Element Business & Accounting Solutions Blog

JobKeeper 2.0 Revamped

JobKeeper 2.0 revamped!


The government has announced updated eligibility rules for JobKeeper 2.0.


  1. Turnover test now only focused on September and December 2020 quarters.
  2. Eligible employee start date now 1 July 2020.

The Superannuation Guarantee Amnesty



JobKeeper 2.0

 

JobKeeper Payments

JobKeeper Payments

Much anticipated legislation for the above was finally passed on Wednesday 8 April 2020!

As you can imagine given its quick turnaround, the legislation has actually turned out to be quite complicated.

We have attempted to put a bit of a summary together for you.


General overview

The JobKeeper Payment scheme will commence on 30 March and finish on 27 September 2020 (a period of 26 weeks) for eligible employers.  It will operate on a fortnightly basis (i.e. the first fortnight commenced on 30 March and will end with the fortnight ending on 27 September).

Businesses (including sole traders and charities) must have suffered a "substantial decline" in turnover to be entitled to the payment of $1,500 for each eligible employee.

A business is not eligible for the JobKeeper Payment if another business has claimed it for the same employee.

 

Businesses that qualify for JobKeeper Payments

There are tests that must be met as at 1 March 2020 and there are other tests that must be satisfied on a rolling fortnightly basis.


Decline in turnover test

To meet this test the employer must (for businesses < $1 billion) have suffered a decline in turnover that exceeds 30%.  Turnover is based on GST turnover, in particular projected GST turnover - which is used when calculating a decline in revenue.

For not for profits the threshold is reduced to 15%.

The turnover test period must be:

·         a calendar month that ends after 30 March and before 1 October 2020, or; 

·         a quarter that starts on 1 April or 1 July 2020.

 

The relevant comparison period must be the corresponding period in 2019.  For example, an employer can make the comparison by comparing the whole of the month of March 2020 with March 2019, or by comparing the quarter beginning on 1 April 2020 with the quarter beginning on 1 April 2019.

Once the decline in turnover test is satisfied, the employer does not need to retest its turnover in later months.  However, if an employer fails the test in the first month (or quarter), it can test in a later month to determine if the test is met and become eligible from that time on.


Reporting

Despite the fact an employer does not need to retest its turnover once the decline in turnover test is satisfied, an employer qualifying for the JobKeeper Payment must, within 7 days of the end of that month, notify the ATO of its current turnover for that month and its projected turnover for the following month.

This seems like overkill given that the same turnover is reported in the employer's BAS.

There is scope for the Commissioner to apply an alternative test to different classes of entities, by way of legislative instrument.  For example, a business that commenced mid-way through the previous year. There will undoubtedly be more ATO guidance on this.

 

Eligible employees

An individual must be employed for a JobKeeper fortnight to be eligible.  In addition, as at 1 March 2020 the employee must:

 

·         be aged 16 or over;

·         be an employee or a long-term casual employee of the entity (12 months of regular and systematic employment);

·         be an Australia resident.  This is determined by reference to the Social Security Act or by the ITAA 1936 where the person holds a Subclass 444 (Special Category) visa; and

·         employees who were retrenched after 1 March 2020 but then were subsequently re-hired

However, if an employee was only engaged after 1 March, that employee would not be eligible for the JobKeeper Payment.

There are some specific exclusions to the definition of an eligible employee and those relate to recipients of parental leave pay, dad and partner pay and specified recipients of worker's compensation.

There is a requirement that eligible employees have provided a notice to their employer agreeing:

 

·         to be nominated by the employer as an eligible employee under the JobKeeper scheme as the employer with which the employee will participate in the JobKeeper scheme;

·         that they confirm they have not agreed to be nominated by another employer; and

·         that they do not have permanent employment with another employer if they are employed as a casual employee with this employer. 

 

An eligible employee who is employed by one or more qualifying employers will need to choose one employer that will receive the JobKeeper Payments for their employment.  Once an employer is nominated by an employee it cannot be changed and that employee will not be eligible for the JobKeeper Payment if this occurs.


