Daily updates: 19-23 July

23 July

Certain business COVID grants NANE
The ATO has reminded business taxpayers that certain government COVID grants received by businesses are non-assessable, non-exempt (NANE) income, and therefore do not have to be included in assessable income. The ATO has also advised that businesses will have to self-assess whether they meet the eligibility requirements to treat such grants as NANE. In this regard, the ATO states that a grant will be NANE if it was received under an eligible grant program in the 2020-21 or 2021-22 financial years by a small business with an aggregated turnover (for the 2020-21 financial year) of less than $50 million. 

Support bolstered for locked down Victorian businesses
The Victorian Government says discussions with the Federal Government confirm that most or all microbusinesses not registered for GST will be eligible for the COVID-19 disaster paymentof $600/$375 per seven-day period, with the Victorian Government to establish a concierge service to help these businesses access this support. It says 90,000 Victorian businesses and sole traders will now share in up to $484.3 million in support for the 12 days of the current lockdown, with automatic top-ups for the lockdown extension to be made in coming days. Businesses that had chosen not to apply for these support programs in relation to the May/June lockdown, or had been ineligible to apply but are now eligible, will be welcome to apply for July lockdown support payments and will be considered outside of the automatic top-up process. More information can be found here.

Handy checklists for keeping on top of your clients’ SMSFs
As running an SMSF takes more time and effort than many clients realise, you can help them keep on top of what needs to be done at every stage of their fund by using a set of handy checklists the ATO has supplied to help clients manage their fund and meet all their SMSF obligations. The checklists, which you could even share with relevant clients, include setting up, investment strategy, trustee reporting obligations, SMSF compliance, starting to pay an income stream, and winding up.

Remind clients that compensation payments have tax consequences
If your client has received a compensation payment from a financial institution for loss on an investment, or a refund or reimbursement of fees or interest, there can be tax consequences. The tax treatment of the compensation depends on what the compensation is being paid for, for example compensation for loss on an investment, or the refund or reimbursement of adviser fees, or for an interest component.

Corporate insolvency reforms prompt update for ASIC guidance
New external administration types were introduced in January 2021 as part of changes made to the insolvency provisions of the Corporations Act. ASIC has now updated its information sheet on commonly-lodged forms in external administration to cover the changes. Three new flowcharts have now been included — Flowchart 2A (liquidator in a creditors’ voluntary winding up, simplified liquidation process), Flowchart 14 (restructuring practitioner of a company), and Flowchart 15 (restructuring practitioner of a restructuring plan for a company).

Australian tax administrative dataset a world leader
A new working paper from the Tax and Transfer Policy unit at ANU provides an overview of the ATO’s “ALife — Individuals” dataset, one of the most comprehensive tax administrative datasets in the world. The dataset currently covers the period 1990-91 to 2017-18, and is based on a 10% longitudinal sample of administrative unit-record personal income tax data. The paper outlines some of the possibilities for public policy research and evaluation that will improve understanding of taxpayer behaviour and support policy development.

Financial wellbeing hampered by systemic factors
For many Australian households, financial issues are a feature of daily life. Prior to the pandemic, according to research from the University of NSW, two in five Australian households were in some form of either financial stress or hardship, and three in 10 Australian households had less than one month’s worth of income in savings. This report from the Centre for Social Impact and UNSW calls for a coordinated response to address systemic factors that have created and continue to perpetuate financial hardship and poor financial wellbeing among Australians.

22 July

COVID-19 disaster payment tally sails past JobSeeker
Minister for Government Services Linda Reynolds says Services Australia has already granted more than 500,000 claims for COVID-19 disaster payments, and that on Tuesday this week the agency received almost 71,000 claims – more than the daily inflows experienced at the height of JobSeeker payment claims in 2020. Claims will open for affected Victorians tomorrow (Friday 23 July) and for South Australians on Wednesday 28 July. More information is available here.

South Australian support package for business and regional workers
The South Australian Government has announced a $100 million support package for businesses affected by its current COVID lockdown. The package will involve cash grants of $3,000 to small and medium businesses that suffer significant loss of income, while sole traders can apply for a $1,000 grant. In addition, a $600 weekly support payment to workers in regional South Australia will be available.

Compensation scheme proposed for financial services failures
As touched on in last Monday’s Daily Update, a compensation scheme for nominated financial services has been proposed (which includes personal advice on relevant financial products to retail clients, credit intermediation, securities dealing, credit provision, and insurance product distribution). Now Treasury has released a paper on the proposed scheme and has introduced draft legislation on the “compensation scheme of last resort”. The last day for submissions on the bill is 13 August 2021.

AAT fees increase for 2021-22
On 1 July, Administrative Appeals Tribunal fees increased. Application fees for the review of a decision, where a fee is payable, increased in accordance with reg 27(1) of the Administrative Appeals Tribunal Regulations 2015. The standard application fee is now $962 (it was $932). The fee payable for review of small business taxation decisions is now $517 (it was $500). The fee payable for other certain taxation applications is $95, up from $92, but there is no change to the concession fee paid within these divisions ($100). The fee increases apply where an application fee is paid on or after 1 July 2021, even if the application was lodged before that date.

“Hawking” of financial products draws ASIC’s attention
Anti-hawking recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (the Hayne report) has resulted in new guidance being formulated by ASIC on its already existing prohibitions. The draft updated guidance includes for the first time a definition of “unsolicited contact”, and takes a technology neutral approach, meaning the ban applies to all forms of real-time communication. Comments close 18 August.

Record-keeping for working from home
The ATO has reminded tax-agents that if their clients are continuing to work from home during the 2021-22 income year, they must still keep a record of the hours they work from home and keep receipts for all items purchased. This, the ATO says, will allow them to use the method that will give them the best outcome when calculating their working from home deduction in future years. 

NSW land tax: relief for landlords providing rent reduction
Reminder: The NSW Government will provide land tax relief to commercial and residential landowners who provide a reduction in rent to a tenant who is experiencing financial distress as a result of COVID-19. Among other things, the relief is intended to reduce a landowner’s land tax payable for 2021, by up to 100% for taxable land where rent relief has been given to the tenant. 

21 July

Understanding the partial CGT exemption for “previously inherited dwellings”
The CGT exemption that is available for the sale of an inherited home within two years of the deceased’s death is invaluable. As well, an extension of this period can be sought directly from the Commissioner or self-assessed under “safe-harbour rules”.

Victorian business grants declared NANE
The Federal Government has released Income Tax Assessment (Eligible State and Territory COVID-19 Economic Recovery Grant Programs) Amendment Declaration (No. 1) 2021 to provide that various grants made under programs administered by Victoria will be non-assessable non-exempt income (NANE) pursuant to s 59-97 of the ITAA 1997. These programs are: the Alpine Support Program; the Business Costs Assistance Program Round Two; the Impacted Public Events Support Program; the Independent Cinema Support Program; the Licensed Hospitality Venue Fund 2021; the Live Performance Support Program; and the Sustainable Event Business Program. 

NSW payroll tax concessions for COVID affected businesses
The NSW Revenue Office has set out the payroll tax concessions available for COVID-affected businesses in the current lockdown. They include a 25% reduction in 2021-22 payroll tax where there is a 30% or more decline in turnover for businesses with Australian wages up to $10 million. In addition, employers will have the option of deferring their payments for the July and August 2021 return periods until 7 October 2021.

ATO reminder on super contribution limits
The ATO has reminded taxpayers and their advisers that there are limits on how much can be contributed into a superannuation fund each financial year. The amount will depend on whether the fund is allowed to accept the contribution and your age and total super balance. Furthermore, the ATO stressed that if these limits are exceeded extra tax may have to be paid.

Stamp duty reform: NSW progress paper released
The NSW government recently published a progress paper providing more detail about its reform intentions including the results of its public consultation process. The next step in the process is to assess feedback on the progress paper and provide an update later in the year. (Note that NSW now joins the ACT as the only two jurisdictions in Australia intent on replacing stamp duty with land tax.)

Tax agent registration terminated: failure to meet personal obligations
A tax agent who contravened the “Code of Professional Conduct” in failing to meet his own personal tax obligations has had his registration terminated and has been prevented from re-applying for it for 18 months. Among other things, the agent failed to: lodge his own tax returns for two years by the due date; pay a large outstanding tax debt; lodge BASs by the due date; and meet various superannuation obligations. In addition, the AAT found that he lodged an application for renewal of his registration with a false declaration. (Tomkinson and Tax Practitioners Board [2021] AATA 2172, AAT, Kirk SM, 8 July 2021.)

