Extending administrative relief for companies to use technology

The Government has passed legislation renewing the temporary relief that allows companies to use technology to meet regulatory requirements under the Corporations Act 2001.

These temporary relief measures will allow companies to hold virtual meetings and use electronic communications to send meeting-materials and execute documents until 31 March 2022.  This should ensure that companies can meet their obligations as they continue to deal with the uncertainty of the COVID-19 pandemic.

With the extension of this temporary relief, the Government will now seek to introduce permanent reforms later this year to give companies the flexibility to use technology to hold meetings, such as hybrid meetings, and sign and send documents.

Expansion of support for SMEs to access funding

The Government is providing additional support to small and medium sized businesses (‘SMEs’) by expanding eligibility for the SME Recovery Loan Scheme. 

Specifically, in recognition of the continued economic impacts of COVID‑19, the Government will remove requirements for SMEs to have received JobKeeper during the March quarter of 2021, or to have been a flood affected business, in order to be eligible under the SME Recovery Loan Scheme.

As with the existing scheme, SMEs who are dealing with the economic impacts of the coronavirus with a turnover of less than $250 million will be able to access loans of up to $5 million over a term of up to 10 years. 

Other key features include:

• The Government guarantee will be 80% of the loan amount.
• Lenders are allowed to offer borrowers a repayment holiday of up to 24 months.
• Loans can be used for a broad range of business purposes, including to support investment, as well as to refinance any pre-existing debt of an eligible borrower.
• Loans can be either unsecured or secured (excluding residential property).

The loans will be available through participating lenders until 31 December 2021.

ATO warns property investors about common tax traps

In 2019/20, over 1.8 million Australians owned rental properties and claimed $38 billion in deductions, so the ATO is reminding property investors to beware of common tax traps that can delay refunds or lead to an audit costing taxpayers time and money.

The most common mistake rental property and holiday homeowners make is neglecting to declare all their income, including failing to declare any capital gains from selling an investment property.

Assistant Commissioner Tim Loh said: “To put it simply, you should expect tax consequences for any property that you earn income from that isn’t your main residence.”

“We are expanding the rental income data we receive directly from third-party sources such as sharing economy platforms, rental bond authorities, and property managers.  We will contact taxpayers about income they’ve received but haven’t included in their tax return.  This will mean they need to repay some of their refund,” Mr Loh said.

So far, the ATO has adjusted more than 70% of the 2019/20 returns selected for a review of rental information.

“Most people we contact about their rental deductions are able to justify their claims.  However, there are instances where we have to knock back claims where taxpayers didn’t keep receipts, claimed for personal use, or claimed for ineligible deductions,” Mr Loh said.

Editor: We can help make sure you get your rental income and deductions right, including where rental income has been affected by COVID-19.

Div.293 concessional contribution assessments have been issued

The ATO has recently issued approximately 30,000 Division 293 assessments for the 2018/19 and 2019/20 financial years.

Editor: Division 293 tax is an additional tax on super contributions, which reduces the tax concession for individuals whose combined income and contributions are greater than the Division 293 threshold (currently $250,000).

Due to a system issue, concessional contributions reported for these financial years were not included in Division 293 assessments where that super account was also reported as closed during that financial year.  This reporting issue was resolved in June 2021, and this has resulted in affected members receiving either an initial or amended Division 293 assessment.

Travel allowances and ‘LAFHAs’

The ATO has released a Ruling explaining:

• when an employee can deduct accommodation and food and drink expenses when travelling on work;
• the FBT implications, including the application of the ‘otherwise deductible rule’, where an employee is reimbursed for accommodation and food and drink expenses, or where the employer provides or pays for these expenses; and
• the criteria for determining whether an allowance is a ‘travel allowance’ or a ‘living-away-from-home allowance’ (‘LAFHA’) benefit.

Whether accommodation and food and drink expenses are deductible depends on the facts and circumstances of each case, so the Ruling uses examples to show how to determine the deductibility of these expenses in a range of situations.

Time running out to register for the JobMaker Hiring Credit

The JobMaker Hiring Credit scheme’s third claim period is now open, so if a taxpayer has taken on additional eligible employees since 7 October 2020, they may be able to claim JobMaker Hiring Credit payments for their business.

Eligible businesses can receive up to:

• $10,400 over a year for each additional eligible employee hired aged 16 to 29 years; and
• $5,200 over a year for each additional eligible employee hired aged 30 to 35 years.

The JobMaker Hiring Credit is available to businesses for each additional eligible employee hired before 6 October 2021, so, if a business is thinking about taking on extra staff, they should check if they are eligible to participate in the scheme.

Labor commits to income tax cuts and certainty on negative gearing

The ALP has formally announced that, if elected to Government, they will deliver “the same legislated tax relief . . . as the Morrison Government”.

This means they have committed to upholding the legislated changes to personal income taxes, and will also maintain the existing regimes for negative gearing and capital gains tax to provide “certainty and clarity to Australian working families after a difficult two years for our country and the world”.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.

Reminder of superannuation caps indexation for 2022

From 1 July 2021, the superannuation contributions caps have been indexed for the 2022 income year.

