Federal Budget 2022-23

On Tuesday night, 25 October 2022, Federal Treasurer Jim Chalmers handed down his first Federal Budget for the Labor Government. The economic outlook for Australia in this Budget is heavily influenced by the current inflation rate and the rising cost of living pressures.  According to the Budget papers, inflation is now expected to peak at 7.75% by the end of 2022 before starting to settle down next year.  While it is forecast that Australia will likely avoid a recession, the impact of large price increases in everyday staples like fuel, electricity and groceries have impacted on the framing of this budget.

Dr Chalmers has described his budget as:

  • Providing responsible cost of living relief that doesn’t put additional pressure on inflation;
  • Investing in a stronger and more resilient modern economy; and
  • Responsibly repairing the Budget.

We’ve outlined below some of the measures that were announced in the Budget that will impact on our clients.  As with all budgetary measures, these measures are not final until the relevant legislation has been passed by the Government.  We will keep you updated on the status of any proposed measures.

Income Tax

The previously legislated stage 3 tax cuts for individuals starting 1 July 2024 remain untouched.

Cost of Living Relief

The budget has a five-point plan for cost-of-living relief:

  1. Cheaper child care;
  2. Expanding Paid Parental Leave;
  3. Cheaper medicines;
  4. More affordable housing;
  5. Getting wages moving again.

Cheaper Child Care

$4.6 billion will be provided to increase the maximum Child Care Subsidy (CCS) rate from 85% to 90% for families for their first child in care and to increase the CCS rate for all families earning less than $530,000 in household income.

Paid Parental Leave

Paid Parental Leave will also be expanded so that it will be available to families earning up to $350,000 per year.  Either parent will also be able to claim the payment and both birth parents and non-birth parents are allowed to receive the payment if they meet the eligibility criteria.  Parents can claim weeks of the payment concurrently so they can take leave at the same time.

From 1 July 2024, the Government will start expanding the scheme by two additional weeks a year until it reaches 26 weeks from 1 July 2026.

Cheaper Medicines

$787 million over four years will be committed to reducing the costs of medicines under the Pharmaceutical Benefits Scheme (PBS).  The maximum general co-payment for medicines on the PBS will be reduced fro $42.50 to $30.

More Affordable Housing

Housing Australia Future Fund: $10 billion will be invested into a newly created Housing Australia Future Fund.  The returns generated from this fund will be used to deliver 30,000 social and affordable homes over 5 years and allocate $330 million for acute housing needs (remote Indigenous communities, women and children fleeing domestic and family violence, homeless veterans).

Housing Accord: $350 million will be provided over 5 years from 2024-25 to support funding of an additional 10,000 affordable homes under a Housing Accord with state and territory governments.

Help To Buy Scheme: $324.6 million over 4 years from 2022-23 to establish a Help to Buy scheme to assist people on low to moderate incomes to purchase a new or existing home using an equity contribution from the Government.  This means more people will be able to buy a home with a smaller deposit and smaller mortgage.

Expanded ATO Compliance Programs

Funding is being provided to extend several ATO compliance programs. 

Personal Income Tax Compliance Program

$80.3 million will be provided to the ATO to extend the Personal Income Tax Compliance Program for 2 years from 1 July 2023.  This enables the ATO to continue to deliver a combination of proactive, preventative and corrective activities in key areas of non-compliance, including over-claiming of deductions and incorrect reporting of income.  The compliance program is expected to generate additional tax revenue of $674.4 million.

Shadow Economy Program

The ATO Shadow Economy Program will be extended for a further 3 years from 1 July 2023.  It will enable the ATO to target shadow economy (dishonest and illegal) activity to protect revenue and level the playing field for businesses that are following the rules.  It is estimated that this program will generate additional tax revenue of $2.1 billion.

Tax Avoidance Taskforce

The ATO will receive an additional $200 million over 4 years from 1 July 2022 to help fund the Tax Avoidance Taskforce.  The Taskforce will also be extended for a further year from 1 July 2025.  The program is expected to generate additional tax receipts of $2.8 billion.

Older Australians

Expanded Downsizer Contribution

The Downsizer Contribution enables people to make a one-off post-tax contribution to their superannuation of up to $300,000 per person from the proceeds of selling their home.  Both members of a couple can contribute and contributions do not count towards their non-concessional cap.  The Government is proposing to reduce the minimum eligible age from 60 to 55 which will enable more people to access the concession. 

Work Incentives for Pensioners

Under the proposed budget, age and veteran pensioners will be able to earn up to $11,800 before their pension is reduced (this is currently $7,800).  This will support pensioners who want to work, or work more hours, to do so without losing their pension.

Seniors Health Card – Income Threshold Lifted

The income threshold for the Commonwealth Seniors Health Card will increase from $61,284 to $90,000 for singles and from $98,054 to $144,000 for couples.

