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2020/21 Federal Budget

The Federal Budget was delivered on October 6, 2020 with the Treasurer announcing various tax measures affecting both individuals and businesses.  The Government was able to secure passage of legislation containing some of the more important measures, as summarised below.

Tax Relief for Individuals

The Government brought forward ‘Stage two’ of their Personal Income Tax Plan by two years, so that, from 1 July 2020:

  • the low income tax offset increased from $445 to $700;
  • the top threshold of the 19% tax bracket increased from $37,000 to $45,000; and
  • the top threshold of the 32.5% tax bracket increased from $90,000 to $120,000.

In addition, in 2020/21, low and middle-income earners will receive an additional benefit of up to $1,080 from the low and middle income tax offset.

Tax Relief for Business

Businesses with a turnover of up to $5 billion are now able to immediately deduct the full cost of eligible depreciable assets as long as they are first used or installed by 30 June 2022.

The Government will also temporarily allow companies with a turnover of up to $5 billion to offset tax losses against previous profits on which tax has been paid.

Also, businesses with an aggregated annual turnover between $10 million and $50 million will, for the first time, be able to access up to ten small business tax concessions.

The expanded concessions will apply in three phases, as follows:

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

Under the changes passed by the Parliament, the Government will also enhance previously announced reforms to invest an additional $2 billion through the Research and Development Tax Incentive.

Should you require additional information and advice regarding this complex area please contact our office.

JobMaker Hiring Credit

The JobMaker Hiring Credit is specifically designed to encourage businesses to take on additional young employees and increase employment.

The scheme provides employers with a fixed amount of $200 per week for an eligible employee aged 16 to 29 years and $100 per week for an eligible employee aged 30 to 35 years, paid quarterly in arrears by the ATO.

To be eligible, the employee must have been receiving JobSeeker Payment, Youth Allowance (Other) or Parenting Payment for at least one of the previous three months, assessed on the date of employment.

Employees also need to have worked an average of at least 20 hours per week of paid work in a quarter, and can only be eligible with one employer at a time.

The hiring credit is not available to an employer who does not increase their headcount and payroll.

Employers and employees will be prohibited from entering into contrived schemes in order to gain access to or increase the amount payable.

Existing rights and safeguards for employees under the Fair Work Act will continue to apply, including protection from unfair dismissal and the full range of general protections.

Tax-Free Business Support Grants

The Government has announced that the Victorian Government’s Business Support Grants for small and medium businesses, as announced on 13 September 2020, are non-assessable, non-exempt income for tax purposes. The Government may extend this arrangement to similar future grants from all States and Territories on an application basis. Eligibility for this treatment will be limited to grants announced on or after 13 September 2020 and for payments made between 13 September 2020 and 30 June 2021.

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2020/21 Victorian State Budget

The recent Victorian State Government budget included initiatives to encourage business innovation, reduce business costs and encourage local tourism.  A brief overview of the more relevant announcements include:

  • The introduction of a payroll tax credit of 10 cents for every dollar of wages paid in 2020-21 and 2021-22 above the previous year’s wages, for those employers with wages below $10m. The credit is non-refundable and can therefore only reduce a businesses payroll tax liability to zero.
  • Increasing the annual reporting threshold from $40,000 to $100,000 for businesses registered for payroll tax in Victoria. This has an expected start date of 1 July 2021.
  • A land transfer duty waiver of 50 per cent for new residential properties and 25 per cent for existing residential properties, for purchases up to $1 million for contracts entered into between 25 November 2020 and 30 June 2021.
  • The introduction of a 50 per cent commercial and industrial land transfer duty concession for regional Victoria to contracts entered into, on or after 1 January 2021.
  • Provision for land tax breaks including a 50 per cent land tax discount for build-to-rent developments running from 2022 to 2040.
  • A six-month wage subsidy to support businesses in hiring those Victorians hardest hit by the pandemic, specifically young people, retrenched workers and long term unemployed.
  • The development of a new Manufacturing and Industry Development Fund to build essential and sovereign manufacturing and industry capability.
  • The introduction of a Digital Future Now package to support businesses in the transition to a digital economy. Registrations are currently open and will remain open until the funds are exhausted or until 28 February 2021.
  • Provision of Research and Development cash flow loans for SMEs to pay up to 80 per cent of their forecast refundable Federal Government Research and Development Tax Incentive offset.
  • The establishment of an Agriculture Technology Regional Innovation Network and a Pathways to Export program, both designed to grow and modernise Victorian agribusiness.
  • The introduction of LaunchVic to provide support for high-potential start-ups and scaleups in priority sectors.
  • Provision of additional funds available for innovative early-stage start-ups founded by women.
  • Expansion of the solar panel rebate and loans scheme to help small businesses to manage their energy costs.
  • Provision of $200 travel vouchers for Victorians spending at least $400 on accommodation, attractions or tours in regional Victoria. These vouchers were made available in December, with additional vouchers available on January 20 and March 30, with a limit of one voucher per household.