The new concessional contributions cap for the 2022 financial year is now $27,500 (increased from $25,000).

The new non-concessional (i.e., non-deductible) contributions cap for the 2022 financial year is now $110,000 or (where the ‘bring forward’ rules are applicable) $330,000 over three years (increased from $100,000 or $300,000 respectively).

The CGT cap amount for the 2022 financial year is now $1,615,000 (increased from $1,565,000).

Editor: The increase in the concessional contributions cap in particular will require those salary sacrificing additional superannuation to consider if they wish to increase their packaging arrangements so as to maximise the $2,500 increase in the cap.

Ref: ATO website, Key superannuation rates and thresholds: contributions caps, updated 6 July 2021

Division 7A benchmark interest rate for 2022 remains unchanged

The Division 7A benchmark interest rate for the 2022 income year remains unchanged from the 2021 rate of 4.52%.

Ref: ATO website, Division 7A benchmark interest rate, 6 July 2021

Changes to STP reporting from 1 July 2021

Employers should have already been reporting through Single Touch Payroll (‘STP’) unless they only have closely held payees, or they are covered by a deferral or exemption.

From 1 July 2021, there have been changes to STP reporting for small employers with closely held payees and quarterly reporting for micro employers.

More specifically, for employers with closely held payees, employers must now report amounts paid to their closely held payees through STP.

They can choose to report such payments via one of three methods, being:

 actual payments each pay day;
 actual payments quarterly; or
 a reasonable estimate quarterly.

For micro employers reporting quarterly, the STP quarterly reporting concession is only available to micro employers who meet certain eligibility requirements (which now include the need for exceptional circumstances to exist).

Ref: ATO website, Changes to STP reporting from 1 July, 16 July 2021

Maximum contributions base for super guarantee

The maximum super contributions base is used to determine the limit on any individual employee’s earnings base for superannuation guarantee purposes on a quarterly basis.

Employers do not have to provide the minimum quarterly support for earnings above this limit.

For the 2022 financial year, the maximum contributions base has increased to $58,920 (up from $57,090).

Editor: This means once an employee earns over $235,680 during the 2022 income year, no additional superannuation guarantee will generally be required to be paid by an employer.

Practically, this means that the maximum superannuation guarantee contribution that an employer must pay for the 2022 income year is 10% of $235,680 (or $23,568).

Ref: ATO website, Key superannuation rates and thresholds, Maximum super contribution base, updated 6 July 2021.

The ‘gigs up’ with a new sharing economy reporting regime

Treasury has released draft legislation introducing the long-awaited third party reporting regime (proposed to apply from 1 July 2022).

The new regime will initially require ride-sharing and short term accommodation online platform operators to report transactions they facilitate directly to the ATO.

This measure was first announced in the 2020 MYEFO (following a recommendation from the Black Economy Taskforce established in 2016).

It is intended to extend to all other types of sharing (‘gig’) economy online platforms such as food delivery and task services from 1 July 2023.

Under this new proposed regime, the identity of participants and payments they receive will be reported to the ATO (twice a year) to identify entities who may not be meeting their tax obligations.

Ref: Treasury website, Implementing a reporting regime for sharing economy platform providers, 6 July 2021

Taxable Payments Annual Reports (‘TPARs’) due 28 August

2021 TPARs are due to be lodged for businesses who have paid contractors to provide the following services:

 building and construction;
 cleaning;
 courier, delivery or road freight;
 information technology (‘IT’); or
 security, surveillance or investigation.

With specific reference to the TPAR due on 28 August 2021, the ATO has reminded taxpayers they may need to report payments made to contractors during the 2021 income year for the first time.

This will particularly be the case where such payments were made for delivery services done on behalf of their business (i.e., perhaps as a result of a COVID-19 business ‘pivot’ during lock down periods).

Importantly, the ATO has reminded taxpayers that they already have the records needed to lodge a TPAR from preparing their relevant activity statements including the:

 contractor’s name, address and ABN (if known); and
 total amounts for the income year of payments to each contractor (including GST) and tax withheld where the contractor did not quote their ABN.

Ref: ATO website, TPAR – check if you need to lodge, 12 July 2021

New FBT retraining and reskilling exemption available

Recent legislative amendments mean that employers who provide training or education to redundant (or soon to be redundant employees) may now be exempt from fringe benefits tax (‘FBT’).

The ATO has reminded eligible employers that they can apply the exemption to retraining and reskilling benefits provided on or after 2 October 2020.

There are no limits on the cost or number of training or education courses that employees may undertake.

Furthermore, retraining and reskilling benefits that are exempt from FBT don’t need to be included in the FBT return, or in an employee’s reportable fringe benefits amount.

The ATO has also advised that if an employer has already lodged and paid for their 2021 FBT return, they will need to amend to reduce the FBT paid for any exempt retraining and reskilling benefits.

Ref: ATO website, FBT retraining and reskilling exemption now law, 19 July 2021.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.

Super guarantee contribution due date for June 2021 quarter

The due date for employers to make super guarantee contributions for their employees for the June 2021 quarter is 28 July 2021.

