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  • 11Nov2020

    Get Ready for ATO Payment Plans – with Strings Attached!!!

    Get Ready for ATO Payment Plans – with Strings Attached!!!

     Taxpayers will need to prepare for tougher rules around tax debt payment plans and justifying historical JobKeeper payments.

    In a recently published article in the accounting press, a newly appointed tax controversy partner at Holding Redlich, Sue Williamson FCPA, warned that accountants and their clients were going to need to work together to prepare for new ATO compliance measures.

    Ms. Williamson, who is also a member of CPA Australia’s Taxation Centre of Excellence, said that the first frontier was likely to be businesses needing to prove their JobKeeper entitlements were justified if they were selected for audit. To substantiate that they received the right amount under JobKeeper, companies must have records on how it was estimated and proof that the money was passed on to employees.

    “The issues we’re starting to see come through around JobKeeper claims typically relate to calculations around turnover,” Ms. Williamson said.

    The ATO is warning,  that while it remains sympathetic to the plight of struggling businesses, there will come a day soon where new tax payment plans will require businesses to provide a plan for repayment of the monies.  

    Senior tax advisers throughout the country have been told that the ATO will soon be wanting greater clarity and understanding of why businesses cannot pay their current tax obligations and a future business plan showing how and when they expect to get out of debt.

    And while it is unlikely to be this year, at some not too distant point Williamson said she expected the ATO to become far less patient with repayments unless there were good grounds to have them delayed. Simply requesting a delay would not be enough. Taxpayers would need to provide proof of why they need extra time to start paying and where the money would be coming from.

    Ms. Williamson said the key to preparing for this tougher ATO compliance regime, was the ability for accountants and clients to have frank discussions about these issues and put solid plans in place.

    It is understood the ATO has no intention of clawing back money where honest mistakes have been made with JobKeeper but will crack down heavily where they uncover deliberately fraudulent behaviour.

    It is worth noting that the ATO has redeployed 3000 staff to focus on audit activities. 


    Affinitas Accounting offers all your financial needs under the one roof

     

    Contact Us If you Need Help

    For help with tax debt payment plans and JobKeeper, contact 07 3359 5244 or email

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  • 05Nov2020

    Refunds for Tax Losses

    2019 tax cuts

    Refunds for Tax Losses

    If your company has made a loss, you may be able to claim a tax refund for tax previously paid on profits.

    In the 2020-21 Federal Budget, the Government announced that businesses with turnover under $5bn* will be able to offset any losses made between 2019-20 and 2021-22 against previously taxed profits between 2018-19 and 2020-21.

    The loss carry-back rules enable a company to offset tax losses against profits taxed in a previous year, generating a refundable tax offset. The amount carried back can be no more than the earlier taxed profits, limiting the refund to the company’s tax liabilities in the profitable years. The company can choose to carry-back a loss or carry it forward. That is, tax losses for 2019-20, 2020-21, or 2021-22 income years can either be:

    •  Carried forward and deducted against income derived in later income years; or
    • Carried back against income of earlier income years as far back as the 2018-19 income year to produce a refundable tax offset.

    Previously, tax losses could only be carried forward and deducted against income in later income years.

    This is not the first time that carry-back losses have been allowed. The loss carry-back rules were introduced some years ago by the Gillard government for the 2012-13 year, then repealed.

    The loss carry-back rules also interact with the Government’s Budget measure allowing immediate expensing of investments in capital assets (See Tax deductions for investing in your business). The new investment will generate significant tax losses in some cases which can then be carried back to generate cash refunds for eligible companies.

    What entities are eligible to carry-back losses?

    Corporate tax entities are eligible to carry-back losses – a company, a corporate limited partnership, or a public trading trust – BUT only if the entity has lodged an income tax return for the current year and each of the five years immediately preceding it. If your company has not kept up to date with its reporting obligations, it might not be able to use the new rules.

    Claiming the refundable tax offset

    Businesses will need to elect to utilise their carry-back losses when they lodge their 2020-21 and 2021-22 tax returns. That is, even if the company made a loss in the 2019-20 year, it cannot claim that loss until the 2020-21 tax return is lodged.

     For the 2020-21 income year, a loss carry-back tax offset may be available to a company if:

    •  It has a tax loss in the 2019-20 income year and/or the 2020-21 income year;
    • It has an income tax liability in the 2018-19 income year and/or the 2019-20 income year; and
    • For the 2020-21 income year and each of the previous five income years, either the entity has lodged an income tax return; the entity was not required to lodge a return, or the Commissioner has made an assessment of the entity’s income tax.

