More support for NSW businesses as Premier declares ‘national emergency’

Projections from earlier in the week by the Population Interventions Unit at the University of Melbourne estimated that Sydney’s stay-at-home orders would need to be extended into September to get the latest outbreak under control, meaning businesses could be facing prolonged closure.

On Friday, facing yet another day of rising case numbers, NSW Premier Gladys Berejiklian declared the situation as a “national emergency”.

While some business owners have said the new federal and state support grants are not sufficient to weather lockdown losses, with many calling for the reinstatement of JobKeeper, new details have emerged about the payroll tax reduction and the deferral scheme announced by the state government earlier this month.

According to a new statement issued by the state treasurer, any business that carries a payroll tax liability now has the option to defer lodgement and payment of their 2020–21 annual reconciliation until 7 October 2021.

Payroll tax customers who are ordinarily required to lodge monthly returns will also have the option of deferring their returns due in August and September until 7 October 2021.

Moreover, anyone who chooses to defer their payments is eligible for an interest-free payment plan of up to 12 months.

Additionally, businesses with annual wages between $1.2 million and $10 million that can prove a 30 per cent decline in turnover over a similar period in 2019 are set to receive a 25 per cent reduction in their 2021–22 payroll tax.

Businesses across NSW are eligible for the reductions and deferrals.

Parliament Passes Bill on Tax-Free COVID-19 Support Payments

The Treasury Laws Amendment (COVID-19 Economic Response No. 2) Bill 2021 finally passed both houses without amendment on Monday after the Senate agreed not to insist on a transparency measure which would have forced businesses to disclose how much they received in JobKeeper wage subsidies.

Under the new law, COVID-19 Disaster Payments dating back to its introduction on 3 June will now be non-assessable non-exempt income, meaning recipients will take home more than they did under the $90 billion JobKeeper wage subsidy program, which was taxed.

Workers who lose 20 or more hours of work a week will receive $750 a week, while those who lose between 8 and 20 hours will receive $450.

COVID-19 Disaster Payment recipients can now expect to be better off by $90 a week compared with the JobKeeper wage subsidy, based on an annualised $39,000 income of $750 each week.

The newly passed bill will also ensure that COVID-19 business support payments will be treated as non-assessable non-exempt income.

Business support payments will only be tax-free if they are made under a program declared eligible by Treasurer Josh Frydenberg and were received in the 2021–22 financial year.

Entities must also have an aggregated turnover of less than $50 million to be eligible for the concessional tax treatment, putting it at odds with NSW’s JobSaver program which was recently expanded to businesses with an annual turnover of up to $250 million.

Information and data from the ATO will also now be shared with the relevant states and territories administering COVID-19 business support programs.

Finally, the bill will also give Treasurer Josh Frydenberg powers to authorise additional COVID-19 payments to businesses affected by state or territory lockdowns between 1 July 2021 and 31 December 2022.

Michael Croker, tax leader at Chartered Accountants Australia and New Zealand, believes the Treasurer now has ace up his sleeve as states continue to enter snap lockdowns to combat the spread of COVID-19.



Lost paper receipts see 1 in 4 SMEs miss out by thousands

A new report conducted by Aussie fintech company Slyp and big four bank NAB surveyed over 300 businesses to identify the impact paper receipts have on SMEs come tax time.

According to the research, 25 per cent of those surveyed have lost up to $10,000 by simply misplacing receipts. A further 8 per cent of those said they’ve lost between $10,000 and $100,000.

A whopping 62 per cent of SMES surveyed said they lose paper receipts at tax time, with those that do collate them noting it’s the most time-consuming part of the tax process (42 per cent). A further 39 per cent said fact-checking paper receipts is the most time-consuming part.

“Australian small business owners are incredibly hard working and the data shows that, for many, paper receipts can add undue stress and complication to tax time,” Tania Motton, NAB executive for business banking, said.

“81.1 per cent of small businesses say the availability of digital receipts would improve their tax-time process.”

Commenting further, CEO and co-founder of Slyp Paul Weingarth said: “The tax-time process is time-consuming for small businesses and it’s clear that there’s a disconnect between the current manual process and the tools that small businesses are using.