Wage condition

Employers must satisfy what is termed the "wage condition" to be entitled for a JobKeeper Payment. This is satisfied in respect of an individual for a fortnight if the sum of the amounts specified below equals or exceeds $1,500. The amounts are:

·         salary, wages, commission, bonus or allowances;

·         amounts withheld by the employer from payments made to the individual in the fortnight under the PAYG provisions e.g. HECS / HELP loan;

·         contributions made by the employer in the fortnight to a superannuation fund if the contributions are made under a salary sacrifice arrangement;

·         other amounts that, in the fortnight, are applied or dealt with in any way if the individual agreed

 

If the regular payment period is longer than a fortnight, the above payments are allocated to each fortnight on a reasonable basis.  For example, if an employee is paid monthly, it would presumably be reasonable to multiply the monthly amount by 12 and then divide that amount by 26.

 

The effect of these rules is:

·         if the employer pays the employee $1,500 or more in income per fortnight before tax, the JobKeeper Payment will assist the employer to continue operating by subsidising all or part of the employee's income;

·         if the employer would otherwise pay the employee less than $1,500 in income per fortnight before tax, the employer must pay the employer, at a minimum, $1,500 per fortnight before tax; and

·         if the employee has been stood down, the employer must pay the employee, at a minimum, $1,500 per fortnight before tax.

 

Sole traders, Partnerships and Trusts

There are special rules that enable sole traders, i.e. entities that do not have employees as such, to obtain the JobKeeper Payment.

Eligible trusts, companies and partnerships will also be eligible for the payment for one individual who is not an employee but is actively engaged in the business.  In summary the individuals that can be nominated for the payment are as follows:

·         Trusts - one individual beneficiary

·         Companies - one director or shareholder

·         Partnerships - one partner

 

To qualify, the business entity must satisfy the decline in turnover test (see above), must have an ABN on 12 March 2020 and must either have included a business receipt in assessable income for the 2018-2019 income year or have made a taxable supply during the period from 1 July 2018 to 11 March 2020.

 

Payment

Qualifying employers must do the following in order to obtain payment:

 

1.       Apply in the approved form and register their interest via the ATO website.  If not done already we can assist you with this process.  Just give us a call.

2.       Notify all employees in writing that they have elected to participate in the scheme and that their eligible employees will all be covered by the scheme.

 

The Government must pay the JobKeeper Payment within 14 days of the end of the calendar month in which the fortnight(s) end.  According to the Fact Sheets, employers will be paid "shortly after the end of each calendar month", for fortnights ending in that month.  This means that the first JobKeeper Payment will not be made until the first week of May.

 

The amount of an entity's JobKeeper Payment for an individual for a fortnight is $1,500.

No payment will be made after 30 September 2021 (i.e. next year).  Entitlement to a payment may be cancelled, revoked, varied etc by later legislation.

 

JobKeeper Payment and superannuation

There are no changes to the superannuation rules in the JobKeeper Rules, but the explanatory statement does flag amendments will need to be made.  The JobKeeper Payment of $1,500 per fortnight is a gross payment and employers must withhold tax from these payments.

 

An employer will only need to make superannuation contributions for any amount payable to an employee in respect of their actual employment.  For example, if an employee is to be paid $1,000, but the employer instead paid them $1,500 to satisfy the wage condition for a JobKeeper fortnight, then the employer will only be required to make superannuation contributions in relation to $1,000.

 

An employer will still be required to make the same superannuation contributions for an employee whose pay exceeds the JobKeeper Payment.  For example, if an employee is to be paid $2,000, the employer will continue to be required to make contributions in relation to that amount, irrespective of whether they were eligible to receive the JobKeeper Payment in relation to the employee.

 

Transitional rules

There is a transitional rule that allows the Commissioner to make an "advance payment" for the JobKeeper fortnights ending in the month of April without being satisfied that the entity is entitled to that payment.  This is necessary to ensure that payments in respect of the first and second JobKeeper fortnights (being the fortnights starting on 30 March 2020 and 13 April 2020 respectively) can be made quickly to assist entities affected by the Coronavirus.  Otherwise, entitlement only arises for those JobKeeper fortnights and later fortnights in which eligible employers are registered under the scheme prior to the end of a JobKeeper fortnight.

