business structure is different – for example, you were a sole trader but your new business is a company – you will get a different ABN.

Tip! If you have changed your business structure, you’ll need to get a new ABN in these circumstances – see above.

Working out if you have to pay super

An ATO factsheet provides a useful reminder about when you have to make contributions under the superannuation guarantee (SG) scheme.

Generally, if you pay an employee $450 or more (before tax) in a calendar month, you have to pay them super on top of their wages.

If your employee is under 18 or is a private or domestic worker, eg a nanny, they must also work for more than 30 hours per week to qualify.

You pay super regardless of whether the employee:

is full-time, part-time or casual – working holidaymakers are included
receives a super pension or annuity while still working
is a company director
is a family member working in your business – provided they are eligible for SG.

Note! You may also have to pay for some contractors, even if they quote an ABN.

Superannuation guarantee amnesty a step closer

The proposed amnesty allowing employers to self-correct superannuation guarantee (SG) non-compliance has been reactivated.

What does this mean for employers?

If the Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019 (the Amnesty Bill) is passed by the Parliament, employers will be given a one-off amnesty, with reduced penalties and fees, to disclose historical SG non-compliance and pay any SG charge imposed in relation to the disclosed SG shortfall.

The amnesty allows employers who qualify for the amnesty to claim tax deductions for payments of SG charge and contributions made to offset any SG charge made during the amnesty period.

The amnesty period starts on 24 May 2018 and ends 6 months after the day the Amnesty Bill becomes law. This is a longer period than the original 12-month amnesty.

Tip! If you are concerned that you may have SG corrections to make, please speak with your tax adviser.

Disclosure of business tax debts

The ATO can now disclose tax debt information of businesses to registered credit reporting bureaus (CRBs), but only if certain criteria are met. Those criteria will be set out in a Legislative Instrument that is being finalised.

The Government has said that the ATO will only disclose tax debt information to a CRB if the business has an ABN and one or more tax debts of at least $100,000 that are overdue by more than 90 days

It’s also important to note that businesses that are engaging with the ATO to manage their tax debts or are disputing the calculation of a tax debt through the AAT or the courts, will not have their tax debt information reported to CRBs.

The ATO has also said that it will apply administrative safeguards above and beyond the legislative ones before reporting the tax debt information of a business.

Are you holding vacant land?

If you are holding vacant land, the law changed from 1 July 2019 so that any expenses you have relating to the land are generally not deductible. This is the effect of legislation (the Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1) Act 2019) that became law on 28 October.

What are the exceptions?

There are certain exceptions. You can still claim a deduction to the extent the land is used, or held available for use, in a business including where the business is carried on by your spouse or child or by an affiliate or a connected entity. A deduction is also available where the land is held by a company or a partnership of companies.

The legislation was amended during its passage through the Parliament to add additional exceptions. These apply to vacant land:

held by primary producers;
used for business purposes under arm’s length arrangements; or
on which there is situated a substantial and permanent structure, and the land effectively becomes vacant because of an event outside your reasonable control, such as a natural disaster, fire or substantial building defects (for up to 3 years).

So, you can still claim a deduction in those circumstances.

To do! Contact your tax adviser if you hold vacant land.

The end of $10,000 + cash transactions?

You may have read about a proposal to ban cash transactions in excess of $10,000. Well, that is a step closer to becoming law as the Parliament is now considering it (the Currency (Restrictions on the Use of Cash) Bill 2019).

If the Bill is passed by the Parliament, it will be a criminal offence for all individuals, companies, partnerships, trusts and other entities to make or accept cash payments (including gifts and loans) of $10,000 or more. Why $10,000? Because it is consistent with the reporting threshold under the anti-money laundering/counter terrorism financing (AML/CTF) regime.

A series of payments totalling $10,000 or more will be caught by the new rules if the payments are for the same supply or part of a single gift or loan. An example would be the purchase of a car by instalments. Regular payments under $10,000 between the same parties will be acceptable where distinct things are supplied.

The new laws will apply to foreign currency as well as Australian currency.

Note! If a partnership breaks the law, each partner can be prosecuted. If a trust breaks the law, the trustee (or each trustee if more than one) can be prosecuted.

What are the exceptions?

Draft rules released by the Government specify a number of exceptions. These will include:

personal or private transactions unless involving real property
digital currency transactions
payments that are subject to reporting obligations under the AML/CTF regime

exceptional transactions where no alternative method of payment could reasonably be used.

7 tips to stay smart online and avoid cybercrime

As part of Stay Smart Online week (in early October), the ATO published some useful tips about improving online safety.

Be careful about what information you share online. Thieves look to steal personal information with the intent to commit identity fraud.
Strong passwords are vital. Use two-factor authentication to add an extra layer of security where possible.
Keep software updated on all devices to protect information.
Back up important information regularly using a storage device or online cloud service.
Be on the lookout for suspicious emails and text messages and think twice before clicking links or opening attachments.
Never transfer funds to an unverified bank account.

