Daily updates: 16-20 November

20 November

NEWS
No more activity statement notification emails to registered agents
The ATO has issued a statement notifying practitioners that it will no longer by emailing activity statement notice by email. Your clients’ monthly and quarterly activity statements are available online by the 16th of each month before they are due. The ATO says you can use on-demand reports to check when activity statements are due, which will help you and your clients take action or vary instalment activity statement amounts on time, if needed. Guidance on setting up on-demand reports can be found on this ATO page.

Tasmania’s Terrorism Insurance Act and general insurance premiums guidance
The State Revenue Office of Tasmania has issued a guideline explaining the calculation of duties payable on insurance premiums collected under the state’s Terrorism Insurance Act 2003. The guideline provides that duty paid on a premium regarding general insurance is calculated on the total consideration received, including GST and Fire Service Levy paid so as to affect the insurance.

TPB says declaration concessions don’t mean you can drop the ball completely
The TPB has issued a reminder to practitioners that although it has eased up on the deadline on annual declarations (with an exemption if it’s due on or before 30 June 2021), you are still required to meet the ongoing obligations to maintain your tax agent, BAS agent or tax (financial) adviser registration. You still need to maintain professional indemnity (PI) insurance, undertake continuing professional education (CPE), satisfy fit and proper requirements, and comply with the Code of Professional Conduct, including maintaining your personal tax obligations.

Ruling issued on managed investment trust non-concessional income
Law companion ruling LCR 2020/2 outlines the ATO’s aim to improve the integrity of the income tax law for arrangements involving stapled structures, and to limit tax concessions for foreign investors in a managed investment trust (MIT). The provisions apply to increase the withholding rate on fund payments by MITs, to the extent they are attributable to non-concessional MIT income, to 30%.

FULL EXPENSING ASSET WRITE-OFF Q&As

  • A motor vehicle is purchased by a small business entity for $100,000 and therefore costs more than the car limit ($59,136). It is estimated that the business use of the car will be 80%. What are the full expensing implications? Read more
  • When an item of plant is purchased using a chattel mortgage, does the cost of the item become available for deduction when the finance contract is settled, and the item of plant is delivered? Read more

19 November

NEWS
Be prepared: Next 5,000 streamlined assurance review
The ATO says practitioners’ clients may be picked at random for a Next 5,000 streamlined assurance review. It says the evidence typically requested includes matters of group structure, that any misalignment between accounting and tax results is explainable and appropriate, the right amount of tax on profit from Australia-linked business is being recognised in Australia, matters of tax governance and risk management, transactions, acquisitions and disposals, plus that tax risks are flagged to the market. 

Consultation open regarding COVID-19 commercial leasing income tax and GST obligations for landlords and tenants
As part of the COVID-19 stimulus package, the Federal Government issued a national mandatory code of conduct for commercial leasing. This applies to commercial tenants with an annual turnover of up to $50 million that are also eligible to receive JobKeeper payments for eligible employees. It contains a number of principles that apply to negotiating amendments in good faith to existing leasing arrangements. The ATO is seeking targeted consultation to obtain feedback on proposed COVID-19 commercial leasing income tax and GST obligations fact sheets for landlords and tenants.

NSW budget extends COVID-19 land tax relief
The NSW Government’s COVID-19 land tax relief for landowners has been extended to 28 March 2021 in modified form. To be eligible for relief, from 1 January 2021 to 28 March 2021 the lease must be a retail lease, the annual turnover of the tenant must be less than $5 million, and the tenant needs to re-establish eligibility by demonstrating a 30% decline in turnover (15% for non-profits) for the December quarter 2020. (See page 4-4 of this Budget Paper.)

Guideline issued on Tasmania’s home business land tax concession
The Tasmanian State Revenue Office has issued a guideline paper on the eligibility requirements for the state’s qualifying home business concession. It explains the eligibility requirements of the concession and the responsibility for landowners to satisfy the Commissioner that a business is a qualifying home business.

Extension of the Child Care Subsidy 
If your clients have not submitted their 2018-19 tax returns, they can still access the Child Care Subsidy (CCS) until 31 March 2021, the ATO says. While additional time has been granted to access the CCS, this doesn’t mean your clients have an extension of time to lodge their 2018-19 income tax returns. If your clients do not need to lodge you should notify the ATO if lodgment is not required and tell your clients to let Services Australia know. If your clients receive Family Tax Benefit and did not confirm their family income by 30 June 2020, they should phone the Services Australia families line. Services Australia can assist those who had special circumstances preventing them or their partner from lodging before the deadline.

FULL EXPENSING ASSET WRITE-OFF Q&As

  • What is the position in relation to full expensing where there are fixtures and leasehold improvements? If I rent premises and refurbish them, is that covered by the new write-off rules or are they still subject to the old rules requiring depreciation over a long time? Read more
  • A motor vehicle is purchased for $80,000 and is capitalised on the balance sheet. For tax purposes, the cost of the vehicle up to the car limit ($59,136) is written off. What happens to the $20,864 difference? Does it just stay on the balance sheet?  Read more

18 November

NEWS
Consultation open regarding JobMaker Hiring Credit scheme and STP 
The freshly legislated JobMaker Hiring Credit, the new incentive for businesses to employ additional young job seekers, is to be administered by the ATO. To be eligible, employers must hold an Australian business number (ABN), be up-to-date with their tax lodgement obligations, be registered for pay-as-you-go (PAYG) withholding, and be reporting through Single Touch Payroll. The ATO is currently taking steps to seek targeted consultation and feedback on the impacts for Single Touch Payroll reporting for the JobMaker Hiring Credit.

Parliamentary Budget Office releases costings and budget analyses
The Parliamentary Budget Office has publicly released some reports on costings, either because they were not requested on a confidential basis, or following advice from the parliamentarian who made the initial inquiry they are no longer confidential. Reports released include Loss of public revenue and a distributional analysis of the tax cuts packages, Impact of accelerating Stage 2 personal income tax cuts, Exempting historic vehicle imports from the luxury car tax, Increase JobSeeker Payment and more.

NSW budget lifts payroll tax threshold, cuts rate
The NSW state budget delivered yesterday increased the payroll tax threshold from $1 million to $1.2 million. The rate was cut from 5.45% to 4.85%, and backdated to 1 July 2020, which will remain for two years. Elsewhere it was announced that businesses that are under the payroll tax threshold will receive $1,500 digital vouchers to cover government fees. Also 15 hours of free preschool per week is to be extended to the end of 2021, and $100 worth of “Out & About” vouchers will be distributed to every adult resident. The state is also launching a public consultation on enabling home buyers to opt out of stamp duty and instead choose a smaller annual property tax.

Reminder for clients: Make sure there’s no unrecognised JobKeeper ‘eligible business participants’
The ATO has published information targeted to taxpayers to make sure there are no previously un-identified eligible business participants who may qualify for JobKeeper payments. It says an eligible business participant is an individual who’s not an employee of the business but is actively engaged in its operation. For example, they might manage the sale of the business’s goods, or exercise control over the business’s strategy.

FULL EXPENSING ASSET WRITE-OFF Q&As

  • If a business has purchased an asset costing more than $30,000 and, due to the time it was first used or installed ready for use, it is being depreciated, can the balance of the asset now be written off? Read more
  • As at 30 June 2021, is the entire pool balance written off no matter the value or does the value have to be less than $150,000 at that date for it to be fully written off? Is it compulsory to write-off the balance of the pool as at 30 June 2021? Read more

17 November

NEWS
Extended payroll tax relief in two states
Three states handed down their delayed 2020-21 budgets last week. While the Northern Territory budget focused on providing support for small businesses, South Australia and Tasmania have extended payroll tax relief. South Australia’s payroll tax concessions introduced for COVID-19 have been extended for another six months for the period covering January to June 2021 for businesses with grouped Australian wages up to $4 million (waiver) and for businesses with grouped Australian wages over $4 million and eligible for JobKeeper (deferral). Tasmania’s Payroll Tax Rebate Scheme is being extended to 30 June 2022 for apprentices and trainees and will now cover all industries (this was previously limited to building, construction, tourism, hospitality and manufacturing) and for all youth employees (aged between 15 and 24). The NSW state budget will be handed down today. Revisit this site for the budget papers later today.

Being eligible for GST margin scheme
The ATO is keen for practitioners’ clients to know that they can avoid the common errors made when selling property using the margin scheme by making sure suppliers meet the eligibility criteria, calculate the margin correctly, and report the amount of the margin on the sale at G1 Total sales – not the full amount of payment received.

Post pandemic landlord-renter dynamics
A research paper from the Australian Housing and Urban Research Institute investigates the mental and economic wellbeing of landlords and tenants affected by the COVID-19 pandemic. For landlords and tenants that have lost employment, had reduced income, or are seeking employment, the pandemic leaves a challenging financial situation for meeting rent or mortgage payments. Read the paper here, or the executive summary.

FULL EXPENSING ASSET WRITE-OFF Q&As
The following builds on questions stemming from our recent Full Expensing of Assets webinar (access the recording here). Further Q&As will follow in coming Daily Updates.

  • I have a client renting out a warehouse to his business which is run through a company. The client now wants to buy trucks and rent out these to the company. Is there any issue with the client claiming the full amount of the cost of the trucks as an expense if he derives rent (in his own name and with his own ABN) from the company in relation to the use of the trucks? Read more
  • Does full expensing apply to second hand assets? Read more

16 November

NEWS
Report published on post-COVID Tasmanian economy
A report just published by the Centre for Future Work analyses the economic effects of COVID-19 on Tasmania, and suggests how Tasmania can rebuild its way out of the crisis. It also makes some key recommendations, and has explored what the shape of Tasmania’s economy could look like, and how it can recover and reconstruct after this pandemic. Click here to downloadThe Choices We Make: The Economic Future of Tasmania.

APRA releases paper for consultation on revised cross-industry remuneration standard
The Australian Prudential Regulation Authority (APRA) has released for consultation a revised remuneration prudential standard designed to strengthen market practice, underpin sound remuneration practices and enhance accountability in the institutions it regulates. The new draft standard responds to industry feedback from the initial consultation, sets robust minimum standards for APRA-regulated entities and addresses the relevant Royal Commission recommendations.

Commissioner has the discretion to retain a refund
A new draft law administration practice statement (PS LA 2020/D2) spells out the Commissioner’s extended discretion to retain refunds where the taxpayer has an outstanding notification which could affect the amount of the refund. The amending legislation commenced on 1 April 2020 and does not limit the Commissioner’s application of the extension to this discretion. The guidance says the discretion is intended to be exercised where there are reasonable grounds to believe the taxpayer is displaying high-risk behaviour, such as phoenix-type activities. The ATO will issue written communication notifying a taxpayer of the amount retained and outstanding notifications to be lodged.

ATO reminds SMSF auditors of an often forgotten obligation
The ATO says that if an auditor is appointed to audit an SMSF, and they identify a contravention of SISA in the course of undertaking that audit, but their engagement is terminated before they finalise the audit (and give the trustees a report on the fund’s operations), the reporting obligation still exists.

FULL EXPENSING ASSET WRITE-OFF Q&As
The following builds on questions stemming from our recent Full Expensing of Assets webinar (access the recording here). Further Q&As will follow in coming Daily Updates.

  • If a small business, that currently does not use the small business entity depreciation concessions, uses full expensing, does this mean they are then forced to use the small business entity depreciation concessions, including pooling and writing off of the pool balance?   Read more
  • What is the depreciation claimed as a tax deduction as at 30 June 2020 in the following example? The opening balance of the general small business pool as at 1 July 2019 was $200,000. During the year ended 30 June 2020, $10,000 of new assets were purchased. The depreciation claimed is $200,000 x 30% = $60,000 + 100% write-off of $10,000 = $70,000. The balance in the general small business pool at 30 June 2020 is $140,000. Can the $140,000 be written off as at 30 June 2020?  Read more
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