Contribution Deadlines to ensure a Tax Deduction for 2020/21

We remind employers that superannuation contributions are only considered to have been 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 2020/21 financial year, payments must be received by employer super funds by 30 June.

To meet this deadline, payments will need to be made well in advance to allow processing time, particularly if there is a clearing house involved.  The ATO Small Business Superannuation Clearing House recently announced that they must accept payments on or before 23 June 2021 to ensure payments reach super funds on time.  Please note, our QBO clients using Beam must have their super payment successfully uploaded by 3.30pm on 23 June.

Super Guarantee Rate Rising from 1 July 2021

The super guarantee rate will rise from 9.5% to 10% on 1 July 2021, so businesses with employees will need to ensure their payroll and accounting systems are updated to incorporate the increase to the super rate.

It is important for employers to note that the new 10% rate will apply to ordinary times earnings paid after 30 June, irrespective of when those amounts accrued.  Accordingly, payroll paid on or after 1^st July will incur the 10% rate, even if some of the payroll period relates to the month of June.

Employers should also be aware that the increasing super guarantee rate has implications for employees remunerated through a superannuation inclusive package.  In the absence of a remuneration review, an employee’s take home payments will likely reduce from 1 July.  In this instance, employers should communicate with employees as early as possible.  Alternatively, employers may consider implementing a pay increase to ensure consistency in employee take-home payments.

Super Contribution Caps will Increase from 1 July 2021

The ATO has confirmed that, from 1 July 2021, the superannuation concessional and non-concessional contribution caps will be indexed.  The new caps for the 2021/22 year will be:

¨ Concessional Cap:  $27,500

¨ Non-Concessional cap:  $110,000 (or $330,000 over 3 years)

The total superannuation balance limit that determines if an individual has a non-concessional contributions cap of nil will also increase from $1.6 to $1.7 million, effective from 1 July 2021.

As we approach a new financial year it will be important, particularly given the increasing super guarantee rate, for clients to review their arrangements to ensure contribution caps are not exceeded.

Temporary Reduction in Pension Drawdown Rates Extended

The Government has announced an extension of the temporary reduction in superannuation minimum drawdown rates for a further year to 30 June 2022. As part of the response to the coronavirus pandemic, the Government reduced the superannuation minimum drawdown rates by 50% for the 2019/20 and 2020/21 income years.  This 50% reduction will now be extended to the 2021/22 income year.

Finalise STP Data for 2021

We remind employers reporting through Single Touch Payroll (‘STP’) – which should be all employers, unless an exemption of deferral applies – that they will need to finalise payroll information for the 2021 income year by making a declaration.  The finalisation declaration is completed once the STP information is confirmed as correct.  The due date for the finalisation declarations is 14 July 2021.

Employers that finalise through STP are not required to provide payment summaries to employees or lodge a payment summary annual report to the ATO.  Instead, employees will be able to access their payroll information (for the preparation of their 2021 tax return), through a registered tax agent or via myGov.

We will be in touch with our payroll clients in relation to completing finalisation declarations.   If you require further assistance please contact us.

Changes to STP Reporting Concessions from 1 July 2021

Small employers (19 or fewer employees) are currently exempt from reporting ‘closely held’ payees through Single Touch Payroll (STP).  A quarterly reporting option also applies to micro employers (4 or fewer employees).  We remind employers that both these concessions for small and micro employers will end on 30 June 2021.  Please contact us if you require any assistance following the change to the STP concessions.

ATO’S Taxable Payments Reporting System Update

The ATO has confirmed that more than 60,000 businesses have not yet complied with lodgment requirements under the taxable payments reporting system (‘TPRS’) for 2019/20.

The TPRS is a black economy measure designed to assist the ATO to identify contractors who don’t report or under-report their income.

The ATO estimates that around 280,000 businesses need to lodge a Taxable payments annual report (‘TPAR’) for the 2020 financial year.

Importantly, 2020 was the first year that businesses that pay contractors to provide road freight, information technology, security, investigation, or surveillance services may need to lodge a TPAR with the ATO (in addition to those businesses providing building and construction, cleaning, or courier services).

Businesses who have not yet lodged need to lodge as soon as possible to avoid penalties.

ATO Assistant Commissioner Peter Holt added that some businesses may not realise they need to lodge a TPAR, but may be required to, depending on the percentage of payments received for deliveries or courier services.

“Many restaurants, cafés, grocery stores, pharmacies and retailers have started paying contractors to deliver their goods to their customers.  These businesses may not have previously needed to lodge a TPAR.  However, if the total payments received for these deliveries or courier services are 10% or more of the total annual business income, you’ll need to lodge,” Mr Holt said.

On 26 March 2021, the Fair Work Act 2009 was amended to change the workplace rights and obligations for casual employees in Australia.  It is important for all employers to be aware of the changes which include:

• a definition of casual employment;
• a pathway for casuals to move to permanent employment; and
• the requirement to provide new and existing staff with a Casual Employment Information Statement.