Other measures of interest

Some other measures of interest include:

  • Digital Currencies
    • The budget has confirmed that digital currencies (for example, bitcoin) will not be taxed as foreign currency.  The current tax treatment of digital currencies will be maintained – including capital gains tax where the currency is held as an investment.
  • Support for Small Business Owners:
    • $15.1 million will be provided over 2 calendar years from 1 January 2023 to 31 December 2024 to extend the Small Business Debt Hotline and the New Access for Small Business Owners programs to support the financial and mental wellbeing of small business owners.
  • Depreciation of Intangible Assets
    • The Government will not proceed with a measure to allow taxpayers to self-assess the effective life of intangible assets.
  • Greater Penalties for Breaching Competition and Consumer Laws
    • Maximum penalties for corporations breaching competition and consumer laws will increase from $10 million to $50 million per breach and from 10% to 30% of turnover (whichever is greater).

We will keep you up-to-date with the progress of the implementation of these Budget measures.

If you would like to discuss the tax implications of the budget proposals, please call us on (07) 56656469.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Queensland Land Tax changes – updated 30/9/22

!! UPDATE – 30 SEP 22 !!

It is being reported today that Queensland Premier Annastacia Palaszczuk has decided to “shelve” the controversial land tax changes (outlined below).  We will provide more details as they come to hand. 

Queensland Land Tax Changes

From 30 June 2023, Queensland land tax will be calculated using the total of your Australian landholdings.

The total of your Australian landholdings will be used to determine:

  • whether the tax-free threshold has been exceeded;
  • the rate of land tax that will be applied to the Queensland proportion of the value of your landholdings.

The current tax-free thresholds are $600,000 for individuals (other than absentees) and $350,000 for companies, trustees and absentees.

You’ll only pay tax on the land you own in Queensland (ie. Queensland land tax is not being imposed on land outside of Queensland).

Queensland land only

If you only own land in Queensland, you will not be affected by this change.

Queensland and interstate land

If you own land in Queensland and in another state or territory, you will need to declare your interstate landholdings.

You will need to setup a QRO online account and complete the declaration (including land description, value and percentage of ownership).

From 30 June 2023, you will need to complete this declaration by the earlier of the following:

  • within 30 days of receiving a land tax assessment notice
  • on or before 31 October.

Calculation land tax with interstate land

The land tax rate that applies depends on what type of owner you are and the value of your land.  This rate (and surcharge, if applicable) is applied to the total value of your Australian land.  Then this figure is applied to the Queensland proportion to get the annual land tax liability.

You can use the interstate estimator to get an idea of how much land tax you may have to pay from 30 June 2023.

Exclusions

For land in Queensland, you may be eligible for a land tax exemption depending on the ownership and use of the land.  If your interstate land meets certain eligibility criteria requirements, you can apply to have its value excluded from the land tax calculation.

Exclusions available for Qld and interstate land

  • Home (principal place of residence)
  • Primary production
  • Supported accommodation
  • Moveable dwelling (caravan) park
  • Retirement village
  • Transitional home
  • Charitable institutions
  • Aged care

Exemptions available for Queensland land only

  • Government land
  • Port authority land
  • Societies, clubs and associations

Action to take

If you own land in Queensland and interstate, you need to:

  1. Review the total value of your landholdings;
  2. Setup a QRO online account and complete the declaration of your landholding.
  3. Calculate your potential land tax liability using the online calculator to ensure you budget for the new liability.

 

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent.

Small Business Skills and Training Boost – Draft Legislation

Small Business Skills and Training Boost – Draft Legislation

The Federal Government has recently released Exposure Draft Legislation for the Small Business Skills and Training Boost.  The Boost is a temporary measure to incentivise small businesses to upskill their employees or train new employees.  Under the Boost, businesses will be able to claim a 120% deduction for eligible expenditure.

* Please note, that the Boost has only been released as Exposure Draft Legislation and will not be law until the relevant legislation has been passed by Parliament.  We will keep you updated on the status of the proposed measures.

Who is eligible?

Businesses with an aggregated turnover of less than $50 million are eligible for the bonus deduction.

As discussed in more detail below, sole traders, partners in a partnership and independent contractors are not eligible for the bonus deduction.

What can be claimed?

The bonus deduction applies to expenditure incurred for in-person or online training for your employees.  The training must be provided by a registered training organisation.  The services provided must be within the scope of the registered provider’s registration (which can be checked at www.training.gov.au).

The training cannot be provided by an associate of the employer.  In-house training or on-the-job training is also not eligible. 

Only the amount charged by the registered training organisation is eligible for the bonus deduction.  If there are incidental costs to the training (eg. books or equipment), it will only be eligible for the bonus deduction if the training provider charges your business for these.

There is no cap on the amount claimed.

When does it apply?

It applies to expenditure incurred from 7:30pm on 29 March 2022 to 30 June 2024.