 

However, before the Commissioner can make such an advance payment:

·         the entity must have notified the Commissioner in the approved form of its election to participate in the scheme; and

·         the Commissioner is satisfied, based on the information provided by the entity in the approved form, that it is reasonable in the circumstances make the payment.

 

Integrity issues

Businesses, individuals and entities that deliberately enter into contrived arrangements with the sole or dominant purpose of reducing their turnover in order to gain access to JobKeeper Payments, or increase the amount of JobKeeper Payments they receive, will not be entitled to the payment or the increased payment.  The GIC and significant administrative and criminal penalties may apply.

 

Tax consequences

The JobKeeper Payment is assessable as a subsidy.  However, as a payment forms part of wages paid to the employee, a deduction for the payment to employees is also available. 

GST does not apply in relation to JobKeeper Payments made to employers because the payments are not consideration for supplies made by employers to the Government.

 

 

 

Home Office Running Costs

Home Office Running Costs

 

With the significant move to people working from home, the Australian Taxation Office ("ATO") has announced a temporary simplified short cut method to make it easier for individual taxpayers to claim deductions for additional running expenses incurred (e.g. lighting and power costs).

 

The ATO are allowing individuals to claim a deduction of all running expenses incurred during the period 1 March 2020 to 30 June 2020, based on a rate of 80 cents for each hour an individual carries out genuine work duties from home. This is an alternative method to claiming home running expenses under existing arrangements, which generally are more onerous to calculate and support.

 

The ATO's 80 cents per hour method covers all running costs.

 

An individual does not have to have a separate or dedicated area of your home set aside for working, such as a private study.

 

The shortcut method rate covers all deductible running expenses, including:

 

electricity for lighting, cooling or heating and running electronic items used for work (for example your computer), and gas heating expenses

cleaning expenses

your phone and internet costs

computer consumables, such as printer ink

stationery

depreciation on home office equipment(computer) and furniture (eg desk and chair).

 

To make a claim an individual does not have to incur all these expenses, but they must have incurred additional expenses in some of these categories as a result of working from home due to COVID-19.

 

If the 80 cents per hour method is used, a separate claim cannot be made for any of the above running expenses.  As a result, using the 80 cents per hour method could result in a claim for running expenses being lower than a claim under existing arrangements (including the existing 52 cents per hour method).  Therefore, our view is this announcement provides relief with respect to the documentation requirements to support working from home tax claims, as opposed to increasing tax deductions available.

 

Additionally, under the 80 cents per hour method:

 

a)       multiple people living in the same household can make a claim; and

b)      an individual will only be required to keep a record of the number of hours worked from home as a result of the Coronavirus, during the above period. This record can include timesheets, diary entries/notes or rosters.

 

Working from home running expenses that are incurred before 1 March 2020 must be claimed using the existing claim arrangements. These are:

 

fixed rate method:

a rate of 52 cents per work hour for heating, cooling, lighting, cleaning and depreciation of office furniture,

the work-related portion of your actual costs of phone and internet expenses, computer consumables, stationery, and

the work-related portion of depreciation on a computer, laptop or similar device.

 

actual cost method:

claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.

Updated 23 March 2020

 

Government stimulus package and other assistance to small business

 

With the current economic climate and unprecedented local and global events, our Government has been working to minimise the financial impacts to Australians. We will keep updating this post with any information regarding economic relief for businesses as and when they are announced.

 

1.       Federal Government Stimulus Package 2020

 

Following the initial stimulus package announced on 12 March 2020, the Government has further announced a $66 billion dollar stimulus package to support the economy during these difficult times. The following elements of the package will provide relief to small businesses in particular:

 

It is important to note the package is subject to legislation being passed through Parliament, which is due to sit next on 23-26 March 2020. Reports state the Labor Party is likely to support the package.

 

Boosting cash flow for employers

Small to medium businesses with a turnover of less than $50 million who employ staff will be able to receive cash payments between $20,000 to $100,000.