Definition of Casual Employment

Under the new definition, a casual employee is defined as a person who is offered and accepts employment on the basis that the employer makes no firm advance commitment to continuing and indefinite work.

In assessing whether an offer is without ‘firm advance commitment’, only the following factors are considered:

• whether an employer can choose to offer the employee work and whether the employee can elect to accept or decline the work;
• whether the employee will work only as required according to the employer’s needs;
• whether the employment is described as casual employment; and
• whether the employee will receive a casual loading.

The new definition provides greater certainty for employers when considering whether the workforce consists of genuine casuals.  It is the offer and acceptance of employment that is the focus, rather than any subsequent conduct of the employee’s actual pattern of work.

Pathway for Casual Employees to Move to Permanent Employment

All casual employees now have the right to become permanent employees in some circumstances.  This is known as ‘casual conversion’.  Access to the conversion provisions are outlined below:

1.   Large Business Employers (15 or more employees)

Large employers are obligated to offer casual employees conversion to permanent employment (full-time or part-time), if the employee:

• has been employed for at least 12 months; and
• has worked a regular pattern of hours on an ongoing basis for at least the last 6 months of that period, which, without significant adjustment, the employee could continue to work as a permanent employee.

An offer for casual conversion must be made in writing by 27 September 2021 or within 21 days after 12 months of employment, whichever is the later.

Please be aware that employers are not required to make an offer of employment permanency where there are “reasonable business grounds” not to, including where:

• the position will cease to exist within 12 months;
• the hours of work the casual would perform will reduce significantly within the 12 months; or
• the days and or times that the casual is required to work will change significantly.

2.   Small Business Employers (less than 15 employees)

Small business employers with less than fifteen employees are not obliged to offer casual conversion to it’s casual employees.  Whilst the obligation to offer casual conversion does not apply to small business employers, their casual employees are still entitled to request casual conversion.

3.   Casual Employee Right to Request Conversion

Eligible casual employees will be able to make a request to their employer for casual conversion after 12 months of employment.  A conversion request can be made by eligible employees to small and large business employers.  Employers will not be able to refuse a conversion request from eligible employees unless there are reasonable business grounds.

Casual Employment Information Statement

The Casual Employment Information Statement is to be provided to existing and new casual employees.  The statement is available from the Fair Work website: www.fairwork.gov.au

Action Required by Employers

All businesses employing casual workers will need to take some action as a result of the casual employment changes, including to:

• Review their systems of engagement of casual employees, including template contracts, to ensure compliance with the new obligations.
• Examine the basis of past offers of employment made to and accepted by casuals, to assess if past offers meet the new definition.
• Provide all existing and new casual employees with a copy of the Casual Employment Information Statement.

In addition, large business employers with 15 or more employees will need to:

• Identify long term eligible casuals and complete the process to offer casual conversion prior to 27 September 2021.
• Establish new processes and maintain good employee records to ensure continued compliance with the casual conversion clauses.

If you require further assistance regarding the casual employment reforms, please contact our office or your employment specialist.

As the JobKeeper program comes to close at the end of March, the Morrison Government has announced additional measures to support the economic recovery and provide continued assistance to businesses, workers and regions still experiencing difficulties.  Some of the more relevant measures for businesses will be examined in further detail, but clients are encouraged to contact our office should they have any questions.

SME Loan Guarantee Scheme

The Government has expanded and extended the SME Loan Guarantee Scheme to provide support of up to $40 billion in lending to small and medium enterprises.  An increase in the Government guarantee will see the current 50/50 split between Government and the banks increase to an 80/20 split.

The size of eligible loans will increase from $1 million to $5 million and businesses with a higher turnover will also become eligible with the maximum eligible turnover increasing from $50 million to $250 million.  Maximum loan terms under the expanded Scheme will also be increased from 5 to 10 years and will also allow lenders to offer borrowers a repayment holiday of up to 24 months.

The Scheme may be used by eligible businesses to refinance their existing loans. This will allow SMEs to access the more concessional interest rates available under the program and to better manage their cash-flows through an extended loan term and lower combined repayments.

The Scheme is open to recipients of the JobKeeper payment between 4 January 2021 and 28 March 2021.  Business that have accessed loans in Phases 1 and 2 can also apply for loans under the scheme.  Loans will be available from 1 April and must be approved prior to 31 December 2021.

Homebuilder Extension

The Government’s HomeBuilder program has been extended to 31 March 2021.  The scheme is expected to support the construction or major rebuild of an additional 15,000 homes.

There is also an extended deadline for all applications to be submitted, including those applying for the $25,000 grant and the new $15,000 grant.

Applications can now be submitted up until 14 April 2021 (inclusive). This will apply to all eligible contracts signed on or after 4 June 2020.  The property price cap for new building contracts has also been increased in Victoria to $850,000.  For further information please refer to our website.

Changes to Insolvency Framework

The Government has made changes to corporate insolvency laws which are intended to reduce costs, cut red tape and help more small businesses recover from the pandemic.  The reforms introduce a new, simplified debt restructuring process.

