Newsletter Archive 

The May 2017 budget announced tax changes and further changes to superannuation. Read the wrap-up to see how you are affected.

The May 2016 budget announced tax changes and some major reforms to superannuation. Read the wrap-up to see how you are affected.

This update explains recent law changes affecting SMSFs.

Quarterly Not-for-Profit Newsletter

2021

• June 2021 - Articles include ACNC updates, Compliance and Financial Reporting insights
• March 2021 - Articles include ACNC updates, Compliance and Financial Reporting insights
  

2014

• July 2014- Articles include Charity Governance, ACNC Register, Public Benevolent Institution Alert and Financial Reporting insights
• October 2014 - Not-for-Profit Newsletter - Articles include Charities' Governance, ACNC activities, financial reporting insights & ACNC's future focus
  

Bulletins 

Federal stimulus boost provides $66b for those on the coronavirus economic frontline

23 Mar 2020

Prime Minister Scott Morrison and Treasurer Josh Frydenberg announced an additional $66b in COVID-19 economic support. In announcing these measures, the PM stated that the priority for this stimulus remains support for small businesses, with wage subsidies of up to $100,000, and access to a further $20b in government guaranteed unsecured loans (capped at $250,000) on offer.

This newsletter outlines the federal government measures across all announcements to date.

Boosting cash flow for employers

• An increase from the first package, small and medium business and not-for-profit (including charities) employers with aggregated annual turnovers of under $50m will be eligible for tax-free payments of up to $100,000 per employer. The first payment (capped at $50,000) will be made after 28th April and the second payment (also capped at $50,000) after 28 July 2020. This is the single largest measure in this package.
• Eligible businesses that pay salary and wages but are not required to withhold tax will receive a minimum payment of $20,000, up from $2,000 in the first package.
• The payment will be available from 28 April 2020 and, as stated in the previous stimulus update, will be paid as a credit to the business upon lodgement of their activity statements.
• The payments are tax free, there will be no new forms and payments will flow automatically through the ATO. 
• Details, including timing of payments, are on the factsheet available here.

Coronavirus SME Guarantee Scheme

• The Government commits to underwrite $20b worth of loans as a 50 per cent guarantee to support lending of up to $40 billion to SMEs from bank and non-bank lenders.
• Starting in early April, this will apply to eligible loans for businesses with annual turnovers of up to $50 million and will include an upfront six month freeze on repayments.
• The loans will be unsecured but used only for working capital purposes and will apply to loans granted within six months from April 1, 2020. New and existing bank customers will be able to apply for loans up to $250,000 over three years.

Providing temporary relief for financially distressed businesses

• Temporary increase to the threshold at which a creditor can take action to initiate insolvency or bankruptcy from $2000 to $20,000 and giving companies and individuals six months instead of 21 days to respond.
• Relief for directors for personal liability when the company is trading while insolvent.
• The Corporations Act 2001 will be amended to provide temporary and targeted relief for companies to deal with unforeseen events that arise as a result of the coronavirus.
• This relief will be provided over the next six months.
• ASIC has also released guidance on AGMs and reporting for listed entities.

Payments for households

• The government is now providing 2 separate payments of $750 to social security and veteran income support recipients and eligible concession card holders, except for those who are receiving an income support payment that is eligible to receive the coronavirus supplement. The forst payemnt will be paid automatically from 31 March 2020 amd the second payment will be made automatically from 13 July 2020.

Coronavirus supplement

• Temporary eligibility expansion to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight.
• This will be paid to both existing and new recipients of the JobSeeker Payment, Youth Allowance jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
• The Coronavirus supplement will be paid for the next 6 months. Eligible income support recipients will receive the full amount of the $550 Coronavirus supplement on top of their payment each fortnight.

Early release of superannuation

• From April, individuals will be able to access their superannuation, capped at $10,000 this financial year and a further $10,000 next financial year. The withdrawals will be tax-free and will be made available to those eligible for the coronavirus supplement as well as sole traders who have seen that hours of work, or income fall, 20% of more as a result of the coronavirus.
• Eligible individuals will be able to apply online through myGov for access of up to $10,000 of their superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020 for another three months. They will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans' Affairs payments. This measure is estimated to cost $1.2 billion over the forward estimates period.

Superannuation minimum drawdown rates and social security deeming rates

• Temporary reduction to superannuation minimum drawdown requirements for account based pensions and similar products by 50 per cent for 2019-20 and 2020-21.
• Reduction of the deeming rates by a further 0.25 percentage points to reflect the latest rate reductions by the RBA. As of 1 May 2020, the lower deeming rate will be 0.25 per cent and the upper deeming rate will be 2.25 per cent. This measure is estimated to cost $876m over the forward estimates period.

