The JobKeeper dates have been extended for 13 fortnights along with reduction in payment rates and additional eligibility criteria. This time as well the popularity of accountants and advisors has enhanced. Till now the details of eligibility and access to JobKeeper 2.0 has not been released. 

Moreover, Division 7A has come up with relief for people influenced by COVID-19 who are not able to meet minimum yearly repayments till the end of 2020 income year. One cannot claim occupancy cost for home office expenses while forcibly working from home.

 

By Government

JobKeeper 2.0

The treasurer declared on July 21st, extension to JobKeeper scheme beyond September 27, 2020 and has released high level details on the alterations of the scheme. It has been extended for 13 fortnights in addition. These alterations shall be applicable in two stages (September 18, 2020 to 3 January 3, 2021, January 4, 2021 to March 28, 2021).

 

  • The workers who are looking to claim for JobKeeper payments for the increased period needs to be assessed again for their eligibility and pass the additional low in turnover tests. The enhanced tests will be on the basis of actual GST turnover.
  • One has to pass the decline in turnover test for June 2020 quarter and September 2020 in order to get qualified for JobKeeper payment for September 28, 2020 to January 3, 2021.
  • One needs to clear a decline in turnover test for June, September and December 2020 quarter, in order to qualify for JobKeeper payment from January 4, 2021 to March 28, 2021.

Read More: JobKeeper Payment

 

Extension in Early Access to Superannuation

The authorities have declared that the special provisions allowing early access to advantages of superannuation shall be extended till December 31, 2020. The changes to the eligibility requirements to access this measure is not clear.

Read More: Early access to superannuation

 

By the ATO

 

Extension in Work from Home Deduction Method

As previously mentioned in the Reliable Bookkeeping Sevices June 2020 Round Up the ATO has declared a practical guideline PCG 2020/3 that outlines a shortcut method which can be used by taxpayer to claim the running expenses while working from home.

The rules for taxes were intended to be applicable from March 1, 2020 till June 30, 2020.  These have now been extended till September 30, 2020 and ATO indicates that this could be extended more.

With the shortcut method, individuals can claim a deduction with the standard rate of 80 cents each hour that is each hour worked from home during mentioned time period.

Read More:  Practical Compliance Guideline

 

Minimum Repayment Relief under Division 7A

When any loan from any private company to a shareholder is placed under loan agreement Division 7A, it will prevent full loan balance being treated as unfranked dividend.

 The ATO has provided with relief for taxpayers who are affected by Coronavirus, who were not able to meet the minimum yearly repayments. If the clients could not be able to meet minimum repayment obligations for 2020 year, it could be possible to apply for extension of time to make the repayments established by ATO.

The shortfalls of minimum yearly repayments of year 2020 would be required to get rectified till June 30, 2021.

 

Carrying the Rental Business – Information on Private Ruling Support

The ATO has been releasing the guidance on additional documents or information that could be required as a part of private ruling application related to the matter. The assistance involves data that must be provided with certain applications that are related to following issues:

  • Either or not the taxpayer is giving short-term accommodation.
  • Either or not the taxpayer is carrying rental properties business.

 

The above mentioned distinctions are very crucial in areas that involve small business concessions, GST and lower company tax rates. The above guidelines consist of lists mentioning the type of documents evidences that are essential and are required by ATO while accessing the private ruling application in either of the areas.

 

Reportable Tax Position Schedule For Large Private Companies

The organizations that meet the criteria will be required to lodge RTP (Reportable Tax Position) from income year 2021. For year 2021 in which big organizations are required to complete the schedule and they are required to lodge the RTP schedule being notified by ATO. The notifications by ATO will be initiated in July 2020. As per these purposes, the big private organizations are those who have total business income of:

  • $ 250 million or more than this
  • $ 25 million or more than this and a part of private economic group with income of $250 million or more than this. The total business income shall be calculated from 2019 company tax return and 2019 tax return of some other entities in economic group.

 

Guidance On Vacant Land

ATO has released assistance on tax issues that could be relevant when the customer holds the vacant land here also the question arises that whether the land is on revenue or capital account and if the deductions could be claimed for holding costs.

The guidance is targeted on position before July 1, 2019. Therefore, it is crucial to remember that from this date the rules shall be changed and prevent the deductions from being claimed for associated costs.

 

Membership Fee – Donations

Under the influence of COVID-19, many of the non-profit entities like cultural organisations and sporting clubs are giving partial or even full refund to their members for membership fee of 2020. Some of the companies are also providing option to donate refundable fee.
The ATO has given certain guidelines for the structures in which these donations will be tax deductible for the members. Basically, the deductions are for only gifts that are made to DGRs.

 

Interest Rate Under Division 7a Benchmark

 

The ATO is not publishing annual taxation determinations since 2020 out of Division 7A benchmark interest rate. This is used to analyze amount of interest arising from loans under Division 7A loan agreements that also influences annual minimum repayments. This rate from now will be published each year on the website of ATO. For year 2021 income year the rate is 4.52%..

 

Determinations and Rulings

 

Overtime Meal Allowances and Reasonable Travel for Income Year 2021

The annual determination has been released by ATO setting reasonable amounts of Commissioner in order to substantiate exception for income year 2021 with relation to the claims made by workers for:

 

  1. Overtime meal expenses

 These are for drinks and food for workers working overtime.

  1. Expenses on domestic travel

This is for accommodation, food and drink and the incidentals while travelling away from home for work.

  1. Travel expenses for overseas

This is for food and drinks and the incidentals while travelling for work overseas.

It is very crucial to rectify that records need to be met to justify the reductions claimed.

 

Deductions Meant for Environmental Protection Activities

This ruling considers the scope of capital expenditure to be levied on carrying environmental protection activities. These involves of the activities to be aimed for preventing, cleaning up, storing, fighting pollution or removal of waste from your income earning activities.

The ATO argues that the cases in which the amount cannot be allocated to different activities, it is significant to apply the sole purpose test to the expenditure.

It is worth noted that the claimable deductions are limited and cannot be applied to the expenditure.

  • For the purpose of acquiring land
  • For the purpose of construction or any improvements in structure of building.
  • For the purpose of doing environment protection activities on bond and security.

 

 

R&D and JobKeeper Tax Offset

The ATO issued draft ruling influence of getting JobKeeper payments on rule “At risk” that is applicable for prevention expenditure as a part of National deductions for claiming R&D tax offset.

In higher terms it can be said that the “at risk” rule prevents expenses from taken into account in the calculation of R&D tax offset in the range of circumstances that includes incurred expenses that leads to expectation f consideration to be received.

The ruling shows that if an individual gets JobKeeper payment for:

  • Paid workers at risk rule and is triggered and cannot deduct wage expenditure levied on R&D activities
  • For the businesses whose participation does not trigger the at-risk rule. So, the individuals are not prevented from deducting expenditure.

 

The entities in R&D who get the JobKeeper payments for their workers will be required to adjust their claims for R&D tax offset for years 2020 and 2021 to deduct salary subsidized by JobKeeper.

 

GST Margin Scheme Valuations

This determination sets out the needs for valuations for the purposes of applying the GST margin scheme to the supplies that are taxable made on March 1, 2010.

When the property is sold by anybody who is registered for GST, it is possible sometimes to calculate the GST liability by making use of margin scheme. Basically the margin is considered as the difference between GST and the GST inclusive price of sale.

The determination makes confirmation of four methods while doing GST margin scheme valuation. It includes of getting a valuation from professional valuer obtaining valuation from ATO.

The requirement is that the valuation msut involves signed certificate mentioning:

  • Description of property to be valued
  • Valuation date that is applicable
  • At the valuation date, the market value of property
  • The valuation calculation and approach
  • Qualification and name of valuer

 

Cases

ATO Decision Influences Statement – Carrying on a Business

The decision influenced statement has been released by ATO relating to the case that considers that either the taxpayer carried on business of forestry in order to take benefits of CGT concessions to a small business.  It was argued by ATO that the business was not carried by the taxpayer, because of the fact that the activities like growing tress for harvesting did not have conducted business activities due to lack of certain factors that would be in operations of business.On the other hand, it was concluded by AAT that the taxpayer was carrying the business.

Even though the operations were not considered to be like in normal business, this was all just because of underlying nature of forestry business.The decision of AAT shows the influence of context in framing such determinations and give another level of complexity in assessment of either largely vacant or passively held property is qualified for CGT concessions for small businesses.

Read More: Commissioner of Taxation and SWPD

 

Termination of Tax Agent Registration Due to Tax Debts

This is the case of tax agent whose registration was terminated by TPB based on the fact that the entity contravened one of the needs under tax agent of conduct.  The requirement was that the tax agent should comply with laws of taxation in conduct of the personal affairs.The entity owned a particular debt to ATO on integrated client account which is related to PAYG, GST and interest etc. Even though there were many complaints raised by an individual against conduct of ATO to manage tax disputes and getting default judgement, AAT disregarded these.

So, Mr Bell was failed to comply with certain obligations regarding taxation for long period.The basic issue which needed to be decided was either the cancellation of registration of individual tax agent was proportionate and appropriate to the contraventions of code of conduct.

While deciding against tax agent and upholding the termination of registration, AT stressed on significance of tax agents with certain personal tax obligations in maintaining good example for others.

Read More: Tax Practitioners Board AATA  v Bell

 

Legislation

Parliament will sit on August 24 till September 3, 2020

Rules for COVID-19 Economic Response Package Amendment 2020.

The rules to be amended confirm that Australian Government agencies and local governing bodies must be able to get confirmation of data about individual’s elections to participate in JobKeeper Scheme.