 

The payments will be released in two tranches:

 

1.       The Government will deliver the payments though the Business Activity Statement (BAS) system. Employers will receive a refund of 100% of the PAYG withholding on wages (minimum of $10,000 and up to $50,000) for periods between 1 January 2020 and 30 June 2020 on their activity statements with refunds to be paid within 14 days

 

2.       An additional payment equal to the total payments received under tranche 1, meaning eligible employers will receive at least $20,000 up to a total of $100,000 under both payments.  This additional payment will cover the July – October 2020 period. 

 

These payments will be available to eligible employers established prior to 12 March 2020. The payments will be tax free.

Business investment incentives

Currently, small businesses with an annual turnover of less than $50 million can claim instant tax deductions for new business-related asset purchases costing up to $30,000.

 

2020 Instant asset write off increase

This threshold has been increased to $150,000 temporarily and applies to businesses up to $500 million in turnover. This increase is available for new assets purchased up until 30 June 2020. More information can be found here.

 

Further asset investment concessions

The Government has also introduced a 15 month investment incentive to 30 June 2021. The incentive allows businesses with $500 million or less in turnover to be able to claim a tax deduction for 50% of the cost of the asset in the year of purchase with the balance of the cost of the asset able to be claimed as a tax deduction according to existing depreciation rules.

 

More information can be found here.

 

Support for individuals

Over the next six months, individuals meeting the following eligibility criteria will receive a $550 payment per fortnight for the next six months.

 

1.       Individuals on jobseeker payments

2.       Youth allowance jobseekers

3.       Individuals receiving parenting payments

4.       Individuals receiving Farm Household Allowance

5.       Special Benefit Recipients

 

In addition, access to the above income support payments have been expended. Jobseeker payments will also now be provided  to permanent employees who are stood down or lose their employment, sole traders, casual works and contract workers who meet the income tests as a result of the economic downturn.

 

The normal asset testing for eligibility will also be waived.

 

Time frames and waiting times have also been reduced. More information can be found here.

 

Support for Retirees

The Government has announced a temporary reduction in super minimum drawdown requirements for account-based pensions and similar by 50% for the 2020 and 2021 income years. This will reduce the need for retirees to sell investment assets in the super funds to fund minimum drawdown requirements.

 

More information can be found here.

 

Support payments to Apprentices

Over $1 billion in wage subsidies will be paid to apprentices to keep them on the job. Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice's or trainee's wage for up to 9 months from 1 January 2020 to 30 September 2020. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.

 

Early Access to Superannuation

Eligible individuals may be able access $10,00 of their superannuation before 1 July 2020 and another $10,000 Is withdrawn from 1 July 2020 to 30 September 2020. Individuals will need to apply online through MyGov.

 

Information including eligibility criteria can be found here.

 

Support for pensioners

Certain pensioners, social security, veteran and other income support recipients and eligible concession card holders will receive two payments of up to $750 cash payments as part of the stimulus package.

 

The payment will be tax free however if a person qualifies for the one off payment in multiple ways, they will still only receive one payment.

 

The first payment will be made from 31 March 2020 and the second payment will be made from 13 July 2020

             

Relief for financially distressed businesses

The Government has announced it will be increasing the thresholds at which liquidation and bankruptcy proceedings can be imposed on businesses.

 

Formerly, a statutory demand on a company over by a creditor on a $2,000 or more debt was grounds for a company to be placed into liquidation. This threshold has been increased to $20,000. In addition, the timeframe for a company to respond to the statutory demand will be extended from 21 days to six months. These concessions will apply for the next six months.

 

For individuals, the threshold for the minimum amount of debt required for a creditor to initiate bankruptcy proceedings against a debtor will increase from the current threshold of $5,000 to $20,000. The timeframe for the debtor to respond to the bankruptcy notice has also been increased from 21 days to six months. These concessions are available for the next six months.

 

For directors of companies, the Government has announced temporary relief for directors on their obligation to prevent the company trading whilst insolvent in the normal course of business for the next six months.