Should you require further information regarding these initiatives please contact our office.  Our clients are also encouraged to monitor the Business Victoria website at www.business.vic.gov.au for detailed information regarding the grants, vouchers and assistance programs available.  Our interstate clients should also note that we are happy to examine the various other state government budget announcements on a state-by-state basis.  Please contact our office for further assistance.

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JobKeeper Update – Extension Period 2

JobKeeper 2.0 Extension Period 2 commences from January 4 2021 and clients are reminded of the need to again apply the decline in turnover test.  To be eligible for the JobKeeper payment for Extension Period 2, from 4 January until 28 March 2021, businesses and not-for-profits will be required to demonstrate an ongoing decline in turnover and reassess their eligibility with reference to their actual GST turnover in the December 2020 quarter relative to the December 2019 quarter.

Importantly, if the business is registered for GST, the manner in which sales are allocated to the relevant quarter must be done consistently with how sales are reported for BAS purposes.  Businesses using a cash basis for reporting GST, for example, must use a cash basis for providing evidence of a decline in turnover.  Please note that alternative tests for determining a decline in turnover may be available in some circumstances and you can discuss these possible alternatives with your accountant.

To be eligible for the JobKeeper payment Extension Period 2, businesses and not-for-profits need to demonstrate a decline in turnover in the December quarter (or other comparison period if an alternative test applies) of at least:

  • 50 per cent for those with an aggregated turnover of more than $1 billion;
  • 30 per cent for those with an aggregated turnover of $1 billion or less;
  • 15 per cent for Australian Charities and Not-for Profits Commission registered charities (excluding schools and universities).

Eligibility for the second extension period is available to new recipients and also those who have previously been in receipt of the payment, either JobKeeper 1.0 and/or JobKeeper 2.0 during Extension Period 1.

Please also note the current JobKeeper payment rates will reduce in Extension Period 2 and from 4 January 2020, the applicable rates will be:

  • $1,000 per fortnight for all eligible employees who, in the four weeks of pay periods before either 1 March 2020 or 1 July 2020, worked in the business or not-for-profit for 80 hours or more, and for business participants who were actively engaged in the business for 80 hours or more in the month of February 2020, and
  • $650 per fortnight for other eligible employees and business participants.

The JobKeeper payment will continue to be made by the ATO to employers in arrears and employers will continue to be required to make payments to employees equal to, or greater than, the amount of the JobKeeper payment, based on the payment rate that applies to each employee.  This is referred to as the wage condition.

ATO Extends JobKeeper Deadlines Ahead of Christmas

The JobKeeper deadlines for the second extension period have now been extended by the ATO ahead of the festive season. Completion of the December business monthly declaration, for employers to be reimbursed for payments between 23 November 2020 and 3 January 2021, has also been extended from the usual 14th of each month to 28 January 2021.

To account for the New Year weekend, the Tax Office will also allow employers to meet the wage condition for payments between 21 December and 3 January 2021 by 4 January 2021.

For clients to apply the decline in turnover test, the ATO has announced it will make the new decline in turnover form available on its systems from 4 January.  To be eligible for JobKeeper payments from the beginning of the second extension period, the decline in turnover form will need to be submitted by all participants by 31 January.  Employers will also be given until 31 January to meet the wage condition for fortnights starting on 4 January and 18 January 2021.

As we prepare to meet JobKeeper deadlines in the coming weeks, we encourage clients to ensure their record keeping is up to date, to allow timely assessments of JobKeeper eligibility for the second extension period.

Please contact our office if further assistance is required for the approaching JobKeeper extension period.  We also remind clients of our office closure from 12pm on December 23rd, until Monday January 11.

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Victorian State Government’s $3 Billion Business Support Package

The Victorian Government recently announced a new support package of cash grants, tax relief and cash flow support for Victorian businesses.  The new measures include:

  • Extension of the Government’s Business Support Fund providing a third round of grants of $10,000, $15,000 or $20,000, depending on size, to eligible businesses with a payroll of up to $10 million.
  • A Licensed Venue Fund providing grants between $10,000 and $30,000, based on venue capacity and location, for licensed venues.
  • A Sole Trader Support Fund providing grants of up to $3,000 to over $30,000 to eligible sole traders who operate from a commercial premises or location as a tenant.
  • Grants of up to $20,000 to businesses in alpine resorts.
  • A liquor license fee waiver for 2021.
  • The deferral of payroll tax for businesses with payrolls up to $10 million for the 2020-2021 financial year.
  • The 50 per cent stamp duty discount for commercial and industrial property across regional Victoria will apply earlier, from 1 January 2021.
  • Vacant Residential Land Tax will be waived for properties that are vacant in 2020.
  • Further money has been allocated to the Click for Vic campaign designed to assist small producers boost sales.

Further details are expected over the next week and as more information is provided we will update our website.  Please be aware the grant application for the Business Support Fund will be available on the Business Victoria website from Friday 18 September: www.business.vic.gov.au

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Extension of the JobKeeper Payment – JobKeeper 2.0

With many Australian businesses a long way from returning to ‘normal’ the Federal Government has extended the JobKeeper Payment scheme, commonly referred to as JobKeeper 2.0.  As many of you will be aware, the JobKeeper payment, which was originally due to run until 27 September 2020, will now continue to be available to eligible businesses (including the self-employed) and not-for-profits until 28 March 2021.

Effectively, there will be two separate extension periods for the JobKeeper payment, these being:

  • Extension period 1 – which covers the seven new JobKeeper fortnights that commence on 28 September 2020 and end on 3 January 2021; and
  • Extension period 2 – which covers the six new JobKeeper fortnights that commence on 4 January 2021 and end on 28 March 2021.

In addition to the separate extension periods, a two-tiered payment system will apply based on hours of work or active engagement.  With further changes announced to expand the eligibility criteria and adjustments to the new ‘Decline in Turnover’ tests applicable from 28 September 2020, JobKeeper 2.0 represents a targeted support package for those businesses still significantly impacted by COVID-19.

We will now examine the new ‘Decline in Turnover’ tests, the extended JobKeeper payment rates and expanded eligibility criteria in more detail.

The ‘Decline in Turnover’ Tests

From 28 September 2020, businesses and not-for-profits seeking to claim the JobKeeper Payment will be required to demonstrate they have suffered an ongoing decline in turnover using actual, rather than projected, GST turnover.  Further, the manner in which sales are allocated to the relevant quarter, must be done consistently with how sales are reported for BAS purposes, if the business is registered for GST.  Accordingly, businesses using an accrual basis for reporting GST, for example, must use an accrual basis for providing evidence of a decline in turnover.

Specifically, to be eligible for the JobKeeper payment Extension Period 1 (ie. from 28 September 2020 until 3 January 2021) businesses and not-for-profits will be required to reassess their eligibility with reference to their actual GST turnover in the September 2020 quarter.  Businesses will need to demonstrate their actual GST turnovers in the September 2020 quarter have decreased (in accordance with the applicable rates) relative to the September 2019 quarter, unless an alternative period has been determined by the Commissioner.

From 4 January 2021, businesses and not-for profits will further reassess their turnover to be eligible for the JobKeeper payment.  To be eligible for the JobKeeper payment Extension Period 2 (ie. from 4 January 2021 to 28 March 2021) businesses only need to demonstrate an applicable decline in turnover in the December 2020 quarter relative to the December 2019 quarter, unless an alternative period has been determined by the Commissioner.

Alternative tests for determining an actual decline in turnover will be available in some circumstances and further guidance regarding alternative tests will be provided in due course.  Please refer to our website for up to date information.

 To be eligible for JobKeeper Payments under the extension, businesses and not-for-profits will still need to demonstrate they have experienced a decline in turnover of at least:

  • 50 per cent for those with an aggregated turnover of more than $1 billion;
  • 30 per cent for those with an aggregated turnover of $1 billion or less;
  • 15 per cent for Australian Charities and Not for profits Commission-registered charities (excluding schools and universities).

If a business or not-for-profit does not meet the additional turnover tests for the extension period, this does not affect their eligibility prior to 28 September 2020.

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

The Extended JobKeeper Payment Rates

From 28 September 2020 to 3 January 2021, the JobKeeper Payment rates will be:

  • $1,200 per fortnight for all eligible employees who, in the four weeks of pay periods before either 1 March 2020 or 1 July 2020, worked in the business or not-for-profit for 80 hours or more, and for eligible business participants who were actively engaged in the business for 80 hours or more in the month of February 2020; and
  • $750 per fortnight for other eligible employees and business participants.

From 4 January 2021 to 28 March 2021, the JobKeeper Payment rates will be:

  • $1,000 per fortnight for all eligible employees who, in the four weeks of pay periods before either 1 March 2020 or 1 July 2020, worked in the business or not-for-profit for 80 hours or more, and for business participants who were actively engaged in the business for 80 hours or more in the month of February 2020; and
  • $650 per fortnight for other eligible employees and business participants.

Businesses and not-for-profits will be required to nominate, and also to notify (the Commissioner and the individual), which payment rate they are claiming for each of their eligible employees (or business participants).

Please note that the total worked hours for an employee includes their total hours of work, paid leave and public holidays.  An employee only needs to satisfy the 80 hour requirement in respect of one reference period where both reference periods (i.e. pre-1 March 2020 and pre-1 July 2020) apply.

Further, a business participant must make a declaration to the entity (or in the case of a sole trader, to the Commissioner) that they had actively engaged in the business for at least 80 hours during the reference period.

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

Expanded Eligible Employee Definition for JobKeeper

Additional recently implemented JobKeeper changes mean more employees will qualify for JobKeeper payments from 3 August 2020.

This is primarily because:

  • the eligible employee test has been extended from 3 August 2020 to include eligible employees who were employed on 1 July 2020 (in addition to the original 1 March 2020 employment date) who are not currently nominated for the JobKeeper Payment by another entity; and
  • from the fortnights commencing on 3 August 2020 and 17 August 2020 (i.e., JobKeeper fortnights 10 and 11) employers will have had until 31 August 2020 to meet the ‘wage condition’ for all new eligible employees included in the JobKeeper scheme under the 1 July eligibility test.

Importantly, as a result of these recent tweaks to the JobKeeper scheme, participating employers should have provided any new eligible employees with an employee nomination form.

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

Information concerning JobKeeper 2.0 is released regularly, so please refer to our website for the most up to date information.

Should you wish to discuss the implications of these JobKeeper 2.0 extensions and adjustments, and your business’s eligibility please contact our office.

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Temporary Fair Work Rules Extended

The JobKeeper provisions in the Fair Work Act were extended recently along with the passing of the JobKeeper 2.0 legislation.  These extended provisions take effect from 28 September 2020 and include some changes for employers.

The extended provisions allow qualifying and legacy employers to continue to access temporary Fair Work Act provisions for a further six months, until 28 March 2021.  For qualifying employers, those employers whose businesses are eligible for JobKeeper 2.0, access to these provisions allows for increased flexibility to help manage their business and their employees.

A significant change to the provisions include the recognition of legacy employers.  Legacy employers are those businesses that previously qualified for JobKeeper but are now unable to qualify for JobKeeper 2.0, and have suffered a 10% decline in turnover for the relevant test quarter.

Notably, legacy employers must have a ‘10 per cent decline in turnover certificate’ confirming, based on the information provided, that the specified employer satisfies the 10 per cent decline in turnover test for the designated quarter.  These ‘certificates’ must be provided by an eligible financial service provider.  Alternatively, for small business employers with less than 15 employees a statutory declaration can be provided.  Please note that Kelly & Associates can assist clients with the provision of a certificate or statutory declaration as appropriate.

Importantly for employers, these temporary Fair Work Act provisions enable qualifying employers and legacy employers to:

  • change an eligible employee’s usual duties
  • change an eligible employee’s location of work
  • agree with an eligible employee to change their days and times or work; or
  • reduce an eligible employee’s hours or days of work in certain circumstances.

Any agreements that legacy employers already have in place will effectively end on 27 September 2020.  All legacy employers will need to reissue or make new directions and agreements with their employees.

Currently, the Fair Work JobKeeper provisions also allow a qualifying employer to make agreements with their employees to take annual leave (including at half pay).  However, from 28 September 2020, these provisions will stop applying and employers will no longer be able to make such agreements under the provisions.

Please contact our office if you require any further assistance regarding these provisions or if you require a 10 per cent decline in turnover certificate or statutory declaration.

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Year End Superannuation Considerations

Superannuation Contribution Deadlines—Beware!

Despite the difficult economic situation of recent months, we remind employers of the need to meet their ongoing super guarantee obligations for their employees.  Due dates for employer contributions remain unchanged with the next June quarter contribution due by 28 July 2020.

We also remind employers that superannuation contributions are only considered to be paid for the purpose of claiming a tax deduction once they have been received by the super fund.  If you wish to claim a tax deduction for your contributions in the 2019/20 financial year, payments must be received by employee super funds by 30 June.  To meet this deadline you will need to make the payment well in advance to allow processing time, particularly if there is a clearing house involved.  The ATO Small Business Superannuation Clearing House (SBSHH) recently announced that they must accept payments by 23rd June to ensure payments reach super funds on time.