Australian economic stimulus package in response to coronavirus - tax and cash measures

17 March 2020

On 12 March 2020, the Australian Government released its economic response to the coronavirus (COVID-19). The ATO also released a series of administrative concessions for taxpayers.

Tax incentives for business investment

 Instant asset write-off increased

For new or second-hand assets first used or installed ready for use from 12 March until 30 June 2020, the instant asset write-off threshold will be increased from $30,000 to $150,000 for businesses with aggregated annual turnover of less than $500 million (up from the current $50 million threshold). The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets. The threshold will revert to $1,000 for small businesses (turnover less than $10 million) from 1 July 2020, however businesses not entitled to the instant asset write off from 1 July 2020 may be entitled to the 50% investment incentive as below.

Backing business investment incentive

The Government is introducing a time limited 15 month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating depreciation deductions. Businesses with aggregated annual turnover of less than $500 million per annum will be able to deduct 50 per cent of the cost of an eligible asset upon installation, provided it was acquired after 12 March 2020 and first used or installed by 30 June 2021. There is no asset value threshold for this 50% investment incentive. Existing depreciation rules applying to the balance of the asset's cost.

Cash flow assistance for businesses

Boosting cash flow for employers

Up to a $25,000 tax-free payment to small and medium-sized businesses with aggregated annual turnover of less than $50 million that employ workers, between 1 January 2020 and 30 June 2020. These eligible businesses will receive a payment equal to 50% of their PAYG withheld, delivered as a credit in their BAS from March to June 2020, with a minimum $2,000 payment and up to a cap of $25,000.

Supporting apprentices and trainees

Eligible small business employers will be able to apply for a wage subsidy of 50% of the apprentice's or trainee's (in training as at 1 March 2020) wage for up to 9 months from 1 January to 30 September 2020, up to $21,000 per apprentice. Employers can register for the subsidy from early April 2020 with final claims for payment due by 31 December 2020.

Non-tax measures

Stimulus payments

A one-off $750 payment will be available from 31 March 2020 to social security, veteran and other income support recipients and eligible concession cardholders including pensioners. There will be one payment per eligible recipient.

Assistance for severely affected regions

The Government has set aside $1 billion to support those regions and communities that have been disproportionately affected by the economic impacts of COVID-19, including those heavily reliant on industries such as tourism, agriculture and education.

ATO relief

On 12 March 2020, the Australian Taxation Office (ATO) announced a series of administrative concessions to assist businesses impacted by COVID-19, which include:

• deferring by up to 4 months the payment of tax amounts due through the BAS (including PAYG instalments), income tax assessments, FBT assessments and excise by affected businesses;
• allowing affected businesses on a quarterly reporting cycle to opt into monthly GST reporting to get quicker access to any GST refunds;
• allowing affected businesses to vary PAYG instalment amounts to zero for the April 2020 quarter. Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters;
• remitting any interest and penalties, incurred by affected businesses on or after 23 January 2020, that have been applied to tax liabilities; and
• allowing affected businesses to enter into low-interest payment plans for their existing and ongoing tax liabilities.

 The ATO assistance is not automatic, taxpayers must first contact the ATO to request assistance, and if eligible, the ATO will 'tailor the assistance package for the relevant taxpayer.

Legislation

Legislation to give effect to these measures will be introduced into Parliament, which resumes on 23 March 2020. It is expected that it will be passed urgently. As certain incentives in the economic package will only be available for a short period of time, businesses should consider taking action as soon as practicable. 

State Government assistance

State Governments are also anticipated to release their own stimulus packages in the coming weeks.

ATO COVID-19 Relief Announced

As part of the government's coronavirus response package, it has provided for the ATO to give administrative relief for some tax obligations for people affected by the coronavirus outbreak, on a case-by-case basis.

Business operatives affected by the coronavirus should contact the ATO to discuss relief options. Options include:

• deferring by up to four months the payment date of amounts due through BAS (including PAYG instalments), income tax and FBT assessments and excise;
• allowing businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get quicker access to GST refunds they may be entitled to;
• allowing businesses to vary PAYG instalment amounts to zero for the April 2020 quarter; businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters;
• remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities; and
• working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low-interest payment plans.

Employers will still need to meet their ongoing SG obligations for their employees.

Important Client Update - Business (almost) as usual at LBW!

We are pleased to advise that we remain ready and able to look after your normal accounting needs. 