             

More information can be found here.

 

Assistance for severely affected regions

The Government has announced $1 billion in support for sectors, regions and communities which have been hit the hardest by COVID-19 especially those heavily reliant on industries such as tourism, agriculture and education including fee waivers and assistance with the identification of alternative export markets and supply chains.

 

More information can be found on the PM's Website here.

 

2.       Relief for tax obligations

 

The ATO have announced a flexible approach in the way it will handle debt and lodgments in the coming months.


ATO Payment Extensions

The ATO will allow up to a four-month deferral for payments of BAS's PAYG Instalments, Income Tax and FBT tax.  This will be automatically implemented by the ATO.

 

BAS Reporting

Businesses currently lodging quarterly BAS's can elect to lodge monthly to get quicker access to GST refunds. If you would like access to this concession, let us know and we can contact the ATO on your behalf.

 

PAYG Instalments

Businesses can elect to vary down their PAYG Instalments to nil after the 31 March activity statement without penalty. A reminder, this is a deferral of tax until you lodge your income tax return.

 

ATO Payment Plans

The ATO will allow affected businesses to enter into low-interest payment plans with the ATO for any existing or ongoing tax debts. We will keep you updated on this.

 

ATO COVID-19 Frequently Asked Questions

The ATO has released an FAQ page for taxpayers impacted. Key questions answered include:

 

1.       Deductibility of expenses when working from home

2.       Deductibility of the purchase of protective items (face masks, gloves etc) when used at work

3.       Exemption from FBT should employers assist their employees with emergency benefits such as accommodation, food and transport.

4.       Exemption from FBT for providing emergency health care to employees affected by COVID-19

5.       Super guarantee still needs to be paid by the due date for employees.

 

The FAQ list is constantly being updated and can be found here.

 

3.       Queensland Payroll Tax

 

The Queensland Government has announced any businesses affected by COVD-19 may be able to apply for a relief package to defer the lodgement and payment of payroll tax until 31 July 2020.

 

To be eligible, you must;             

a.       Be an employer who pays $6.5 million or less in Australian taxable wages; and

b.       Your business must be affected by COVID-19 including your current turnover, profit, customers, sales, suppliers or staff compared to normal operating conditions.

 

To apply for the concession or for more information, refer to the Queensland Government's website here.

 

4.       $500 Million Loan Facility for Business

 

The QLD Government has announced it will be offering loans to businesses affected by the pandemic. The Government has stated the purpose of the loans is to assist businesses to retain staff. The loans will be:

 

-          Available only to businesses affected by the virus (eligibility criteria yet to be clarified)

-          Available loan amounts of up to $250,000 per business

-          Interest free for the first 12 months

-          Low interest after the first 12 months

 

QRIDA is responsible for the administration of the loans and are currently taking expressions of interest from businesses.

 

Follow the link here to register your interest or for more information and please contact our team if you would like assistance.

 

5.       Virus spread during business interactions

 

Experts have announced one of the ways to limit the spread of COVID-19 in the business environment is to begin using fist-bumps instead of the traditional handshake when greeting one another. It has been found the handshake can transmit twice the amount of pathogens as a fist bump or even a high five.

 

              More information can be found here.

The SG Amnesty is finally here!

The Superannuation Guarantee Amnesty is finally here!

 

After a long period of uncertainty, the proposed Super Guarantee (SG) Amnesty finally passed Parliament on 24 February 2020, providing employers with a once-off temporary relief from late payment penalties and administration fees when correcting unpaid or underpaid super contributions for their employees.

 

The amnesty is still awaiting Royal Ascent (i.e. when the measures become law) however employers will only have 6 months to take advantage of the amnesty after it receives Royal Ascent. 

 

The amnesty period starts from 24 May 2018 and will expire six months after the date the amnesty receives Royal Ascent.

 

What does this mean for you?

 

If you have late paid, underpaid or not paid any of your employees' super between 1 July 1992 and 31 March 2018, this is your chance to self-correct and pay the employee super without incurring the otherwise hefty fines and fees charged by the ATO.

