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Time running out to register for the JobMaker Hiring Credit

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

Eligible businesses can receive up to:

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

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

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Travel allowances and ‘LAFHAs’

The ATO has released a Ruling explaining:

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

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

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Div.293 concessional contribution assessments have been issued

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

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

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

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ATO warns property investors about common tax traps

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

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

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

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

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

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

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

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Expansion of support for SMEs to access funding

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

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

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

Other key features include:

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

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

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Extending administrative relief for companies to use technology

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

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

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

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New FBT retraining and reskilling exemption available

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Maximum contributions base for super guarantee

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

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

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

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

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

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