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Crypto Taxes in Australia: A Guide for Investors and Traders

Crypto Taxes in Australia: A Guide for Investors and Traders

The Australian Tax Office (ATO) is aware of an increasing number of Australians buying and selling cryptocurrency over the past few years, the most popular types are Bitcon (BTC), Ethereum (ETH), Tether (USDT), etc. However, not every one of them are aware of their tax obligations. It is essential for investors and traders to understand the tax implications associated with these digital assets. ATO has provided comprehensive guidelines on how crypto assets are treated for tax purposes. To help you along the way, this article will outline the implication of tax on crypto assets in two aspects, which is Capital Gains Tax (CGT) for crypto investors and income tax for crypto traders.

Investor or Trader?

It is important to identify whether you are a crypto investor or crypto trader to determine whether your activities will be taxed under CGT rules or income tax rules. The most common use of cryptocurrency is as an investment, individuals who buy and sell crypto assets to make a profit would be considered as a crypto investor, any gains made from the disposal of crypto assets will be subject to CGT. On the other hand, for individuals who actively engage in trading cryptocurrency in an organised, business-like manner, would be considered as a crypto trader who carry on a crypto trading business. The trading income from the activities would be treated as business income.

Crypto Assets Investors

For individuals who hold crypto assets as investments, CGT becomes a crucial aspect to consider when selling, trading, or disposing of these assets. According to the ATO, cryptocurrencies are considered to be a form of property for tax purposes. This means that any gains made from the sale or disposal of crypto assets may be subject to CGT.

CGT Event:

A CGT event happens when you sell, gift, trade, exchange or swap crypto assets, even when you convert a crypto asset into Australian or foreign currency or buy goods or services with it. By simply buying or holding a crypto asset, you would not need to calculate any capital gains or losses. You are only required to calculate it when a CGT event happens.

Determining Capital Gain or Loss:

To calculate CGT, the ATO requires investors to determine the cost base of their crypto assets, which includes the original purchase price, transaction fees, and any incidental costs. When a crypto asset is sold or disposed of, the capital gain or loss is calculated by subtracting the cost base from the sale proceeds. If the resulting value is positive, a capital gain has been made, and if negative, a capital loss has been incurred. Any capital loss can be used to deduct against capital gains you made.

Holding Period and CGT Discount:

The duration for which a crypto asset is held can impact the amount of CGT payable. If an investor holds their crypto assets for longer than 12 months before selling or disposing of them, they may be eligible for the CGT discount. This discount allows you to reduce the capital gains by 50%, effectively lowering the overall tax liability.

Record-Keeping:

It is essential to maintain accurate records of all cryptocurrency transactions, including purchase and sale dates, amounts, and values. This documentation is crucial when calculating capital gains and losses for tax reporting purposes.

Crypto Assets Traders

For individuals who actively engage in cryptocurrency trading as a business, the ATO views the trading income as assessable income for tax purposes.

Reporting Trading Income:

As a trader, you are required to report your trading activities and include the profits as part of your taxable income. This includes gains from selling cryptocurrencies, profits from mining activities, and any other trading-related income. Ensure that you accurately track your trading income and report it in the appropriate section of your tax return.

Deductible Expenses:

As a trader, you are entitled to claim deductions for expenses directly related to your trading activities. These may include transaction fees, exchange fees, trading software subscriptions, and other expenses incurred in the process. You would need to keep receipts for everything related to your operating expense to substantiate any claims made.

Business Structures:

Depending on the scale and complexity of your trading activities, you may consider operating as a sole trader or setting up a business structure such as a company or trust. Each structure has its own tax implications, and it is advisable to seek professional advice to determine the most suitable option for your circumstances.

Conclusion

As the cryptocurrency market continues to expand, understanding the tax implications associated with crypto assets becomes increasingly important. Whether you are an investor or a trader, it is essential to comprehend how taxes apply to your specific situation. By adhering to the ATO guidelines, maintaining accurate records, and seeking professional advice, you can ensure compliance with tax obligations and minimise any potential risks or penalties from ATO.

Our team have enormous experience in the crypto compliance work and tax advice. By using professional crypto capital gain/profit calculation platform, we can assure you that your new year tax return could save ample accountant fees this time. Please feel free to contact our friendly team in Pitt Martin Tax at 0292213345 our info@pittmartingroup.com.au.

The material and contents provided in this publication are informative in nature only.  It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.

By Zoe Ma @ Pitt Martin Tax

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Federal Budget 2023-24

Federal Budget 2023-24 Tax Insight

The Australian Federal Budget 2023-24 is announced on 9 May 2023. As usual, in this article, we mainly look into the details of the business and super fund tax changes given there isn’t much individual tax changes in this budget including any amendment on the controversial stage three tax cuts.

Business & employers

$20,000 small business instant asset write-off

Date1 July 2023 to 30 June 2024

Small businesses with an aggregated turnover of under $10 million can deduct the full cost of eligible depreciating assets under $20,000 if they are used or installed between 1 July 2023, and 30 June 2024. This means they can claim a tax deduction in the same year of purchase and use. If the business is GST registered, the asset cost must be under $20,000 after subtracting GST credits; otherwise, it includes GST. The deduction applies per asset, and assets worth $20,000 or more can be placed in a depreciation pool. The suspension on re-entry into the simplified depreciation regime for small businesses opting out will continue until 30 June 2024. The temporary full expensing rules will end on 30 June 2023, so businesses should consider this cut-off date when acquiring assets.

$20,000 small business incentives for energy efficiency

Date1 July 2023 to 30 June 2024

The Small Business Energy Incentive allows small and medium businesses with annual turnover below $50 million to receive an additional 20% deduction on eligible depreciating assets that support electrification and energy efficiency. Businesses can claim up to $20,000 as a bonus deduction, with a total expenditure cap of $100,000. The incentive applies to assets like electrified heating and cooling systems, energy-efficient fridges and induction cooktops, and the installation of batteries and heat pumps. Exclusions include electric vehicles, renewable electricity generation assets, capital works, and assets not connected to the electricity grid or reliant on fossil fuels. To qualify for the bonus deduction, eligible assets or upgrades must be first used or installed ready for use between 1 July 2023, and 30 June 2024.

Increase payment frequency of employee super

Date1 July 2026

Starting from 1 July 2026, employers will be obligated to pay their employees’ super guarantee entitlements on the same day as their salary and wages. Currently, super guarantee payments are made quarterly. The government plans to engage in a consultation process to finalize the details of this measure, with the intention of providing more information in the 2024-25 Federal Budget.

Small business ATO compliance

From1 July 2024

To alleviate the compliance burden on small businesses, several measures have been introduced to streamline paperwork, including:

  • Starting from 1 July 2024, small businesses will have the option to authorize their tax agent to submit multiple Single Touch Payroll forms on their behalf.
  • Beginning 1 July 2024, the Australian Taxation Office (ATO) will minimize the use of cheques for income tax refunds.
  • Effective from 1 July 2025, small businesses will be allowed up to 4 years to make amendments to their income tax returns, which is an extension from the usual 2-year timeframe.

Lower tax instalments for small business

Date1 July 2023 to 30 June 2024

The adjustment of GST and PAYG instalment amounts is typically done using a GDP uplift factor. However, for the 2022-23 income year, the government reduced this factor to 2% instead of the expected 10% rate. Now, for the 2023-24 income year, the government has set the uplift factor to 6% instead of the usual 12% rate. This 6% uplift rate will be applicable to small to medium enterprises that meet the eligibility criteria and use the relevant instalment methods for their 2023-24 income year instalments. The instalments will be due after the amending legislation becomes effective, with the criteria being an annual aggregated turnover of up to $10 million for GST instalments and $50 million for PAYG instalments.

Small business lodgement penalty amnesty

Date1 June 2023 – 31 December 2023

Small businesses with an aggregated turnover below $10 million will have the opportunity to participate in a lodgement penalty amnesty program. This amnesty will waive failure-to-lodge penalties for outstanding tax statements that were originally due between 1 December 2019 and 29 February 2022, and are lodged between 1 June 2023 and 31 December 2023.

Exclude hybrid cars from FBT exemption

Date1 April 2025

Starting from 1 April 2025, plug-in hybrid electric cars will no longer qualify for the fringe benefits tax (FBT) exemption that applies to eligible electric cars. However, arrangements made between 1 July 2022 and 31 March 2025 will remain eligible for the FBT exemption if the car was already exempted before 1 April 2025 and the employer has a legally binding commitment to continue providing private use of the car on and after this date.

Franked distributions funded by capital raisings start date shifted

Date15 September 2022

The Government, in the 2016-17 fiscal year, announced its intention to prevent shareholders from benefiting from franking credits linked to dividends funded by capital raisings. The Budget reiterates this commitment, with a revised implementation date of 15th September 2022.

According to the measure, a distribution (dividend) paid by an entity will be considered funded by capital raising if:

  • The distribution deviates from the entity’s established practice of regularly making such distributions.
  • There is an issuance of equity interests in the entity.
  • Considering all relevant circumstances, it is reasonable to conclude that either:
    • The primary effect of issuing any of the equity interests was to directly or indirectly fund all or part of the distribution.
    • An entity that issued or facilitated the issuance of the interests did so with the purpose of funding all or part of the distribution.

The proposed changes aim to prevent the utilization of artificial arrangements where capital is raised specifically to fund franked dividends, allowing for the distribution of franking credits. The Government is concerned that such arrangements involve manipulating the system, enabling existing shareholders to benefit from both the franking credits and the retained profits generating those credits within the company.

If implemented, direct or indirect recipients of affected dividends would not be eligible for a tax offset, and the franking credit amount would not be included in their assessable income. Additionally, these dividends would not be exempt from non-resident withholding tax.

The initial application date for the measure was set for 19th December 2016, but it has been rescheduled to 15th September 2022.

This measure is outlined in the Treasury Laws Amendment (2023 Measures No. 1) Bill 2023, which was introduced to Parliament on 16th February 2023.

15% minimum tax for multi-national global and domestic

From1 January 2024

The Government will implement key elements of the OECD’s Two Pillar Solution, including:

  • A 15% global minimum tax for large multinational enterprises, with the Income Inclusion Rule effective from 1st January 2024 and the Undertaxed Profits Rule effective from 1st January 2025.
  • A 15% domestic minimum tax, applicable from 1st January 2024.

These taxes are based on the OECD Global Anti-Base Erosion Model Rules, ensuring that large multinationals pay a minimum level of tax in each jurisdiction where they operate. Australia will have the authority to impose a top-up tax on resident multinational parent or subsidiary companies if their income is taxed below 15%. These minimum tax rules will be applicable to large multinationals with annual global revenue of EUR 750 million (approximately $1.2 billion) or more.

Tax breaks for build-to-rent developments

From9 May 2023

In line with previous announcements, the Government is introducing attractive incentives for build-to-rent developments. For qualifying new build-to-rent projects commencing construction after 9th May 2023 at 7:30 pm AEST, the Government will:

  • Increase the capital works tax deduction (depreciation) rate from 2.5% to 4% per annum.
  • Reduce the final withholding tax rate on eligible fund payments from managed investment trust (MIT) investments from 30% to 15%.

These incentives are applicable to build-to-rent projects that offer 50 or more apartments for rent to the general public. The dwellings must be held under a single ownership for a minimum of 10 years before they can be sold, and landlords must provide a minimum lease term of 3 years for each dwelling.

The reduced MIT withholding tax rate for residential build-to-rent will take effect from 1st July 2024. The Government will engage in a consultation process to determine the specific implementation details, including any required minimum proportion of affordable tenancies and the duration of single ownership retention for the dwellings.

 Increase of tobacco excise and duty from September

From1 September 2023

Starting from 1st September 2023, the tobacco excise and excise-equivalent customs duty will undergo a 5% annual increase for a period of 3 years, in addition to regular indexing. Moreover, the duty on products subject to per kilogram excise and excise-equivalent customs duty (such as roll-your-own tobacco) will also see an increase. The “equivalisation weight” will be gradually reduced from 0.7 to 0.6 grams on 1st September each year, starting from 2023, and the new weight will be fully implemented by 1st September 2026.

This measure is anticipated to result in a revenue increase of $3.3 billion and lead to a $290 million rise in GST payments to the states and territories over a span of 5 years, starting from 2022-23.

Heavy vehicle user charge increase

From2023 – 24

The Heavy Vehicle Road User Charge will increase by 6% per year for 3 years starting from 2023-24, resulting in a rate of 32.4 cents per litre of diesel in 2025-26. The current rate of 27.2 cents per litre will progressively rise over this period.

Tax law changes for general insurers

From1 January 2023

The implementation of the new accounting standard, AASB17 Insurance Contracts, by the Australian Accounting Standards Board, has resulted in a misalignment between tax law and accounting standards. To address this, a legislative amendment will be introduced to allow general insurers to use audited financial reporting information based on the new standard when filing their tax returns. This will enable them to maintain consistency in their reporting practices.

Clean building MIT withholding tax concession extended

From1 July 2025

The clean building managed investment trust (MIT) withholding tax concession will now be expanded to include eligible data centres and warehouses that meet the required energy efficiency standard. This extension applies to constructions starting after 7:30pm AEST on 9 May 2023. Additionally, the minimum energy efficiency requirements for both new and existing clean buildings will be raised to a 6-star rating from either the Green Building Council Australia or the National Australian Built Environment Rating System. The Government will engage in consultations to establish transitional arrangements for existing buildings.

Tax treatment of exploration and mining, quarrying and prospecting rights

FromExpenditure incurred from 21 August 2013

As previously stated, the Government plans to make changes to the Petroleum Resource Rent Tax (PRRT) to provide clarity on the definition of ‘exploration for petroleum’. The amendment will specify that exploration activities are limited to the process of discovering and identifying the existence, extent, and characteristics of petroleum resources. It will exclude activities and feasibility studies focused on assessing the commercial viability of extracting the resource. This clarification aims to provide a clear distinction between exploration and activities related to commercial recovery, ensuring appropriate taxation within the petroleum sector.

Also, from 7:30pm AEST, 9 May 2023, the tax treatment of depreciation deductions for mining, quarrying, and prospecting rights will be revised. The clarification ensures that deductions will only begin when these rights are actively used, rather than when they are simply held. This measure aims to align the tax treatment with the actual utilization of the rights, ensuring a fair and accurate depreciation calculation for mining, quarrying, and prospecting activities.

Bringing forward tax on natural gas

DateConsultation later 2023

The Government will introduce amendments to the Petroleum Resource Rent Tax (PRRT) targeting deductions and implementing integrity measures for the offshore LNG industry. Consultation on these changes will take place in 2023. It is expected that this measure will result in a revenue increase of $2.4 billion over a five-year period starting from 2022-23. Additionally, the Australian Taxation Office (ATO) will receive $4.4 million in funding to administer and ensure compliance with these amendments.

Development of Hydrogen industry

From2023-24

Over $2bn will accelerate Australia’s hydrogen industry, drive clean energy sectors, and enable global hydrogen supply chains. The Hydrogen Headstart program will support renewable hydrogen investment, while the Guarantee of Origin scheme, funded with $38.2m, will certify renewable energy and track emissions, including hydrogen.

Critical technology industry support

From2022-23

$116m over 5 years will foster critical technology development, including integrating quantum and AI into businesses. Initiatives include a Challenge Program for quantum projects, expanding the National AI Centre, establishing the Australian Centre for Quantum Growth, and aiding SMEs in adopting AI. Additionally, the Powering Australia Industry Growth Centre will contribute to advanced technology and skills for the Australian Made Battery Plan.

Child care workforce support

From2022-23

The Early Childhood Education and Care (ECEC) sector will receive support through measures including subsidizing services with $34.4 million over 5 years, providing financial assistance of $33.1 million for teacher education practicums, and allocating $4.8 million for practicum exchanges for ECEC workers.

15% pay increase for Aged Care Workers

From2022-23

$515 million over 5 years will fund the outcome of the Aged Care Work Value Case, raising award wages by 15% for various aged care workers from 30 June 2023. The increase will be offset by temporarily reducing the residential aged care provision ratio.

‘Patent Box’ regime scrapped

From2022-23

The Patent Box regime, which offered a concessional tax rate of 17% on patent-derived income for R&D conducted in Australia, has been completely scrapped. Originally intended for medical, biotech, agriculture, and emissions industries, it is no longer in effect.

Streamlining excise administration for fuel and alcohol

From1 July 2024

The implementation of the fuel and alcohol excise compliance streamlining measure from the 2022-23 March Budget has been rescheduled to commence on 1 July 2024.

Film industry location offset

From2022-23

In order to encourage investment from major screen productions and create more employment and training opportunities, the Location Offset rebate rate will be raised to 30%. Additionally, the minimum Qualifying Australian Production Expenditure thresholds will be increased to $20 million for feature films and $1.5 million per hour for television series.

Superannuation & investors

Non-arms length income rules clarification

FromExpenditure that occurred after the 2018-19

The non-arms length income (NALI) rules aim to prevent artificial inflation of superannuation fund balances and accessing preferential tax treatment by not recognizing expenses provided by a related party at a reduced rate. Proposed amendments suggest capping NALI taxable income to twice the level of a general expense. Contributions will be excluded from NALI taxable income, and expenditure before the 2018-19 income year will be exempt. Large APRA regulated funds would be exempt from NALI provisions for both general and specific expenses, based on Treasury consultation recommendations. Awaited legislation will clarify details.

30% tax on super earnings above $3m

From1 July 2025

From 1 July 2025, individuals with a total superannuation balance exceeding $3 million will face an additional 15% tax on earnings. The tax calculation considers contributions, withdrawals, and both realized and unrealized gains, with negative earnings carried forward. Defined benefit scheme interests will be valued and taxed similarly to other interests. Individuals can choose to pay the tax personally or from their superannuation fund, and those with multiple accounts can designate the paying fund. This measure is expected to raise tax receipts by $950 million and payments by $47.6 million over a 5-year period starting from 2022-23.

Should you please have any question in regards to above, please feel free to contact our friendly team in Pitt Martin Tax at 0292213345 our info@pittmartingroup.com.au.

The material and contents provided in this publication are informative in nature only.  It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.

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EV FBT Exemption

What’s New Tax Rules to Electric Cars?

Electric cars are becoming increasingly popular as a more environmentally-friendly and cost-effective alternative to traditional petrol or diesel vehicles. As a result, many people are wondering how tax applies to electric cars. The Australian Taxation Office (ATO) has released updated information on electric vehicles just in time for the Fringe Benefits Tax (FBT) year that began on April 1.

Under the new regulations, employers can potentially qualify for an FBT exemption when providing employees with the use of a zero or low emissions vehicle, regardless of whether it is through a salary sacrifice arrangement or not. The exemption applies if the value of the car is below the luxury car tax threshold ($84,916 for 2022-23) for fuel-efficient vehicles when it was initially purchased, and if the vehicle is both first held and used on or after July 1, 2022. The FBT exemption covers associated benefits, such as registration, insurance, repairs, maintenance, and fuel, but not the charging stations.

Employees are still required to report the value of the fringe benefit on their income statement and tax return, which is taken into account when determining their adjusted taxable income for various areas, such as the Medicare levy surcharge, private health insurance rebate, employee share scheme reduction, and certain social security payments. The FBT exemption does not apply to sole traders, partners of a partnership, or shareholders of a company, unless the benefit is provided in their capacity as an employee or director of the entity.

If an employer provides a charging unit to an employee, FBT could be triggered. Nevertheless, employees can potentially claim depreciation deductions if they purchase a home charging unit for income-producing purposes.

In addition, the ATO has set a running cost rate of 4.20 cents per km for EVs provided to an employee from 1 April 2022 for FBT purpose and 1 July 2022 for income tax purpose. Like the other actual cost method to the normal motor vehicle, you can use actual electricity costs for tax claiming too.

In summary, if your employer provides you with the use of a zero or low emissions vehicle, there is an FBT exemption that may apply. However, this exemption does not extend to home charging units. The cost of electricity can be calculated using the ATO’s set rate or actual costs if you can calculate them accurately. It is important to keep in mind that the value of the fringe benefit is still taken into account when working out the reportable fringe benefits of the employee.

Should you please have any question in regards to above, please feel free to contact our friendly team in Pitt Martin Tax at 0292213345 our info@pittmartingroup.com.au.

The material and contents provided in this publication are informative in nature only.  It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.

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Family Trust

The ATO’s conclusive stance on precarious trust distributions

The ATO has recently published its final position (TR 2022/4) on trust distributions that pose a risk to the integrity of the tax system. Specifically, the ATO has clarified how section 100A, an integrity rule that aims to prevent distributions of trust income being used to shift tax liability to lower-taxed individuals or entities, will be applied. As a result, trusts distributing to adult children, corporate beneficiaries, and entities with losses may face higher taxes due to the ATO’s more aggressive stance.

To trigger section 100A, a “reimbursement agreement” must be in place at or before the time the income is appointed to a beneficiary. This rule does not apply to distributions to minor beneficiaries or those under a legal disability. If section 100A applies, the trustee is taxed on the income at penalty rates instead of the beneficiary being taxed at their own marginal tax rates.

Previously, section 100A exceptions protected beneficiaries under a legal disability or those receiving distributions as part of an ordinary dealing. However, the ordinary dealing exception is now under scrutiny, leaving some vulnerable to higher taxes. For example, a university student who is presently entitled to trust income may reimburse their parents for expenses incurred when they were a minor. This arrangement is high risk if the student has a lower marginal tax rate than their parents, as the parents are ultimately receiving the income’s real benefit. Circular distributions, such as when a trust distributes income to a company owned by the trust, which then pays dividends back to the trust, are also considered high risk by the ATO. Other scenarios identified as high risk include when a beneficiary is a company or trust with losses that is not part of the same family group as the trust making the distribution, or when trustee of the trust issue units for the distribution owed to the beneficiary and the subscription price of the units is much higher than the market value. In these cases, the ATO views the arrangements as high risk from a section 100A perspective.

To ensure compliance, those with discretionary trusts should review all trust distribution arrangements in light of the ATO’s guidance and ensure that appropriate documentation is in place to demonstrate how funds relating to trust distributions are being used or applied for the benefit of the beneficiaries. The ATO’s new approach applies to entitlements before and after the publication of the new guidance, but entitlements arising before 1 July 2022 will not generally be pursued if they comply with the ATO’s previous guidance on trust reimbursement agreements or are low risk under the new guidance.

Should you please have any question in regards to above, please feel free to contact our friendly team in Pitt Martin Tax at 0292213345 our info@pittmartingroup.com.au.

The material and contents provided in this publication are informative in nature only.  It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.

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working from home

Working from home tax claim rule has been changed

The Australian Taxation Office (ATO) has updated its approach to claiming expenses for working from home. In the past during Covid-19 period, taxpayers could choose between two fixed rate methods, depending on their scenario. These included an 80 cents per hour rate or a 52 cents per hour rate, which only applied to those with a dedicated workspace. However, from the 2022-23 financial year onwards, the ATO has introduced a new ‘fixed rate’ method that combines the previous two methods. Taxpayers can now claim 67 cents per hour for all expenses related to working from home, including energy expenses, phone usage, internet, stationery, and computer consumables.

If you work from home, it is essential to keep records of all the hours you work from home, as well as at least one copy of each the bills or invoices for any expenses you incurred. You need to retain these records for at least five years so that you can prove your claim in case the ATO comes calling. Moreover, the ATO will no longer accept estimates or a sample diary over a four-week period as proof. Instead, you must have an accurate record of the total number of hours worked from home. You can keep an electronic record or a PDF summary of your calendar.

The first issue for claiming any deduction is that there must be a link between the costs you incurred and the way you earn your income. If the expense does not relate to your work or only partially relates to your work, you cannot claim the full cost as a deduction. The second key issue is that you must incur costs associated with working from home. If you live with your parents and do not pay any expenses for running the home, you cannot claim deductions for working from home, even if you are paying board.

For taxpayers who have high expenses, the actual cost method might be a better option. This method allows taxpayers to claim the actual additional expenses they incurred when working from home. However, they will need to keep records of these expenses and prove the extent to which they relate to their work. Examples of expenses that can be claimed under this method include the decline in value of home office furniture, electricity and gas expenses, phone and internet expenses, stationery and computer consumables, and cleaning expenses for a dedicated home office.

When it comes to claiming deductions, it is important to remember that there are no restrictions on claiming outside standard office hours. If you work from home outside standard office hours or over the weekend, you need to keep an accurate record of the hours worked to maximize your deductions.

In summary, the ATO has updated its approach to how you claim expenses for working from home. Taxpayers can now choose between a new fixed rate method and the actual cost method, depending on which one works best for their scenario. For the fixed rate method, taxpayers can claim 67 cents per hour for all expenses related to working from home. To claim the actual cost method, taxpayers must keep records of all additional expenses they incurred when working from home, and prove the extent to which these expenses relate to their work. Regardless of which method you choose, keeping accurate records is crucial to prove your claim.

Should you please have any question in regards to above, please feel free to contact our friendly team in Pitt Martin Tax at 0292213345 our info@pittmartingroup.com.au.

The material and contents provided in this publication are informative in nature only.  It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.

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External Examiner

Law Firm Trust Account External Examination

As a law firm in New South Wales or Victoria, it is crucial that you understand your obligations when it comes to managing your trust accounts. One of these obligations is to have your trust account audited or examined by an external examiner every year between 1 April and 31 May. In this article, we’ll take a closer look at the process of external examination, and how our specialty in performing external examination can help your firm stay compliant with the trust account regulation and legislation.

The Law Society of New South Wales requires that all law firms taking trust money maintain a trust account, which is a separate account used to hold clients’ money. This ensures that clients’ funds are kept separate from the firm’s own money, and provides a layer of protection for clients’ funds. However, with this comes the responsibility of ensuring that the trust account is managed in accordance with the Legal Profession Uniform Law (NSW) and the Legal Profession Uniform General Rules 2015.

One of the key requirements of trust account management is the annual external examination. This involves engaging an external examiner to review your trust account records and verify that your trust account is being managed in compliance with the relevant laws and regulations. The external examination process involves a detailed review of your trust account transactions, including bank statements, cheque books, receipts and payments, and other relevant documentation. Any discrepancies or errors will be noted, and the law firm will be required to take corrective action to ensure compliance.

At our firm, we specialize in performing external examinations for law firms. We have a team of experienced and qualified professionals who are well-versed in the trust account system and the requirements of external examination. Our team is committed to helping law firms achieve compliance with the trust account system, and to providing practical solutions for any issues or problems that may arise.

One of our key strengths is our knowledge of the trust account system and our ability to help law firms solve compliance issues. We understand that managing a trust account can be complex and challenging, and that mistakes can easily be made. Common non-compliance breaches that we often witness are failure to enter a receipt or payment of trust money into the trust ledger account within 5 working days, and failure to perform a month-end reconciliation within 15 working days.

To overcome these issues, we recommend implementing a system for tracking and recording trust account transactions on a daily basis or at least weekly basis. This will help ensure that all receipts and payments are promptly entered into the trust ledger account and that month-end reconciliations can be performed in a timely manner. We also recommend providing regular training and support to staff on trust account management, and establishing clear policies and procedures for managing trust accounts.

In summary, as a law firm in New South Wales or Victoria, it is important to understand your obligations when it comes to managing your trust accounts. This includes the requirement for an annual external examination, which ensures that your trust account is being managed in compliance with the relevant laws and regulations. At our firm, we specialize in performing external examinations, and we have a team of experts who can help you stay compliant and solve any compliance issues that may arise. Contact us today to learn more about our services and how we can assist your law firm.

Should you please have any question in regards to above, please feel free to contact our friendly team in Pitt Martin Tax at 0292213345 our info@pittmartingroup.com.au.

The material and contents provided in this publication are informative in nature only.  It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.

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How capable is ChatGPT in terms of Australian taxation?

How capable is ChatGPT in terms of Australian taxation?

Not to be overly skeptical, but we are just curious about the ability of this latest AI software – ChatGPT – in dealing with the Australian tax system, so we conducted a simple test.

Firstly, it is worth noting that what impressed us most in the test was ChatGPT’s tone and approach, rather than its ability to handle the complexity of the tax question. The results of our test, including the example below, indicate that you may get some fairly accurate summary comments, but you cannot rely on a definitive answer. As most technical comments are formed into databases based on personal recommendations, rather than comments that can be explored on the internet, it is difficult for us to obtain reliable answers in a short time.

Here are the results of our test questions and comments (ChatGPT’s responses are presented in italics).

Question: How much capital gains tax do Australian residents pay on investment properties, with an example?

ChatGPT: Australian residents pay capital gains tax (CGT) on the profits earned from the sale of investment properties. The calculation of CGT is the sale price minus the cost of the property (purchase price plus any expenses related to acquiring and owning the property). For example, if an Australian resident purchased an investment property for $500,000 and spent $50,000 on expenses related to purchasing and owning the property (such as legal fees, stamp duty, and repair costs), the total cost of the property would be $550,000.

Accountant: Let’s take a moment to review. When calculating the asset cost base, there are some techniques and pitfalls to consider. Although in some cases, repair costs can be part of the property cost base, it is not always the case. If the asset sold is an investment property rented to tenants, the situation is usually different. When the landlord repairs damage that occurred during the rental period, this can usually be deducted in the financial year when the landlord incurs the repair costs. Since these repair costs are deductible, they should not be included in the property’s cost base.

Similarly, other adjustments need to be considered. In the context of investment properties, it is usually necessary to adjust the cost base to account for capital works deductions. When an investment property is used to earn rental income, the landlord can usually claim capital works deductions. So when calculating the cost base, we should subtract the capital works deductions that the landlord has already claimed or can claim (although there are some exceptions, such as the property acquired before May 13, 1997, and the improvement costs incurred before June 30, 1999).

The longer an investment property is held, the more significant the impact of capital works deductions and repair costs will become, and the more substantial the impact on capital gains calculations.

ChatGPT: Several years later, the resident decided to sell the property for AUD 700,000. The profit from the sale is AUD 700,000 – AUD 550,000 = AUD 150,000. The current CGT tax rate in Australia is 45%, and the resident will pay 45% of the profit of AUD 150,000, which is AUD 67,500.

Accountant: Hang on, let’s take a closer look about this. In Australia, there is no specific CGT tax rate of 45% that applies to capital gains. Net capital gains are part of an individual’s taxable income subject to income tax. We just need to add the net capital gains to calculate the individual’s corresponding taxable income for the year. If the taxable income figure is positive, then we apply the individual’s marginal tax rate. As a result, higher taxable income generally leads to higher marginal tax rates and higher tax amounts. Meaning, the tax rate applicable to an individual’s net capital gains will be affected by the individual’s other income or losses (if any).

In addition, although the highest marginal tax rate for individuals is currently 45%, Australian residents with taxable income over AUD 180,000 per year usually also have to pay a 2% Medicare levy. This should also be considered and included in the calculation.

ChatGPT: It should be noted that there are some exemptions and reliefs for CGT calculation, such as the main residence exemption and small business CGT concessions.

Accountant: If only taxation were that simple! For capital gains, some exemptions and reliefs can be applied. Although the answer mentioned the main residence exemption and small business CGT concessions, these concessions usually do not apply to the sale of investment properties.

To qualify for the main residence exemption (or partial main residence exemption), a key requirement is that the property needs to be constructed and used as the individual’s main residence. If the property is only used as an investment property to generate taxable rental income, the exemption usually does not apply, but if the property is inherited, the situation may be different.

In addition, small business CGT concessions usually do not apply to the sale of investment properties. This is because the concessions only apply to assets that pass the active asset test, which requires the property to be used in a qualifying business activity for a minimum period of time.

For properties used by the property owner or certain related parties in a business activity, they can be considered as active assets eligible for the concessions, but this is not the case for properties primarily used to generate rental income from unrelated parties.

If the property is only used to generate rental income from unrelated parties (i.e., used in a leasing business), the property is likely to fail the active asset test, and the small business CGT concessions should not apply.

Interestingly, the answer did not mention the general CGT discount or indexation, which is actually the most likely relief to apply in this situation.

If the vendor was an Australian resident for tax purpose (not a temporary resident) during the period of owning the property and has owned the property for more than 12 months, the 50% CGT general discount is usually available to reduce the capital gain.

If the property was acquired before 21 September 1999, cost base indexation may be available. Both methods need to be compared to determine which would provide the most favorable tax result.

ChatGPT: It’s always best to consult a tax professional for specific advice on your individual circumstances.

Accountant: Yes, that’s right. Thank you, ChatGPT.

Should you please have any question in regards to above, please feel free to contact our friendly team in Pitt Martin Tax at 0292213345 our info@pittmartingroup.com.au.

The material and contents provided in this publication are informative in nature only.  It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.

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director ID

Last chance – Director ID due on 14 Dec 2022

New rules have been set out by the Australian Taxation Office (ATO) for Australians who are the directors of companies and now have less than two weeks to take action to avoid a big fine of $13,000.

The Australian directors of companies covered by the Corporations Act now need to have a director identification number (director ID). Meanwhile the ATO has said that a grace period will apply for those who apply for the director ID before December 14.

According to the policy-executing body, the Australian Business Registration Service (ABRS), 1.8 million company directors have already applied for a director ID. However, about 700,000 directors still yet applied.

The Director ID is a unique 15-digital number aimed to deter illegal schemes such as phoenix activity.

Who needs to apply?

The rules apply to all directors in Australia in the structure of companies, self-managed superannuation fund with corporate trustee, charities and not-for-profit entities. If you are operating your business as a sole trader or partnership, you do not need to apply for this identification number.

You can apply online through the ABRS website. Once completed, you will be issued with a Director ID instantly.

How to apply

Prior to applying for a Director ID online, you will need a myGovID with minimum a standard strength of identity.

You will need your myGovID to apply for a Director ID online by logging into the ABRS website.

If you are unable to register a myGovID with standard strength or above of identity, how you apply will be up to where you reside. If you currently reside in Australia and are unable to apply online, please call the ABRS to apply for a director ID. If you currently reside outside of Australia and are unable to apply online, you can use the Director Identification Number paper application form (NAT 75433, PDF 651KB) to apply. However, in the meanwhile, you must provide a certified copy of your identification documents.

If you are not sure whether you need to apply, you can find out by checking the ABRS website or by contacting us.

The ABRS states that you need to apply for a director ID in your own name and verify your identity so generally speaking, we as tax agents cannot make the application on your behalf.

Should you please have any question in regards to above, please feel free to contact our friendly team in Pitt Martin Tax at 0292213345 our info@pittmartingroup.com.au.

The material and contents provided in this publication are informative in nature only.  It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.

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2022-23 Federal Budget

Federal Budget 2022-23 2.0 Tax Insight

We take insight here of the mainly tax changes in the Federal Budget 2022-23 2.0 announced in October 2022, in relates to the topics of Individual & Families, Superannuation & Investors, Business & Employers, and Government & Regulators.

Individual & Families

Child Care Subsidy lifted

From2022-23 

For families earning less than $80,000, the maximum Child Care Subsidy (CCS) rate increases from 85% to 90%, but the rates will reduce by 1% for each additional $5,000 in income and reaches 0% CCS when families earning up to $530,000.

The current higher CCS rates will be maintained for families who have more than one child in childcare who is 5 years old or younger, but the higher CCS rate will cease after the older child’s last session of care, or when the child reaches age of 6.

From 2022-23, families with First Nations children will receive a base entitlement of 36 hours per fortnight of subsidized early childhood education and care, independent of income level or activity hour.

The change in CCS comes with a renewed emphasis on industry compliance, requiring providers to report CCS related revenue and profits publicly. On top of that, managing CCS from 2022-23 onwards will require electronic payment of early childhood education and care gap fees, to prevent from fraudulent claims for cares not received.

Paid parental leave changes

From1 July 2023 1 July 2024

From 1 July 2023, the Paid Parental Leave Scheme will be reformed to provide higher flexibility for families. Either parent is able to claim the payment and both birth and non-birth parents can receive the payment when they are eligible. Parents are also able to claim payment simultaneously so both of them can take leave at the same time

A new family income test of $350,000 is introduced to the eligibility criteria. The family income test is applicable when parents do not meet the individual income test.

From 1 July 2024, two additional weeks a year will be added under the new parental leave scheme until it reaches 26 weeks from 1 July 2026.

Both parents can share the leave entitlement under the ‘use it or lose it’ basis, emphasizing on sharing equal responsibilities for caring. Sole parent will access the full 26 weeks of the paid parental leave. 

Encourage pensioners back to work

From2022-23

The government is encouraging age and veteran pensioners to work and earn more before their pension is reduced by providing a one-time credit of $4,000 to their Work Bonus income bank.

This change will increase the amount pensioners can earn before their pension is reduced, from $7,800 to $11,800.

The Work Bonus allows eligible pensioners to earn more before it affects their pension rate, the current rule of which first $300 income per fortnight is not assessed and not applicable to pension income test. In addition to the pension income test free area, the Work Bonus will operate. the Work Bonus is not used in a fortnight, it accumulates in an income bank with standard maximum of $7,800. It allows pensioners to work on casual basis to not be disadvantaged compared to those who receive regular fortnight income.

Reform to aged care

The government is providing $2.5bn over 4 years to improve the quality of aged care in residential aged care facilities. from 1 July 2023, all residential aged care facilities will require a registered nurse onsite 24 hour per day, 7 days a week. From 1 October 2024, all residents in residential aged care facilities will have their care minutes increased to 215 minutes per resident per day.

The aged care form will set a cap limit on the charges the approved home care providers may charge on care recipients, and the removal of exit fees.    

Extra support for floods and natural disasters

The government is providing $51.5m to support communities impacted by natural disasters through the Australian Government Disaster Recovery Payments (AGDRP), Disaster Recovery Allowance (DRA) and other payments made under the Disaster Recovery Funding Arrangements.

Increase the income limit on Seniors Health Card

A highly income test limits will be applied for the access of the Commonwealth Senior Health Card (CSHC), CSHC provides benefits in subsidised pharmaceuticals and other medical benefits to self-funded retiree who have reached aged pension age.

The income test incorporates adjusted taxable income and deeming on account-based pensions unless grandfathered under the pre-1 July 2015 rules. Note that CSHC is not asset tested.

 Current ($ per annum)New ($ per annum)
Single$61,284$90,000
Couples combined$98,054$144,000

Legislation enabling the increase is before Parliament.

Social security deeming rates will be freeze at their current level for further two years until 30 June 2024.

Disposal of sale of main residence extended with income support asset test

The government will:

  • Assets test exemption for principal home sale proceeds will be extended from 12 month to 24 months for income support recipients.
  • The income test will apply the lower deeming rate (0.25%) to principal home sale proceeds when calculating deemed income for 24 months after sale of the principal home.

Until the income support recipient gets another main residence or the 24-month period is expired, the exemptions can apply. The extension Bill is now in front of Parliament.

Raise to veterans total and permanent incapacity payments

From2022-23

The Special Rate of Disability Compensation Payment, Temporary Special Rate Payment, and the Special Rate Disability Pension for veterans will be raised by $1,000 every year.

Household solar community batteries

From2022-23

Across the country, the Australian Government will support $224.3m fund over 4 years (from 2022-2023) to deploy 400 batteries in community.

A related solar initiative will also receive an additional $102m, in commitment to establish a Community Solar Banks program for deployment of community-scale solar and clean energy technologies. It is aimed to target regional communities, social housing, apartments, rental accommodation, and households that are usually unable to use rooftop solar.

Superannuation & Investors

Change to taxation of listed companies buy-backs off-market share

From7:30pm AEDT, 25 October 2022

From 25 October 2022 7:30pm AEDT, the tax treatment of off-market share buybacks by listed public companies will be aligned with the treatment of on-market buybacks. This change expects to deliver $550m in savings.

An on-market buy-back is like a listed company buys its shares back through the stock exchange platform. All others are treated as off-market buy-backs.

According to current legislation, a company conduct an off-market buy-backs will consider what portion of proceeds are taxed as dividend and what portion of proceeds are taxed under CGT rules. Dividend can potentially include franking credits.

For listed company conducting an on-market buy-back, the full transactions are taxed under CGT regime and therefore franking credits cannot be applied to the shareholders.

It is a potential tax advantage when ff-market buy-backs is offered to low-taxed shareholders eg. superannuation funds. The government is concerned with tax treatment inappropriate exploitations between on and off-market buy-backss.

Only listed public companies are mentioned in this Budget. Therefore, it is presumably interpretated that for private companies and public companies that are not listed, the current tax treatment of off-market buy-backs will be unchanged.

Although this announcement hasn’t been legislated, with the immediate effective time of Budget night, any new off-market share buy-backs will be affected instantly.

Eligibility of ‘Downsizer’ extended to 55

FromFirst quarter after Royal Assent

The government is now reducing the age requirement for individuals making ‘downsizing contribution’ from 60 to 55 years of age.

Currently, eligible ‘downsizers’ aged 60 or older can make ‘downsizing contribution’ up to $300,000 per person ($600,000 for couple) to their super fund when they dispose their home.

If you have owned your principal residence in Australia for the past ten or more years and now you are selling, you can contribute the downsizer proceeding into your superannuation. The contributions are exempted from the age test, work test, and your total superannuation balance; not exempt from your transfer balance cap though.

The expanding age legislation eligibility for downsizer contributions is now in front of Parliament. 

Postponed relaxation of the requirements of SMSF residency

Earlier this year’s Budget, for Self-Managed Super Fund (SMSF) and small APRA Regulated Funds (ARFs), the residence rules will be relaxed by extending the central control and management test safe harbour from two to five years for SMSFs. The active member test for both fund types are also removed.

This measure was supposed to be started from 1 July 2022. But in this Budget, the Government will not start the measure until the income year commencing on or after the date when Royal Assent enables the legislation.

Removed the requirement of 3-year SMSF audit

The 3-year SMSF audit requirement announced back in 2018-19, applies to SMSFs with history of good record-keeping and compliance, only need to have their fund audited every three years, will be removed.

The measure will not be proceeding announced in this Budget.

Digital currency not a foreign currency

Digital currencies such as Bitcoin will continue to be excluded from the Australian income tax treatment of foreign currency. However, digital currencies issued by, or under authority of a government agency, will be continually taxed under foreign currency.

Business & Employers

Scrapped intangible assets self-assessment

The previously announced measure that due to commence from 1 July 2023, taxpayers will be able to self-assess the effective life of certain intangible assets has been scrapped. So the requirement to use the effective life currently prescribed by statute continues.

The measure was for assets acquired from 1 July 2023 such as patents, registered designs, copyrights and in-house software.

Significant increase in penalties for the breaches of competition and consumer law

From2022-23 financial year

From 2022-23, corporations breaching competition and consumer laws will be penalized more heavily, fine will jump from a maximum of $10m to $50m per breach or 10% of annual turnover to 30% of turnover (whichever is greater) for the period the breach took place.

Energy efficiency funding for SMEs

From2022-23 financial year

From 2022-23, the government will provide $62.6m over 3 years to support small and medium enterprises (SMEs) in funding energy efficient equipment upgrades. The funding aims to support studies, planning, equipment and facilities upgrade that leads to better energy efficiency, reduce emissions or improve management of power demand. No further details are currently available.

Deferred requirements for ridesharing reporting

Back to the 2019-20 Mid Year Economic and Fiscal Outlook (MYEFO), for data matching purposes, sharing economy online platforms were required to report participating sellers ‘ identification and income information to the ATO. These measures have now been deferred from:

  • 1 July 2022 to 1 July 2023 for transactions in relation to the supply of ride sourcing and short-term accommodation, and
  • 1 July 2023 to 1 July 2024 for all other reportable transactions (including but not limited to asset sharing, food delivery and tasking-based services).

Earnings based test introduced to thin capitalisation rules

From1 July 2023

The government is making amendment to the thin capitalisation rules which affects the amount that can be claimed as debt deduction, such as interests. A new earnings-based tests is introduced to replace the current safe harbour and worldwide gearing tests, that limit debt deductions to more in-line with entity’s profits.

Applying to global entities running in Australia and any inward or outward investor, aligning with the existing regime of thin capitalisation, the measures will:

  • Cap a debt-related deductions to 30 per cent of profits of an entity (EBITDA is used as the metrics of profit). The current safe harbour test will be replaced by this new earnings-based test.
  • Deductions rejected under the EBITDA test of entity-level is allowed (interest expense amounts over the 3% EBITDA ratio) to be carried forward and claimed in a future income year (up to 15 years).
  • An entity in a group is allowed to claim debt-related deductions up to the level of the global group’s net interest expense as a share of earnings (that could be over the 30% EBITDA ratio). The global gearing ratio will be replaced by this new earnings-based group ratio.
  • An arm’s length debt test will be kept as a substitute test that will only apply to the external (third party) debt of a entity, which doesn’t allow deductions for related party debt.

Existing thin capitalisation rules still apply to financial entities.

The current thin capitalisation rules limit debt deductions up to the three different tests whichever is bigger:

  • A safe harbour (debt to asset ratio) test;
  • An arm’s length debt test; and
  • A worldwide gearing (debt to equity ratio) test.

Declaration of companies’ subsidiaries

From1 July 2023

New reporting from 1 July 2023 will request:

  • Australian public companies (listed and unlisted) to reveal information about the number of subsidiaries and their tax residency;
  • Bidders for contracts for Australian Government valued greater than $200,000 to reveal their country of tax residency (supply their ultimate head entity’s country of tax residence); and
  • Significant global entities, to prepare to release publicly for certain tax information on a country by country (CbC) basis and a taxation approach statement.

Global entities disallowed deductions for intangible assets

FromPayment made on or after 1 July 2023

Significant global entities with at least $1bn global revenue will be disallowed to claim a tax deduction on a direct or indirect payments made to related low or no tax jurisdictions parties in regards to the usage of intangible assets, such as royalties paid for the trademarks and other intellectual property items usage.

A low or no tax jurisdiction is one with:

  • A tax rate of less than 15%, or
  • A tax preferential patent box regime without significant substance.

The measure will be commented on or after 1 July 2023 for such type payment.

This measure could impact on Australian subsidiaries of a foreign head entity whose global revenue of the consolidated group is $1bn or more for accounting purposes.

Government & Regulators

ATO focused area

Individual income tax deductions and false declaring

Additional $80.3m will be handed down to ATO to smash the non-compliance behaviour including:

  • False deductions for overclaiming; and
  • Short report of income

This measure will be expected to raise tax revenue by $674.4m and direct payment by $80.3m over 4 years preriod.

Shadow economy and tax fraud in business

The ATO’s Shadow Economy Program has been extended for another 3 years from 1 July 2023, which aims to crackdown the ‘shadow economy’, such as underpaid salary, credit card fraud, cash payment, etc. The extended program is estimated to raise tax revenue by $2.1bn and direct payment by $685.2m over the 4 years from 1 July 2022.

The Tax Avoidance Taskforce on multinational business

The ATO’s Tax Avoidance Taskforce will be allocated extra $200m over 4 years from 1 July 2022 focusing on multinational organisations and large public and private entities. This taskforce is expected to raise additional $2.8bn tax revenue and $1.1bn payments for the next 4 year.

$3.6bn external labour, advertising, travel and legal expenses cut

The Government will be committed to save $3.6bn by cutting the expense on external labour, advertising, travel and legal.

Electric vehicle and hydrogen refuelling

Boosting the Nation Fund, the Government will provide:

  • $146.1m over 5 years from 2023-24, enabling the Australian Renewable Energy Agency to co-invest in projects for emissions reduction from road transport sector across Australia
  • $89.5m over 6 years from 2022-23, enabling the Hydrogen Highways initiative to fund the establishing of hydrogen refuelling stations on Australia’s busiest freight routes, partnering with states and territories, including $5.5m to LINE Hydrogen Pty Ltd for its George Town green hydrogen heavy transport project
  • $39.8m over 5 years from 2022-23, enabling a National Electric Vehicle Charging Network to deliver 117 fast charging stations on Australia’s highways, partnering with the NRMA.

Increase foreign investment review board fees

The Government has raised foreign investment fees and along with that, financial penalties will be raised for breaches for those in relates to residential land. All applicants applicable to the foreign investment framework will have their fees doubled from 29 July 2022 and in the meantime, the maximum financial penalties for breaches related to residential land will also double from 1 January 2023.

Should you please have any question in regards to above, please feel free to contact our friendly team in Pitt Martin Tax at 0292213345 our info@pittmartingroup.com.au.

The material and contents provided in this publication are informative in nature only.  It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.

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NSW Business Support

NSW Business Support 2022

The NSW Government has announced a $1bn support package for the NSW small businesses affected by the Omicron outbreak.

The NSW Treasurer Matt Kean, acknowledging the difficulties that NSW small business are facing due to the recent Omicron outbreak, has announced a small businesses support package over January and February 2022.

The NSW Treasurer said about the support package,

“household balance sheets are strong at the moment, when we get out of this wave, we expect a snap back and the economy will bounce back better on the other side of this.”

Small Business Support Package

Eligible businesses and not-for-profit organisations will receive 20% of weekly payroll as a lump sum for the month of February, with a minimum payment of $750 per week up to a maximum payment of $5,000 per week.

Eligible non-employing businesses will receive $500 per week (paid as a lump sum of $2,000).

Eligibility

To access the package, businesses or not-for-profit organisation must:

  • Have an aggregated annual turnover between $75,000 and $50 million (inclusive) for the year ended 30 June 2021 or the year ended 30 June 2020; and
  • Experienced a decline in turnover of 40% or more due to Public Health Orders or the impact of COVID-19 during the month of January 2022 compared to January 2021 or January 2020; and
  • Experienced a decline in turnover of 40% or more from 1 to 14 February 2022 compared to the same fortnight in either 2021 or 2020 (you must use the same comparison year utilised in the decline in turnover test for January); and
  • Maintain their employee headcount as of 30 January 2022.

The support package is for the month of February 2022 only. Applications for support are expected to be opened mid-February.

Fees and charges rebate increased and expanded to RAT tests

The NSW government has increased small business fees and charges rebate from $2,000 to $3,000. In the meantime, eligible employing small businesses will be able to use the rebate against the cost of rapid antigen tests (RATs) (up to 50%) which is purchased by the business to protect staff and clients. The rebate for RAT tests won’t be available until “March” and is unlikely to cover RAT tests purchased prior to the funding coming online to prevent additional pressures on the RAT test supply chain.

The rebate is not a cash payment; rather it will be a digital credit that businesses can draw down on to offset the cost of eligible NSW and local government fees and charges.

The small business fees and charges rebates can also be used to pay other fees and charges like:

  • food authority licences
  • liquor licences
  • tradesperson licences
  • event fees
  • outdoor seating fees
  • council rates
  • road user tolls for business use.

View a complete list of all eligible fees and charges.

For small and medium food and beverage businesses wanting to create or expand their outdoor dining area, there is an existing $5,000 small business Alfresco Restart rebate available there. Applications for this rebate are open until the end of April 2022 or when the allocation is finished.

Eligibility

The fees and charges rebate is available to sole traders, small business, and not-for profits that have:

  • Total Australian wages below the NSW Government 2020-21 payroll tax threshold ($1.2 million)
  • An Australian Business Number (ABN) registered in NSW and/or have business premises physically located and operating in NSW.

Businesses already registered will receive an automatic top up of $1,000 and newly registering businesses will receive a rebate of $3,000. Each ABN can only has one rebate.

Commercial landlord relief extended

The protections under the Retail and Other Commercial Leases (COVID-19) Regulation 2021 for eligible and affected tenants will be extended for another two months, until 13 March 2022. This regulation protects the tenant from certain actions by landlords (such as lock out or eviction) unless the landlord has first renegotiated rent with eligible tenants and attempted mediation.  

Grants of up to $3000 per month (GST inclusive) are available for eligible landlords who have provided rental waivers to affected tenants.

Rent waived must comprise at least half of any rental reduction provided. The remaining portion may be a rental deferral. The grant does not apply to rent deferrals.

Grants will be paid as a lump sum amount for the rent waived.

NSW Performing Arts Package extended

The existing NSW Performing Arts COVID Support Package has been extended from 14 February 2022 to 30 April 2022.

Eligibility

To be eligible for funding, you must be one of the following:

  • An eligible venue (list published by Create NSW)
  • A producer of an eligible performance scheduled to perform at one of the eligible venues
  • A promoter of an eligible performance scheduled to perform at one of the eligible venues.

See CreateNSW for more details.

Should you please have any question in regards to above, please feel free to contact our friendly team in Pitt Martin Tax at 0292213345 our info@pittmartingroup.com.au.

The material and contents provided in this publication are informative in nature only.  It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.

Updated 31 January 2022

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