Disaster payments for lockdowns in declared COVID-19 hotspots
The Federal Government has announced a new “temporary COVID-19 disaster payment” for people who live in declared COVID-19 hotspots and are unable to work because of a lockdown. $500 a week can be claimed by people who would normally work more than 20 hours a week, or $325 for those working less than 20 hours. Applicants must be at least 17 years old, employed prior to the lockdown’s effects, not be on any other income support, and have less than $10,000 in liquid assets. People can apply for the payment from Tuesday, 8 June.
Payment-only deferral requests for registered agents
Practitioners should note that payment-only deferrals are available for clients who are experiencing exceptional and unforeseen circumstances in regard to obligations for income tax, fringe benefits tax, and excise payments. Such deferrals are not available for Quarterly PAYG instalment notice (Form R), Quarterly GST instalment notice (Form S), Quarterly GST and PAYG instalment notice (Form T), or Annual PAYG instalment notice (Form N). Apply using the ATO assessed payment deferral application form.
Webcast on key changes for this tax time
The next Tax Professionals webcast will focus on the key changes and considerations for you and your clients this tax time. Making a reservation is necessary. The webcast is on Thursday 17 June at 2pm AEST.
Heavy vehicle using clients and fuel tax credits
The ATO points out that heavy vehicle using businesses can use the basic method to calculate fuel tax credits for diesel used if your client claims less than $10,000 each year. The method makes it easier to work out on and off public road use. The rate for travel off public roads is higher than on public roads, and means your client will get more fuel tax credits if you calculate off public road use correctly.
Individuals tax time toolkit
The ATO has made available a tax time essentials toolkit for 2020-21 that your clients will find helpful. It has links loaded with information covering topics such as essentials to know before your client lodges, what to do when clients are ready to lodge, after they lodge, protect themselves at tax time, and where to get help.
The case for wage rises post-COVID
This report from Per Capita, Just reward: the case for a wage rise after COVID-19, outlines the case for a significant increase in the minimum wage, which will flow through to higher take-home pay for the more than two million Australian workers who rely on award wages. It also considers that the Fair Work Commission’s 2021 Annual Wage Review is occurring in the context of the most uncertain economic outlook Australia has experienced in decades.
COVID-19 Victorian outbreak business support package increase
Business Victoria has published preliminary information on an announcement made yesterday that the Circuit Breaker Business Support Package grants are to be increased. The Business Costs Assistance Program Round Two grants for eligible businesses located in metropolitan Melbourne will be doubled from $2,500 to $5,000. Applications open today and will remain open for three weeks.
Early lodgers and SAP concession deadline
A lodgment concession is available for your early December balancing substituted accounting period (SAP) company and super fund clients. To receive the concession, they will need to have lodged their tax return electronically by 31 July 2021. The lodgment concession does not change the payment due date.
Farm household support debt waiver amendment
The Farm Household Support Amendment (Debt Waiver) Bill 2021 has been introduced. The bill aims to waive the repayment of certain classes of debts in relation to the Farm Household Allowance (FHA) program through amendments to the Farm Household Support Act 2014. The FHA program provides time-limited, means-tested income support to farmers and their partners experiencing financial hardship. Farmers are eligible for the FHA for a maximum of four years (recorded as a 1,460 day clock) in every 10 year period (beginning 1 July 2014). The days do not need to be consecutive and can be taken only if and when needed.
Lodging for part year or SAP: Schedule for TFE and accelerated depreciation
The ATO has published the schedule (form NAT 75345) to be completed for taxpayers who have an approved substituted accounting period with a year ending before 30 June 2021, or who need to lodge a part year tax return and are claiming temporary full expensing (TFE) or choosing to opt out of this regime or the temporary accelerated depreciation (backing business investment) regime. From 1 July 2021, the relevant labels for temporary full expensing in the respective 2021 tax return must be used.
Calling for tax tip offs from the community
The ATO says it is interested in tip-offs from the wider community about COVID-19, JobKeeper, phoenix, tax evasion and black economy misdemeanours. In particular about members of the community who gain an unfair advantage by intentionally doing the wrong thing.
exchange rates updated
The ATO’s list of daily, monthly and annual foreign exchange rates have been updated to include the monthly rates for May 2021. All foreign income, deductions and foreign tax paid must be translated (converted) to Australian dollars before including it in tax returns. Generally, these require amounts to be converted at the exchange rate prevailing at the time of a transaction, or at an average rate.
