TAX UPDATES

2022 TAX UPDATES

Small business CGT concessions accessed by ineligible taxpayers

Single Touch Payroll Phase 2 now deferred

The ATO is contacting taxpayers that have claimed small business CGT concessions in recent income tax returns. The main focus of the correspondence is for taxpayers to ensure they meet eligibility conditions and have records to substantiate the concessions claimed. For planned future transactions, taxpayers can seek a pre-lodgment compliance agreement or apply for a private ruling to ensure small business CGT concession eligibility.

The ATO has announced an extension to begin additional reporting requirements under Single Touch Payroll Phase 2. Employers will not be penalised as long as they start reporting the additional information by 1 March 2022. Previously, the guidelines were to have employers commence Phase 2 by 1 January 2022. However, if an employer is able to complete the additional reporting they have been encouraged to do so. One reason may be that the software provider enables an employer to complete additional reporting.

Single Touch Payroll Phase 2 will mainly require an employer to:

• split gross income of their employees into relevant sections • explain the withholding category of each employee, and • provide details on cessation of employment.

Announced: 15-Nov-2021 Updated: 22-Nov-2021

Payment Times Reporting Scheme

The Payment Times Reporting Scheme commenced on 1 January 2021, providing small businesses with greater understanding of the corporate treasury management processes within large businesses and government enterprises. Information reported by large businesses on payment terms and times for their small business suppliers at an aggregate level is publicly available on the Payment Times Reports Register. This will assist a small business in decision making by increasing transparency on how quickly they could expect payment for work with a big business.Small businesses can opt out of being identified as a small business for the purposes of the scheme. This will mean that their payment times and terms with large businesses will not be reported.

Victorian windfall gains tax

Royal assent has been given to the windfall gains tax (WGT), which is to be levied on rezoned land in Victoria. The WGT will apply to rezoning planning decision which will substantially increase the value of land. The WGT will not apply if a rezoning event causes a taxable value of land uplift of less than $100,000. The commencement date for the WGT will be from 1 July 2023, with various deferrals and exemptions available.Information relating to the interaction between the WGT and other federal income tax is yet to be released by the ATO.

For 4 income years, many corporate tax entities will be eligible to claim a refundable tax offset when they incur a taxable loss. This optional offset is available only to corporate businesses and is a recoupment of prior year income tax paid, but is only available for recent income years. The loss carry-back is available to businesses with turnover under $5 billion. Any refundable tax offset is limited to prior year tax paid and the balance of the franking account. In the 2021 Federal Budget, the ability to utilise tax losses for a refund has been extended by 12 months into the 2022–23 income year. The extension has been introduced into parliament.

Announced: 23-Nov-2021 Updated: 24-Nov-2021

Announcement(10-Dec-2020) Consultation Introduced(13-May-2020) Passed(6-Oct-2020) Royal Assent(14-Oct-2020) Date of effect(1-Jan-2021)

Announced: 2-Dec-2021 Updated: 3-Dec-2021

Announcement(6-Oct-2020) Consultation(6-Oct-2020) Introduced(7-Oct-2020) Passed(9-Oct-2020) Royal Assent(14-Oct-2020) Date of effect(1-Jul-2021)

Loss carry-back available for companies

2022 TAX UPDATES

Employee share scheme tax and regulatory changes proposed

Intangible assets depreciation changes proposed

AAT extended power to pause or modify ATO debt recovery (2021 federal budget measure)

ACT COVID-19 stimulus package

SA COVID-19 stimulus and relief package

New legislation has been introduced into parliament which will remove 'cessation of employment' as a deferred taxation point on employee share schemes (ESS). Further draft regulations have been released by the Treasury around changing both the taxation and regulatory framework for Australian businesses. Overall, these combined proposals for both ESS participants and businesses may change traditional structuring of arrangements if they are enacted. Further, it will allow greater flexibility and clarity for businesses to make ESS offers to participants in the future.

A proposal to change legislation around intangible asset depreciation has been issued by the Treasury after an initial announcement in the 2021 Federal Budget. Under the proposal, taxpayers will have the option to self-assess the effective life of certain intangible assets that currently have statutory depreciation rates.

If the proposal passes through the legislative process, self-assessed intangible asset depreciation will begin for assets first held on or after 1 July 2023.

Small businesses (aggregated turnover less than $10 million) will be able to apply to the Administrative Appeals Tribunal (AAT) to pause or modify ATO debt recovery action for debts being disputed in the AAT. Currently, small businesses are required to go through the court system to pause or modify ATO debt recovery action. Taxpayers are otherwise required to pay disputed tax liabilities by the due date or enter into a 50/50 arrangement with the ATO to defer recovery action. In the 2021 federal budget, it was announced that the AAT will have power to pause or modify ATO debt recovery action until the underlying dispute is resolved. Debt recovery action includes garnishee notices and the recovery of general interest charges or related penalties.

In its response to the COVID-19 lockdowns during the second half of 2021, the Australian Capital Territory (ACT) Government has implemented support grants for businesses. Grants of up to $20,000 are available to eligible small and medium businesses where turnover has declined by at least 30% over the lockdown period. These grants were subsequently extended in October 2021. Businesses do not need to re-apply as payments will be automatically paid. The federal government has also announced that these payments received will be tax free. Landlords and commercial owner-occupiers may be eligible for new land tax relief in 2021.

Throughout the COVID-19 pandemic, the South Australian Government has implemented a range of stimulus payments for residents and businesses. In December 2021, density restrictions in place may have meant that your client has experienced a further decline in turnover.

• These support measures include: • automatic payments for those also in receipt of the COVID-19 Tourism and Hospitality Support Grant • automatic payments for gym who qualified for the Additional COVID-19 Business Support Grant • one-off grants for other eligible businesses that experienced a reduction in turnover, and • new grants available for major events that are cancelled or postponed. • For previous measures that were in place in South Australia, refer to our state COVID-19 page.

nnouncement(10-May-2021) Consultation(25-Aug-2021) Introduced(25-Nov-2021) Passed Royal Assent Date of effect

Announcement(2-Dec-2021) Consultation(23-Dec-2021) Introduced Passed Royal Assent Date of effect

Announcement(8-May-2021) Consultation(12-Jan-2022) Introduced Passed Royal Assent Date of effect

Announced: 22-Mar-2020 Updated: 20-Jan-2022

Announced: 26-Mar-2020 Updated: 21-Jan-2022

REALESTATE REAL APRIL 2022 ESTATE FIND AUSTRALIA’S #1 PLACE FOR PROPERTY

HOUSE OF THE MONTH

Free RENTAL LISTING Advertising for Real Estate Agents