Any expenditure incurred between 29 March 2022 and 30 June 2022 will be claimed in the 2023 tax return.

What is excluded?

Sole traders, partners, independent contractors

As the draft legislation currently stands, the bonus deduction is only available for spending on external training for employees.  The explanatory memorandum for the draft legislation specifically states that the bonus deduction is not available for sole traders, partners in a partnership and independent contractors (as they are not “employees” of the business).

Incidental costs

As noted above, incidental costs (like books or equipment) cannot be claimed unless the registered trainer charges for these.

Action to take

  1. Review all expenditure incurred from 29 March 2022 to 30 June 2022 to identify whether your business has incurred any costs eligible for the bonus deduction.  Document these costs and have them ready for your 2023 tax return.  If you are one of our business clients, please feel free to email the invoices for these costs through to us and we will retain these on file for your 2023 tax return.
  2. Setup a separate expense account in your chart of accounts to track eligible training expenses for the 2023 and 2024 year (to make it easier to identify and claim at year end).
  3. For all eligible expenditure, ensure you have an appropriate invoice from the registered training organisation (and that the services provided come within their scope of their registration).  If you are using accounting software like Xero, you can attach these invoices to the relevant expense entry (making it easier at year end for your accountant to review the eligibility of the expense).
  4. For all eligible expenditure, ensure it has been incurred for employees (ie. that the relevant employee is recorded on the payroll of the business and that appropriate payroll data has been lodged via Single Touch Payroll for the employee).
  5. Review your current training programs for your staff and consider whether additional training is required.  If so, ensure the training is undertaken prior to 30 June 2024 to be eligible to the bonus deduction.

 

 

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent.

Small Business Technology Investment Boost – Draft Legislation

Small Business Technology Investment Boost – Draft Legislation

The Federal Government has recently released Exposure Draft Legislation for the Small Business Technology Investment Boost provides businesses with a 120% deduction for expenditure to support their digital technologies. 

* Please note, that the Boost has only been released as Exposure Draft Legislation and will not be law until the relevant legislation has been passed by Parliament. We will keep you updated on the status of the proposed measures.

Who is eligible?

Businesses with an aggregated turnover of less than $50 million are eligible for the bonus deduction.

What can be claimed?

Eligible businesses can claim a bonus 20% deduction on expenditure to support digital operations.  The expenditure must be incurred wholly or substantially for the purposes of a business’ digital operations or digitising the entity’s operations.  This may include:

  • Digital enabling items – computer and telecommunications hardware and equipment, software, systems and services that form and facilitate the use of computer networks
  • Digital media and marketing – audio visual content that can be created, accessed, stored or viewed on digital devices; and
  • e-commerce – supporting digitally ordered or platform enabled online transactions.

It only applies to expenditure up to $100,000 per income year (which would give the business an maximum additional $20,000 deduction per income year).

When does it apply?

It applies to expenditure incurred from 7:30pm on 29 March 2022 to 30 June 2023.

Any expenditure incurred between 29 March 2022 and 30 June 2022 will be claimed in the 2023 tax return.

What is excluded?

A bonus deduction cannot be claimed on the following costs:

  • Salary and wages
  • Capital works claimable under Division 43 (building depreciation)
  • Financing costs
  • Training and education (see the Small Business Skills and Training Boost)
  • Spending associated with training stock.

The boost is not intended to cover general operating costs relating to employing staff, raising capital, the construction of the business premises and the cost of goods and services that the business sells.

Action to take

  1. Review all expenditure incurred from 29 March 2022 to 30 June 2022 to identify whether your business has incurred any costs eligible for the bonus deduction.  Document these costs and have them ready for your 2023 tax return.
  2. Setup a separate expense account in your chart of accounts to track these expenses for the 2023 year (making it easier to identify and claim at year end).
  3. For all eligible expenditure, ensure you have appropriate invoices to support the cost.  If you are using accounting software like Xero, you can attach these invoices to the relevant expense entry (making it eaiser at year end for your accountant to review the eligibility of the expense).
  4. Consider whether your business needs to make further investments to support their digital operations.  If so, ensure these costs are incurred before 30 June 2023.

 

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent.

2022 End of Year Tax Planning

Now is the time for you to review your 2022 estimated tax position to see what action can be taken prior to 30 June to minimise your tax liability.

There are quite a few new issues to consider for the 2022 financial year.  We have outlined some of the key 2022 tax planning ideas for you below.

There are also some significant changes taking effect from 1 July 2022.  We have also outlined these changes here.

Depreciation of assets

For businesses with a turnover under $50 million, up to 30 June 2022 you can claim a deduction for the acquisition of any eligible depreciating assets (there is no limit for most assets).

For small businesses (turnover under $10 million) that use simplified depreciation rules, the balance of your small business pool can be written off at the end of the income year.

