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TAX UPDATES
2022 TAX UPDATES
Loss carry-back available for companies
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. The loss carry-back tax offset has been extended by 12 months to include losses in the 2022–23 income year. The amendment is now as the legislation has been given royal assent.
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)
Partial abolition of the superannuation work test
First home super saver scheme maximum set to increase
Employee share scheme tax and regulatory changes
The work test for making non-concessional or salary sacrifice superannuation contributions will be removed from 1 July 2022. Prior to the change, super fund 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. However, it should be noted 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’).
The maximum amount of contributions that can be released from superannuation under the first home super saver (FHSS) scheme will increase from $30,000 to $50,000. The increase will apply to withdrawal requests from 1 July 2022 as amending legislation has now passed and been given royal assent. Individuals can withdraw funds out of their superannuation account to be used for a first home deposit. The scheme began on 1 July 2017, with voluntary contributions up to $15,000 per year able to be used for an FHSS scheme withdrawal. The withdrawal also includes deemed earnings on the voluntary contributions. The scheme is intended to provide an incentive to enable first home buyers to build savings faster for a home deposit, by accessing the tax advantages of superannuation. The scheme also is available for non-first home buyers in limited circumstances. Other administrative changes from the amending legislation include allowing individuals to withdraw or amend their application for release prior to receiving payment. Individuals who withdraw or amend an application will not lose their ability to re-apply for a FHSS release in future. These administrative changes will apply retrospectively from 1 July 2018.
New legislation will remove ‘cessation of employment’ as a deferred taxation point on employee share schemes (ESS) from 1 July 2022. Further regulations have been released by the Treasury around changing both the taxation and regulatory framework for Australian businesses. Overall, combining both the new legislation and regulations for ESS participants and businesses may change traditional structuring of arrangements. Further, it will allow greater flexibility and clarity for businesses to make ESS offers to participants in the future. These updates will commence for ESS interests entered into on or after 1 July 2022.
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 would be empowered to pause or modify ATO debt recovery action until the underlying dispute is resolved.
Announcement(11-May-2021) Consultation Introduced(27-Oct-2021) Passed(10-Feb-2022) Royal Assent(22-Feb-2022) Date of effect(1-Jul-2022
Announcement(10-May-2017) Consultation(4-Aug-2017) Introduced(27-Oct-2021) Passed(10-Feb-2022) Royal Assent(22-Feb-2022) Date of effect(1-Jul-2018)
Announcement(10-May-2021) Consultation(25-Aug-2021) Introduced(25-Nov-2021) Passed(10-Feb-2022) Royal Assent(22-Feb-2022) Date of effect(1-Jul-2022)
Announcement(8-May-2021) Consultation(12-Jan-2022) Introduced(17-Feb-2022) Passed Royal Assent Date of effect
2022 TAX UPDATES
ATO scrutiny of family trust arrangements
Potential end for Div 7A and sub-trust arrangements
Tasmania COVID-19 stimulus package
Intangible assets depreciation changes proposed
The NSW Government has introduced a financial assistance package for small and medium-sized businesses under pressure in early 2022 as a result of COVID-19. Specifically, eligibility for the Small Business Support Program will be based on turnover levels in January 2022 or the first fortnight of February 2022. The program is similar in nature to the JobSaver program available to businesses in NSW during 2021. Businesses will receive payments based on their level of payroll if they have experienced a minimum decline in turnover. Applications need to be made through Service NSW and close 31 March 2022.
On 23 February 2022, the ATO released TR 2022/D1 and PCG 2022/D1 in relation to distributions made by trustees of discretionary trusts. This was complemented by TA 2022/1, which discusses parents benefitting from the trust entitlements of the adult children. All 3 documents focus on schemes where income is diverted from an intended beneficiary in order to reduce tax liabilities. The rulings discuss these at detail and include significant attention to an important carve out for dealings that are “ordinary family or commercial” dealings. These dealings are excluded from the anti-avoidance provisions. Trustees need to make sure that their distributions are in accordance with the expectations of the ATO, otherwise they may be subject to an audit. Helping them understand their obligations is paramount coming up to the end of the current income year.
A draft determination has changed the ATO’s position on how sub-trust arrangements apply within the context of Div 7A. Effectively, when a corporate beneficiary and trustee of the trust are ultimately the same people, Div 7A will apply directly to unpaid present entitlements (UPEs). The assumed provision of financial accommodation in practice means that sub-trust arrangements will have no benefit when it comes to deferral of tax or repayments of loans. When finalised, the determination will apply from 1 July 2022. A consultation period ends on 8 April 2022 and stakeholders are encouraged to have their say with the ATO.
The Tasmanian Government has extended payroll tax relief for businesses who employ apprentices, trainees or a person under 25 years of age. Previously, the relief from payroll tax was due to end on 30 June 2022, but this will be extended for 2 years to 30 June 2024. Further, support packages continue to be available to assist micro and small businesses that are impacted by lockdowns and restrictions. COVID-19 Business Impact Support Program Round 3 has been announced and grants of up to $10,000 are available. To be eligible, a business will need to have turnover under $10 million and be able to demonstrate a 30% reduction in turnover as a direct result of lockdowns and restrictions.
Applications for the grant open 16 March 2022 and will close on 5 April 2022.
New legislation has entered parliament that deals with intangible asset depreciation. The amending legislation comes 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.
Announced: 30-Jan-2022 Updated: 25-Feb-2022
Announcement(23-Feb-2022) Consultation period(8-Apr-2022) Released
Announcement(23-Feb-2022) Consultation period(8-Apr-2022) Released
Announced: 20-Mar-2020 Updated: 15-Mar-2022
Announcement(2-Dec-2021) Consultation(23-Dec-2021) Introduced(9-Feb-2022) Passed Royal Assent Date of effect
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