STP concession changes in effect July 1
JobKeeper scheme comes to an end
STP Phase 2 expands data collection
On The Money - Episode 46
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The company tax rate for base rate entities will reduce to 26% from 27.5% in the 2020–21 income year, and then reduce again to 25% in the 2021–22 income year. A base rate entity is a company that both has an aggregated turnover less than the $50 million aggregated turnover threshold, and 80% or less of their assessable income is base rate entity passive income – this replaces the requirement to be carrying on as a business. Base rate entity passive income is corporate distributions & franking credits, royalties and rent, some interest income, gains on qualifying securities, net capital gain, and an amount included in the assessable income of a partner in a partnership or a beneficiary of a trust. In 2017-18, companies with an aggregated turnover threshold of $25 million and under paid a tax rate of 27.5%. For the 2018-19 and 2019-20 financial years, the threshold was increased to $50 million. In 2020-21, the tax rate will lower to 26% and in 2021-22, it will be lowered to 25%.
Lodge and pay quarter 3, 2020–21 PAYG instalment activity statement for head companies of consolidated groups.
Lodge and pay March 2021 monthly business activity statement.
Lodge and pay quarter 3, 2020–21 activity statement if electing to receive and lodge by paper and not an active STP reporter.
Pay quarter 3, 2020–21 instalment notice (form R, S or T). Lodge the notice only if you are varying the instalment amount.
Make super guarantee contributions for quarter 3, 2020–21 to the funds by this date.
Employers who do not pay minimum super contributions for quarter 3 by this date must pay the super guarantee charge and lodge a Superannuation guarantee charge statement – quarterly (NAT 9599) by 28 May 2021.
Lodge TFN report for closely held trusts if any beneficiary quoted their TFN to a trustee in quarter 3, 2020–21.
Lodge lost members report for the period 1 July 2020 to 31 December 2020.
Lodge 2020 tax returns for all entities that did not have to lodge earlier (including all remaining consolidated groups), and are not eligible for the 5 June concession.
Lodge and pay April 2021 monthly business activity statement.
Final date to add new FBT clients to your client list to ensure they receive the lodgment and payment concessions for their fringe benefits tax returns.
Lodge and pay Fringe benefits tax annual return if lodging by paper.
Lodge and pay eligible quarter 3, 2020–21 activity statements if you or your client have elected to receive and lodge electronically.
Lodge and pay quarter 3, 2020–21 Superannuation guarantee charge statement - quarterly (NAT 9599) if the employer did not pay enough contributions on time.
Employers who lodge a Superannuation guarantee charge statement - quarterly can choose to offset contributions they paid late to a fund against their super guarantee charge for the quarter. They still have to pay the remaining super guarantee charge.
The fringe benefits tax, (FBT) year ended on March 31. Organisations that provided benefits to employees in the past 12 months will need to understand which benefits attract FBT, and subsequently lodge an FBT return by May 21, 2021. This date may differ if you lodge through a tax agent. Fringe benefits include the private use of work cars, reimbursement of employees' expenses, including educational fees, and salary sacrifice arrangements. FBT does not usually apply to the following benefits: items provided to employees to enable them to work from home – for example, a laptop or portable device; emergency accommodation, food and transport; or emergency health care. The minor benefits exemption may also apply for minor, infrequent and irregular benefits under $300. Visit ato.gov.au for more fringe benefit tax information.
Employers should be reporting through Single Touch Payroll (STP) unless they only have closely-held payees, or they’re covered by a deferral or exemption. There are changes to STP reporting for small employers with closely held payees and quarterly reporting for micro-employers beginning July 1, 2021. This may affect how employers report to the ATO. Employers with closely held payees must report their closely held payees through STP. You can choose to report these payees each pay day, monthly or quarterly. Micro employers reporting quarterly will need to meet certain eligibility requirements. To report quarterly, micro employers must apply for a concession through the online deferral tool beginning July 1. Employers who have not started reporting through STP and do not have a deferral or exemption must start reporting now.