“Three-quarters (75 per cent) of Australian small businesses say they’d like to change the way that they process paper receipts in the next financial year and more than two-thirds (69.6 per cent) say they’d be more inclined to purchase through a retailer that provided digital receipts.”

Please ask our office about the use of Dext (previously Receipt Bank) software and how to process this software within your xero accounting system. Clients that currently use Dext have described this software as an invaluable tool.




Superannuation Guarantee Changes from 1 July 2021

Superannuation Guarantee rate increases to 10% on 1 July 2021

The Superannuation Guarantee (SG) rate as currently legislated will increase from 9.5% to 10% with effect from 1 July 2021 with further increases of 0.5% per year to come from 1 July 2022 until it reaches 12% from 1 July 2025 onwards. The SG rate increases were not affected by the 2021-22 Federal Budget. Accordingly, from 1 July 2021 not only will employers need to update their payroll settings to reflect the 0.5% increase in the SG rate, but importantly both employers and employees will need to consider the potential increased SG costs of these changes going forward.

Impact on employers and employees

The financial impact of the 0.5% increase in the SG rate will depend on the terms of existing and new salary and wage packages.

The effect of the increase on particular salary packages needs to be carefully considered to determine whether the additional 0.5% SG contribution needs to be added on top of the existing salary package (i.e., no change to the employee’s take home pay) or incorporated into the existing salary package amount (i.e. resulting in a reduction of the employee’s take home pay). In addition, employers will need to consider the effect of the increase in the SG rate on relevant employee awards.

Salary sacrifice arrangements

Employers also need to be aware that they cannot use an employee’s salary sacrifice contributions to account for the extra 0.5% of SG. The ordinary time earnings (OTE) base for SG purposes now specifically includes any sacrificed OTE amounts. This means that contributions made on behalf of an employee under a salary sacrifice arrangement are not treated as employer contributions which reduce an employer’s charge percentage.

Maximum super contribution base and opt-out for multiple employers

The increase in the SG rate to 10% from 1 July 2021 means the maximum super contribution base (i.e. earnings that employers do not have to pay SG on above this limit) will increase on 1 July 2021 to $58,920 per quarter ($235,680 per annum), up from $57,090 per quarter ($228,360 per annum).

The increase in the SG rate to 10% from 1 July 2021 also means that the SG opt-out income threshold will increase to $275,000 from 1 July 2021 (up from $263,157). This allows high-income earners with multiple employers to opt-out of the SG regime in respect of an employer to avoid unintentionally breaching the concessional contributions cap.

Concessional contributions cap increase

In addition, from 1 July 2021 the annual concessional contributions cap (which effectively limits the annual concessional super contributions for employees) will increase from $25,000 to $27,500. Correspondingly, the total maximum super contribution base will also increase to $275,000 (i.e., $27,500 dividend by 0.10). Employers and employees should ensure concessional contributions are not made beyond this amount as excess contributions may attract higher tax rates and an excess charge.

Employers should review employee agreements and contracts and determine any expected future employee costs. Once determined, employers should then review and update all payroll settings and systems ahead of the increase in the SG rate on 1 July 2021.


Tax Depreciation Business Incentive Summary Information

The latest Federal Budget announced a welcome extension to the full expensing policy. BMT tax Depreciation Quantity Surveyors provide 3 tables summarising all the 2020 to 2023 business stimulus incentives available for plant & equipment purchases for small, medium and large businesses. The tables show qualifying dates and thresholds to make it easy for you to quickly cross check what is available for your business.

This information is provided as a general guide. Information summarised from Neither BMT Tax Depreciation, nor its directors, shareholders or advisors make
any representation or warranty as to the accuracy or completeness of information produced. Nor will they have any liability to you or any other party for any representations
(expressed or implied) contained in, or any omissions from, this information.

Federal Budget 2021 – 2022

Federal Budget 2021 – 2022


Personal tax rates unchanged for 2021–2022

In the Budget, the Government did not announce any personal tax rates changes, having already brought forward the Stage 2 tax rates to 1 July 2020 in the October 2020 Budget. The Stage 3 tax changes will commence from 1 July 2024, as previously legislated.

The 2021–2022 tax rates and income thresholds for residents are therefore unchanged from 2020–2021:

  • taxable income up to $18,200 – nil;
  • taxable income of $18,201 to $45,000 – 19% of excess over $18,200;
  • taxable income of $45,001 to $120,000 – $5,092 plus 32.5% of excess over $45,000;
  • taxable income of $120,001 to $180,000 – $29,467 plus 37% of excess over $120,000; and
  • taxable income of more than $180,001 – $51,667 plus 45% of excess over $180,000.

Stage 3: from 2024–2025
The Stage 3 tax changes will commence from 1 July 2024, as previously legislated. From 1 July 2024, the 32.5% marginal tax rate will be cut to 30% for one big tax bracket between $45,000 and $200,000. This will more closely align the middle tax bracket of the personal income tax system with corporate tax rates. The 37% tax bracket will be entirely abolished at this time.

Therefore, from 1 July 2024, there will only be three personal income tax rates: 19%, 30% and 45%. From 1 July 2024, taxpayers earning between $45,000 and $200,000 will face a marginal tax rate of 30%. With these changes, around 94% of Australian taxpayers are projected to face a marginal tax rate of 30% or less.

Low income offsets: LMITO and LITO retained for 2021–2022L

Low and middle income tax offset
The Government also announced in the Budget that the low and middle income tax offset (LMITO) will continue to apply for the 2021–2022 income year. The LMITO was otherwise legislated to only apply until the end of the 2020–2021 income year, meaning low-to-middle income earners would have seen lower tax refunds in 2022.

The amount of the LMITO is $255 for taxpayers with a taxable income of $37,000 or less. Between $37,000 and $48,000, the value of LMITO increases at a rate of 7.5 cents per dollar to the maximum amount of $1,080. Taxpayers with taxable incomes from $48,000 to $90,000 are eligible for the maximum LMITO of $1,080. From $90,001 to $126,000, LMITO phases out at a rate of 3 cents per dollar.

Consistent with current arrangements, the LMITO will be received on assessment after individuals lodge their tax returns for the 2021–22 income year.

Low income tax offset
The low income tax offset (LITO) will also continue to apply for the 2021–2022 income year. The LITO was intended to replace the former low income and low and middle income tax offsets from 2022–2023, but the new LITO was brought forward in the 2020 Budget to apply from the 2020–2021 income year.

The maximum amount of the LITO is $700. The LITO will be withdrawn at a rate of 5 cents per dollar between taxable incomes of $37,500 and $45,000, and then at a rate of 1.5 cents per dollar between taxable incomes of $45,000 and $66,667.

Self-education expenses: $250 threshold to be removed

The Government will remove the exclusion of the first $250 of deductions for prescribed courses of education. The first $250 of a prescribed course of education expense is currently not deductible.

Primary 183-day test for individual tax residency

The Government will replace the existing tests for the tax residency of individuals with a primary “bright line” test under which a person who is physically present in Australia for 183 days or more in any income year will be an Australian tax resident.

People who do not meet the primary test will be subject to secondary tests that depend on a combination of physical presence and measurable, objective criteria.

Child care subsidies to change 1 July 2022

The Budget confirmed that the Government will make an additional $1.7 billion investment in child care. The changes will commence on 1 July 2022 (that is, not in the next financial year). This measure was previously announced on 2 May 2021.

Commencing on 1 July 2022, the Government will:

  • increase the child care subsidies available to families with more than one child aged 5 and under in child care by adding an additional 30 percentage point subsidy for every second and third child (stated to benefit around 250,000 families); and
  • remove the $10,560 cap on the Child Care Subsidy (which the Government expects to benefit around 18,000 families).


Temporary full expensing: extended to 30 June 2023

The Government will extend the temporary full expensing measure until 30 June 2023. It was otherwise due to finish on 30 June 2022.

Other than the extended date, all other elements of temporary full expensing will remain unchanged.

Currently, temporary full expensing allows eligible businesses to deduct the full cost of eligible depreciating assets, as well as the full amount of the second element of cost. A business qualifies for temporary full expensing if it is a small business (annual aggregated turnover under $10 million) or has an annual aggregated turnover under $5 billion. Annual aggregated turnover is generally worked out on the same basis as for small businesses, except that the threshold is $5 billion instead of $10 million.

There is an alternative test, so a corporate tax entity qualifies for temporary full expensing if:

  • its total ordinary and statutory income, other than non-assessable non-exempt income, is less than $5 billion for either the 2018–2019 or the 2019–2020 income year (some additional conditions apply for entities with substituted accounting periods); and
  • the total cost of certain depreciating assets first held and used, or first installed ready for use, for a taxable purpose in the 2016–2017, 2017–2018 and 2018–2019 income years (combined) exceeds $100 million.
Loss carry-back extended by one year

Under the temporary, COVID-driven restoration of the loss carry-back provisions announced in the previous Budget, an eligible company (aggregated annual turnover of up to $5 billion) could carry back a tax loss for the 2019–2020, 2020–2021 or 2021–2022 income years to offset tax paid in the 2018–2019 or later income years.

The Government has announced it will extend this to include the 2022–2023 income year. Tax refunds resulting from loss carry-back will be available to companies when they lodge their 2020–2021, 2021–2022 and now 2022–2023 tax returns.

Employee share schemes: cessation of employment removed as a taxing point

The Government will remove the cessation of employment as a taxing point for tax-deferred employee share schemes (ESSs). There are also other changes designed to cut “red tape” for certain employers.

Cessation of employment change

Currently, under a tax-deferred ESS and where certain criteria are met, employees may defer tax until a later tax year (the deferred taxing point). In such cases, the deferred taxing point is the earliest of:

  • cessation of employment;
  • in the case of shares, when there is no risk of forfeiture and no restrictions on disposal;
  • in the case of options, when the employee exercises the option and there is no risk of forfeiting the resulting share and no restriction on disposal; and
  • the maximum period of deferral of 15 years.

The change announced in the latest Budget will result in tax being deferred until the earliest of the remaining taxing points.


Allowing small businesses to pause disputed ATO debt recovery

The Government will introduce legislation to allow small businesses to pause or modify ATO debt recovery action where the debt is being disputed in the Administrative Appeals Tribunal (AAT). Treasurer Josh Frydenberg had earlier announced this measure on 8 May 2021.

Specifically, the changes will allow the Small Business Taxation Division of the AAT to pause or modify any ATO debt recovery actions – such as garnishee notices and the recovery of general interest charge (GIC) or related penalties – until the underlying dispute is resolved by the AAT. This measure is intended to provide an avenue for small businesses to ensure they are not required to start paying a disputed debt until the matter has been determined by the AAT.


Superannuation contributions work test to be repealed from 1 July 2022

The superannuation contributions work test exemption will be repealed for voluntary non-concessional and salary sacrificed contributions for those aged 67 to 74 from 1 July 2022.

As a result, individuals under age 75 will be allowed to make or receive non-concessional (including under the bring-forward rule) or salary sacrifice contributions from 1 July 2022 without meeting the work test, subject to existing contribution caps. However, individuals aged 67 to 74 years will still have to meet the work test to make personal deductible contributions.

Currently, individuals aged 67 to 74 years can only make voluntary contributions (both concessional and non-concessional), or receive contributions from their spouse, if they work at least 40 hours in any 30-day period in the financial year in which the contributions are made (the “work test”). The work test age threshold previously increased from 65 to 67 from 1 July 2020 as part of the 2019–2020 Budget.

Non-concessional contributions and bring-forward
The Government confirmed that individuals under age 75 will be able to access the non-concessional bring forward arrangement (ie three times the annual non-concessional cap over three years), subject to meeting the relevant eligibility criteria. However, we note that the Government is still yet to legislate its 2019–2020 Budget proposal to extend the bring-forward age limit so that anyone under age 67 can access the bring-forward rule from 1 July 2020. The proposed legislation for the 2019–2020 Budget measure is yet to be passed by the Senate.

The Government also noted that the existing restriction on non-concessional contributions will continue to apply for people with total superannuation balances above $1.6 million ($1.7 million from 2021–2022).

Downsizer contributions eligibility age reduced to 60

The minimum eligibility age to make downsizer contributions into superannuation will be lowered to age 60 (down from age 65) from 1 July 2022.

The proposed reduction in the eligibility age will mean that individuals aged 60 or over can make an additional non-concessional contribution of up to $300,000 from the proceeds of selling their home. Either the individual or their spouse must have owned the home for 10 years.

The maximum downsizer contribution is $300,000 per contributor ($600,000 for a couple), although the entire contribution must come from the capital proceeds of the sale price. As under the current rules, a downsizer contribution must be made within 90 days after the home changes ownership (generally the date of settlement).

Downsizer contributions are an important consideration for senior Australians nearing retirement as they do not count towards an individual’s non-concessional contributions cap and are exempt from the contribution rules. They are also exempt from the restrictions on non-concessional contributions for people with total superannuation balances above $1.6 million ($1.7 million from 2021–2022). People with balances over the transfer balance cap ($1.7 million from 2021–2022) can also a make a downsizer contribution; however, the downsizer amount will count towards that cap when savings are converted to the retirement phase.

First Home Super Scheme to be extended for withdrawals up to $50,000

The Budget confirmed that the maximum amount of voluntary superannuation contributions that can be released under the First Home Super Saver (FHSS) scheme will be increased from $30,000 to $50,000. The Treasurer previously announced this measure on 8 May 2021.

NSW Payroll Tax Avoidance Penalties Set for 400% Increase

NSW Minister for Finance and Small Business Damien Tudehope on Wednesday announced a package of new tax laws which will see fines of $110,000 and imprisonment issued to businesses committing wage theft, and empower Revenue NSW to name and shame offenders.

“The new legislation, including harsher penalties and naming taxpayers who have underpaid payroll tax on wages, sends a clear message to businesses — do the right thing by your employees and by the taxpayers of NSW,” Mr Tudehope said.

“It will allow Revenue NSW to name taxpayers who have avoided payroll tax on underpaid wages and will also allow Revenue NSW to disclose information to the Commonwealth Fair Work Ombudsman to assist in its wage theft investigations.”

The new laws will see penalties for failing to keep tax records, and failing or refusing to lodge a document, statement or return as required each spike from 100 to 250 penalty units, currently $11,000 to $27,500.

Meanwhile, penalties for making or including records containing misleading information; willfully damaging or destroying records; knowingly giving false or misleading information to a tax officer; and falsifying or concealing the identity or location of a taxpayer, will each jump from 100 to 500 penalty units, or $11,000 to $55,000.

For second-time offenders caught making or including misleading records and knowingly giving false or misleading information to a tax officer, penalty units will rise from 100 to 1,000, with fines soaring to $110,000, and the latter exposing business owners to an additional two years in prison.

Mr Tudehope said the new measures emerge as a fervent crackdown on wage theft in the face of those who do the right thing.

According to data from PwC, 13 per cent of Australians are underpaid about $1.35 billion every year, in addition to the millions of dollars in estimated payroll tax avoided via wage theft in NSW.

The legislation and its accompanying enforcement measures were designed to complement the Commonwealth’s national wage theft efforts, to ensure NSW residents aren’t sold short on wages, aligning with laws across Victoria and Queensland which employ state-based wage theft laws of their own.

In addition to the new legislation, the Berejiklian government has also called for the opposition and members of the crossbench to co-operate on establishing a national framework for thwarting wage theft.

“The NSW government will continue to work with the Commonwealth in this area, as the Commonwealth is primarily responsible for legislating on industrial relations including dealing with wage theft,” Mr Tudehope said.



Treasury Reveals Director ID Deadline

The new dates come as the government looks to introduce the director ID regime to prevent illegal phoenixing by ensuring directors can be traced across companies, while also preventing the use of fictitious identities.