 

Should you choose to take advantage of the amnesty;

·       You will be able to claim a tax deduction for the super paid under the amnesty. Super paid late outside of the amnesty is otherwise non-deductible.

·       Costly administration fees will not be charged by the ATO.

·       Penalties will be significantly reduced.

 

What if I have already disclosed super paid late to the ATO?

 

If you have already lodged Super Guarantee forms with the ATO for super relating to the Amnesty period, you may be eligible for a refund of any penalties and fees you have paid to the ATO.

 

What should you do?

 

If you employ staff and believe you may have unpaid or underpaid super, please contact our team and we will be happy to assist you with the appropriate forms and disclosures that need to be made to the ATO to be eligible for the amnesty.

 

If you have already lodged Super Guarantee Charge forms with the ATO to disclose super paid late and believe you are eligible for a refund, contact our team so we can assist in determining if you are eligible for a refund.

Until recently, a company that had experienced a significant change in ownership or control could only carry forward its earlier tax losses to a later income year if the company carried on the "same" business after the change. In practice the "same" business test can be notoriously difficult to meet.  However, a new alternative test that applies retrospectively from 1 July 2015 means that now companies only need to carry on a "similar" business.

What exactly does "similar" mean?

The legislation outlines several factors you must consider when assessing whether your business is "similar". This is a non-exhaustive list, and it requires a weighing-up of all relevant factors. The ATO unpacks the legislation as follows:

First, you must consider the following three things and compare them before and after the significant change in control of the company:

  1. the assets (including goodwill) used in the business;
  2. the activities and operations; and
  3. the "identity" of the business.

Then, where there have been some changes, you must identify to what extent these can be explained by natural development or commercialisation of the business that existed before the change in control. Natural development suggests a similar business is now carried on. But if those changes arose merely from a commercial decision, it's less likely the business is similar.

The ATO gives the example of a parcel courier company that expands its services to include food delivery. If this new activity commenced because the company undertook R&D to improve its bicycle design in order to improve efficiency, and as a result developed a new bicycle that it realised was suitable for transporting food, the service expansion results from development of the earlier business, so the similar business test is satisfied. In contrast, if the company commenced this activity because it noticed a growing demand for food delivery services and purchased a new type of bicycle to embark on that opportunity, that would weigh against the current business being similar. The ATO also emphasises that goodwill is an important asset to consider. For example, if a business adopts a new brand name and transforms from budget to "premium" products, it won't pass the similar business test as it hasn't used the goodwill of its former incarnation. This isn't the result of any natural development of the old business (but rather a commercial decision to present a new identity).

If you are an employee and you sometimes work from home, you may be able to claim deductions for some of the expenses you incur, provided you are not reimbursed by your employer. Here, we consider common types of expenses that employees may claim and how you must substantiate your deductions.

Running expenses

Running expenses such as heating, cooling and lighting costs are only deductible if you exclusively use these services while performing work at home. For example, the ATO says that you would not be able to claim deductions for these expenses if you work on your laptop while sitting next to your partner who is watching TV. However, if you perform work in a room when others are not present, or in a separate room dedicated to work activities, you may be able to claim some running expenses.

In practice the ATO accepts two methods for calculating your deduction:

  1. a simple rate of 52 cents per hour worked (effective from 1 July 2018), which covers all the running expenses you can claim, or
  2. you can claim the work-related proportion of actual expenses incurred by maintaining thorough records and evidence.  You can claim up to $50 in total for all work-related device usage charges (phone calls, text messages and internet) with basic documentation only. However, if you need to deduct more than $50, you must maintain detailed written evidence to substantiate the work-related proportion of your expenses.

Electronic devices

Deductions for electronic devices are calculated separately. If you purchase these items to help you earn income, you may be entitled to an immediate deduction for items costing $300 or less, or a deduction for decline in value for more expensive items.