Be wary of online scams. For example, promoters of illegal schemes promise early access to your super. Check with the ATO if you suspect a scam. If something seems too good to be true it probably is.

Recent real-life case: You can’t always rely on ATO website

The ATO website contains lots of useful information but a recent case shows you should be wary of relying on the website.

The taxpayer (a Mr Lacey) had until 31 December 2017 to bring his transfer balance account below the $1.6m cap. So, he transferred $30,000 from that account to his accumulation account, believing that, when combined with pension drawdowns, it would bring him within the $1.6m cap. This belief was based on a statement on the ATO website that that “you will not have to pay excess transfer balance tax” if “you remove” the excess by 31 December 2017.

Unfortunately, it didn’t work that way and the taxpayer/Mr Lacey was eventually told to pay excess transfer balance tax of $596. So, he took the matter to the Administrative Appeals Tribunal (AAT), claiming that he would not have been misled if the ATO website had used “commute” rather than “remove”.

Although the AAT accepted that the taxpayer/Mr Lacey genuinely believed that the steps he took would operate to bring his transfer balance below the $1.6m cap (and the ATO did not dispute that), the AAT ruled that it did not have the jurisdiction to hear the case. In the end, the taxpayer/Mr Lacey still had to pay $596.

Tip! The lesson to be learnt? Speak with your tax adviser if you have any tax or superannuation issues.

Note! We should point out that the ATO website has been updated and, in the words of the AAT, “it is objectively a much more instructive document than its predecessor”.

Top 4 weird tax time excuses

31 October is, of course, the due date for individual tax returns where you don’t use a registered tax agent to lodge your return. The ATO has published some of the weirder excuses it has heard for why the tax return was late or the taxpayer did not have supporting documents. Hopefully they will make you smile – some may even sound familiar (who hasn’t misplaced a document).

Someone’s stolen my pants

One taxpayer had a thief break into their car and walk off with their uniform pants. Unfortunately, the taxpayer had kept their receipt in his pocket and couldn’t provide a record of their purchase.

The ATO recommends taxpayers keep digital records of all claims you intend to make. When you only keep physical receipts, you run a real risk of losing all evidence of your purchases.

A mouse ate my receipts

The most common problem that the ATO keeps seeing excuses for is missing receipts. One taxpayer contended that a mouse had broken into their car and eaten their receipts.

In cases where you’ve lost your receipt, check with the seller to see if they have a record of your transaction.

The car wash did it

Leaving receipts in cars seems to frequently cause taxpayers strife. The ATO heard from one taxpayer, who, while trying to get their car squeaky clean, vanished all traces of their purchase.

The ATO advises you to close the windows when you’re going through a car wash.

I’ve got ‘holiday brain’

One reason for late lodgment was that a taxpayer had gotten ‘holiday brain’ after returning from a trip and had forgotten to lodge their tax return.

The ATO knows that preparing your tax return may not be the most exciting date on your calendar, but it is an important one, and it may even result in you receiving a refund that you can put towards your next holiday.

Disclaimer

November 12th, 2019|

Tax changes for 2019

It’s Tax Time again!

This edition of TaxWise outlines some tax changes for 2018-19 that should be considered by small businesses when preparing tax returns for 2018-19. There are also some tax tips and lodgment dates that businesses may find helpful when preparing returns. Focus areas that the ATO will be looking at have also been listed.

There have been some tax changes for small businesses for 2018-19 in relation to:

Expanding accelerated depreciation;
Increasing access to company losses;
Single Touch Payroll; and
International tax changes.

Expanding accelerated depreciation

The Federal Budget raised the instant asset write-off threshold to $30,000 from Budget night and expanded the number of businesses who could access the write-off to businesses with turnover less than $50 million. The write-off will be accessible to eligible businesses until 30 June 2020.

The lifting of the threshold and extending the availability of the concession to many more businesses is most certainly a positive step. However, it does leave businesses in a situation where they will have to deal with three different thresholds in the 2019 income year if they want to actually claim the offset.

The thresholds will apply in the following way in the 2019 income year:

assets costing less than $20,000 from 1 July 2018 to 28 January 2019 (for businesses with turnover less than $10 million);
assets costing less than $25,000 from 29 January 2019 to 2 April 2019 (7.29pm) (for businesses with turnover less than $10 million); and
assets costing less than $30,000 from 2 April 2019 to 30 June 2019 (7.30pm) (for businesses with turnover less than $50 million).

It is important to note that the instant asset write-off threshold now includes businesses with a turnover from $10 million to less than $50 million.