Our office remains attended by a member of our administration team during normal business hours (9am – 5pm) so that we remain running a continuous service.  The rest of our team are working remotely and remain fully contactable as normal by email or phone.

We will continue to receive your ATO correspondence (and other correspondence) as normal and it will be attended to as usual.

Whilst external visitor meetings can't be held at the office, you are able to drop off documents and arrange collections.  Drop offs can be made to the mail box in the building foyer or you can hand them across to our staff as normal.  You will need to call the office on arrival as the lift is locked to control access.

We are able to assist in any queries relating to the Government support packages available to businesses. In fact, we encourage you to contact our office prior to lodgement of your March 2020 BAS.

Please contact us as normal by email or by telephone on (02) 9411 4866.

Government announces "JobKeeper" payment for businesses

Under the JobKeeper Payment, businesses impacted by the Coronavirus will be able to access a subsidy from the Government to continue paying their employees. Eligible employers will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum period of 6 months.

Outlined below are the impacts on small business client.

Eligible employers

Employers will be eligible for the subsidy if their turnover will be reduced by more than 30 per cent relative to a comparable period a year ago (of at least a month). 

Not-for-profit entities (including charities) and self-employed individuals (businesses without employees) that meet the turnover tests that apply for businesses are eligible to apply for JobKeeper Payments.

The employer must have been in an employment relationship with eligible employees as at 1 March 2020, and confirm that each eligible employee is currently engaged in order to receive JobKeeper Payments.

Obligations on Employers

To receive the JobKeeper Payment, employers must:

• Register an intention to apply on the ATO website and assess that they have or will experience the required turnover decline.
• Provide information to the ATO on eligible employees.  This includes information on the number of eligible employees engaged as at 1 March 2020 and those currently employed by the business (including those stood down or rehired). For most businesses, the ATO will use Single Touch Payroll data to pre-populate the employee details for the business.
• Ensure that each eligible employee receives at least $1,500 per fortnight (before tax). 
• For employees that were already receiving this amount from the employer then their income will not change;
• For employees that have been receiving less than this amount, the employer will need to top up the payment to the employee up to $1,500, before tax; and
• For those employees earning more than this amount, the employer has the option to provide them with a top-up.
• Notify all eligible employees that they are receiving the JobKeeper Payment.
• Continue to provide information to the ATO on a monthly basis, including the number of eligible employees employed by the business.

Eligible Employees

Eligible employees are employees who:

• are currently employed by the eligible employer (including those stood down or re-hired);
• were employed by the employer at 1 March 2020;
• are full-time, part-time, or long-term casuals (a casual employed on a regular basis for longer than 12 months as at 1 March 2020);
• are at least 16 years of age;
• are an Australian citizen, the holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder; and
• are not in receipt of a JobKeeper Payment from another employer.

If your employees receive the JobKeeper Payment, this may affect their eligibility for payments from Services Australia as they must report their JobKeeper Payment as income.

Application process & ongoing requirements

Businesses with employees

Initially, employers can register their interest in applying for the JobKeeper Payment via www.ato.gov.au from 30 March 2020.

Subsequently, eligible employers will be able to apply for the scheme by means of an online application. The first payment will be received by employers from the ATO in the first week of May.

Eligible employers will need to identify eligible employees for JobKeeper Payments and must provide monthly updates to the ATO.

Participating employers will be required to ensure eligible employees will receive, at a minimum, $1,500 per fortnight, before tax.

It will be up to the employer if they want to pay superannuation on any additional wage paid because of the JobKeeper Payment.

Further details for businesses for employees will be provided on ato.gov.au.

Businesses without employees

Businesses without employees, such as the self-employed, can register their interest in applying for JobKeeper Payment via ato.gov.au from 30 March 2020.

Businesses without employees will need to provide an ABN for their business, nominate an individual to receive the payment and provide that individual's Tax File Number and provide a declaration as to recent business activity.

People who are self-employed will need to provide a monthly update to the ATO to declare their continued eligibility for the payments. Payment will be made monthly to the individual's bank account.

Some examples follow. 

For our newsletter covering all the government measures, please download it by clicking here

EXAMPLES

Example 1 - Employer with employees on different wages

Adam owns a real estate business with two employees. The business is still operating at this stage but Adam expects that turnover will decline by more than 30 per cent in in the coming months. The employees are:

• Anne, who is a permanent full-time employee on a salary of $3,000 per fortnight before tax and who continues working for the business; and
• Nick, who is a permanent part-time employee on a salary of $1,000 per fortnight before tax and who continues working for the business.

