TAX UPDATES

2022 TAX UPDATES

Partial abolition of the superannuation work test

The work test for making non-concessional or salary sacrifice superannuation contributions is proposed to be removed from 1 July 2022.

Currently, members over the age of 65 are required to work at least 40 hours over a 30 day period in a relevant financial year when making a contribution. Removing this test for non-concessional contributions (including the bring forward rule) will allow members to contribute more to super throughout their lifetime, subject to meeting other requirements.

It is noted in the 2021 Federal Budget announcement that the work test for individuals between 67 and 74 years will continue to apply for personal deductible contributions. However, an individual may be entitled to a ‘one-off’ work test exemption in limited circumstances (see event ‘Work test exemption for low balance retirees’).

Downsizer contributions to superannuation

Downsizer contributions have been available to members of complying superannuation funds since 1 July 2018. From this date, a person aged 65 years or older will be able to make a contribution up to $300,000 from the proceeds of selling their main residence. A recent legislative amendment originally from the 2021 Federal Budget proposes that from 1 July 2022 the age limit will reduce from 65 to 60.

This contribution will be outside the current non-concessional rules.

To be eligible to make the contribution, they must have owned their main residence for at least 10 years. It is available to both members of a couple for the same home, even if only one is on the title deed.

These contributions are in addition to existing rules and caps and are exempt from the:

• age test

• work test, and

• $1.6 million total superannuation balance test

for making non-concessional contributions.

Announcement(11-May-2021) Consultation Introduced(27-Oct-2021) Passed Royal Assent Date of effect

Announcement(10-May-2017) Consultation(11-May-2021) Introduced(27-Oct-2021) Passed Royal Assent Date of effect(1-Jul-2018)

Victoria COVID-19 package for state taxes

Throughout the COVID-19 pandemic, the Victorian government has announced various assistance for businesses who are required to pay land tax or payroll tax. Assistance has been given in the form of reductions, refunds and deferrals of these state taxes. However, not all assistance is applied automatically and requires direct application with the State Revenue Office. Most recently, a 12-month deferral of payroll tax applies to businesses with Victorian taxable wages under $10 million. Also, land tax relief has been extended into 2021 for landlords who provide qualifying rental reductions to their tenants. This has recently been extended again in October 2021. The impact statement and letters provide more detailed information for you to correspond with your clients, to ensure they receive all the assistance they are entitled to.

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.

Announced: 20-Mar-2020 Updated: 2-Nov-2021

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

Payment Times Reporting Scheme

2022 TAX UPDATES

Single Touch Payroll Phase 2 now deferred

Small business CGT concessions accessed by ineligible taxpayers

Victorian windfall gains tax

Loss carry-back available for companies

Employee share scheme tax and regulatory changes proposed

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.

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.

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.

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.

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

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

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

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