     The carry-back cannot generate a franking account deficit. That is, the refund is further limited by the company’s franking account balance.

     

    Source: Knowledge Shop Newsletter Oct 2020.


    Affinitas Accounting offers all your financial needs under the one roof

     

    Contact Us If you Need Help

    If you have any questions, you can contact 07 3359 5244 or email

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  • 30Oct2020

    Latest Tax News and Budget Announcements

    Latest Tax News and Budget Announcements

    The 2020-21 Budget delivered a range of incentives for businesses to invest.

    If you would like us to review your position and the tax impact of any investments you are contemplating, please contact us at or 07 3359 5244  and we can assist you to get the best possible outcome.

    The following is a summary of where things are at with some of the big-ticket Budget items.

    JobMaker Hiring Credits: What We Know So Far

    The JobMaker hiring credit announced in the 2020-21 Federal Budget. The legislation enabling the JobMaker scheme has not passed Parliament as yet and until this occurs, the JobMaker rules are not certain and may change. More details should be available soon and we’ll let you know as soon as we have some certainty. Here is what has been announced so far:

    What is JobMaker?

    JobMaker is a credit available to eligible businesses for hiring additional employees (not if you are merely replacing someone who left). The hiring credit is available for jobs created from 7 October 2020 until 6 October 2021.

    The credit provides:

    • $200 per week for new employees between 16 to 29 years of age, and
    • $100 a week for new employees between 30 to 35 years of age.

    Payment is from the start date of the employee for 12 months.

    When do the credits start?

    Assuming the legislation passes Parliament and your business and the employee are eligible, and the ‘additionality’ test is passed, credits can be claimed for employees hired from 7 October 2020 until 6 October 2021. The credit will be claimed quarterly in arrears by the employer from the ATO from 1 February 2021. The credit is an incentive for the employer to support wage costs and not passed onto the employee.

    For an extended article on JobMaker, including frequently asked questions, visit our blog on JobMaker Hiring Credits.

    business accountant Virginia woman using calculator

    Tax deductions for investing in your business

    Stimulating investment spending is high on the Government’s agenda. To encourage spending, the 2020-21 Budget introduced a measure that allows businesses with turnover under $5bn* to immediately deduct the cost of new depreciable assets and the cost of improvements to existing assets in the first year of use. This means that an asset’s cost will be fully deductible in the year it’s installed ready for use, rather than being claimed over the asset’s life. And, there is no cap on the cost of the asset.

    When it comes to second-hand assets the rules are a bit different depending on the size of the business. Businesses with an aggregated turnover under $50 million can claim an immediate deduction for the cost of second-hand assets under the new measures.

    Businesses with aggregated annual turnover between $50 million and $500 million can still deduct the full cost of eligible second-hand assets costing less than $150,000 that are purchased by 31 December 2020 under the existing enhanced instant asset write-off. Businesses that hold assets eligible for the enhanced $150,000 instant asset write-off will have an extra six months, until 30 June 2021, to first use or install those assets.

    For an extended article on Immediate Asset Write-offs for business, visit our blog on Tax Deductions.


    Refunds for Business Tax Losses

    If your company has made a loss, you may be able to claim a tax refund for tax previously paid on profits.

    In the 2020-21 Federal Budget, the Government announced that businesses with turnover under $5bn* will be able to offset any losses made between 2019-20 and 2021-22 against previously taxed profits between 2018-19 and 2020-21.

    The loss carry-back rules enable a company to offset tax losses against profits taxed in a previous year, generating a refundable tax offset. The amount carried back can be no more than the earlier taxed profits, limiting the refund to the company’s tax liabilities in the profitable years. The company can choose to carry-back a loss or carry it forward. That is, tax losses for 2019-20, 2020-21, or 2021-22 income years can either be:

    • Carried forward and deducted against income derived in later income years; or
    • Carried back against income of earlier income years as far back as the 2018-19 income year to produce a refundable tax offset.

    Previously, tax losses could only be carried forward and deducted against income in later income years.

    Tax table reminder

     The 2020-21 personal income tax cuts announced in the Federal are now law. Employers need to ensure that the tax withheld from employee salaries is correct. The ATO has published updated tax tables that apply from 13 October 2020. Employers have until 16 November 2020 to implement the changes.

    For an extended article on refunds and tax losses, visit our blog on refunds for tax losses.