We note that there is still a cost limit on certain assets – for example, you can only claim a maximum deduction of $60,733 for a passenger vehicle during the 2022 financial year.  A passenger vehicle is a vehicle that is designed to carry a load less than one tonne and fewer than 9 passengers.

EOFY Tax tip: If you are looking to acquire capital assets for your business, we recommend doing so prior to 30 June to get the deduction in the current financial year.  If the deduction puts your company in a loss position – consider the loss carry-back provisions below.

Business tip: While you get the benefit of deducting the full cost of the asset in the current financial year, this means that you will not receive any depreciation on this asset in future years.  It also means that when you sell the asset, any income from the sale will be subject to income tax.

Business tip: The tax depreciation deduction is only available once the asset is installed and ready for use.  Getting assets installed and ready for use by 30 June might be difficult for some businesses given the current lack of supply for equipment and vehicles.

Company loss carry-back

Companies that make a loss in the 2020 to 2023 financial years, can carry this loss back to reduce taxable profits made on or after the 2019 financial year.  The company can then elect to receive a refund of the tax paid in that year when lodging the later year tax return.

EOFY Tax tip: Your company may be able to take advantage of the asset depreciation rules to write off the full value of new assets purchased.  If the depreciation puts your company into a loss, this loss may be applied against the taxable profits from 2019, 2020 or 2021.  You may then receive a refund of tax paid in those financial years.

Employee superannuation guarantee

The June quarter superannuation guarantee liability is required to be paid by 28 July.  However, a business can only claim a tax deduction for employees’ superannuation when it is actually paid.  As such, to ensure you get a deduction in the current year, you need to pay your employees’ June superannuation guarantee liability prior to 30 June (cashflow permitting).  We recommend that the payment be made by 14 June (to ensure it is processed by the recipient superfund). 

EOFY Tax tip: Pay your employee June quarter superannuation by 14 June 2022 to get a deduction in the current financial year.

Business tip: The ATO are currently allocating considerable resources to reviewing employer compliance with paying employees’ superannuation guarantee.  There are significant penalties that can be incurred if you pay your employee superannuation late. 

Business tip: The payment of your June quarter superannuation liability does not impact on your profit and loss position (as the superannuation liability has already been recorded in your profit and loss).  The payment before 30 June simply brings the tax deductibility of the payment forward to the current financial year.  If you make the payment after 1 July (and before the 28 July cut-off), the payment will be deductible next financial year.

Business tip: From 1 July 2022, the superannuation guarantee rate increases to 10.5%.  This will continue to increase by 0.5% per year until it reaches 12%.  This will have flow-on implications for payroll tax, workcover etc.  The $450 minimum threshold for the payment of the superannuation guarantee will also be abolished from 1 July 2022, meaning that superannuation is payable on the first $1 of your employee’s wages. 

Personal superannuation

You may also want to make personal contributions to super.  For the 2021/22 financial year, the maximum concessional (deducted) contribution is $27,500.

However, if your superannuation balance was less than $500,000 as at 30 June 2021, it may also be possible for you to contribute more super by taking advantage of the unused concessional cap carry forward rules. 

EOFY Tax tip: If you have unusually high income during the 2022 financial year, consider whether making additional deductible superannuation contributions fits within your personal financial plan.  We recommend speaking with your financial adviser with regards to your superannuation contributions.

Trade debtors

You should review your trade debtors as at 30 June.  You must ensure that any debts that are uncollectible are written off prior to 30 June in order to claim a tax deduction for the write-off in the current financial year.  This is particularly important given the on-going effect of COVID-19 on many businesses.

EOFY Tax tip: To write off a bad debt – you must have made reasonable and commercial attempts to recover the debt and have now determined it is uncollectible.  You then need to make a decision in writing to write off the bad debt (eg. you have removed the debt from the customer’s account and have recognised a bad debt expense).

Prepay or bring forward your expenses

Make sure you review all of your expenses and bring forward any expenses to June (where possible).  For example, stock up on stationery and office consumables, prepay your insurance and interest (if applicable) and look at any other expenses you may be able to pay in June.  By bringing these expenses forward to June, you are obtaining a tax deduction in the current financial year which will reduce your overall tax bill for the 2022 year.

EOFY Tax tip: If your business is in a loss position, it may not be advantageous to bring forward expenses to the current financial year.  Please contact us to discuss whether this strategy is appropriate for you.

Defer assessable income

Consider whether it is possible to defer your assessable income (being mindful of cashflow implications) to next financial year. 

Motor vehicles

If you are using a vehicle for a high percentage of work-related travel, make sure you keep a logbook.  Without a logbook, an individual is limited to claiming a maximum of 5,000km at $0.72 (or $3,600) in the 2022 financial year.  If you keep a logbook, you can claim the business percentage of the operating costs of the vehicle (petrol, registration, servicing, depreciation, interest etc).

