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The Director ID regime started on November 1 and legislation before Parliament presents a series of the 2021-22 budget measures./

From Government

Increased Child Care Subsidy (CCS) has been Brought Forward

The initial date for the additional subsidy for families with two or more children has been brought forward from March 7, 2022, to July 11, 2022. Families with two or more children aged five years will have their CCS rate increased by 30% for their 2nd child and younger children, the maximum rate will be 95%.
The $10,665 annual child care subsidy cap will be scrapped on December 10, 2021 and applicable for the entire 2021-22 financial year.

From the Regulators

Preparation for the Director ID Regime

The government has presented a new director regime to prevent fraudulent director identities and minimise unlawful activity like phoenix activity.
The ATO and Australian Business Services Registry (ABSR) have issued information on the new director ID requirements, implying that individuals can apply for director ID from November 2021.

How to Apply?
Two stages are included in the application process:

  • Verification of the director’s identity
  • Connecting the director to the business’s ABN

Apart from this, directors will apply through ABSR using myGovID. On the other hand, for clients who can’t apply through myGovID, then the best method to apply will depend on their situation.

  • If an individual has an Australian TFN, then they are allowed to apply by phone. 
  • If the individual doesn’t have an Australian TFN, then they can apply with a form that can be downloaded and will need to give certified copies of documents for identity verification. 

Who Needs to Apply?
Individuals need to get a director ID if they are a director or qualified officer of any of the below entities:

  • A company
  • An Aboriginal and Torres Strait Islander corporation 
  • A charity or not-for-profit organisation 
  • A corporate trustee
  • A registered Australian body
  • A foreign company that is registered with ASIC and has a business in Australia

Timing 

Date you become a director Date you must apply
On or before 31 October 2021 By 30 November 2022
Between 1 November 2021 and 4 April 2022 Within 28 days of appointment
From 5 April 2022 Before appointment

STP Changes for 2022
Tax practitioners will know that from July 1, 2021, small employers with closely held payees and micro employers reporting quarterly will be required to start through single touch payroll (STP). The STP quarterly reporting concession for micro employers is accessible by micro employers that match eligibility requirements. Employers need to match the guidelines for the application period commencing after July 1, 2021.

The start date for STP Phase 2 is January 1, 2022. The ATO has suggested that:

  • Having Phase 1 reporting solution ready for January 1, 2022, will allow you to start Phase 2 reporting from January 1, 2022.
  • If you can begin Phase 2 reporting before March 1, 2022, then it will be considered that you are reporting on time and you don’t need to apply for more time.
  • If you require more time, then you can apply for a delayed transition from December 2021.
  • For genuine mistakes, the ATO will not impose penalties for the first year of Phase 2 reporting until December 31, 2022.

More Cryptocurrency Guidance
The ATO has issued some additional guidance on some issues that tax practitioners must consider when customers are involved in cryptocurrency investment. When it comes to cryptocurrency, the ATO has raised a few points including:

  • A CGT event happens when disposing of cryptocurrency. It can include selling cryptocurrency for a fiat currency, trading or exchanging one cryptocurrency for another or using it for services or goods.
  • Cryptocurrency is considered a separate asset for CGT purposes. 
  • Transferring cryptocurrency from one wallet to another will not be considered a CGT disposal if coin ownership is maintained. 
  • The longer someone maintains cryptocurrency, the fewer chances it will be considered a personal use asset. 
  • Things like transfer costs, brokerage fees, platform costs, borrowing expenses, legal fees, and interest on loans can be incorporated in the cost base of cryptocurrency. 
  • Keeping records is extremely important – clients need details and receipts of the type of coin, any exchange record, time and date of transactions in Australian dollars, and what they paid in brokerage fees or commissions. 

NSW Commercial Landlord Hardship Fund
The NSW government has issued a hardship fund for smaller landlords whose primary income source is given by rental relief to commercial tenants that have been financially affected by the 2021 Covid-19 lockdown. Under the scheme, landlords are allowed to apply for payment of up to $3,000/month, per property impacted by an impacted lease.

For eligibility criteria for payment, landlords must satisfy the following criteria:

  • They have met a rental abatement agreement to minimise rent payable to affected tenants, per other commercial leases regulations 2021.
  • They get approval from tenants to disclose the terms of agreements to apply for the fund. 
  • They keep evidence that the agreed rent reduction has been applied to the month for which the fund has been claimed. 

Loss Carry Back Offset and Franking Accounts

The ATO has given a reminder to companies that can access the loss carry back measure that they need to confirm the balance in their franking accounts because it can reduce the amount of loss carry back tax offset that can be claimed.

Issues can be pointed out when reviewing franking accounts of a company:

  • Checking all transactions have been entered correctly
  • Checking for any deferred debits that link to R&D tax incentive refunds and tax payments have been assigned accurately against those deferred debits
  • Checking whether the balance has been calculated accurately to see if it is in debit or credit position at the end of the income year

Minimising the Requirement for an Actuarial Certificate
Self-managed super funds (SMSFs) don’t need to get an actuarial certificate for exempt current pension income (ECPI) in circumstances for the 2021-22 and later income years.

Ruling & Determination 

The ‘Games and Sports’ Income Tax Exemption (TR 2021/D6)
This draft ruling condition is to be satisfied for a not-for-profit entity to self-assess its applicability as a tax-exempt entity based on the fact that its primary goal is to encourage game or sport.
To access tax-exempt status, the entity must be a not-for-profit entity. Common ways of meeting this requirement include the use of particular clauses in the governing documents. Another requirement is that the entity must have the aim of encouraging a sport or game.

Direct or indirect activities that show the purpose of encouragement of a sport or game can include:

  • Creating, preparing, and entering teams and competitors in competitions in the sport or game
  • Co-coordinating activities
  • Enhancing the abilities of participants 
  • Conducting tournaments
  • Enhancing the standards of coaches and trainers
  • Providing facilities for the activities of the sport or game for the visitors and club members

Calculating Aggregated Annual Turnover
Aggregated annual turnover is used for a variety of purposes within a tax system. TD 2021/7 considers calculating the annual turnover of linked affiliates and entities that have a different income year from that entity that is being tested. TD 2021/D2 elaborates the application of the linked entity rules in relation to partnerships, non-entity joint ventures and foreign hybrids. TD 2021/D3 looks at the linked entity rules in relation to corporate limited partnerships. TD 2021/D4 considers the public entity exception to the indirect control test.

Shortcut Method for Home Office Deductions
PCG 2020/3 has been changed to extend the period that taxpayers will be able to use the ‘shortcut’ 80 cents per hour method for calculating deductions for extra expenses when an individual is working from home because of the Covid-19 pandemic.

Electronic Sales Suppression Tools (PS LA 2021/D2)
The ATO has issued this draft practice statement to apply administrative penalties for the supply, production, possession and use of an electronic sales suppression tool (ESST). These tools can help to manipulate, falsify, destroy, hide, or prevent the formation of electronic sales records.

Legislation 

  • Treasury Laws Amendment Bill 2021: This bill has various Federal Budget announcements such as amendments to the operation of the superannuation system and extension of the temporary full expensing measures. 
  • Simplifying and facilitating access to covid-19 related financial advice.
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