Adam is eligible to receive the JobKeeper Payment for each employee, which would have the following benefits for the business and its employees:

• The business continues to pay Anne her full-time salary of $3,000 per fortnight before tax, and the business will receive $1,500 per fortnight from the JobKeeper Payment to subsidise the cost of Anne's salary and will continue paying the superannuation guarantee on Anne's income;
• The business continues to pay Nick his $1,000 per fortnight before tax salary and an additional $500 per fortnight before tax, totalling $1,500 per fortnight before tax. The business receives $1,500 per fortnight before tax from the JobKeeper Payment which will subsidise the cost of Nick's salary. The business must continue to pay the superannuation guarantee on the $1,000 per fortnight of wages that Nick is earning. The business has the option of choosing to pay superannuation on the additional $500 (before tax) paid to Nick under the JobKeeper Payment.

Adam can register his initial interest in the scheme from 30 March 2020, followed subsequently by an application to ATO with details about his eligible employees.  In addition, Adam is required to advise his employees that he has nominated them as eligible employees to receive the payment.  Adam will provide information to the ATO on a monthly basis and receive the payment monthly in arrears.

Example 2 - Employer with employees who have been stood down without pay

Zahrah runs a beauty salon in Melbourne. Ordinarily, she employs three permanent part-time beauticians, but the government directive that beauty salons can no longer operate has required her to shut the business. As such she has been forced to stand down her three beauticians without pay.

Zahrah's turnover will decline by more than 30 per cent, so she is eligible to apply for the JobKeeper Payment for each employee, and pass on $1,500 per fortnight before tax to each of her three beauticians for up to six months. Zahrah will maintain the connection to her employees, and be in a position to quickly resume her operations.

Zahrah is required to advise her employees that she has nominated them as eligible employees to receive the payment. It is up to Zahrah whether she wants to pay superannuation on the additional income paid because of the JobKeeper Payment.

If Zahrah's employees have already started receiving income support payments like the JobSeeker Payment when they receive the JobKeeper Payment, they will need to advise Services Australia of their new income.

Commercial Rent Reductions & Mandatory Code of Conduct

Prime Minister Scott Morrison has revealed the final details of the mandatory Commercial Tenancies Code for commercial and retail leases.  This is generally in line with the update the Prime Minister gave last Friday.

The Code will be legislated and managed by the States and Territories and will be subject to binding mediation.  The two core principles underpinning the Code will be good faith and proportionality, with landlords and tenants urged to work together on how to best manage rent relief going forward.

Who does the mandatory code apply to?

• The code will apply to tenants with a turnover of $50m or less.
• Where the tenant is an eligible business or will be eligible for the purpose of the Commonwealth Government's JobKeeper programme (including businesses that are themselves landlords).  This generally means tenants that have experienced a 30% or greater loss in revenue (15% for Charities and NFPs).

What rent relief will tenants get?

• Landlords are expected to negotiate in good faith and 'share the pain'.
• The rent relief should be proportionate to the "reduction to the tenants trade" and should comprise waivers and deferrals.
• Waivers must account for at least 50% of the reduction.
• Any recoupment of deferred rent will be over the duration of the lease period or a minimum of 24 months (see note). This means if a tenant has six months left on their lease, they should be offered a 24 month period to pay any deferred rent.
• Landlords cannot terminate a lease on the basis of non-payment, nor dip into bonds to cover unpaid rent.  Those who choose not to engage may forfeit themselves out of the lease.
• Tenants are expected to honour their obligations under the existing lease (i.e. they can't just walk away, which was one of the industry concerns when the initial guidelines were announced).

States and Territories are expected to announce how this will be applied in each jurisdiction, as well as announcements of additional relief on land tax and rates – on the proviso this is also passed on to the tenants.

There remains questions as the process for landlords and tenants that don't fit within the mandatory Code to work together over the coming months.

Covid-19 Business relief resources

Download the Commercial Tenancies Code here

Download our Business Stimulus Newsletter here

Fact sheet on JobKeeper

Fact sheet on Stimulus packages

Note - while Prime Minister Scott Morrison said during his press conference that tenants would receive a minimum of 12 months to pay any deferred rent – or the remainder of the lease, having reviewed the Code once released, we can confirm that tenants will receive a minimum of 24 months to pay these deferrals.

As of 30 September 2020, some of the variable interest rates on Rabobank's Personal and Self-Managed Super Fund (SMSF) savings accounts have been reduced*.

Changes to variable rates are based on a number of factors, including movements in the official cash rate and market forces. Current market conditions mean that Rabobank now need to reduce their interest rates. Please see the changes outlined below: