Year: 2020

5. Other budget announcements 5.1 Removing CGT for ‘granny flat arrangements A targeted CGT exemption will apply from 1 July 2021 (subject to the passing of legislation), for ‘granny flat arrangements’. Broadly, these involve older Australians or people with disabilities transferring their home or the proceeds from the sale of their home (and/or other assets) to their adult children or other trusted persons in return for the promise of ongoing housing and care. Under this exemption, CGT will not apply to the creation, variation or termination of a formal written granny flat arrangement providing accommodation for older Australians or people …

4. FBT Changes 4.2 Reducing the compliance burden of FBT record keeping The Government will provide the ATO with the power to allow employers to rely on existing corporate records, rather than employee declarations and other prescribed records, to finalise their FBT returns. The measure will have effect from the start of the first FBT year (i.e., on 1 April) after the date of Royal Assent of the relevant legislation. Currently, the FBT legislation prescribes the form that certain records must take, and forces employers (and in some cases employees) to create additional records in order to comply with FBT …

4. FBT changes 4.1 FBT exemption for retraining and reskilling employees From 2 October 2020, the Government will introduce an FBT exemption for retraining and reskilling benefits provided by an employer to redundant, or soon to be redundant, employees, where the benefits may not be related to their current employment (e.g., where an employer retrains a sales assistant in web design in order to redeploy them to an online marketing role in the business). This measure is designed to encourage employers to assist redundant workers to transition to new employment opportunities within or outside an employer’s business (e.g., to prepare …

3. Changes affecting companies 3.3 Meetings conducted via virtual attendance In order to reduce regulatory barriers, the Government has announced it will undertake public consultation on making permanent changes to the Corporations Act 2001. These changes would allow companies to call and conduct meetings electronically (with a quorum achievable through virtual attendance of shareholders and officers) and also to provide certainty that company officers can electronically execute a document. …

3. Changes affecting companies 3.2 Clarifying the corporate residency test The corporate residency rules are fundamental to determining a company’s Australian income tax liability. The Government will amend the law to provide that a company that is incorporated offshore will be treated as an Australian tax resident if it has a ‘significant economic connection to Australia’. This test will be satisfied where both the company’s core commercial activities are undertaken in Australia and its central management and control is in Australia. This change will ensure the principles governing the residency of foreign incorporated companies will reflect the position prior to …

3. Changes affecting companies 3.1 Temporary loss carry back for eligible companies The Government has announced that it will introduce measures to allow companies with a turnover of less than $5 billion to carry back losses from the 2020, 2021 or 2022 income years to offset previously taxed profits made in or after the 2019 income year. This will allow such companies to generate a refundable tax offset in the year in which the loss is made. The tax refund is limited by requiring that the amount carried back is not more than the earlier taxed profits and that the …

2. Changes affecting business tax payers 2.4 Uncapped immediate write-off for depreciable assets The Government has announced it will introduce the following changes to the Capital Allowance provisions: (a) Businesses with an aggregated annual turnover of less than $5 billion will be able to claim an immediate deduction (what the Budget terms as ‘full expensing’) for the full (uncapped) cost of an eligible depreciable asset, in the year the asset is first used or is installed ready for use, where the following requirements are satisfied: The asset was acquired from 7:30pm AEDT on 6 October 2020 (i.e., Budget night). The …

2. Changes affecting business tax payers 2.3 Tax-free business support grants The Government has announced that the Victorian Government’s Business Support Grants for small and medium businesses, as announced on 13 September 2020, are non-assessable, nonexempt income for tax purposes. The Government may extend this arrangement to similar future grants from all States and Territories on an application basis. Eligibility for this treatment will be limited to grants announced on or after 13 September 2020 and for payments made between 13 September 2020 and 30 June 2021   …

2. Changes affecting business tax payers 2.2 JobMaker Hiring Credit 2.2.2 Who is an eligible employer? An employer is able to access the JobMaker Hiring Credit if the employer: has an ABN; is up to date with tax lodgement obligations; is registered for Pay As You Go withholding; is reporting through Single Touch Payroll; is claiming in respect of an ‘eligible employee’; has kept adequate records of the paid hours worked by the employee they are claiming the hiring credit in respect of; and is able to demonstrate that the credit is claimed in respect of an additional job that …

2. Changes affecting business tax payers 2.2 JobMaker Hiring Credit 2.2.1 Who is an eligible employee? Employees may be employed on a permanent, casual or fixed term basis. To be an ‘eligible employee’, the employee must: be aged (i.e., at the time their employment started) either: 16 to 29 years old, to attract the payment of $200 per week; or 0 to 35 years old to attract the payment of $100 per week; have worked at least 20 paid hours per week on average for the full weeks they were employed over the reporting period; have commenced their employment during …