The new regime will require all directors to provide a number of documents to establish their identity with the Commonwealth Registrar in order to receive a unique director ID, which they will keep permanently, even if they cease to be a director.

The Commonwealth Registrar will now conduct testing of the director ID system by inviting a controlled number of existing directors to ensure the new platform delivers a robust, reliable & consistent user experience.

The testing period is anticipated to end by 31 October.

Once the testing period concludes, existing directors will be required to obtain a director ID by 30 November 2022.

This time frame will apply for both existing directors who were appointed prior to the commencement of the director ID regime and directors appointed during the testing phase.

Individuals who are seeking appointment after 30 November 2022 will be required to obtain a director ID prior to being appointed as a director.

There will be civil and criminal penalties for directors who fail to apply for a director ID within the applicable time frame, and for conduct that undermines the new requirements, including providing false identity information to the Registrar or intentionally applying for multiple director IDs.

ATO on the Hunt for 60,000 TPAR Businesses

The ATO estimates that around 280,000 businesses are required to lodge a taxable payments annual report (TPAR) for the 2019–20 year, following the regime’s extension last year to businesses providing road freight services, information technology services, and security, investigation or surveillance services.

Businesses providing building and construction, cleaning, or courier services are also required to lodge a TPAR.

With the annual 28 August deadline now well overdue, the ATO has confirmed that more than 60,000 businesses have yet to lodge their TPAR, with failure-to-lodge penalties looming.

ATO assistant commissioner Peter Holt has urged these businesses to lodge immediately, noting that the taxable payments reporting system (TPRS) aims to create a level playing field for contractors.

Mr. Holt describes the ATO’s role is to ensure the ‘bubble’ is centered as much as possible to keep things fair for everyone.

Mr. Holt also believes that many more businesses might be captured under the TPRS for the first time ever after COVID-19 forced businesses to pivot to a delivery service model.

This is evident in the many restaurants, cafes, grocery stores, pharmacies and retailers which have begun paying contractors to deliver their products to their customers.

Although these businesses may not have previously needed to lodge a TPAR they will need to lodge, if the total payments for these deliveries or courier services are 10 per cent or more of the total annual business income.

Accountants have also been urged to identify all clients with TPAR obligations after it was reported that the ATO’s automated list of such clients — sent out to tax agents last year — may have been incomplete in some cases.



Industry Pressure Forces ATO’s Hand on STP 1 July 2021 Deadline Extending it till 1 January 2022

A legislative instrument issued by the ATO on Wednesday has confirmed that mandatory STP phase 2 reporting will commence from 1 January 2022 — a six-month extension from the previously proposed 1 July 2021 start date.

STP phase 2 will require additional payroll information to be reported to the ATO, and subsequently shared with Services Australia and other government agencies.

The deferral comes after fierce backlash from the profession, with tax and accounting professional bodies, bookkeeping associations and software providers pushing back against the proposed 1 July start date.

The ATO was told that the deadline was unrealistic, given the impact of COVID-19 on the workload and priorities of tax practitioners, employers and digital service providers.

The Tax Institute’s senior advocate, Robyn Jacobson, said that while a 12-month deferral would have been preferable, the extension was a “sensible” outcome.

“Today’s announcement in the form of a legislative instrument issued by the ATO to defer the commencement to 1 January 2022 is very welcome,” Ms Jacobson said.

The deferral will help to ensure that data submitted through STP phase 2 to the ATO and subsequently shared with Services Australia is more likely to be accurate and able to be relied upon by the government.

“The start date of 1 January 2022 is softened by the fact that if businesses are not ready at the time, they can seek additional time depending on their circumstance, so it would be a case-by-case basis of the ATO allowing more time for individual businesses.”

The ATO notes that there is nothing practitioners and employers need to do at the moment, with work being done with accounting and payroll software providers to develop and test their services.

The profession also continues to wait for further public guidance on the rollout of STP reporting for closely held payees, after the ATO extended the exemption for such employers to 1 July 2021 in light of COVID-19.


Source: Article by Jotham Lian –