New FBT exemption on retraining: ATO provides eligibility guidelines
Employers who provide training or education to redundant, or soon to be redundant, employees may now be exempt from fringe benefits tax (FBT). If you’ve already lodged and paid your or your client’s 2021 FBT return, it may need to be amended to reduce the FBT paid for any exempt retraining and reskilling benefits. You can check if you or your clients are eligible for the exemption by visiting the ATO’s guidance page.

ASIC releases reference checking and information sharing protocol for financial advisers and mortgage brokers
ASIC has made available its reference checking and information sharing protocol that will give effect to the Financial Services Royal Commission’s recommendations to improve reference checking in the financial advice and mortgage broking industries. ASIC has also released guidance documents that will help Australian financial services and credit licensees comply with their new reference checking obligations.

Whacky Tax Fact
In the late 17th century, William of Orange’s court popularised gin – then the favoured drink of the Dutch – among the British. English troops, fighting alongside soldiers from the Low Countries during the Thirty Years’ War, had already noted the bravery-inducing effects of the drink on their foreign counterparts – nicknaming it “Dutch Courage”. Thanks to lower import duties on gin, and deliberate hikes to beer duty, gin quickly supplanted ale as the favoured drink of the poor. Sales skyrocketed, with one estimate putting gin consumption during the 1740s at an average of two pints a week for every man, woman and child! London’s birth rate fell, while the mortality rate rose, as people literally drank themselves to death as can be seen in contemporary artworks like William Hogarth’s Gin Lane etching. The government understandably sought to combat the social problems, and passed a far-reaching Gin Act in 1736, which aimed to make (legal) gin prohibitively expensive for all but the wealthiest. The act required all sellers to purchase a retail licence for £50, which was a huge sum at the time. The act certainly changed the gin trade, but not in the way intended, as the quantity of “bad spirits” consumed by the English public continued to rise, with gin sellers deploying increasingly creative means to dodge the legislation. This era is even thought to have originated the world’s first vending “machine”, as a front for selling bootleg gin on the streets. A replica of the vending contraption has been made by an enterprising publican.

20 July

Latest round of lockdown grants open in WA
Eligible small businesses throughout Western Australia can now apply for a $3,000 grant to assist with some of the costs incurred as a direct result of the recent four-day lockdown. The one-off grants are for the lockdown between 29 June and 2 July, and the associated restriction period from 3 July to 6 July. The program is also available to eligible small businesses in regional WA that were most likely to have been impacted during this period. More details here.

Changes to STP reporting for small employers from 1 July
The ATO has advised of changes to STP reporting for small employers with closely held payees and quarterly reporting for micro employers from 1 July 2021. In particular, the STP quarterly reporting concession for micro employers is only available to micro employers who meet certain eligibility requirements (and this now includes the need for exceptional circumstances to exist).

New ATO app live Monday 19 July
From Monday 19 July the refreshed ATO app will be available in both the Google Play and Apple App Store. Features of the app allows all users to: check available prefill information and decide if they should wait for more information from third parties before proceeding; view the outcome of their 2020-21 tax return and download a copy of their Notice of Assessment; view in real-time when lodgments and payments are due, and action them via ATO Online; and use myDeductions to keep records of their work and general expenses and then upload to their tax agent or myTax.

Options for taxpayers if difficulty meeting obligations
The ATO has again advised all taxpayers who may have difficulties in meeting their tax obligations (in terms of either lodgment or payment obligations) of the various options available to help them with these matters.

ASIC’s internal dispute resolution initiative prepares to launch
The implementation of the Federal Government’s mandatory internal dispute resolution (IDR) data reporting framework has entered pilot phase after the release from ASIC of its data dictionary and data glossary. The former sets out the information that financial firms will be required to collect and report to ASIC, while the latter provides explanations about the key terms in the data dictionary. 

ASFA’s latest economic snapshot during new lockdowns
To help practitioners and fund members assess the economic and social impact of the COVID-19 pandemic, ASFA has introduced a regular “economic snapshot”. Compiled by the economic specialists within ASFA’s policy team, this timely snapshot brings together key data to reveal the impact of the virus on financial and economic conditions, as well as government policy measures to support economic activity and employment. The latest snapshot takes into account the most recent, and ongoing, lockdowns.

Retirement income covenant position paper issued
The Federal Government is inviting feedback on a retirement income covenant position paper. The proposed retirement income covenant outlines a pathway to further develop the retirement phase of superannuation. The covenant will place a key obligation on trustees to formulate, review regularly and give effect to a retirement income strategy outlining how they plan to assist their members to balance key retirement income objectives. Responses are open until 6 August.

Latest Federal and State government support for COVID-affected areas
In the wake of the current outbreak of the COVID-19 Delta variant which is ripping through NSW and surrounding states, both the NSW and Federal Governments have announced packages to support businesses and workers affected by various public health orders.

19 July

Cash support for locked down Victorian businesses and workers
The Victorian Government has issued a media release announcing new cash grants for businesses affected by the short lockdown. Automatic payments will be made to eligible businesses and sole traders. The announcement stated that up to 90,000 businesses that have and will receive payments through the Licensed Hospitality Venue Fund and Business Costs Assistance Program relating to the May-June lockdown will receive the Victorian Government’s new support payments of $3,000 and $2,000 respectively.  Workers affected by the public health restrictions are now eligible for the same payments afforded by the Commonwealth to NSW workers. More details here.

Accelerated NSW COVID-19 Business Support Grant open
From today, eligible NSW businesses, sole traders and not-for-profit organisations will be able to apply for up to $15,000 from the first of the NSW Government’s economic support packages — the 2021 COVID-19 Business Support Grant. Applications for the second tranche of assistance, which includes the Micro Business Support Grants and the JobSaver program, will open from Monday, July 26. The Business Support Grant will be available to NSW businesses that have a turnover of more than $75,000 and up to $50 million, as well as having a total annual wages bill of less than $10 million. Eligible businesses will receive $15,000 for a decline in turnover of 70% or more, $10,500 for a decline in turnover of 50% or more, and $7,500 for a decline in turnover of 30% or more. Businesses can expect to start receiving funds from the Business Support Grant from the end of July.

More Hayne recommendation implementations in the pipeline, including compensation plan
Draft exposure legislation has been released that puts in place more recommendations stemming from the Banking, Superannuation and Financial Services Royal Commission (the Hayne report). The Financial Accountability Regime and the Compensation Scheme of Last Resort proposals are each open for consultation until 13 August. In announcing the draft legislation, Treasury also states it has released ASIC’s report into industry’s transition away from grandfathered conflicted remuneration.

Tax time form changes summarised for non-individual returns
The ATO has provided a summary of the changes made to certain income tax return forms and schedules for the 2020–21 income tax reporting period. The summary covers the changes for the following products: Company income tax return, Fund income tax return, Partnership tax return, Trust tax return, Attribution managed investment trust (AMIT) tax return, International dealings schedule (IDS), Reportable tax position (RTP) schedule, Capital gains tax (CGT) schedule, Research and Development (R&D) tax incentive schedule, Losses schedule, Consolidated losses schedule, and Loss carry back claim form.

List of information needed when applying for Competent Authority determination
The ATO has provided an overview list of the sort of information required when sending a request for a determination from an Australian Competent Authority under provisions within tax treaties between the UK and USA and other similar tax treaties. The ATO emphasises that the information published is not a complete list as the information required will depend on the circumstances of the applicant.

Country-by-country reporting local file instructions for 2021
The local file instructions are now available to help practitioners complete the 2021 local file as part of your country-by-country (CBC) reporting obligations. Updates to the instructions include instructions for new fields, such as on whether debt interests are interest free, new codes for foreign and other jurisdictions, and expanded instructions for foreign currency deferred payment arrangements. Note that these come with a lodgment extension until 30 August 2021 for early balancing entities. Feedback or questions can be directed to CBCReporting@ato.gov.au.

Getting deductions for clothing and laundry expenses right
The ATO allows certain taxpayers to claim a deduction for the cost of buying and cleaning occupation-specific clothing, items of protective wear and for certain unique, and usually distinctive, uniforms.

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