EOFY Tax tip: A logbook started prior to 30 June can be used to support a logbook claim even if the logbook isn’t completed until after 30 June.

Working from home

If you worked from home during the 2022 financial year, you may be able to claim a deduction for a percentage of the running costs of your home.  There are a few different methods you can use to calculate your deduction:

(1) Shortcut method ($0.80 per hour) – available until 30 June 2022 and covers all home office running expenses including telephone, electricity, depreciation, internet, computer consumables

(2) Fixed rate method ($0.52 per hour) – this claim only covers depreciation of office furniture and furnishings, electricity and repairs (so you can claim telephone, internet, equipment depreciation and computer consumables separately)

(3) Actual cost method – you can calculate and claim the work-related portion of your actual expenses provided you have kept appropriate records

EOFY Tax tip: The ATO have calculators that may assist you to calculate your working from home deduction shortcut method calculator and fixed rate method calculator

EOFY Tax tip: The ATO have announced that work-related expenses and working from home deductions will be a specific area of review for the 2022 tax returns. 

Trust minutes

Prior to 30 June, make sure the trustees of your discretionary trusts decide how they are going to distribute their income and capital.  This decision must be documented in a trust minute before 30 June.  It is important that you review your trust income for the 2022 financial year to ensure that the trust minute accurately reflects the trustee’s intention.  There have been recent announcements from the ATO with regards to the distribution of income to adult children and other tax advantaged beneficiaries.  It is important that you get tax advice for your end of year tax minutes.

EOFY Tax tip: Your trust minutes must be prepared prior to 30 June to evidence the trustees decision regarding the distribution.  Keep this minute with your tax records.

Rental properties

For your rental properties, if you have any expenses coming up in the next few months, try to pay these prior to 30 June – this will bring the deduction into the current tax year and will help you to reduce your 2022 tax bill.

EOFY Tax tip: Consider getting a depreciation report for your rental property.  You may be able to claim additional tax deductions for the the cost of the building and potential its fixtures and fittings.

EOFY Tax tip: Consider undertaking repairs to your property prior to 30 June.

Cryptocurrency

The ATO have specifically announced that they will be reviewing cryptocurrency transactions in the 2022 tax returns.  It is important to ensure you include all cryptocurency transactions on your tax return.  If you have had any cryptocurrency gains in the current financial year, you may wish to consider some additional tax planning measures before 30 June to reduce any tax liability.

EOFY Tax tip: Make sure you have all of your documentation available for all cryptocurrency transactions.  Noting that changing your investment from one cryptocurrency to another constitutes a transaction which may result in a tax liability.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent,

Employers…changes are coming

Below we have outlined some upcoming changes to employee superannuation obligations and employee data reporting.  It is important to check that your payroll software is updated to take into account these changes.  Some of these changes will increase your overall employee costs and will need to be taken into account when you are setting your budget for the 2023 financial year.

Superannuation guarantee rate increasing to 10.5%

The superannuation guarantee (SG) rate will increase to 10.5% from 1 July 2022 and will continue to increase by 0.5% each financial year until it reaches 12% on 1 July 2025.

Business impact

The increase in the SG rate can have the following impacts on your business:

  1. An increase in your superannuation expense – if your employees are paid their super on top of their hourly rate or salary, then an increase in the SG rate will increase your overall superannuation liability.
  2. An increase in your workcover cost – workcover is calculated on the wages and superannuation that you pay to your employees so an increase in the superannuation rate will increase the total wages declared to workcover.
  3. A liability to payroll tax – if your business is near the payroll tax threshold, an increase in your superannuation expense may result in you becoming liable to payroll tax.
  4. An increase to your existing payroll tax liability – if your business is already liable for payroll tax, an increase to your superannuation expense will increase your overall payroll tax liability.

Action to take

To ensure your business takes into account the implications of the increase in the SG rate, we recommend that you:

  1. Review your employee contracts or awards to determine if their wages include or exclude superannuation;
  2. Calculate your increased liability for superannuation, workcover and payroll tax and factor this into your business’ budget and cashflow forecasts;
  3. Review your method of recording and reporting employee superannuation and ensure that the increased rate will be reflected in your reporting system (most online accounting software – Xero, Reckon, MYOB etc – should be automatically updated to take into account the increased rate);
  4. Ensure you pay your employee superannuation by the relevant due dates (28 July, 28 October, 28 January, 28 April) to avoid a potential 200% penalty for late payment.

$450 monthly wages threshold for superannuation guarantee removed

Prior to 1 July 2022, employers only had to pay super once an employee’s monthly wage exceed $450.  From 1 July 2022 employers will be required to make superannuation guarantee contributions to their employee’s super fund regardless of how much the employee is paid. 

Single Touch Payroll Phase 2 

Single Touch Payroll Phase 2 is an extension to the original Single Touch Payroll reporting system introduced on 1 July 2018.  Phase 2 is intended to reduce the reporting burden for employers who need to report information about their employees to multiple government agencies (like Services Australia).