Occupancy expenses

Occupancy expenses such as rent, mortgage interest, council and water rates, land taxes and insurance premiums are usually not deductible for employees who work from home. You can only claim the work-related proportion of your occupancy expenses in two very limited circumstances where:

  1. the space in the home is a place of business, and not suitable for domestic use; or
  2. no other work location is provided to an employee by an employer and the employee is required to dedicate part of their home to their employer's business as an office – you can claim the portion of these costs that relate to a clearly identified place of business.

It is important to note if you claim occupancy expenses, you don't qualify for the capital gains tax (CGT) main residence exemption for the part of your home that you use for work. If you use your home as a place of business there may be CGT implications when you sell it.

If you work from home as an employee, and intend to claim working from home related expenses, it is important to ensure that you are keeping adequate records and evidence to protect you in the event of an ATO audit.

September 2017 Quarterly Update

What's new for small businesses

 

Tax concession rules for small businesses have changed. The changes are effective from 1 July 2016: 

a) Expanded access to small business concessions 


More businesses are now eligible for most small business tax concessions. From 1 July 2016, a range of small business tax concessions became available to all businesses with turnover less than $10 million (the turnover threshold). Previously the turnover threshold was $2 million.

The $10 million turnover threshold applies to most concessions, except for:

- the small business income tax offset, which has a $5 million turnover threshold from 1 July 2016

- capital gains tax (CGT) concessions, which continue to have a $2 million turnover threshold.

The turnover threshold for fringe benefits tax (FBT) concessions increased to $10 million from 1 April 2017.

b) Increased small business income tax offset

 

You can claim the small business income tax offset if you are a small business sole trader, or have a share of net small business income from a partnership or trust.

 

From the 2016–17 income year, the small business income tax offset:

 

·         increased to 8%, with a limit of $1,000 each year

·         applies to small businesses with turnover less than $5 million.

 

The tax offset increases to 10% in 2024–25, to 13% in 2025–26 and to 16% from the 2026–27 income year. The amount of your offset is based on amounts shown in your tax return.

 

c)      Company tax rate cut for small businesses

 

For the 2016–17 income year, the company tax rate for small businesses decreased to 27.5%. Companies with turnover less than $10 million are eligible for this rate.

 

The maximum franking credit that can be allocated to a frankable distribution has also been reduced to 27.5% for these companies – in line with the company tax rate. The reduced company tax rate of 27.5% will progressively apply to companies with turnover less than $50 million by the 2018–19 income year. From 2024–25, the rate will reduce each year until it is 25% by 2026–27.

 

Tax rate cuts – "not meant to apply to passive investment companies"

 

On 4 July 2017, the Minister for Revenue and Financial Services, Ms Kelly O'Dwyer MP, issued a statement on the tax rate cuts for small companies.

 

Minister O'Dwyer said, "Reports today that the ATO has broadened the interpretation of company tax cuts are premature … however, the policy decision made by the Government to cut the tax rate for small companies was not meant to apply to passive investment companies."

 

Minister O'Dwyer said the ATO has issued a draft ruling and will in due course provide other guidance.

 

d)      Instant asset write-off extension

 

Australia's 3.2 million small businesses can continue to purchase equipment up to $20,000 and write it off. The period in which small business entities can access the instant asset write-off has been extended by 12 months to 30 June 2018. It was originally intended to end on 30 June 2017.

 

The increased small business threshold from $2 million to $10 million means more businesses are now eligible to buy equipment (new or second hand) up to $20,000 and write it off immediately. Multiple claims can be made under the program. 

 

GST

 

i)       Simpler BAS

 

From 1 July 2017, small businesses now have less GST information to report on their business activity statement (BAS). This will be the default GST reporting method for small businesses with a GST turnover of less than $10 million. 

 

The ATO automatically transitioned eligible small business' GST reporting methods to Simpler BAS from 1 July 2017.

 

ii)     GST on low value imported goods

 

The Government has passed the Treasury Laws Amendment (GST Low Value Goods) Act 2017 which will extend GST to low value imports of physical goods imported by consumers from 1 July 2018. 

 

Treasurer's press release on GST low value goods

 

The Treasurer, the Hon Scott Morrison MP, released a statement following the passage of the Treasury Laws Amendment (GST Low Value Goods) Act 2017 by the Parliament on 21 June 2017. 

