2020 Budget Summary

2020 BUDGET

 

We have summarized the main Tax related budget points released last night.

 

Personal Income Tax Changes Some welcome tax cuts at the individual level as follows:

 

Applicable rates from 01 July 2020

Increase on the 19% bracket from $37,000 to $45,000

Increase on the 32.5% bracket from $90,000 to $120,000

 

The rates would look like this:

 

Tax Rate

Income Brackets Comment

0%

0 – $18,200

No Change

19%

$18,201 – $45,000

Increased upper limit from $37,000

32.5%

$45,001 – $120,000

Increased upper limit from $90,000

37%

$120,001 – 180,000

No Change

45%

$180,001 +

No Change

 

 

Changes to Low income Tax Offset:

Increase on the offset from $445 to up to $700

 

For BUSINESS TAX PAYERS  there are some reasonably good news:

1- Expanding access to small business tax Concessions including

  • Deduct certain start up expenditure and certain prepaid expenditure
  • Eligible businesses will be exempt from FBT on car parking and some work-related electronic devices

 

2- Uncapped immediate write off for depreciable assets

Businesses with turnover of less than $5Bn can claim an immediate deduction on eligible depreciable assets in the year the asset is first used or installed ready for use provided

  • the asset is acquired from 7:30 pm on 06 October 2020
  • it is a NEW ASSET or an IMPROVEMENT

 

For second-hand assets, the asset can be fully deductible if the cost is less than $150,000 and purchased from 02 April 2019 and first used or installed ready to used by 12 March 2020 and 31 December 2020

 

3- Write off Simplified Depreciation Pools

Small businesses (turnover under $10mill) can deduct the simplified depreciation pools at the end of the income year up t 30 June 2022.

 

4- Jobmaker Hiring Credit

The introduction of the Jobmaker Hiring credit applicable to eligible employers hiring eligible employees aged 16 to 35.

The credit will be $200 per week for employees aged 16 to 29

The credit will be $100 per week for employees aged 30 to 35

 

To be claimed quarterly in arrears with a cap of $10,400 for each additional position created.

Certain criteria for eligibility of employees will apply

 

5- Tax Free Grants 

The possibility of making government business support grants to be non assessable /non exempt income in other states, just like it currently applies in Victoria.

However, this is not legislated just yet and will be applicable for grants announced after 13 Sept 2020

 

6-FBT Compliance simplification

Employers will be able to rely on corporate records for FBT purposes instead of employee declarations, thus reducing the compliance for businesses

 

For COMPANIES only, there is the temporary loss carry back

Applicable for companies with turnover of up to $5bn

Can carry tax losses for years 2020,2021 or 2022 to offset previously taxed profits made in or after 2019 year

There are some limitations for example, the carry back is limited to no more than earlier tax profits and it cannot generate a franking account deficit

Other Budget Tax Concessions

Granny Flat CGT exemption 

From July 2021, there will be a targeted CGT exemption (subject to the legislation been approved) for granny flat arrangements (where elder people transfer their home or proceeds from Sale to Adult children in return for ongoing housing and care)

 

As usual, if you have any questions please contact us at

 

From the team

KARDIA GROUP, BUSINESS ADVISORS

 

 

 

Jobkeeper UPDATE – Businesses now able to claim Jobkeeper for new employees

 

The government has registered a new legislative instrument on the 14 August, whereby the eligibility date for assessing employees eligible to Jobkeeper is Now 1 July 2020.

 

As you would recall, the eligibility date for employees to be enrolled in jobkeeper was the 01 March 2020.

Now this date has been shifted to 01 july 2020 providing room for further claims for additional employees initially to September 2020.

 

And there is another change:

There is now an ability for an employee (and eligible business person ) to RE-NOMINATE for Jobkeeper with a new employer under certain circumstances.

 

What does this mean to you as employer:

  • Any employees that were employed as at 01 July 2020 under a permanent part time / Full time basis will be eligible for Jobkeeper (subject to the other eligibility conditions)
  • Any long term casual employees that meet the 12 month test as of 01 July 2020 now become eligible for jobkeeper (not employed by any other entity)
  • You may have employees turning 18 between March and July 2020. These employees would be eligible for jobkeeper now
  • Any employees whose immigration status changed between March and June 2020 may be eligible for Jobkeeper

 

Few clarifications that I am sure you have circling your head at the moment:

 

  • The change starts for jobkeeper fortnights commencing on 03 August 2020.

 

  • The ATO has confirmed that for fortnights commencing on the 3rd August and 17 August employers will have until the 31 August to meet the wage payments for employees who are now included in the Jobkeeper under the 1 July eligibility test (not for the prior employees though…..)