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    JobKeeper Clawback Begins

    At the recent Senate Estimates hearing, Jeremy Hirschhorn, the ATO’s Second Commissioner, stated that $120 million in JobKeeper payments had been clawed back from those either deliberately seeking to rort the system or who had made reckless mistakes.

    Mr. Hirschhorn went on to say that there did not appear to be widespread fraud across the Government’s stimulus measures and most mistakes were honest. In the cases identified so far, JobKeeper had not been clawed back from employers making honest mistakes but these employers were prevented from making future claims.

    In September, the ATO noted that compliance checks had halted 55,000 JobKeeper applications at the very first stage, because they did not meet the eligibility criteria, and delayed $1bn in payments to more than 75,000 applicants for further review.

    Eleven matters have been referred to as Serious Financial Crime Taskforce operations and around 50 matters referred for criminal investigation. But overall, the Tax Commissioner stated, “the vast majority of Australians have done the right thing and only claimed the amounts they were entitled to.”

     Source: Knowledge Shop Newsletter October 2020


    Affinitas Accounting offers all your financial needs under the one roof

     

    Contact Us If you Need Help

    If you have any questions regarding the JobMaker hiring credits or scheme, you can contact 07 3359 5244 or email

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  • 30Oct2020

    Tax Deductions for Investing in Your Business

    Tax Deductions for Investing in Your Business

    Stimulating investment spending is high on the Government’s agenda. To encourage spending, the 2020-21 Budget introduced a measure that allows businesses with turnover under $5bn* to immediately deduct the cost of new depreciable assets and the cost of improvements to existing assets in the first year of use.  

    This means that an asset’s cost will be fully deductible in the year it is installed ready for use, rather than being claimed over the asset’s life. And, there is no cap on the cost of the asset.

    When it comes to second-hand assets, the rules are a bit different, depending on the size of the business. Businesses with an aggregated turnover under $50 million can claim an immediate deduction for the cost of second-hand assets under the new measures.

     

    Instant asset write-off thresholds

    Aggregated turnover under $10m

    Aggregated turnover under $50m

    Aggregated turnover under $500m

    Aggregated turnover under $5bn

    1 July 2018 – 28 January 2019

    $20,000

    29 January 2020 – 2 April 2020

    $25,000

    2 April 2020 – 11 March 2020

    $30,000

    $30,000

    12 March 2020 – 31 December 2020

    $150,000

    $150,000

    $150,000

    6 October 2020+ – 30 June 2022

    unlimited

    unlimited

    unlimited

    Unlimited

    Businesses with aggregated annual turnover between $50 million and $500 million can still deduct the full cost of eligible second-hand assets costing less than $150,000 that are purchased by 31 December 2020 under the existing enhanced instant asset write-off. Businesses that hold assets eligible for the enhanced $150,000 instant asset write-off will have an extra six months, until 30 June 2021, to first use or install those assets.

    For small business entities that have assets in a general pool, the changes seek to ensure that pool balances are completely written-off for tax purposes in the 2021 and 2022 income years.

    These super-charged immediate deduction rules tie into the existing instant asset write-off for businesses with a turnover under $500 million (summarised below).

    The instant asset write-off only applies to certain depreciable assets. There are some assets, like horticultural plants, capital works (building construction costs, etc.), and certain intangible assets that don’t qualify for the new rules.

    If your business will make a tax profit this year, this measure is likely to reduce the taxable income of the business for the year and it may be possible to vary upcoming PAYG installments to improve cash flow. If your business operates through a company and will make a tax loss, you might be able to use the loss to offset tax paid in previous years. Alternatively, tax losses can generally be carried forward to a future year.

     Source: Knowledge Shop Newsletter Oct 2020


    Affinitas Accounting offers all your financial needs under the one roof

     

    Contact Us If you Need Help

    If you have any questions regarding the JobMaker hiring credits or scheme, you can contact 07 3359 5244 or email

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  • 30Oct2020

    JobMaker Hiring Credits: What We Know So Far

    The JobMaker hiring credit announced was in the 2020-21 Federal Budget. The legislation enabling the JobMaker scheme has not passed Parliament as yet and until this occurs, the JobMaker rules are not certain and may change. More details should be available soon and we’ll let you know as soon as we have some certainty. Here is what has been announced so far:

    What is JobMaker?

    JobMaker is a credit available to eligible businesses for hiring additional employees (not if you are merely replacing someone who left). The hiring credit is available for jobs created from 7 October 2020 until 6 October 2021.

    The credit provides:

    • $200 per week for new employees between 16 to 29 years of age, and
    • $100 a week for new employees between 30 to 35 years of age.

    Payment is from the start date of the employee for 12 months.

    When do the credits start?

    Assuming the legislation passes Parliament and your business and the employee are eligible, and the ‘additionality’ test is passed (see How Can We Access JobMaker?), credits can be claimed for employees hired from 7 October 2020 until 6 October 2021. The credit will be claimed quarterly in arrears by the employer from the ATO from 1 February 2021. The credit is an incentive for the employer to support wage costs and not passed onto the employee.

    How Can We Access JobMaker?

    There are three tests for JobMaker:

    Employer eligibility

    • Has an ABN
    • Up to date with tax lodgements
    • Registered for PAYG
    • Reporting through single touch payroll
    • Keeps adequate records of the paid hours worked by the employee they are claiming the credit for
    • Another employer is not claiming JobMaker for the same employee

    Employee eligibility

    • Received the JobSeeker Payment, Youth Allowance (Other) or Parenting Payment for at least one month within the three months before they were hired
    • Between 16 and 35 years of age at the time their employment started
    • Worked at least 20 hours per week on average for the full weeks employed for the period being claimed. If the employee worked less than 20 hours, the employer cannot claim JobMaker for them during that period
    • Started work between 7 October 2020 and 6 October 2021
    • The first year of employment with the employer
    • The employer is not receiving other forms of assistance from the Commonwealth Government for the employee, for example, JobKeeper or an apprenticeship subsidy

    Additional employee test (additionality test)

    The employer’s:

    • Total employee headcount on the last day of the reporting period increased by at least one additional employee compared initially to 30 September 2020, then to the previous reporting period.
    • Total payroll for the reporting period increased compared initially to the September quarter 2020 (July, August, September 2020), then to the previous reporting period. The hiring credit cannot exceed the increase in payroll.

     

    Government entities or agencies, banks, and other institutions subject to the bank levy, businesses in liquidation, and foreign Government entities (unless a resident entity), are unable to access JobMaker.

    jobkeeper 2.0

    Key Questions Answered

    • I can only claim JobMaker if the number of employees and payroll increases. What happens if one of my team resigns through no fault of the business?

    Your business can only receive JobMaker for your eligible employees if the total employee headcount and payroll increases. If the headcount or payroll decreases or remains the same, JobMaker cannot be claimed for that period.

    For example, if you had three staff in September 2020 and hired an additional two employees in late October 2020, your business can claim JobMaker for the two new employees assuming the business and the employer are eligible and payroll has increased compared to the September 2020 quarter. However, in December 2020, one of your original staff members resigns. As a result, your business can only claim JobMaker for one eligible employee in December as your headcount has increased by one, not two, compared to the September 2020 baseline.

    A similar baseline concept applies to payroll. If you employed new eligible employees in October 2020 but your overall payroll remained the same or only increased marginally because the hours of your existing staff reduced when the two new employees were employed, then the JobMaker credit will only be the additional payroll amount. That is, if the JobMaker credit for the two employees for the quarter is $8,960, but payroll compared to the September 2020 quarter only increased by $1,200, then the JobMaker credit you receive would be $1,200. The JobMaker credit cannot exceed the increase in payroll.

    Each month, employers will need to ensure they pass these ‘additionality’ tests before claiming.

    Your headcount and payroll increase is measured on the last day of each reporting period from the date your first new employee started. For example, if your first new employee joined in October 2020, your baseline is set at that point. If a new employee starts in January 2021, your payroll and headcount baseline is measured from the last reporting period, in this case, December 2020 for headcount and the December quarter for payroll.  That is, your baseline commences from the date your new employee starts and then is reassessed each reporting period to ensure there is an increase.

     

    • If I don’t hire new staff until January 2021, can I claim JobMaker for 12 months or only up to 6 October 2021?

    JobMaker is available for 12 months for eligible employees hired from 7 October 2020 until 6 October 2021. If you hire new employees from January 2021, JobMaker is available for 12 months for these employees assuming that the employees and business are eligible and the ‘additionality’ test is passed.

    The baseline for the ‘additionality’ tests – headcount and payroll – starts from the start date of your new employee. The Government has indicated that the baseline for the ‘additionality’ test will be adjusted in the second year of the program to ensure an employer can only receive JobMaker for 12 months for each additional position created.  The detail of exactly how these rules will work has not been released as yet.

     

    • My business did not have employees in September but I hired my first employee in late October. Can I claim the JobMaker credit for them?

    Businesses with no employees on 30 September, cannot claim JobMaker for their first employee. However, JobMaker can be claimed for your second and any subsequent employees that started on or before 6 October 2021.

     

    • Can the business get JobKeeper and JobMaker?

    No. Once your business exits JobKeeper and is no longer receiving JobKeeper payments for any employees or business participants, if eligible, the business could then start to receive JobMaker credits. The business is eligible for the hiring credit in the reporting period following your JobKeeper exit date.

     

    Caution

     The JobMaker credit and the details of how the rules will apply are subject to change. Please do not make decisions based on the JobMaker information available as the final shape of the legislation could change. We will provide a summary of the rules and how you can claim the JobMaker hiring credit as soon as the rules are confirmed.  (Source: Knowledge Shop, Newsletter 10 Oct 2020)

     


    Affinitas Accounting offers all your financial needs under the one roof

    Contact Us If you Need Help

    If you have any questions regarding the JobMaker hiring credits or scheme, you can contact 07 3359 5244 or email

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  • 22Oct2020

    ATO Tax Update: Where are My Tax Cuts?

    ATO Tax Update: Where are My Tax Cuts?

    You’ve heard about them…

    You’ve read about them…

    But when (and how) are you going to receive the personal tax cuts announced in the Federal Budget earlier this month??

    Part of the announcement was that the tax cuts were backdated, for all employees, to 1 July 2020. Does that mean you are due a lump sum catch-up amount? Unfortunately, that is not how it will work in practice.

    The extra dollars you are eligible for (via the tax cut) will be calculated across the entire year – but it will be paid to you in even installments in your weekly/fortnightly or monthly pay.

    The ATO issued updated tax tables on October 13 to allow for these tax changes.

    Employers throughout Australia have until November 16 to implement these new tables in their payroll cycle. Those who use payroll software will be provided with system updates to implement the new tax rates. Most people will see an extra $20 per week in their pay packets starting from mid-November.

    And the final check will be via your annual 2020-21 tax return. In other words, if you have not received the full benefit of the tax cuts before 30 June 2021, you can expect some extra back in your end of the year tax return.

    So, while a lump sum would be nice – as long-term, professional tax accountants our motto is: ANY TAX CUT IS A GOOD TAX CUT!!!

     


    Contact Us If you Need Help

    Employers who are unsure about how to implement the new tax tables can contact 07 3359 5244 or

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  • 28Sep2020

    Beware: New Alternative Tests for JobKeeper 2.0

    jobkeeper 2.0

    Beware of New Alternative Tests for JobKeeper 2.0

     The introduction of JobKeeper 2.0 will be starting from 28 September 2020 onwards. The new levels of payments and how they will be assessed have been widely publicised – you can read more about that here.

    The original JobKeeper legislation included various alternative tests that could be applied to various businesses to help determine whether they pass the decline in the turnover test. If an entity has already passed the original decline in the turnover test for a JobKeeper fortnight before 28 September 2020 then there is no need to apply the original test again.

    The updated alternative tests released by the Commissioner of Taxation are broadly similar to the alternative tests that were released in connection with the original decline in the turnover test. However, there are some key differences.

    ‘Projected’ GST Turnover No Longer Applies

    The new alternative tests use the concept of projected GST turnover. The comparison only uses current GST turnover. In other words, you will only be using actual GST turnover figures with previous periods – and not using any estimates or projections.

    Capital Asset Sales Included in GST turnover

    One of the key differences between the concept of current GST turnover compared with projected GST turnover is that proceeds from the sale of capital assets are included in current GST turnover calculations (unless the sale of the asset is input taxed), while proceeds from the sale of capital assets are ignored when calculating projected GST turnover. This is likely to make it more difficult for entities to access the JobKeeper extension if they have sold plant and equipment, vehicles, property etc during the test period.

    GST Reporting Method Must Be Consistent with Accounting

    The timing of supplies for the JobKeeper decline in turnover tests apply to these new alternative tests as well. This means that if an entity is registered for GST it needs to calculate current GST turnover using the same accounting method that is used for GST reporting purposes (ie, cash or accruals). Entities that are not registered for GST can choose which method, but must use a consistent approach.

    Substantial Increase in Turnover Test Modified

    The “substantial increase in turnover” test has been modified to provide an additional level of flexibility in accessing this test. Under the original version of the rules, you had to start by checking if there was an increase in turnover of at least 50%, 25%, or 12.5% in the 12, 6, or 3 months before the test period. While this is still possible under the updated version of this test, an entity can also access the test if there was an increase in turnover of at least 50%, 25%, or 12.5% in the 12, 6, or 3 months before 1 March 2020.