 

The Treasurer said, "Turnbull Government laws will level the playing field for Australian businesses by applying the GST to goods costing $1,000 or less supplied from offshore to Australian consumers from 1 July 2018." 

 

Using a vendor collection model, the law will require overseas suppliers and online marketplaces such as Amazon and eBay with an Australian GST turnover of $75,000 or more to account for GST on sales of low value goods to consumers in Australia. 

 

 

iii)    Buy services or digital products from overseas?

 

From 1 July 2017, GST will apply to imported services and digital products. 

 

Australian GST-registered business can avoid GST on these purchases from a non-resident supplier if they provide their ABN to the non-resident supplier and state that they are registered for GST. 

 

iv)    GST input tax credits disallowed – tax invoices not enough

 

Re GH1 Pty Ltd (in liq) and FCT [2017] AATA 1063 (5 July 2017) a property development company was not entitled to input tax credits in relation to bulk earthwork services supplied to it by another land development company. The evidence showed that purported tax invoices did not evidence any actual supplies made to the taxpayer.

 

The Administrative Appeals Tribunal noted that the taxpayer bore a two-fold onus: to prove, on the balance of probabilities, that the assessment was excessive and what the correct assessment ought to be. In this case, the taxpayer had failed to discharge that burden.

 

The Tribunal observed that the mere existence of a "tax invoice" is not, by itself, sufficient to establish that a "taxable supply" (under s 9-5 of the GST Act) and corresponding "creditable acquisition" (under s 11-5 of the GST Act), had, in fact, occurred.

 

v)      GST – removing the double taxation of digital currency

 

On 9 May 2017, the Government announced that from 1 July 2017 it will align the GST treatment of digital currency (such as Bitcoin) with money

 

Digital currency is currently treated as intangible property for GST purposes. Consequently, consumers who use digital currencies as payment can effectively bear GST twice: once on the purchase of the digital currency and again on its use in exchange for other goods and services subject to GST. 

 

This measure will ensure purchases of digital currency are no longer subject to the GST. 

 

No changes to the income tax treatment of digital currency are proposed.  

 

Tax incentives for early stage investors

 

From 1 July 2016, investors who purchase new shares in a qualifying early stage innovation company (ESIC) may be eligible for tax incentives. 

 

The tax incentives provide eligible investors who purchase new shares in an ESIC with a:

 

·         non-refundable carry forward tax offset equal to 20% of the amount paid for their qualifying investments. This is capped at a maximum tax offset amount of $200,000 for the investor and their affiliates combined in each income year

·         modified capital gains tax (CGT) treatment, under which capital gains on qualifying shares that are continuously held for at least 12 months and less than 10 years may be disregarded. Capital losses on shares held less than ten years must be disregarded.

 

Changes for employers of working holiday makers

 

On 1 January 2017, the tax rate for working holiday makers on 417 or 462 visas changed. If you employ working holiday makers on 417 or 462 visas, you will need to register with the ATO. 

 

Employers who do not register with the ATO will have to withhold tax at the foreign resident tax rate of 32.5% from the first dollar earned. Penalties may apply for failing to register. 

 

Superannuation

Key super rates and thresholds

 

For the 2017-18 income year, the:

 

·         concessional contribution cap is $25,000

·         non-concessional contribution cap is $100,000 (conditions apply)

·         CGT cap amount is $1,445,000

·         Div 293 tax threshold amount is $250,000

·         low rate cap amount is $200,000

·         ETP cap for life benefit termination payments is $200,000

·         ETP cap for death benefit termination payments is $200,00.

 

The full list of rates and thresholds can be found on the ATO website.

Streamlined reporting with Single Touch Payroll

 

Employers with 20 or more employees will need to report through Single Touch Payroll from 1 July 2018.

 

More information can be found on the ATO website.

 

Changes to tax withholding amounts

 

The way tax is calculated on salary and wages has changed.

 

From 1 July 2017, the:

 

·         temporary budget repair levy has been removed

·         Medicare levy low-income threshold increased.