The mandatory start date for Phase 2 reporting is 1 January 2022.  However, the ATO is offering a flexible approach to transition by allowing employers who were reporting by 1 March 2022 to be deemed compliance at 1 January 2022.

Digital Service Providers also have the option to apply for a deferred start date.  This deferred start date then automatically applies to customers of that provider.  For example, Xero has a deferred start date of 31 December 2022 for its customers. 

Action to take

Check with your digital service provider to determine their status with regards to the implementation of Single Touch Payroll Phase 2.  Please contact us if you employ staff and you are unsure of whether your software is compliant.

 

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent.

Business Basics Grant

The Queensland Government have recently announced the third round of the Business Basics Grant to help Queensland small businesses continue to recover and grow.

Small Business – Business Basics Grant – $5,000

The Business Basics grant provides up to $5,000 to help businesses increase core skills and adopt best practice. 

Activities financed:

The grant will fund activities from one of the following priorities:

  1. Training and coaching
  2. Website build or upgrades
  3. Professional business advice
  4. Strategic marketing advice
  5. Business continuity and succession planning.

Eligibility:

To be eligible for the grant, your businesses must:

  • not have been approved for funding under Round 1 or 2 of this Grant;
  • have fewer than 20 employees at the time of applying for the grant (by headcount);
  • have an active ABN and be registered for GST;
  • have a Queensland headquarters;
  • have a turnover of $300,000 or less in the current financial year;
  • not be insolvent or have owners/directors that are an undischarged bankrupt.

Key details:

  • Funding available: up to $5,000
  • Opens: 4 May 2022
  • Closes: When funds are exhausted

To apply (and for more details) go to: https://www.business.qld.gov.au/starting-business/advice-support/grants/business-basics-grant

Federal Budget 2022-23

UPDATE – 13 APRIL 2022

Legislation has been passed to enact the following tax-related measures announced in the budget:

  • The tax deductibility of COVID-19 tests for the purposes of attending your workplace or required during the course of carrying on your business;
  • The increase to the low and middle income tax offset by $420 (to $1,500);
  • A one-off cost of living payment of $250 to certain social security and pension recipients;
  • A reduction to the GDP factor for 2022-23 for the calculation of PAYG and GST instalments;
  • A 50% reduction to fuel excise and excise-equivalent customs duty;
  • The increase in the Medicare Levy low-income thresholds for individuals and families and those eligible for the senior and pensioner tax offset.

Notably, there has not been legislation introduced for the proposed Small Business Skills and Training Boost and the Technology Investment Boost.  Given that Parliament has now been dissolved, we will need to await the outcome of the Federal Election to see whether these new measures will be legislated in the future.

On Tuesday night, 29 March 2022, Federal Treasurer Josh Frydenberg handed down his fourth Federal Budget.  To be fair, the current Treasurer hasn’t had the easiest of times in the job.  Two out of three of his budgets were delivered amidst global pandemic and economic uncertainty.  He now faces a ‘make-or-break’ budget with a looming federal election.  Pre-budget leaks of direct cash payments and relief at the petrol pump, both targeted at reducing the cost-of-living, turned out to be correct.

Last year, the deficit for the 2021-22 financial year was forecast to be $106.6 billion.  This has now improved to $79.8 billion.  The improvement seemingly coming from more people back at work and fewer on welfare, meaning the Government has collected more tax revenues than expected.

Key budget measures that will impact on our clients include:

  • An extra $420 in individual tax relief for 2022 tax returns (to be lodged from 1 July 2022).  This will be reflected in an increase in the low and middle income tax offset (LMITO) to $1,500;
  • Temporary full expensing of eligible assets extended to 30 June 2023;
  • Temporary reduction to the fuel excise which will reduce fuel costs for individuals and businesses;
  • A 120% deduction for eligible costs aimed at encouraging small businesses to adopt digital technologies (like portable payment devices, cyber security systems and subscriptions to cloud-based services); and
  • A 120% deduction for costs incurred in training and upskilling staff.

Unfortunately, there was still no substantial debate around the change or movements to GST or significant tax reform.  We have an expected late May 2022 Federal election, and a great part of this Budget was aimed at providing immediate relief to taxpayers (rather than addressing any long term, significant tax reform).

We’ve outlined below some of the main tax measures that were announced in the Budget.  As with all budgetary measures, these measures are not final until the relevant legislation has been passed by the Government.  We will keep you updated on the status of any proposed measures.

Temporary reduction in fuel excise

The excise and excise-equivalent customs duty rate that applies to petrol and diesel will be halved for 6 months (to 28 September 2022).

The current rate of excise and excise-equivalent customs duty is 44.2c/L. This will be halved to 22.1c/L.

The price faced by consumers at the petrol pump is expected to reduce by more than the 22.1c/L given that GST will now be levied on a lower excise amount.

The ACCC will be monitoring the price behaviour of retailers to ensure the lower excise rate is passed on to consumers.

Low and Middle Income Tax Offset

To help ease the increasing costs of living, the Low and Middle Income Tax Offset (LMITO) has been increased.  This offset reduces the amount of tax payable by individuals (and will be reflected in a higher tax refund when the 2022 income tax return is lodged). 

The LMITO will be increased by $420 for individuals (to $1,500) and by $840 for couples (to $3,000). Taxpayers with incomes of more than $126,000 will not be eligible for the offset.

Cost of living payment

In April, a one-off $250 payment will be made to eligible Australian pensioners, welfare recipients, veterans and concession card holders.

The eligible recipients are those that receive the following payments or hold the relevant concession cards:

  • Age pension
  • Disability support pension
  • Parenting payment
  • Carer payment
  • Carer allowance
  • Jobseeker payment
  • Youth Allowance
  • Austudy and Abstudy living allowance
  • Double orphan pension
  • Special benefit
  • Farm Household Allowance
  • Pensioner Concession Card holders
  • Commonwealth Seniors Health Card holders
  • Eligible Veterans’ Affairs payment recipients and Veteran Gold Card holders.

The payments are exempt from tax and will not count as income support for the purposes of income support payments.  You can only receive one payment (even if you are eligible under 2 or more categories).  The payment is only available to Australian residents.

Small Business - Skills and Training Boost

The skills and training boost is designed to support small businesses to train and upskill their employees.

Small businesses (with a turnover of less than $50 million) can claim an additional 20% deduction for expenditure incurred on external training courses provided to their employees.

The external training course must be provided to employees in Australia or online and delivered by entities registered in Australia.  It does not include in-house or on-the-job training.

For example, if your business paid $1,000 for your employee to attend a training course, your business could be eligible to claim a deduction of $1,200.

This measure applies to expenditure incurred from 7:30pm, 29 March 2022 to 30 June 2024.  Expenditure incurred between 29 March 2022 to 30 June 2022 can only be claimed in the 2023 financial year.  Expenditure incurred between 1 July 2022 and 30 June 2024 can be claimed in the year in which it is incurred.

Small Business - Technology Investment Boost

The technology investment boost is designed to encourage digital adoption by small businesses.

Small businesses (with a turnover of less than $50 million) can claim an additional 20% deduction for expenditure incurred on business expenses and depreciating assets that support adoption – for example: portable payment devices, cyber security systems or subscriptions to cloud-based services.

There is a cap of $100,000 on expenditure that will be eligible for the boost.

For example, if your business paid $100 for a subscription to a cloud-based service, your business could be eligible for a deduction of up to $120.

This measure applies to expenditure incurred from 7:30pm, 29 March 2022 to 30 June 2024.  Expenditure incurred between 29 March 2022 to 30 June 2022 can only be claimed in the 2023 financial year.  Expenditure incurred between 1 July 2022 and 30 June 2024 can be claimed in the year in which it is incurred.

COVID-19 Measures

Business grants

Certain COVID-19 business support program payments (from states and territories) will be non-assessable and non-exempt income until 30 June 2022 (this measure was originally announced on 13 September 2020).

Deductibility of COVID-19 tests

The cost of taking a COVID-19 test to attend a place of work will be tax deductible from 1 July 2021.

Further, fringe benefits tax will not be incurred by businesses where COVID-19 tests are provided to employees for this purpose.

Free Rapid Antigen Tests

The Government will be delivering up to 20 free Rapid Antigen tests to all Australians with a concession card.

Changes to PAYG instalment system

PAYG instalment rates

The GDP uplift factor for PAYG and GST instalments is to be reduced to 2% (currently the statutory rate is 10%).  This measure will provide cash flow support to small businesses (including sole traders) and other individuals with investment income.

While this may free up cash in the short term for taxpayers, it is simply deferring the tax liability which may present additional cashflow problems when the end of year tax returns are prepared and final tax liabilities become payable.

Modernisation of PAYG instalment system

It is anticipated that from 1 January 2024, companies can choose to have their PAYG tax instalments calculated based on current financial performance extracted from their business accounting software (with some tax adjustments).  This is subject to software providers having the anticipated systems in place by 31 December 2023.

Superannuation - Minimum pension drawdowns

The 50% reduction to minimum pension drawdowns has been extended to 30 June 2023.  This will allow retirees to avoid selling down assets in order to have sufficient cashflow to meet the minimum drawdown requirements.

