NSW Budget 2020-21

Tax Highlights
The 2020-2021 Budget was described as responding to the urgent needs of NSW now, whilst also looking beyond the current crisis and into the future.

The key factors for NSW businesses are as follows:

  • Changes to payroll tax rates and thresholds
  • $1,500 digital voucher
  • Commercial rent relief
  • Jobs Plus program
  • Tax reforms

Payroll tax changes
The payroll tax rate will be reduced from 5.45% to 4.85% for the next two years, in addition, the payroll tax threshold will increase from $1m to $1.2m from 1 July 2020.

These changes will take many small and medium businesses out of the payroll tax system and reduce the payroll tax burden on those businesses that continue to be subject to payroll tax.

Please do not hesitate to contact your client manager to conduct a review of your payroll tax circumstances, as this is a regular area of NSW revenue reviews.

$1,500 digital voucher
Small and medium size businesses, which do not pay payroll tax, will be provided with a $1,500 digital voucher that can be applied towards the cost of government fees and charges.

Commercial Rent Relief
The commercial rent relief scheme has been extended until 28 March 2021. The extension will apply to retail tenants with annual turnover less then $50mil that has a downturn of turnover greater then 30%.

Jobs Plus Program
The Jobs Plus Program aims to create or support 25,000 jobs between 15 December 2020 and 30 June 2022. Businesses that create (net) at least 30 new jobs in NSW will be eligible for payroll tax relief for up to a four year period.

Tax reforms
There will also be a review into reforming the property tax system, including stamp duty and land tax.

Stay tuned for further updates as they arise!

Please contact your client manager directly by phone on (02) 8543 6800 or email for more information.

Tax deductions for investing in your business

Stimulating investment 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.

Instant asset write-off thresholdsAggregated turnover under $10mAggregated turnover under $50mAggregated turnover under $500mAggregated 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 2022unlimitedunlimitedunlimitedUnlimited

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 instalments 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.

Please contact your client manager directly by phone on (02) 8543 6800 or email for more information.

JobMaker Hiring Credits: What we know so far

We’ve had quite a few questions about 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.

How can we access JobMaker?

There are three tests for JobMaker:

Employer eligibilityHas an ABNUp to date with tax lodgementsRegistered for PAYGReporting through single touch payrollKeeps adequate records of the paid hours worked by the employee they are claiming the credit forAnother employer is not claiming JobMaker for the same employee
  
Employee eligibilityReceived the JobSeeker Payment, Youth Allowance (Other) or Parenting Payment for at least one month within the three months before they were hiredBetween 16 and 35 years of age at the time their employment startedWorked 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 periodStarted work between 7 October 2020 and 6 October 2021The first year of employment with the employerThe 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.

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

Your business can only receive JobMaker for your eligible employees if 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 at 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.

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.

Please contact your client manager directly by phone on (02) 8543 6800 or email for more information.

Spring 2020 Newsletter – Profit Matters

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Business Matters Newsletter – Q4 2020

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BUSINESSES GIVEN A MONTH TO IMPLEMENT UPDATED ATO TAX TABLES

The changes to personal income tax thresholds identified in the Federal Budget have been passed by Parliament and the ATO has subsequently updated it’s tax tables and withholding schedules.

The changes will apply to payments made on and from 13 October this year, with employers now given until mid-November to implement the adjustments.

“As the changes to withholding are made part way through the income year, employers and other payers who are unable to immediately implement these changes into their payroll will have until 16 November 2020 to do so,” the ATO said.

The tax changes have been backdated to 1 July this year however, the tax table changes do not take into account any over-withheld amounts that individual taxpayers have paid since the start of the financial year.

This amount will be subsequently be incorporated into the tax assessment of an individual at the end of the 30 June 2021 income tax year.

View the updated tax tables here.

Please contact your client manager directly by phone on (02) 8543 6800 or email for more information.

Budget 2020-21 Update

Road to Recovery?

The 2020-21 Federal Budget is a road to recovery paved with cash.
 
Key initiatives include:
  • Personal income tax cuts from 1 July 2020
  • A $4 billion ‘JobMaker’ Hiring Credit to encourage businesses to take on additional employees aged 16 to 35 years old
  • $110 billion in infrastructure investment over 10 years
  • Immediate deductions for business investment in capital assets
  • Changes to how companies can manage losses

Access to generous tax concessions for a wider range of businesses

 
Please contact your client manager directly by phone on (02) 8543 6800 or email for more information.

Superannuation Guarantee Amnesty Ends 7 September 2020

Do you need to apply for the superannuation guarantee amnesty? If yes, you need to act now.
 
If you have unpaid super to your employees, you must apply for the amnesty no later than 7 September 2020 to avoid incurring penalties or paying administration fees.
 
To be eligible for the amnesty you will need to meet the following criteria
 
Have unpaid super between 1 July 1992 to 31 March 2018.
Have not been informed the ATO is examining or intends to examine your SG obligation for the above period.
You have not already advised the ATO of the shortfall.
You must lodge your application no later than 7 September 2020
 
You will be able to claim a tax deduction for the super amnesty amounts paid to the ATO by 7 September 2020.
 
Click Here for Further Information
 
https://www.ato.gov.au/business/super-for-employers/superannuation-guarantee-amnesty/#Superguaranteeamnesty
Please contact our office urgently if you require assistance on (02) 8543 6800.

JobKeeper 3.0

JOBKEEPER 3.0

The Treasurer has announced further changes to JobKeeper, following on from our Newsletter ‘JobKeeper 2.0’ on 23 July 2020.

SUMMARY OF KEY POINTS

1. The relevant date of employment will move from 1 March 2020 to 1 July 2020, which increases the number of employees able to access JobKeeper.

2. JobKeeper payments from 28 September 2020 – 3 January 2021:
Eligibility will be dependent on a 30% reduction in actual turnover between 1 July 2020 and 30 September 2020.
Note: This is for business with an aggregated turnover of $1billion or less. See link below for details on larger businesses and not for profits.

3. JobKeeper payments from 4 January 2021 to 28 March 2021:
Eligibility will be dependant on a 30% reduction in actual turnover between 1 October 2020 to 31 December 2020.

4. Payment rates reduced to $1,200 per fortnight from 28 September 2020 and $1,000 per fortnight from 4 January 2021. Note that there are further reductions in payments for employees working less than 20 hours per week.

For further details please refer to the Treasury Fact Sheet Here.
Did you find this newsletter useful? If yes, please feel free to forward it onto a business colleague or friend.

If you have any concerns regarding your circumstances please contact your client manager on (02) 8543 6800 or email them directly.

Business Matters Newsletter – Q3 2020

Click here to download the Business Matters Newsletter Issue Q3 2020