5 minute tax updates: 5-9 October

Insolvency reform consultation open
Small business tax concessions extended to more SMEs
Granny flats to be CGT free
GST BAS toolkit under development
GST and transaction account acquisitions made outside of Australia
TPB announces increased service provision for BAS agents
E-invoicing unstoppable
Business support grants in Victoria to be non-assessable (and could spread)
Economy recovery bill introduced
Advisers get to give feedback on code of ethics
Claim for September JobKeeper payments due soon
Significant global entity penalties extended to subsidiary entities
SMSFs reminded that TBAR due this month

Insolvency reform consultation open
Treasury has released a consultation paper on proposed reform to the insolvency regime, which have been foreshadowed for some time, with Treasury previously releasing a fact sheet on the reforms. The Government says the changes will introduce new processes suitable for small businesses, reducing complexity, time and costs for small businesses. The changes will enable more Australian small businesses to quickly restructure. Where restructure is not possible, businesses will be able to wind up faster. The aim is for reforms to commence 1 January 2021, but consultation closes 12 October, so interested parties had best get their submissions in quick if they haven’t already so do.

Small business tax concessions extended to more SMEs
Businesses with an aggregated annual turnover between $10 million and $50 million will have access to many small business tax concessions, the government has announced. It says the expanded concessions will apply in three phases:

  • From 1 July 2020, eligible businesses will be able to immediately deduct certain start-up expenses and certain prepaid expenditure.
  • From 1 April 2021, eligible businesses will be exempt from the 47% FBT on car parking and multiple work-related portable electronic devices, such as phones or laptops, provided to employees.
  • From 1 July 2021, eligible businesses will be able to access the simplified trading stock rules, remit PAYG instalments based on GDP adjusted notional tax, and settle excise duty and excise-equivalent customs duty monthly on eligible goods. Eligible businesses will also have a two-year amendment period apply to income tax assessments for income years starting from 1 July 2021.

Granny flats to be CGT free
A targeted CGT exemption is to be provided for granny flat arrangements where there is a formal agreement in place, the Treasurer has announced. Subject to the passage of legislation, the exemption could commence from 1 July 2021. Arrangements under the measure will be limited to family relationships, not commercial rentals, and also extend to disabled family members. The announcement comes on the back of a review of these arrangements initiated by the Board of Taxation in 2018, which produced a report a year later. Speaking in Accountants Daily, TSA’s tax counsel John Jeffreys said the existing situation where these dwellings attract CGT “has often been considered a bit tough, because the rent is being transferred between family members rather than through a business”.

GST BAS toolkit under development
The ATO is developing what it calls a GST BAS Toolkit, which is an information product that will be available to small business and tax professionals with the intent to reduce the incidence of common GST BAS errors. Feedback (email kim-sherrie.harper@ato.gov.au) will be used to enhance the GST BAS toolkit.

GST and transaction account acquisitions made outside of Australia
The GST determination GSTD 2020/1 sets out guidance regarding the extent to which the supply of a transaction account is GST-free where the account can be used outside of Australia. This should be read with GSTR 2020/1, which was mentioned in last week’s 5 minute tax update.

TPB announces increased service provision for BAS agents
The Tax Practitioners Board has announced that BAS agents can now legally provide advice and assist eligible businesses to claim their entitlements under the JobKeeper payment and cash flow support for business initiatives.

E-invoicing unstoppable
As part of its Digital Business Plan, the government has announced that all Federal Government agencies are mandated to adopt electronic invoicing by 1 July 2022. It says it will consult on options for mandatory adoption of e-invoicing by businesses. More information is here, and more will be provided as it becomes available.

Business support grants in Victoria to be non-assessable (and could spread)
As confirmed in the Federal Budget (see Budget Paper No 2, p 14) the Federal Government will make the Victorian Government’s business support grants for small- and medium-sized business – as announced on 13 September 2020 – non-assessable, non-exempt (NANE) income for tax purposes. The Federal Government will extend this arrangement to all states and territories on an application basis. Eligibility would be restricted to future grants program announcements for small- and medium-sized businesses that are facing similar circumstances to Victorian businesses. The Government will introduce a new power in the income tax laws to make regulations to ensure that specified state and territory COVID-19 business support grant payments are NANE income. 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.

Economy recovery bill introduced
A bill, the Treasury Laws Amendment (A Tax Plan for the COVID-19 Economy Recovery) Bill 2020, has been introduced. It contains several Federal Budget measures. These measures relate to personal income tax cuts, temporary loss carry back, increasing the small business entity turnover threshold, research and development (R&D) tax incentive and expensing of depreciating assets.

Advisers get to give feedback on code of ethics
The Financial Adviser Standards and Ethics Authority (FASEA) has released a draft Financial Planners & Advisers Code of Ethics 2019 Guide for consultation to support advisers in understanding the practical application of the Financial Planners and Advisers Code of Ethics 2019. Submissions or feedback can be sent until 2 November.

Claim for September JobKeeper payments due soon
Employers have until 14 October to lodge a business monthly declaration for JobKeeper payments made in September. An employer must demonstrate a decline in actual GST turnover in the September 2020 quarter. The decline must be relative to a comparable period. Participants have until 31 October 2020 to determine and submit the decline in turnover information.

Significant global entity penalties extended to subsidiary entities
Significant global entity (SGE) penalties have been extended to subsidiary entities, the ATO has announced. Under new legislation, subsidiary members of SGE consolidated or MEC groups are subject to the same increased penalties as their head company from 5 December 2019.

SMSFs reminded that TBAR due this month
The ATO is reminding any SMSFs that report transfer balance account events on a quarterly basis that the report will be due on 28 October where they had an event occur in the September quarter. SMSFs are required to report if:

  • a TBA event occurred between 1 June and 30 September 2020
  • any member of your SMSF has a total super balance greater than $1 million.
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