Prefill notice for tax agents
The ATO is to start consultation to explore tax agent views on value and appetite to include “all expected client prefillable data readiness status” in Online services for agents. As it issues messages to self preparers who have third party data, notifying them when all their expected prefillable data is ready for them to lodge their tax return, the ATO is considering if including a notice such as “all expected client prefillable data readiness status” in tax agent notification may assist tax agents in planning their interactions with clients.
The new SG rate and ordinary time earnings: What’s in, what’s out
It is the extra elements to ordinary time earnings (OTE) that can trip up an employer. For example, shift loadings and allowances are included in OTE, but not overtime payments.
TPB registration fees to increase 1 July
The TPB has has announced an increase in application fees for tax and BAS agents from 1 July 2021. The application fee to register or renew as a tax agent, BAS agent or tax (financial) adviser is subject to a CPI adjustment on 1 July each year. Agent application fees from 1 July 2021 will be tax agents $704 (up from $700), tax (financial) advisers $563 (up from $560), and BAS agents $141 (up from $140).
Depreciation car limit for 2021-22
Passenger vehicles (vehicles that carry less than one tonne and nine passengers, and not a motorbike or similar) are subject to a cost limit for the purposes of calculating depreciation. The limit is $60,733 for the 2021-22 income year (it is $59,136 for 2020-21).
Land tax relief in Victoria
The State Revenue Office of Victoria says applications for 2021 land tax relief in all categories (residential landlords, commercial landlords and commercial owner-occupiers) close at 10pm on Wednesday 30 June. Residential and commercial landlords of properties with a single tenancy, and commercial owner-occupiers can apply via the SRO’s My Land Tax. Landlords of properties with multiple tenancies (residential or commercial) can apply via its Coronavirus land tax relief – Multiple tenancy properties SmartForm.
Compliance approach for COVID-19 stimulus measures this tax time
The ATO has stated that it will be keeping an eye on the compliance results for the temporary full expensing, loss carry back, and accelerated depreciation measures that were introduced to help businesses cope with the pandemic. It has updated it web materials in this regard, and now includes information on what attracts its attention, what the ATO is doing, and what your client should do first.
TPB guidance on appropriate supervision to register or renew registration
TASA requires all partnerships and companies to meet a “sufficient number” requirement in order to register and provide tax agent, BAS agent or tax (financial) adviser services. The guidance includes relevant factors that can be considered to ensure company and partnership entities have a sufficient number of individuals registered. An exposure draft information sheet has been issued, with comments or submissions due by 28 June.
Scholarships for women’s leadership; applications extended to 30 June
Scholarships are still available through Women & Leadership Australia to support the development of female leaders across Australia’s finance sector. Scholarships of $1,000 to $5,000 enable participation in one of three leadership development courses designed for emerging through to senior leaders. All scholarships must be allocated by the end of June and it is unsure when these scholarships will be available again. Register your interest by completing the expression of interest form on this page.
Whacky Tax Fact
The tax office of Sweden (Swedish Tax Agency, or Skatteverket) administers the country’s baby name regulations, which were enacted in 2017, replacing a 1982 law. These regulations require people to have their child’s name approved by the agency before the child turns five. Parents failing to do so have been known to have a penalty issued of up to 5,000 kroner (A$778). Some interesting names have been allowed to pass by the Swedish Tax Agency, such as Metallica and even Lego, but the names Ikea, Allah and Jesus have been disallowed (although the latter has been permitted on appeal for use by members of the country’s Hispanic community).
Super drawdown rate reduction to continue another year
The Federal Government has announced an extension of the temporary reduction in superannuation minimum drawdown rates for a further year to 30 June 2022. This extends an earlier reduction that was made as support for retirees during the COVID-19 crisis, which saw drawdowns halved for the 2019-20 and 2020-21 income years.
Bitcoin in the spotlight
Cryptocurrencies (not just Bitcoin) are to get a lot more attention this tax time after the ATO has expressed concern that Australian taxpayers may be labouring under a misconception that cryptocurrency gains are tax free or only taxable when the holdings are cashed back into Australian dollars. It has created a cryptocurrency factsheet with tips and information on how capital gains tax applies to cryptocurrency, says more information for taxpayers can be found on the ATO website, and points to ASIC’s MoneySmart website for what to watch out for when making cryptocurrency investments.
SMSF June SAR lodging reminder
The ATO has issued a prompt for SMSF trustees who have a 5 June SAR lodgment deadline. The ATO says tasks required include completing or organising for a valuer to complete a valuation of the fund’s assets, preparing (or have prepared) the fund’s end-of-year financial statements and be ready to provide signed copies to the auditor. It also reminds trustees that an auditor should have been appointed 45 days before the lodgment due date.