Note that the super guarantee rate in relation to salary and wages paid on or before 30 June 2021 is 9.5%, but the super guarantee rate is 10% in relation to salary and wages paid  from 1 July 2021 (even if they are paid in relation to work performed before that date).

Also, contributions made (and received by the fund) after 30 June 2021 will not be deductible in the 2021 income year, even if they are made in relation to work performed during the 2021 income year.

Extension of time to make repayments on Division 7A loans

Editor: Under a complying Division 7A loan from a private company, the borrower must make minimum yearly repayments (‘MYR’) before the end of the lender’s income year to avoid the loan being treated as an assessable dividend.

To offer more support due to the ongoing effects of COVID-19, an extension of the repayment period is now available for those who were unable to make their MYRs by the end of the lender’s 2020/21 income year (generally 30 June).

The borrower can apply for this administrative relief using the ATO’s streamlined online application.  Note that they must still make up the shortfall of their 2020/21 MYR by 30 June 2022.

Editor: A similar extension was also available for the MYR for the 2019/20 year, and borrowers who obtained this extension needed to have made up that shortfall by 30 June 2021.

If they didn’t meet this deadline, they will need to either obtain a further extension of time for the 2019/20 MYR outside the streamlined process, or amend their 2019/20 tax return to include a dividend.

Rent or lease payment changes due to COVID-19

The ATO has provided updates regarding the tax implications when a landlord gives, or a tenant receives, rent concessions (such as waivers or deferrals of rent) as a result of COVID-19.

For example, the ATO provides the following advice for tenants that have received a rent waiver.

If the waived rent is related to a past period of occupancy that the tenant has already incurred and claimed a deduction for, they are still entitled to that deduction.

However:

• if they have already paid the incurred rent and it has been waived and refunded to the tenant, they will need to include this amount in their assessable income when they receive it; or
• if they have not already paid the incurred rent and it has been waived, the rent waiver will be a debt forgiveness.  When such a debt is forgiven, the tenant will make a gain.  The amount isn’t usually included in the business’s assessable income — it is instead offset against amounts that could otherwise reduce the business’s taxable income.

If the waived rent is related to a future period of occupancy, they will not be entitled to a deduction for that amount.

Editor: These types of rent concessions can give rise to various tax implications for both tenants and landlords (including GST implications), so please contact our office if you would like assistance in this regard.

Lost, damaged or destroyed tax records

The ATO knows that many taxpayers are facing lasting impacts left in the wake of natural disasters, so if they find their records have been lost or destroyed, whether in cyclones, floods or bushfires, the ATO can help.  According to ATO Assistant Commissioner Tim Loh:

“If you have a myGov account linked to the ATO, you’ll be able to view some of your records, including income tax returns, income statements and previous notices of assessments.  If you lodge through a registered tax agent, they can also access these documents on your behalf.”

Government agencies, private health funds, financial institutions and businesses provide information to the ATO which is available to tax agents and automatically included in returns by the end of July.

If taxpayers have lost receipts due to a natural disaster, the ATO can accept reasonable claims without evidence, so long as it’s not reasonably possible to access the original documents (although the taxpayer may be required to tell the ATO how they calculated the claim).

Introducing SMSF rollover alerts

Since February 2020, the ATO has been issuing alerts via email and SMS when certain changes are made to a self-managed super fund (‘SMSF’).

With the inclusion of SMSF rollovers in SuperStream, the ATO will send the fund an email and/or text message alert when the fund uses the SMSF verification service (‘SVS’) to verify the SMSF’s details before making a rollover.

Note that funds may use this service multiple times when actioning a single rollover request, which may result in receiving multiple alerts.

These alerts are being sent to help safeguard retirement savings and reduce the risk of fraud or misconduct.

If a fund receives an alert and is already aware of the rollover request, there is nothing more that needs to be done.

However, if a member didn’t request a rollover to be made to an SMSF, or they want more information, they will need to contact their existing super fund(s) as a matter of priority, as rollovers through SuperStream may be processed in as little as 3 business days.

SMSF limited recourse borrowing arrangements interest rates

The ATO has confirmed that the following interest rates charged under a limited recourse borrowing arrangement (‘LRBA’) to an SMSF would be consistent with the safe harbour terms the ATO will accept for the 2021/22 financial year.

Real property:                        5.10%

Listed shares or units:          7.10%

Note that these rates are unchanged from those the ATO accepted for the 2020/21 year.

New ATO data-matching programs

The ATO has advised that it will engage in two new data matching programs, as outlined below:

• the ATO will acquire novated lease data from McMillan Shakespeare Group, Smartgroup Corporation, SG Fleet Group, Eclipx Group, LeasePlan, Toyota Fleet Management, LeasePLUS and Orix Australia for the 2018/19 through to 2022/23 financial years (relating to approximately 260,000 individuals each financial year); and
• the ATO will acquire account identification and transaction data from cryptocurrency designated service providers for the 2021 financial year through to the 2023 financial year inclusively (relating to approximately 400,000 to 600,000 individuals each financial year).

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.