 

  • No, you do not need to satisfy the turnover test again, at least until the 28th September

 

  • Remember that ALL eligible employees must be in job keeper if they qualify and accept to be nominated.

This is known as the “one in, all in” principle

 

  • Since August is a 3 fortnight period for the purposes of jobkeeper, you must ensure that your employees receive the minimum $1500 per fortnight for the three fortnights, otherwise you will not be eligible to receive the payment

 

  • For any new employees entering the scheme you will need to Complete the nomination form as soon as possible (just like you did at the beginning of the scheme.

 

Feel free to contact us with any enquiries

 

The team at KARDIA GROUP.

 

End of Financial year end – Last few reminders

Since we are on the last few days of the financial year we thought it would be useful to send a couple of reminders to ensure you are all up to speed with all compliance issues coming up. Short and straight to the point:

 

  • For individuals, COVID 19 brought up the opportunity to have an early access to your super provided you satisfy certain conditions.
    • You can access up to $10,000 before the 30 June

Ensure you really meet the conditions such as being unemployed or having suffered a reduction in your work hours by more that 20% among other conditions. Check the full eligibility on the link below: https://www.ato.gov.au/individuals/super/withdrawing-and-using-your-super/early-access-to-your-super/#Compassionategrounds

 

    • If you are intending to make personal deductible superannuation contributions ,Today or tomorrow would be the last few days you have to pay those so they count towards your 2020 year.

Remember to keep in mind the concessional Caps and the bring forward rule.

 

  • For small businesses:
    • The second round of the Small Business COVID 19 adaptation Grant program will open on the 1st of July 2020.

Check the details here https://www.business.qld.gov.au/starting-business/advice-support/grants/adaption

 

    • Remember the $150,000 instant asset write off is still available and it has now been extended to 31 December 2020.

 

    • If you are receiving Jobkeeper payments, these will be TAXABLE INCOME for your business. Keep this in mind for your tax planning

 

    • If you are considering paying extra super for the business owners, these need to be made within the next two days so the funds are cleared in your superannuation fund by the end of the month

 

    • If applicable, remember to attend your stock take, you can value the items at cost or market value.

 

    • By now, you would be using your Single touch payroll (STP) compliance system to process your wages. These has various implications when coming to the end of the financial year:
      • You do not need to supply your employees with a payment summary unless you want to. Notify your employees that they will not be receiving the annual PAYG certificate.
      • You do not need to lodge annual payment summaries with the ATO anymore
      • You will need to attend the finalisation process for your wages in your STP system. This is basically an electronic declaration processed through your payroll system.
      • The key dates for you to complete the declaration are:
          • 14 July for employers that have 20 or more employees
          • 31 July for employees that have 19 employees or LESS
    • Remember your June Jobkeeper reporting is due by the 14 July

 

    • Remember your Super guarantee payment for the quarter ended 30 june 2020 is due on the 28th july

 

    • Remember the BAS for June 2020 will be due on 28 July for quarterly lodgers or 21 July for monthly lodgers.

 

  • For Property  Investors

 

    • From 01 July 2019 there is no deductions for Vacant Land unless the land is used in carrying on a business (e.g. an active farm)

This means there is no deduction for things like Interest, rates or maintenance expenses.

 

    • There is an additional 10% CGT discount for those Individuals who provide affordable rental housing for periods totalling at least three years.

 

    • From 01 July 2020, there is no Main residence exemption to foreign residents except in limited circumstances

 

If you have any questions regarding the above, please do not hesitate to contact us here at KARDIA GROUP.

 

JobKeer UPDATE operative provisions

UPDATE JOBKEEPER SUBSIDY PROGRAM

 

Some of you would have received a text message on your phones yesterday about 5:48 pm directly with the ATO with some updated information regarding the Jobkeeper subsidy.

 

So, we thought it would be good if we summarise and give you an updated view of how this program is likely to work.

The actual document is presented by the ATO on the following link: https://www.ato.gov.au/General/JobKeeper-Payment

 

The operation in broad details is as follows:

  • The scheme requires an initial registration with the ATO. The application for the scheme will start on the 20th April 2020 via online application.

Cant’ give you a link until that date, however would be important to receive updates directly from the ATO. You can subscribe to the updates here: https://www.ato.gov.au/Job-keeper-payment/

As soon as the registrations open we will notify you. You will be able to enrol or we will be able to do it for you.

 

  • You must check your eligibility as employer.Here is where the ATO has provided some additional information:
    1. Determine if you as employer are eligible – AKA the 30% drop in turnover test. / 15% drop in Turnover for ACNC registered Charities

There are three ways to determine the turnover test:

  • Compare your turnover in March 2020 to March 2019
  • Compare your projected turnover in April 2020 to April 2020
  • Compare your Projected turnover April to June 2020 to April to June 2019
  • An alternative test as approved by the ATO .

 

Few things to mention here:

  • The turnover is based on your GST Turnover. (regardless of your reporting cycle, monthly or quarterly)
  • You only need to meet the test ONCE, however you will have ongoing reporting requirements (not yet defined by the ATO)
  • If you do not qualify as at 30 March 2020, you can apply the tests above for any month or quarter, and once met you will be eligible for the subsidy from that fortnight onwards.

 

  • Determine eligibility of the employees.
    1. Permanent / part time employed by you at 01 March 2020
    2. Casual employees employed systematically for at least 12 months prior to 01 March 2020
    3. At least 16 years of age
    4. Australian permanent residents / Citizens
    5. Special visa holders

 

  • Your employees must be Nominated for the jobkeeper program
    1. Notify your employee that you are nominating them
    2. Employee must agree to the nomination by signing the JOBKEEPER EMPLOYEE NOMINATION NOTICE (form can be downloaded from this link:  https://www.ato.gov.au/Forms/JobKeeper-payment—employee-nomination-notice/
    3. This form is only for your records.
    4. This form is to be returned to the employer before the end of April 2020.

 

  • Payment must be made:
    1. Once you have determined the eligible employees and your eligibility as employer for the program, you NEED TO PAY the employees at least $1,500 per fortnight.
    2. Continue to pay them for as long as you continue claiming the subsidy or until the end of the program.
    3. Tax must be withheld as appropriate.

 

  • The employer will be required to process a Claim for the Jobkeeper Payment at the end of the month :
    1. Process claim via ATO portal , likely performed by us, tax agents.
    2. Report No. of eligible employees
    3. report to the ATO on an ongoing basis the number of employees, terminated employees etc.

 

  • Superannuation:

There seems to be some new rules being introduced by the government to not require super guarantee on the additional payments as a consequence of the Jobkeeper. However this is not finalised.

So, for the moment the position seems to be as follows:

 

– If your employee earns over $1500 per Fortnight, full super applies as normal.

– If your employee is receiving the payment but not performing any work, there is no requirement for super to be calculating on the amount to $1500.

– If your employee’s wages are less than the Jobkeeper, you only pay super on the actual portion related to the hours worked, any extra payment to reach $1500 is not subject to superannuation

 

Final Comments:

– All Jobkeeper payments are assessable income for the EMPLOYER

– No GST is applicable in this income

– The final details of the program are not yet released in full, the ATO is still fine-tuning the final details, so we will continue providing updates as they get released.

 

 

If you have any questions regarding the above, please call us and we will be happy to discuss further.

The Team at Kardia Group 

T: 07-33924900

 

 

 

LIABILITY LIMITED BY A SCHEME APPROVED UNDER PROFESSIONAL STANDARDS LEGISLATION.

 

 

JobKeeper Subsidy

Another development in the fight to keeps businesses afloat:

This time around, the government has released a subsidy program called the JOBKEEPER program.

This is mainly designed to assist employers / sole traders cover the costs of their wages.

Eligibility Criteria for small businesses just like yours:

– Turnover of less than $1 Billion per annum
– The turnover of your business is REDUCED BY MORE THAN 30% relative to a comparable period a year ago
(This period is at least a month )

Eligible employees:

– Full time / Part Time / long term  casuals / stood down employees
– Casual employees eligible if they have been with the employer on a regular basis for the previous 12 months as of 01 March 2020
– Employee Immigration status: Only those that are Australian citizens, Permanent resident visa holders, New Zealanders with 444 visa, special category visa holder residing in Australia continually for 10 years or more
– Re-engaged employees who were employed with the same employer on 01 March 2020
– SELF EMPLOYED individuals will be eligible to receive the jobseeker payment where their income has reduced over 30% compared to a prior year (period being at least one month)

The Process:

In order to receive the subsidy you must:
– elect to participate in the scheme by completing an expression of interest here https://www.ato.gov.au/general/gen/JobKeeper-payment/?=redirected_JobKeeper
– You will be required to :

  • provide supporting information to demonstrate the downturn on your business
  • Report the number of eligible employees employed by the business on a monthly basis going forward.

The Payment:

– Eligible employers will receive a payment of $1,500 per fortnight PER EMPLOYEE FOR UP TO 6 MONTHS
– The payment is the wages BEFORE Tax
– You are able to top up the payment to your employees
– You will receive these payments a month in arrears
– It will be up to you as employer if you want to pay superannuation on any additional wage paid because of the Jobseeker payment.

If you have any questions regarding the above, please contact us immediately
We will be glad to assist in these difficult times

The team at KARDIA GROUP