Tip! Such a simple concession so favourable to small business is unnecessarily complicated for the 2019 income year. If you don’t get the timing or the amount right, you could miss out. You should ask your tax adviser to make sure you don’t miss out.

Increasing access to company losses: ‘Similar business test’

Most businesses will be familiar with the ‘same business test”. However, from 1 March 2019, there is also a more flexible test called the ‘similar business test’.

The purpose of these tests is to determine whether a company’s tax losses and net capital losses from previous income years can be used.

The new test should make it easier to access past year losses when companies enter into new transactions or business activities.

Under the similar business test, a company (and some trusts) can access losses following a change in ownership where its business is similar having regard to various factors, including the:

assets used by the business to generate assessable income;
activities and operations used to generate assessable income;
identity of the business; and
changes resulting from the development or commercialisation of assets, products, processes, services, or marketing or organisational methods.

Single Touch Payroll

Do you have employees? Are you ready for Single Touch Payroll?

If an employer reports through Single Touch Payroll, they are not required to provide a payment summary to their employees. Not all employers are reporting through this system yet. It only became compulsory for smaller employers from 1 July 2019.

Under this system, many individuals will no longer receive a Payment Summary (Group Certificate) from their employer due to the introduction of Single Touch Payroll. Individuals will find they have an ‘Income Statement’ through their myGov account.

Tip! Small businesses need to be ready for Single Touch Payroll.

International tax changes

Hybrid mismatch rules

There have been changes to the hybrid mismatch rules. These rules are designed to prevent entities that are liable to income tax in Australia from avoiding income tax or obtaining global double tax benefits through hybrid mismatch arrangements that exploit differences in the tax treatment of an entity or instrument under the laws of two or more tax jurisdictions.

Thin capitalisation

There have also been changes to the thin capitalisation provisions. These rules prevent certain debt deductions (eg for interest expenses). The changes are designed to prevent double gearing structures. Double gearing structures use layers of ‘flow-through’ entities (such as trusts and partnerships) to issue debt against the same underlying asset.

Tip! These changes are complex. If they apply to your business, you should seek advice from your tax adviser. ■

5 tax tips for small businesses

A few tips that small businesses should consider when preparing their tax returns are:

Check if you are applying the correct company tax rate;
Check if you are entitled to the small business income tax offset;
Check if you are entitled to a small business CGT concession;
Ensure that deductions are only claimed for business (not personal) expenses; and
Keeping the right records to support your claims.

Correct company tax rate

Companies will pay tax at the full rate of 30% or at the lower rate of 27.5% if certain eligibility requirements are met.

The ATO has published a useful table to help companies determine which tax rate is applicable.

Income year	Aggregated turnover threshold	Tax rate for base rate entities* under the threshold	Tax rate for all other companies
2017–18	$25m	27.5%	30.0%
2018–19 to 2019–20	$50m	27.5%	30.0%
2020–21	$50m	26.0%	30.0%
2021–22	$50m	25.0%	30.0%

A base rate entity is a company that:

has an aggregated turnover less than the aggregated turnover threshold – which is $50 million for the 2018-19 income year; and
80% or less of their assessable income is base rate entity passive income (eg corporate distributions, royalties, rent, interest income).

Tip! Small businesses should make sure whether the 30% rate or 27.5% rate applies to them.

Small business income tax offset

The small business income tax offset can reduce the tax you pay by up to $1,000 each year.

To be eligible, you must be carrying on a small business as a sole trader or have a share of net small business income from a partnership or trust. The ATO has published the following table outlining the relevant turnover thresholds.

Income year	Aggregated turnover threshold	Rate of offset	Maximum offset
2015–16	$2m	5%	$1,000
2016–17 to 2019–20	$5m	8%	$1,000
2020–21	$5m	13%	$1,000
2021–22 and onwards	$5m	16%	$1,000

When determining whether you are entitled to the small business income tax offset, you need to determine your aggregated turnover.

Your aggregated turnover is generally your annual turnover plus the annual turnover of any business connected or affiliated with you.

Small business CGT concessions

There are four small business CGT concessions that may allow a small business to disregard or defer some or all of a capital gain from an active asset used in a small business.

If your business has disposed of an eligible active asset used in a business for a profit, you should consider if these concessions can apply to reduce the amount of tax payable by the business.

Broadly, these concessions are available when you dispose of an active asset and:

you’re a small business with an aggregated annual turnover of less than $2 million; or
your asset was used in a closely connected small business; or
you have net assets of no more than $6 million (excluding personal use assets such as your home, to the extent that it has not been used to produce income).

Tip! Your tax adviser can assist you in determining whether these conditions are satisfied. For example, your tax adviser can assist you in determining whether the asset in question satisfies the active asset test.

If available, these concessions can be very beneficial to small businesses. The concessions are:

15-year exemption – no assessable capital gain on the sale of active assets owned by a business for 15 years where certain other conditions are satisfied (eg you are over 55 or retiring).
50% active asset reduction – capital gains on the sale of active assets can be reduced by 50%.
Retirement exemption – Capital gains from the sale of active assets are exempt (subject to a lifetime limit of $500,000). If you’re under 55, other conditions apply.
Rollover – defer capital gains made on the sale of active assets for two years (or longer in certain circumstances).

Business expenses

Generally, a small business can deduct expenses that are related to earning assessable income and are incurred to run the business.

Common expenses that may be deducted include:

salaries;
rent or mortgage interest expenses;
running expenses – eg lighting, phone, internet, stationery; and
some travel expenses.

The line between business and personal expenses can easily be blurred when it comes to travel expenses. Make sure travel expenses are correctly characterised (or apportioned) as business or personal expenses.

The general rule for businesses is that you can claim deductions for expenses if you or your employee are travelling for business purposes. Such expenses can include:

airfares, bus, train and taxi/Uber fares;
car-hire fees plus fuel, tolls and cap parking costs; and
accommodation and meals if you are away overnight.

You must keep proper tax records to claim travel expenses. The records need to be kept for 5 years and can include tax invoices, boarding passes, tickets. Records are also needed to detail how you worked out the private portion of any travel expenses. For example, if you travelled for business but extended the stay to go sightseeing and have a holiday. In this case, you will need to work out an appropriate apportionment of the expenses.

Depending on the length of travel, you may need to keep a travel diary as well. In fact, the ATO highly recommends a travel diary is kept for all travel expenses.

Some expenses that may be characterised as private and are not deductible could include:

costs incurred to take your family on a business trip;
sightseeing and entertainment; and
visas, passports or travel insurance.

Keeping records

It is vital that proper tax records are kept by small businesses. Small businesses need to keep records in relation to establishing, running or selling the business.

Legally, records must:

explain all transactions;
be in writing (electronic or paper);
be in English or in a form that can be easily converted; and
be kept for five years (some records may need to be kept longer).

Tip! You’ll find tax time much easier if all your records are in order and readily accessible.

What are the ATO’s focus areas?

The ATO has identified the top 3 issues that they see as issues when small businesses lodge their tax returns:

Failing to report all of their income;
Not having the necessary records to prove small business expenses claims; and
Claiming private expenses as business expenses.

Tip! You should keep these focus areas in mind when preparing your tax return. ■

Key tax dates

23 Sep 2019	August monthly BAS due
30 Sep 2019	Single touch payroll deadline to start reporting
21 Oct 2019	September monthly BAS due
28 Oct 2019	– September quarter SG due – September quarterly BAS due – September quarter PAYG instalment due
31 Oct 2019	2019 Income tax return due
21 Nov 2019	October monthly BAS due
28 Nov 2019	September quarter SG charge statement due

Disclaimer

September 4th, 2019|

Final Budget Outcome for 2021–22

What’s the Government’s plan?

Specific measure

Helping small business

Increased penalties

Pensioners

Want to read more?

Intangible depreciating assets

Share buy-backs

Thin capitalisation changes

Other multinational tax integrity measures

ATO tax avoidance taskforces

Legacy measures dropped

Legacy measures – start dates deferred

Other measures

Personal tax rates – no changes

Tip! Talk to your tax adviser about any of the Budget measures that might affect your business.

COVID-related grants

Director ID – time is running out

To apply

Business income and expenses

Using a motor vehicle for business?

Tip! Talk to your tax adviser about the best way to calculate the deductions and the record-keeping requirements.

How’s your record keeping?

Tip! Talk to your tax adviser about what records to keep and how to keep them.

Using business stock for private purposes?

Entertaining your employees?

Superannuation for holiday work

Get new workers onboard faster

Stapled superannuation funds for employers

Tip! Your tax adviser may be able to help your business meet its superannuation obligations.

Brothers busted for fake document scheme

Restaurateur served with jail term

5 years jail for serial GST fraudster

Tip! If you know or suspect phoenix, tax evasion or shadow economy activity, the ATO would like you to report to it by completing the tip-off form on the ATO website or phoning them on 1800 060 062.

Key tax dates

Disclaimer

Tax thresholds and rates

Tip! Contact your tax adviser to find out about any changes that might affect your business.

Tip! Talk to your tax adviser for more details about this FBT exemption.

Disclaimer

Disaster recovery payments

ATO help

Pre-Budget announcements

Changes approved by Parliament

Changes in the pipeline

Tax losses

Changing loss carry back choice

Using business money for private purposes

Check your business’ PAYG instalments

Digital record keeping

Don’t get burned by a phoenix

Employee or independent contractor?

FBT return time

FBT thresholds and rates for 2022–23

Disclaimer

Disclaimer

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Disclaimer

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