The Reserve Bank of Australia (RBA) cut official rates to a record low of 0.1% last year. It is also engaged in a $200 billion quantitative easing program, buying federal and state government debt, aiming to keep yields on these bonds at record lows. The Reserve Bank intends to keep interest rates low until 2024 while using tighter lending standards to prevent a surge in house prices. Reserve Bank governor Philip Lowe said interest rates would only rise when wages were growing fast enough to lift inflation. Global inflation expectations, and a faster-growing Australian economy, prompted market speculation that the RBA may lift rates next year or early 2023. However, wages growth, currently at 1.4%, would have to lift above 3% to get inflation back to the bank’s target of between 2 and 3%, Lowe said. The last time wages growth was that strong was in 2013. Unemployment would have to be closer to 4%, well down from its 5.8% level at present, while under-employment would also have to fall. Banking regulators are watching the housing market carefully. Action such as tighter lending standards could be taken to cool the market. Market experts speculate the 0.1% rate could remain until 2024.
The difference between a contractor and an employee is not always clear cut. The courts and tax office take a number of factors into account when determining the actual status, such as hours worked, superannuation, method of payment and leave to name a few. Any written agreement stating the nature of the relationship is certainly relevant, but it’s not conclusive, and should not be relied solely upon. Both employers and contractors need to be fully aware of their situation as serious penalties are involved with sham contracting arrangements. Find out more here.
A taxpayer company has been unsuccessful before the Administrative Appeals Tribunal (AAT) in a claim to secure the capital gains tax (CGT) concessions for small businesses.
In this case, the AAT affirmed the Commissioner's decision that the taxpayer did not satisfy the "maximum net asset value" test for the purposes of qualifying for the concessions. The AAT found that the individual who controlled the company could not exclude from the test his interest in a Queensland property, which he claimed was used for "personal use and enjoyment".
TIP: The small business CGT concessions are intended to offer small business taxpayers a range of unique tax concessions. However, despite being targeted towards taxpayers who typically have less complicated affairs, the rules are riddled with complexities that may not appear obvious at first glance.
Each concession has its own particular rules. However, there are two basic conditions for the relief - either the taxpayer is a small business entity (SBE) or is a partner of a partnership that is an SBE, or the taxpayer satisfies the maximum net asset value test. If you have any questions, please contact our office.
The AAT has recently dismissed an appeal by a florist against the Tax Commissioner's decision to issue income tax and GST assessments following an ATO audit of her florist business.
The taxpayer had reported that the cost of goods sold in her business represented 83% of her reported business income. The ATO had selected the taxpayer for audit because this figure was outside what it considered to be the industry benchmark range of between 44% and 54%.
In this case, the taxpayer was unable, due to a lack of evidence, to prove to the AAT that the assessments were excessive.
TIP: The Tax Commissioner has warned that businesses operating outside the relevant benchmarks could be subject to ATO review and/or audit, and where the businesses do not have adequate records to substantiate their performance, the ATO will make a default assessment using the appropriate small business benchmark.
Businesses may want to consider reviewing their record-keeping practices and assess whether they are at risk of an audit. Please contact our office for further information.
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Disclaimer: This is not advice. Information provided in this bulletin may be in the form of summaries and generalisations - it may omit detail that could be significant in a particular context or to your personal circumstances. You should not act solely on the basis of material contained in this bulletin. Before you start any transactions, you should obtain appropriate professional advice relevant to your particular circumstances. Links to third-party websites are inserted for your convenience, but do not constitute endorsement of material at those sites or any associated product or service. Changes in legislation may occur quickly and we therefore recommend that our formal advice be sought before acting in any of the areas. The information in this bulletin is provided on the basis that all persons accessing the bulletin undertake responsibility for assessing the relevance and accuracy of its content.
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