Other measures of interest

Some other measures of interest from a tax perspective include:

  • Dad and Partner Pay and Parental Leave pay to be combined into a single scheme with up to 20 weeks, fully flexible and shareable leave available for eligible working parents to take as they see fit.  It can be taken at any time within 2 years of the birth or adoption of their child.
  • ATO to share STP data with State and Territory Revenue offices on an ongoing basis.  This will be used for prefilling of payroll tax returns.
  • $80 million in additional support for small and medium export businesses to re-establish their presence in overseas markets through the Export Market Development Grant (EMDG) program.
  • Approx. $157 million in assistance to Ukraine (including $91 million in military assistance and $65 million in humanitarian assistance).
  • Option to report Taxable Payments Reporting System Data to the ATO on the same lodgement program as activity statements from 1 January 2024.  This is subject to the software providers being able to deliver appropriate software by 31 December 2023.

We will keep you up-to-date with the progress of the implementation of these Budget measures.

If you would like to discuss the tax implications of the budget proposals, please call us on (07) 56656469.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Employers – New Stapled Super Obligations

On 1 November 2021, employers will need to request details of an employee’s “stapled super fund”  from the ATO, if the employee does not nominate a choice super fund.

What is “stapled super fund”?

A stapled super fund is an existing super fund account that is linked (“stapled”) to an individual employee.

This stapled super fund account follows the employee if they change jobs.  It is intended that all contributions for the individual go into this stapled super fund account which will avoid a new account being set up each time an employee starts a new job.

When do you need to request stapled super fund details?

As an employer, you will need to request stapled super fund details for new employees who start on or after 1 November 2021, when:

  • you need to make super guarantee payments for that employee; and
  • they are eligible to choose a super fund, but don’t.

You may also need to request stapled super fund details for some employees who are ineligible to choose their own super fund (temporary residents and employees covered by an enterprise agreement or workplace determination made before 1 January 2021).

How do you request stapled super fund details?

Before you can request stapled super fund details using the ATO online services, you need to have offered all eligible employees a choice of super fund.

You (or your authorised representative, including tax agent) can request stapled super fund details using the ATO online services. 

You will only be able to request your employee’s stapled super fund details after you have submitted a tax file number declaration or single touch payroll pay event, which identifies your employment relationship with your employee.

What happens if you haven’t made a request for an employee’s stapled super fund when you should have?

You may be liable for a superannuation choice shortfall penalty if you contributed an employee’s superannuation to your default fund (without making a stapled super fund request).

Steps to take from 1 November 2021 for new employees

From 1 November 2021, you need to take the following steps for all new employees:

  1. Provide your eligible employees with a Choice of Superannuation Form.
  2. Establish your employment relationship with the employee by submitting a tax file number declaration or single touch payroll event.
  3. If your employee does not choose their own superannuation fund (using the Choice form), you must request details of their stapled super fund from the ATO.
  4. Once you receive the stapled super fund details for your employee, you must make superannuation contributions for this employee into this stapled fund.

You may incur shortfall penalties if you make contributions into a default fund without making a stapled super fund request.

For more information

Please do not hesitate to contact us if you require any further information about the new stapled super fund requirements.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent.

Director ID Regime

The Australian Business Registry Services (ABRS) will start the director ID Regime from 1 November 2021.

What is a director ID?

A director ID is a 15 digit unique identifier that will help prevent the use of false or fraudulent director identities. Directors will only ever have one director ID (much like a tax file number).  They will keep it forever even if they:

  • change companies
  • stop being a director
  • change their name
  • move interstate or overseas.

Who needs a director ID?

You need a director ID if you’re an eligible officer (director or alternate director) of:

  • a company, registered Australian body or registered foreign company under the Corporations Act 2001;
  • an Aboriginal and Torres Strait Islander corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006.

A director must apply for their director ID themselves because they need to verify their identity.  No one can apply on their behalf.

What do you need to do from 1 November 2021?

Individuals who are currently a director or who will be acting as a director in the future must apply for a director ID in the timeframes outlined below:

Director on or before 30 November 2021: You must apply by 30 November 2022

Director between 1 November 2021 and 4 April 2022: You must apply within 28 days of appointment

Director from 5 April 2022: You must apply before appointment

How do individuals apply for a director ID?

Step one: Setup myGovID

Please note that myGovID is different from myGov.  myGovID is an app you download to your smart device.  It lets you prove who you are and log in to a range of government online services, including myGov. 

If you have myGovID, you do not need to do anything until 1 November when you can apply for your director ID.

If you do not have myGovID, you can find information on how to download the app at How to Setup myGovID.

Step two: Gather your documents

You will need to have some ATO information ready when you apply for your director ID:

  • Your tax file number
  • Your residential address as held by the ATO
  • information from two documents to verify your identity, including:
    • bank account details
    • an ATO notice of assessment
    • super account details
    • dividend statement
    • Centrelink payment summary
    • PAYG payment summary

Step three: Complete your application

From November 2021 you can log in at the ABRS website and apply for your director ID.

For more information

Please do not hesitate to contact us if you require any further information about the director ID regime.  You can also visit Australian Business Registry Service.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent.