Tag: Legislation Update

Coronavirus stimulus package worth $84 billion passed without objection by Parliament

23/03/20 The Federal Parliament has rushed through $84 billion in financial support for workers, students and businesses affected by the coronavirus outbreak, before wrapping up for a five-month-long break. 

A bare minimum of MPs and Senators came to Canberra for a single day to vote on legislation for the Government’s two rounds of stimulus measures. 

The bills were passed late Monday night without objection in both the House of Representatives and the Senate after some amendments were made. 

“The measures that have been passed by the Parliament today represent the most significant support for the Australian economy and community since the war,” said Treasurer Josh Frydenberg. 

The legislation supports both the first coronavirus economic stimulus package, worth $17.6 billion, and the $66 billion in direct financial support announced in the second package on the weekend

It also includes a raft of other measures to support the economy more broadly, as well as giving the Government flexibility to respond to changing circumstances without needing further legislation. 

Under pressure from Labor and the Greens, the Coalition amended its own legislation to give the social services minister the power to make changes to the stimulus payments, including rates, means testing, eligibility and residency requirements. 

The Government will immediately use those powers to extend the $550 coronavirus supplement to students receiving Youth Allowance, Austudy and Abstudy payments. 

Other than the income test, “there are really very few other requirements” students will have to meet to get support, said Social Services Minister Anne Ruston. 

The Government estimates up to 236,000 students could benefit from the change. 

https://www.abc.net.au/news/2020-03-23/coronavirus-economic-stimulus-passes-parliament/12080388

Key Points
Changes to the Government’s stimulus package include:

Extending the $550 per fornight coronavirus payment to students
New powers to increase or expand payments as needed, including for pensioners, those on disability support payments and carers, jobseekers and people who fall through the cracks
Making it easier for people who lose their job to get support by relaxing the test on their partner’s income

Superannuation Amnesty – Now Law

This week the Parliament passed legislation to enact the Superannuation Amnesty. 

The Amnesty is designed to encourage employers to come forward and disclose past quarters (from 1 July 1992 to 24 May 2018) where they have not paid Superannuation Guarantee (SG) to employees in full (i.e. an SG shortfall still exists). 

The Amnesty period in which employers can come forward is from 24 May 2018 and ends six months after the date the legislation receives Royal Assent (therefore until at least late August 2020). 

Under the Amnesty, the employer in coming forward will enjoy the following benefits: 

  • Tax deductions for payments of the SG Charge (these would otherwise not be tax deductible) 
  • No administrative penalty of $20 per employee 
  • No Part 7 penalties (which could otherwise be 200% of the SG Charge owing). 

It is anticipated more than 7,000 additional employers will come forward now that the legislation has passed. 

Given that SG non-compliance can now be more easily detected by the ATO, non-complying employers should strongly consider their options. 

Employers who do wish to take advantage of the Amnesty should contact the ATO. 

 

New GST Law for Directors!

Last week the Government passed legislation which may make company directors personally liable for any unpaid/overdue GST of their business. 

21 Day GST Director Penalty Notices may be issued by the ATO to a director if their company fails to pay GST but lodges the relevant activity statements within three months of the due dates. To avoid personally liability, within the 21 day period of the notice being issued, directors can: 

  • Pay the GST from the company 
  • Place the company into liquidation or voluntary administration. 

Alternatively, the ATO can issue Lockdown GST Director Penalty Notices if a company fails to pay GST and also fails to lodge activity statements within three months of being due. In this case, personal liability cannot be avoided through bankruptcy, liquidation or voluntary administration. 

The take-home message is to keep your GST lodgements and payments up-to-date, moving forward. 

The new law applies to quarters commencing 1 April 2020, and is not retrospective. 

The New Importance of Tax Compliance

New legislation could see businesses lose tax deductions for payments to employees and contractors. This article details this new law, and provides a checklist of how to be compliant…

BASICS

In March, legislation was passed which will deny an income tax deduction for certain payments if the associated withholding obligations are not complied with by the business making the payment. This new law commences on 1 July 2019, and provides a very strong incentive for employers to comply with their withholding obligations. Under current law, employers are entitled to a deduction for actually having made a payment to an employee or contractor – irrespective of whether they have correctly met the withholding requirements in respect of these payments. This is, the payment itself is sufficient to claim a deduction.

NEW RULES

From 1 July 2019, a deduction will no longer be allowed in relation to the following payments:

  • Of salary, wages, commissions, bonuses, or allowances to an employee
  • Of directors’ fees
  • To a religious practitioner
  • Under a labour-hire arrangement
  • For a supply of services – excluding supplies of goods and supplies of real properyt – where the recipient of the payment has not quoted their Australian Business Number (ABN)

….if withholding applied to the payment, and the payer was required to withhold an amount from the payment and did not withhold an amount OR did not notify the ATO when required. To be clear, deductions will only be denied where no amount has been withheld at all from the payment that attracts withholding or no notification is made to the ATO. Withholding an incorrect amount (such as from an allowance etc.) or reporting the withholding incorrectly will not result in a deduction being denied.

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Update – Instant Asset Write-off Changes now Legislated

In the Budget on Tuesday, the Government announced that it would increase the instant asset write-off threshold to $30,000 and extend it to medium sized businesses (those with an aggregated annual turnover of less than $50 million).

This, and the earlier change announced in January (to extend the write-off threshold to $25,000) passed both Houses of Parliament yesterday and is now law (subject to the formality of Royal Assent).

The amendments mean there will be three tiers in the 2018/2019 financial year:

1.     $20,000 threshold for depreciable assets that are acquired and installed ready for use before 29 January 2019. Only available for businesses with an aggregated turnover less than $10 million.

2.     $25,000 threshold for assets first used or installed between 29 January 2019 and 2 April 2019. Only available for businesses with an aggregated turnover less than $10 million.

3.     $30,000 threshold for assets first used and installed after the 2 April budget announcement and before 1 July 2020. Available for businesses with a turnover of less than $50 million.

Going forward, all businesses with a turnover under $50 million are now eligible for a write-off of $30,000. This will be available under 30 June 2020.

To get the taxation benefit of this in the current financial year, you will need to have the asset installed ready for use on or before 30 June 2019.

Legislation Update 26/02/2019

The first sitting of Parliament for 2019 wrapped up last week. While legislation to extend the Single Touch Payroll reporting regime to all employers passed into law (just awaiting Royal Assent), there are a couple of other measures that remain unlegislated which could impact your business. With the full Parliament only expected to sit for three more days (April 2 – 4) until an Election is called, there are now serious doubts surrounding whether these measures will pass into law. In view of this, we put forward the following suggested approach in the meantime: 

  1. Superannuation Amnesty 

The legislation to enact this measure is still before the Senate. To recap, the Superannuation Guarantee Amnesty was to be available for the 12-month period from 24 May 2018 to 23 May 2019. To get the benefits of the Amnesty (set out below) employers must during this 12-month period voluntarily disclose any Superannuation Guarantee underpayments that exist in the past (going back to when Superannuation Guarantee commenced in 1992). 

For an employer, the tax benefits of the Amnesty are: 

* The administration component of the Superannuation Guarantee Charge (SGG) is not payable (this is a $20 per employee, per quarter, for whom there is an SG Shortfall) 

*  Part 7 penalties will not be applied. This can be up to 200% of the SG Charge that is payable (note that SG Charge includes the SG Shortfall that you owe to employees) 

* All catch-up payments that you make during the 12-month Amnesty period will be tax deductible. 

By contrast, under the current law, when superannuation has been underpaid or paid late Superannuation Guarantee Charge that must paid to the ATO is not deductible, and late contributions that an employer has made to an employee’s superannuation and has elected to offset against their SG Charge liability are also not deductible. 

If an employer is contemplating disclosing past superannuation shortfalls specifically to get the benefits of the Amnesty (including claiming a deduction for your late contributions) then it may be prudent to hold off until such time that the Amnesty actually becomes law (if at all). We will keep you apprised of the passage of the legislation through Parliament. However, with only a few sitting days remaining for this Parliament, and with the Opposition opposed to this measure, there are serious doubts about it becoming law. 

Irrespective of the Amnesty however, all employers should consider coming forward to disclose and pay past shortfalls to get their Superannuation Guarantee affairs in order. The Government is committing more resources to this area – including requiring Superannuation Funds to report more regularly to the ATO (at least once each month) – therefore non-complying employers may be more easily detected going forward. 

  1. Enhancing the Instant Asset Write-Off 

Legislation to expand and extend the Small Business Instant Asset Write-Off is still before the House of Representatives. This Bill seeks to extend the write-off by 12 months until 30 June 2020 (currently set to expire on 30 June 2019) and increase the threshold by $5,000 to $25,000; with the increase backdated to 29 January 2019. If passed into law, this would mean that there would be two thresholds for 2018/2019 as follows: 

* $20,000 (for assets installed ready for use between 1 July 2018 and 28 January 2019), and 

* $25,000 (for assets installed ready for use between 29 January 2019 and 30 June 2019. 

Irrespective of the whether the legislation passes into law, it is important to have perspective. You are only getting back the tax rate on the asset, not the full value of the asset. This is the same as the old law where the write-off threshold was $1,000  You don’t get any extra cash than you would otherwise have received under the old rules – you simply get it sooner. Consequently, you should not let tax distort or blur your commercial instincts – as you don’t get any extra cash than you would otherwise have under the old rules, you should continue to only buy assets that fit within your business plan.