The changes reflect a ‘debtor in possession’ model and means that the director of a debtor company remains in place during the relevant moratorium period and does not have to hand over control of the business to an external insolvency accountant.

This new model provides for eligible businesses to work with specialist restructuring practitioners to restructure existing liabilities under a restructuring plan approved by creditors.

These measures apply to incorporated businesses with liabilities of less than $1 million – covering around 76% of businesses subject to insolvencies today, 98% of which have less than 20 employees.

JobMaker Hiring Credit scheme: Claims open from 1 February 2021

The JobMaker Hiring Credit is being administered by the ATO and provides a wage subsidy payment directly to employers as an incentive to employ additional job seekers aged 16 to 35 years.

Registrations for the JobMaker Hiring Credit scheme opened on 7 December 2020, and claims for the first JobMaker period can be made from 1 February 2021, provided employers are registered and meet all eligibility requirements.

Employer eligibility requirements include that applicants:

• are up to date with their tax and GST lodgment obligations for the last 2 years;
• have not claimed JobKeeper payments for a fortnight that started during the JobMaker period; and
• are reporting through Single Touch Payroll.

The ATO will be writing to employers who have registered for the JobMaker Hiring Credit from 15 January 2021, encouraging them to check that they meet all JobMaker Hiring Credit eligibility criteria before they claim.

Should clients have any queries regarding the various measures outlined above please contact your accountant for further clarification and advice.

Small employers (19 or fewer employees) are  currently exempt from reporting ‘closely held’ payees through Single Touch Payroll (‘STP’).  A quarterly STP reporting option also applies to micro employers (four or fewer employees).  Both of these concessions for small and micro employers will end on 30 June 2021.

The STP reporting changes that apply for these employers from 1 July 2021 are outlined below.

Closely held payees (small employers)

From 1 July 2021, small employers must report payments made to closely held payees through STP using any of the options below.  Other employees must continue to be reported by each pay day.

A ‘closely held payee’ is an individual who is directly related to the entity from which they receive payments.  For example, this could include family members of a family business, directors or shareholders of a company and beneficiaries of a trust.

Payments to such payees can be reported via STP (from 1 July 2021) using any of the following options:

1. Report actual payments on or before the date of payment.
2. Report actual payments quarterly on or before the due date for the employer’s quarterly activity statements.
3. Report a reasonable estimate quarterly on or before the due date for the employer’s quarterly activity statements. Penalties may apply for those that under-estimate amounts reported for closely held payees.

Small employers with only closely held payees have up until the due date of the payee’s tax return to make a finalisation declaration.  Employers will need to speak with these payees about when their individual income tax return is due.

Micro employers

From 1 July 2021, the quarterly reporting concession will only be considered for eligible micro employers experiencing ‘exceptional circumstances’.

Common examples of when the ATO would generally consider it to be fair and reasonable to grant a deferral due to exceptional or unforeseen circumstances include natural disasters, other disasters or events, serious illness or death.

Further, ‘exceptional circumstances’ for access to the STP quarterly reporting concession from 1 July 2021 may include where a micro employer has:

• seasonal or intermittent workers; or
• no or unreliable internet connection.

The ATO says it will consider any other unique circumstances on a case-by-case basis.

It should be noted that registered agents must apply for this concession and lodge STP reports, quarterly, on behalf of their eligible micro employer clients.

The STP reports are due the same day as the employer’s quarterly activity statements.  If an employer prefers to report monthly, the STP reports must be lodged on or before the 21st day of the following month and finalisation declarations will need to be submitted by 14 July each year.

The superannuation guarantee (‘SG’) amnesty ended on 7 September 2020.  Employers who disclosed unpaid SG amounts and qualified for the amnesty are reminded that they must either pay in full any outstanding amounts they owe, or set up a payment plan and meet each ongoing instalment amount so as to avoid being disqualified and losing the benefits of the amnesty.

The ATO will be sending employers reminders to pay disclosed amounts, if they have not previously engaged with the ATO.  Employers will have 21 days to avoid being disqualified from the amnesty.

Registered agents can assist their employer clients who qualified for the SG amnesty avoid disqualification.  In particular, if a client needs to set up a payment plan, agents can do this (online) on their behalf, if the employer:

• has an existing debit amount under $100,000 (total balance or overdue amounts);
• does not already have a payment plan for that debit amount; and
• has not defaulted on a payment plan for the relevant account more than twice in the past two years.

The ATO has advised that employers who are disqualified from the amnesty will:

• be notified in writing of the quarter they are disqualified for;
• be charged an administration component of $20 per employee for each disqualified quarter;
• have their circumstances considered when deciding a Part 7 penalty remission (this is an additional penalty of up to 200% of the unpaid SG amount that may be imposed under the SG laws); and
• be issued with a notice of amended assessment.

Employers who continue to qualify for the SG amnesty are reminded that they can only claim a tax deduction for amounts paid on or before 7 September 2020 (i.e., the amnesty end date).

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.

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.

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 14^th 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.

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