Whether meeting the 30 June deadline for tax deductibility or the quarterly due date required for super guarantee contributions, we recommend that employers make their super payments 10 days prior to the relevant deadline.

Superannuation Guarantee and JobKeeper

We also advise that amendments have been released to ensure employers are not subject to additional superannuation guarantee obligations by participating in JobKeeper.

Superannuation Guarantee (Administration) Amendment (JobKeeper Payment) Regulations 2020 has now been registered, setting out that superannuation guarantee payments will only be required to be paid to an employee for the performance of work.

The regulations specify that employers are not required to make contributions for top-up payments to satisfy the wage conditions for JobKeeper payments.  For example, where an employee earns her usual wages of $1,000 per fortnight, and her employer pays an additional $500 per fortnight to meet the wage condition for JobKeeper, the additional payment of $500 is excluded from being salary or wages and is not subject to additional superannuation guarantee obligations.

Early Release of Super due to COVID-19

Clients who are experiencing financial stress as a result of the COVID-19, may be able to access some of their superannuation money early.   Individuals who meet eligibility criteria will be allowed to access up to $10,000 from their superannuation in 2019/20 and a further $10,000 in the 2020/21 financial year.

Funds accessed under the early release measures are tax free and will not affect Centrelink or veteran’s payments.

Applications for the 2019-20 financial year opened on April 20 and close on 30 June 2020.   In relation to the 2020/21 year, applications can be lodged between 1 July 2020 and 24 September 2020. 

Clients can apply online through myGov however we recommend that you contact our office to discuss the eligibility criteria and the suitability of this measure to your circumstances.

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150k Instant Asset Write-off Extended for 6 Months

The $150,000 instant asset write-off has now been extended until the end of the year as the government looks to encourage businesses to invest further in assets.  Businesses with an aggregated annual turnover of less than $500 million are eligible for an expanded instant asset write-off for asset investments of up to $150,000.  The threshold applies on a per asset basis, so businesses can immediately write-off multiple assets, provided each asset costs less than $150,000.  The announcement applies to new or second-hand assets first used or installed ready for use from 12 March 2020 until 31 December 2020. Legislation to give effect to the extension will be introduced to Parliament shortly.

Also from 12 March 2020,  businesses with turnover less than $500 million (not otherwise using the instant asset rules) will be able to access a 15-month investment incentive via an accelerated depreciation deduction.  Eligible businesses will be able to deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.  This measure applies until 30 June 2021.

 

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New Approach to 2020 Individual Tax Returns

With the 2020 tax season commencing in July and current medical advice recommending limited adult contact, we advise that we will not be conducting individual tax appointments in our office during the next few months.  Instead we will be offering a remote service and encourage you to contact our office if you require a remote consultation with your accountant, either via Zoom or telephone.

To assist with the electronic approach to tax preparation this year, we have provided a complementary Tax Data Organiser and an Individual Tax Return Checklist that you might like to use to help gather and compile your tax information.  The ATO website also provides some helpful deduction guides that are specific to particular occupations and industries: https://www.ato.gov.au/Individuals/Income-and-deductions/Occupation-and-industry-specific-guides/

This tax season information can be forwarded to us in the mail or via email direct to your accountant or [email protected]   Alternatively, you may upload your information to the client portal and we have provided instructions for this process below.

Please note that as circumstances and medical advice changes we will review our current remote appointment policy.  We will update our website with any changes in our policy or alternatively please contact our office to check if appointments are available.

We thank you for your patience and understanding as we try to ensure the safety of all clients and staff.

Uploading your Tax Information to the Client Portal

Uploading your tax documents to the client portal is a simple and secure way to share your information with us!

Simply log in to the client portal as you usually would and enter the relevant portal area.

From the ‘document listing’ page, open the ‘upload manager’ (the upwards facing arrow shown above) located in the top right hand corner of the page, choose ‘select files’ and then ‘start’ to complete the transfer.

Please note that we will be automatically notified that you have sent your documents and that they are available for us to retrieve!

We also remind you that we have provided ‘client portal tips’ on our website to help with the process of retrieving and signing your tax returns.

If you need further assistance with the client portal please do not hesitate to contact us.

 

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Kelly & Associates COVID-19 Update

We are working hard to ensure we continue to meet our clients’ needs during this challenging time.   Currently, half our staff are in the office and the remainder are working from home.  We are continuing to encourage phone calls, email and Zoom meetings as our preferred forms of communication.  We will continue to maintain a record of all clients attending our office and practice social distancing measures.

Over recent months we hope you have found our communication and website helpful.  We encourage you to regularly review the website for further updates.

 

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