The sporting Kiwis and their taxing rights
Legislation has been introduced that, among other measures, seeks to ensure New Zealand maintains its primary taxing right over members of its sporting teams and support staff due to COVID-19. The EM states (see page 29) that the amendments contained in the bill preserves the “uniquely targeted outcome” that the international tax agreement in place ordinarily achieves for cross-border sports in circumstances that could strand NZ residents in Australia for more than 183 days.
Luxury vehicle thresholds increase
The luxury car tax threshold for the 2021-22 financial year is $69,152, up from $68,740 for 2020-21. The fuel efficient car threshold for LCT purposes for 2021-22 is $79,659, up from $77,565 for 2020-21, and has an indexation factor of 1.027.
Working out the LCT on a sale and on an import of a luxury car
The ATO has published a formula to apply luxury car tax (LCT) to the value of a luxury car above the LCT threshold, less GST. If LCT has previously been paid on the car your client may be able to take this into account. It has also made available a formula for working out the LCT on the import of a luxury car.
Guideline changes due to COVID for ancillary funds
In June 2020, the ancillary fund guidelines were amended to encourage increased distributions to deductible gift recipients (DGRs) as a result of the COVID-19 pandemic. The ATO is reminding funds that they have until 30 June 2021 to increase their distributions in line with the amendments to be eligible for a lower minimum annual distribution rate in future years.
Board of Taxation’s latest CEO Update
The Board of Taxation has released the latest in its publication CEO Update, and deals with the Federal Budget measure to reform the individual tax residency rules to make them more certain and easier to understand and apply in practice. It also notes the reforms being worked on in regard to the Research and Development Tax Incentive, noting that details of the review, including terms of reference, are now available on its website.
Circuit breaker business support for Victoria
The Victorian Government has launched the $250 million Circuit Breaker Business Support Package to assist small to medium businesses and sole traders during the snap lockdown the state is currently experiencing. The package includes a $190.01 million second round of the Business Costs Assistance Program, a $40.7 million new round of the Licensed Hospitality Venue Fund, and $20 million in targeted support for the events industry (registration links are here).
Franking account can influence amount up for loss carry back claims
The Tax Practitioner Stewardship Group has pointed out that the loss carry back measure’s applicability can depend to an extent on an entity’s franking account balance. The TPSG says that, given the franking account balance can limit the amount of loss carry back tax offset which is claimable, it’s important to get it right. Clients need to ensure records are accurate, and they may need to check to ensure they have identified all transactions that result in a credit or debit in their franking account, recorded all transactions, and calculated the balance of the franking account correctly in determining whether the franking account is in a surplus (credit) or deficit (debit) position at the end of the income year.
Tax refund timetable (in case a client asks)
The ATO says it expects to start full processing of 2020-21 tax returns on 7 July 2021, and expects to start paying refunds from 16 July 2021. It says it aims to finalise the majority of electronically lodged current year tax returns within 12 business days of receipt. It has summarised the key changes for 2020-21 here, and has also provided a webpage for tax time publications, forms and instructions as they are released as well as a suite of PDF resources to help educate your clients.
SMEs with $50m turnover soon to join $10m club concessions
Concessions previously only available to small business entities with an aggregated turnover of less than $10 million will from 1 July also be available for SMEs with aggregated turnover of less than $50 million. Eligible businesses can choose to use a simplified trading stock regime, will be able to apply to defer settlement of their excise duty, and excise equivalent customs duty, from a weekly to a monthly reporting cycle. They will also have two years to amend an income tax assessment for income years that start on or after 1 July 2021, and will have the option to pay PAYG instalments using an amount the ATO calculates based on previously reported information. See details and more here.
Portability for pensioners away from their national residence
Legislation has been introduced to allow an amendment to the social security law to include a permanent discretion to provide portability extensions for pensioners who are temporarily away from their country of residence and unable to return home within 26 weeks for reasons such as serious illness, death of a family member, natural disaster or public health crisis such as COVID-19 More details are in the EM.
New accounting standard reminder
In June 2020 the ATO advised that a new amended accounting standard had been released by the Australian Accounting Standards Board (AASB), and it is now reminding practitioners that the new standard comes into effect from 1 July 2021. See more details here.
EOFY last-minute tax planning tactics
The financial year is almost over, but there are still effective strategies that can be put in place with the aim to make sure no more tax is paid than is necessary for the 2020-21 year and to maximise any refunds that are legitimately available.