    Irregular Turnover Test Modified

    A similar modification has been made to the “irregular turnover” test and the wording used for this test has been updated. Under the original version of the rules you started by looking at whether the entity’s lowest turnover quarter was no more than 50% of the highest turnover quarter for the quarters ending in the 12 months immediately before the applicable turnover test period. However, under the updated version you look at whether the entity’s current GST turnover for any consecutive 3-month period before the applicable test period or 1 March 2020 is no more than 50% of the highest of the entity’s current GST turnover for any other of those 3-month periods.

    Changes to Sole Trader or Small Partnership Test

    When applying the test for sole traders or small partnerships where the sole trader or a partner could not work for at least part of the comparison period because of sickness, injury, or leave, the updated version of the test requires you to look at the current GST turnover for the month immediately before the month in which the sole trader or partner did not work. The original version of the test looked at the turnover for the month immediately after the month in which they returned to work.

    Sole Trader Eligible Business Participants

    To be able to claim the Tier 1 JobKeeper 2.0 payment as a sole trader (initially $1200/fortnight),  eligible business participants need to have been actively engaged in the business for 80 hours or more in February and provide a declaration to that effect. All other eligible business participants will qualify for Tier 2 benefits (initially $750/fortnight)


    Contact Us If you Need Help

    We’re here if you need help with JobKeeper 2.0, including support to apply the alternative tests. Contact Affinitas Accounting on 07 3359 5244 or

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  • 21Jul2020

    JobKeeper Scheme Changes

    Government Tightens Purse Strings with JobKeeper 2.0

    jobkeeper payment changes

    JobKeeper payments will be less and harder to qualify for under the next phase of the scheme.

    The current $1500 per fortnight JobKeeper payment will be reduced to between $750 and $1200 per fortnight from 28 September 2020. The lower $750 rate will apply to employees working less than 20 hours a week.

    As expected, Prime Minister Scott Morrison and Federal Treasurer Josh Frydenberg announced the changes on Tuesday, 21 July 2020, which will be the first part of the phasing out of JobKeeper payments by the end of March 2021.

    From 4 January 2021, the rate will again fall to $1000 per fortnight and $650 for people working less than 20 hours a week. The program will run to 28 March 2021, at a further cost of $16 billion, taking the entire JobKeeper program to $86 billion.

     New Eligibility Tests

    New eligibility tests beyond September 2020 are expected to result in numbers of people on JobKeeper reduced from 3.5 million to 1.4 million in the December quarter and 1 million in the March quarter.

    Businesses will still be required to demonstrate the required reduction in turnover –  30 per cent for businesses with turnovers of $1 billion or less, 50 per cent for those with turnover of more than $1 billion, and 15 per cent for ACNC-registered charities.

    However, the government will now require businesses to demonstrate that they have suffered an ongoing significant decline in turnover using actual GST turnover, rather than projected GST turnover.

    From 28 September 2020, businesses will be required to show an actual decline in turnover for the June and September quarters to qualify for JobKeeper 2.0.

    From 4 January 2021, businesses will need to reassess their turnover to demonstrate that they have met the decline in turnover test for each of the June, September and December 2020 quarters.

    Treasurer Frydenberg said employers would need to demonstrate that they had met the relevant decline in turnover in both the June and September quarters to be eligible for the JobKeeeper payment in the December quarter.

    “Employers will need to demonstrate that they have met the relevant decline in each of the previous three quarters ending on 31 December 2020 to remain eligible for the payment in the March quarter 2021,” Mr Frydenberg said.

    While there are currently 3.5 million workers covered under JobKeeper, Treasury expects the new eligibility rules to see the figure fall to just 1.4 million workers for the December 2020 quarter, before dropping to 1 million workers in the March 2021 quarter.

    To find out more, contact or phone 07 3359 5244.

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  • 09Jun2020

    Tax Time 2020 Preparation

    As tax time 2020 gets closer and closer, we wanted to help our clients prepare and ensure they are ready for the important financial period ahead. The COVID-19 pandemic has thrown a curve ball, causing this year’s tax time to be a little more complex than those in the past. However, the Affinitas Accounting team has remained on top of all things tax time 2020 related to make it easier for our clients. Are you looking to prepare for tax time 2020? Find out what steps you can take below!

     

    tax time 2020

    Preparing for Tax Time 2020

    If you’re a business owner, you know how stressful tax time can be. This tax time, there is the added stress and responsibility of the Coronavirus, which has implicated every part of every Australian’s daily life – business owner or not. In order to help our clients prepare for tax time 2020, we’ve put together a list of handy hints and helpful tips to set you on the right path. Business owners and individuals looking for help with their tax time 2020 tax returns can also get in touch with any member from our helpful team for faster assistance.

     

    Want help preparing for tax time 2020? Get in touch!

    Call or email us now!

     


    Handy Hints for Tax Time 2020 Preparation

    If you are preparing for tax time 2020, it’s best to start well before 30 June 2020. This will give you enough time to gather what you need for your tax return and prevent any nasty surprises once your tax accountant is done with your yearly results. This year, the onset of COVID-19 has made tax time considerably more stressful and given business owners and individuals alike a lot to think about and prepare for. With this in mind, we’ve put together a list of things to start thinking about and getting prepared to be on the front-foot for tax time 2020.

     

    Covid-19 Claims

    1. If you have worked from home due to Covid-19, the government has announced that it will let taxpayers claim 80c per hour to cover costs of home office expenses, based on documented records of the hours you worked from home. However, if you do not think that this will adequately compensate for what it has actually cost you to work from home, you can choose to assess via a one-month diary establishing your percentage of expenses – mobile phone, home computers, printers, internet and any other costs related to working from home.

     

    Individuals 

    1. Account for all your sources of income during the year, particularly if your have had several jobs or received Centrelink benefits for part of the year.
    2. Make sure you have receipts for all your work related deductions. Some expenses like union fees can be taken straight from your annual PAYG summary, but most require their own receipt.
    3. If you have made tax deductible donations during the year, you will need receipts for these.
    4. If you use your car for work make sure you have a calculation of how many km you have travelled. If you require a log book, make sure that it is up to date.
    5. Any other work related travel expenses will require diarised notes of where and when you travelled, the purpose of the travel and receipts for fares, accommodation and any other expenses.
    6. Did you purchase any uniform or protective clothing for work purposes?
    7. Did you undertake any study that was directly related to your work activities?
    8. If you studied or worked from home, how many hours per week?
    9. If you were required to use your personal internet or mobile phone, have you made an effort to establish the percentage usage for work?
    10. You will need details of any earnings from bank interest, share dividends and managed funds.
    11. If you sold any investments you will need both purchase and sales details if there is a capital gains calculation to be completed.
    12. Have you checked your insurances to see if they include tax deductible income protection premiums?

     

    Small Business Owners

    1. Many of the hints for individuals are transferrable to small business owners.
    2. Have you reviewed your debtors to see if there are any bad debts to be written off?
    3. Do you have any obsolete stock or equipment that can be written off prior to 30 June?
    4. Are all your staff obligations for PAYG Tax and Superannuation up to date?
    5. Have you disposed of any capital equipment or bought any new equipment?
    6. Is any of the new equipment worth less than $150,000 and available for immediate write-off?
    7. Have you sat down and completed a tax planning exercise to in the past quarter?

     

    Investment Property Owners

    1. Ask for an annual statement of income and expenses from your rental property manager
    2. Account for all the expenses paid directly by you in relation to the property – usually rates, water, body corp, insurance and some repairs.
    3. Have you checked whether you have a current depreciation schedule for the property.

     

    tax time 2020

     

    Virtual Visits for Tax Time 2020

    Covid-19 is about to change the way many people deal with their annual tax returns. Online tax preparation is nothing new, but tax season 2020 is going to put more emphasis on professional accountants to offer flexible and virtual alternatives to face-to-face appointments.

    Many taxpayers traditionally visit their accountant for an annual chat, and we look forward to this face-to-face connection at our Aspley office. But this year, visiting your tax accountants office is a risk that should be avoided by all tax professionals and their clients. Covid-19 may be contained – but it has not been cured, nor has a vaccine been developed. We don’t want to put our clients or our team at risk, if that risk can be easily avoided.

    The Affinitas Accounting team will be engaging with clients via email, phone, Zoom or any other form of communication that does not involve face-to-face interaction. Affinitas Accounting has already spent many years in the online world and have prepared thousands of returns via post and/or email. This will make the transition easy for those new to such a system.

    Via the tax agents portal, we already have access to much of our clients’ current and historical tax information. We have learnt how to use technology to its best advantage – including sharing our screens with clients to better explain various issues. And we are working on introducing paperless processes to allow clients to check and sign their returns – then ultimately receive their notices of assessment. Even if you have multiple years’ worth of tax returns to lodge, or a business or investment property tax return, these can be done via a virtual initial appointment and online process.

    We believe many people are going to discover just how easy and convenient it is to virtually visit their accountants in 2020 – and will probably make it an annual event.

     

    Need Help for Tax Time 2020?

    The Affinitas Accounting team is dedicated to helping you manage the upcoming tax season and make the process as smooth and simple as possible. To this end, we are extending our operating hours during tax time, from July to October, to help clients or schedule virtual appointments. If you need to speak to one of our friendly tax agents, get in touch!

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  • 28May2020

    Understanding the ATO Instant Asset Write-Off

    The ATO’s instant asset write-off is another form of financial relief the ATO and the Federal Government has included and expanded on in the COVID-19 relief schemes. First developed in 2015 as a way of enabling small businesses to claim the depreciation amount of a work-related purchase like a car or a computer in one hit, rather than gradually over a number of years. Recently, the ATO expanded on the criteria needed for this asset write-off. If you are a business owner or sole trader interested in the instant asset write-off, read on to find out how the scheme works. 

     

    instant asset write-off

     

    What is the ATO Instant Asset Write-Off?

    The instant asset write-off scheme was initially introduced in 2015 and was largely aimed at helping small businesses claim the depreciation amount of company assets immediately, rather than over many years. The onset of the COVID-19 pandemic has seen the government and the ATO introduce a number of financial relief schemes aimed at helping businesses survive this troubling time, and recently, they adjusted the criteria for the instant asset write-off scheme to include larger businesses. 

    As part of the ATO and the government’s economic stimulus measures, the asset limit for the instant asset write-off scheme has increased from $30,000 to $150,000. The pool of eligible businesses has also been amended from those with an aggregated turnover of less than $50 million, to an aggregated turnover of less than $500 million. These significant changes will see the instant asset write-off scheme benefit many more businesses than before. 

    This means that a greater number of businesses can purchase a piece of equipment or a company vehicle and receive an immediate deduction of up to $150,000. However, the relief scheme is not without strict regulations that must be adhered to if businesses are to utilise this financial relief benefit to its maximum, and there is some confusion in particular around how the scheme works for company-owned and bought vehicles. 

     

    What is the ATO Instant Asset Write-Off Limit on Cars?

    While the instant asset write-off limit has increased from $30,000 to $150,000, a ‘car cost limit’ has been implemented for businesses wanting to purchase a vehicle at this time. This will define the amount you can actually claim on a newly purchased vehicle. 

    Specifically, cars that are “designed to carry a load less than one tonne and fewer than nine passengers,” have a total claim limit of $57,581 and anything beyond that point “cannot be claimed under any other depreciation rules,” the ATO explains. 

    However, the full purchase price of a vehicle which can carry more than one tonne/more than nine passengers can be claimed back. 

    Cars that cost $150,000 or more, as well as farm trucks and tractors, are ineligible for the instant asset write-off scheme.

     

    Does the Car Threshold Include LCT, On-Road Costs, Insurance and Registration?

    All costs but insurance and registration are included in the car threshold amount – this includes stamp duty, any accessories, luxury car tax, on-road costs and delivery. 

    Insurance and registration are recurring business costs, which are immediately deductible under the general deduction provision and thus not included in the cost of the car. 

     

    Are Lease and Financed Cars Eligible?

    A hire purchase lease will be eligible for the instant asset write-off scheme, but operating and finance leases will not qualify. 

     

    Criteria for the ATO Instant Asset Write-Off: Cars

    1. Must be a business asset. Any old asset will not comply. Whether it’s a new or second hand asset, to get the 100% deduction the asset must be 100% employed in your business. Assets that are part business and part private will require a log book to establish a business use percentage.
    2. Car limits may still apply. A passenger vehicle designed to carry a load of less than 1 tonne and fewer than 9 passengers is limited to a maximum write-off of $57,581 – even if it 100% used in business. Vehicles that are greater than one tonne or carry 9 passengers or more may be eligible for a higher write-off amount.
    3. You must own and be using the asset by 30 June. The asset must be owned by the business and be in use (or able to be used) by the business by 30 June to claim the write-off.
    4. Employees are not eligible for the instant asset write-off scheme, but they may be able to claim back some of their own car usage.

    Many car dealerships are calling for the extension of the scheme to allow more businesses to take advantage of it. 

     

    Choose Affinitas Accounting

    The ATO’s instant asset write-off can provide a major financial aid to many businesses. If you think you are eligible and want to apply, please feel free to contact one of our friendly business accountants for swift, prompt assistance. 

     

    Contact Us Now

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