Articles

2020 Federal Budget Announcement

The 2020 Federal Budget Announcement on 6 October included significant measures to encourage consumer spending and drive the economy out of its current state. The key areas are summarised below, of which several have already passed through legislation.

Inclusions in the Tax Bill (Passed) 

Personal income tax cuts

Personal income tax cuts will now be brought forward and backdated to 1 July this year. There are two key parts:
Part 1 – A larger 2021 tax refund (in most circumstances) to account for the extra tax withheld in the July-Oct 2020 period.
Part 2 – A reduction in tax withheld from wages going forward giving a bigger net pay packet. This will start in the next few weeks. Here is an example of what you can expect:



Non-employees should consider varying PAYG Instalments to account for the cuts from September onward.

Instant asset write-off

This will allow any business with an aggregated turnover of less than $5 billion to immediately deduct the full cost of eligible depreciable assets of any value from 6 Oct 2020 which are installed and ready for use prior to 30 June 2022.
Second-hand assets are excluded from this measure, however small and medium-sized businesses with an annual turnover of less than $50 million will be able to fully expense second-hand assets.

Loss carry-back

Companies will be able to carry back tax losses from the 2019–20, 2020–21 or 2021–22 income years to offset against tax paid in a previous income year as far back as the 2018–19 income year. The applicable offset will be called a 'Loss Carry-back Tax Offset' and is available to companies earning less than $5 billion.
The tax refund will be limited by requiring that the amount carried back is not more than the earlier taxed profits and that the carry-back does not generate a franking account deficit.

Small business concessions expansion

Entities with a turnover of less than $50 million will also now be able to access 10 small business tax concessions (this was previously capped at $10 million):
  1. access an immediate deduction for certain prepaid expenses from 1 July 2020
  2. access an immediate deduction for certain start-up expenses from 1 July 2020
  3. access to a fringe benefits tax exemption in relation to small business car parking from 1 April 2021
  4. access to a fringe benefits tax exemption in relation to the provision of multiple work-related portable electronic devices from 1 April 2021
  5. access to a simplified accounting method for the purposes of GST from 1 July 2021
  6. ability to defer excise-equivalent customs duty to a monthly reporting cycle from 1 July 2021
  7. ability to defer excise duty to a monthly reporting cycle from 1 July 2021
  8. a two-year amendment period in respect of amendments to income tax assessments from 1 July 2021
  9. access to the simplified trading stock rules from 1 July 2021
  10. ability to pay PAYG instalments based on GDP-adjusted notional tax from 1 July 2021

R&D tax incentive

For companies with a turnover of less than $20 million, there will be no cap on the amount of refundable R&D tax offset a company can claim.
The refundable R&D tax offset for small companies will also be set at 18.5 percentage points above the claimant's company tax rate (up from 13.5 per cent from the current bill).
Larger companies with an annual turnover of $20 million or more will face a simplified two-tier intensity approach.

Other Federal Budget Announcements

Small Business Pooling – Immediate Write Off

Small business entities that have a turnover of less than $10 million and are using the pooling system can claim the balance of their depreciation pool at the end of the 2021 year as a deduction.
This means that all remaining depreciation can be claimed in 2021 but also means there is no further depreciation claim for assets previously purchased. It also means that proceeds on the sale of any depreciated assets are 100% taxable.

JobMaker

A credit will be available to eligible employers for additional new jobs they create for an eligible employee. The credit will be $200 per week for employees aged 16-29 and $100 per week for employees aged 30-35 and is payable over a 12 month period.
To be eligible, the employee will have to work a minimum of 20 hours per week and have received JobSeeker, Youth Allowance or Parenting Payment for at least one month out of the three months prior to start date.
Employers will also need to prove that the new employee will increase overall headcount and payroll.

Apprenticeship Commencements

A 50% wages subsidy will be available to businesses who take on a new or recommencing Australian apprentice, up to a maximum of $7,000 per quarter.

Economic Support Payments

For those people who receive a range of government payments, including aged pension, carer payment and family tax benefit, they will receive two $250 cash payments paid in December and March 2021.

Fringe Benefits Tax

The record keeping burden for FBT purposes will be reduced and an exemption will be provided for retraining and reskilling benefits that employers provide to redundant, or soon to be redundant employees where the benefits may not be related to their current employment.

Water Infrastructure Grants

This year's Budget includes $50 million to top up the on-farm emergency water rebate scheme that provides farmers with a rebate of up to $25,000 to clean dams and drill bores, which ran out of money 18 months early. This funding is contingent on being matched by the states.

Have you reassessed your eligible employees for JobKeeper?

If you are receiving a monthly JobKeeper subsidy for employees, it is essential that you reassess eligibility for any employees that are either new, or were not previously eligible. This must be done without delay to ensure that any 'newly eligible' employees are paid the minimum amount of $1500 per fortnight from the fortnight starting on 3rd August.

What has changed…..

Basically, all criteria was based around a date of 1st March 2020. THIS DATE HAS NOW CHANGED to 1st July 2020.

This means that:

a) staff who started after 1st March but before 1st July may now be eligible, and

b) staff who did not meet the criteria on 1st March may now meet it.

What if I do nothing……

If you have newly eligible employees and do not reassess and complete the necessary steps, you will not be eligible for any JobKeeper subsidy from 3rd August, as it is a 'one-in, all-in' rule.

Please contact us if you need help or if you are not sure whether or not this applies to you – it is better to be safe than sorry.

Case law update - Casuals v Permanent Employees

If you engage casual employees, make sure you're aware of the latest updates.

What is happening?

  • The Federal Court recently handed down a decision re-confirming a previous decision it handed down approximately 18 months ago
  • The decision reconfirms that a casual employee with a "firm advance commitment from their employer to continuing and indefinite work" is entitled to annual leave, personal/carer's leave, compassionate leave and public holidays

Next steps

  • This decision is highly likely to be appealed to the High Court, but in the meantime, this decision is law and it is important to understand whether this impacts your business
Download the below fact sheets for more information.

The impact of the Rosatto decision fact sheet


Please contact us if you would like any assistance.

Coronavirus Special Update


Government's Stimulus Package in response to the Coronavirus

Editor: What a changed world we are living in as we all try to navigate the challenges arising from the current Coronavirus Pandemic, including protecting the health and safety of our friends and family, and the viability of our businesses, employment and investments.

The purpose of this communication is to provide you with an update relating to the Government's Economic Stimulus Package in response to the Coronavirus.  Our office will continue to apply its available resources to assist and support you where we can through this uncertain period as we attempt to survive the ever changing restrictions we are all dealing with.

The following is a broad summary of the key aspects of the Federal Government's stimulus package in response to the Coronavirus, as recently announced and enacted. 

These measures were implemented via various Bills introduced into Parliament, which very quickly received Royal Assent on 24 March 2020 (including the Coronavirus Economic Response Package Omnibus Bill 2020), so as to give effect to the Government's stimulus package.  

 

Income support for individuals

Various measures have been introduced so as to provide a 'safety net' for individuals who are financially impacted by the Coronavirus.

The new Coronavirus supplement

A new six-month 'Coronavirus supplement' of $550 per fortnight will be paid to individuals who are currently eligible for certain income support payments, including the:

  • Jobseeker Payment;
  • Youth Allowance; and
  • Parenting Payment (Partnered and Single).

Furthermore, it appears that this new (additional) supplement will be paid to eligible individuals as part of their existing income support payments (e.g., Jobseeker Payment and Youth Allowance).

Expanding access (and eligibility) to certain income support payments

For the period that the Coronavirus supplement is paid, the Government will also expand access to certain income support payments (e.g., the Jobseeker Payment, the Youth Allowance Jobseeker and the Parenting Payment) for eligible individuals. 

For example, a new category of Jobseeker Payment and Youth Allowance Jobseeker will become available for eligible individuals financially impacted by the Coronavirus.

According to the Government, this could include, for example, permanent employees who are stood down or lose their employment; sole traders; the self-employed; casual workers; and contract workers who meet the income tests, as a result of the economic downturn due to the Coronavirus.

Additionally, asset testing for the JobSeeker Payment, the Youth Allowance Jobseeker and the Parenting Payment will be waived for the period of the Coronavirus supplement.  Income testing will still apply to the person's other payments, consistent with current arrangements.

Tax-free payments of $750 to eligible recipients

The Government will be providing two separate $750 tax-free payments (referred to as 'economic support payments') to social security, veteran and other income support recipients and to eligible concession card holders.

The first $750 payment will be available to individuals who are residing in Australia and are receiving an eligible Government payment, or are the holders of an eligible concession card, at any time from 12 March 2020 to 13 April 2020 (inclusive).  This payment will be made automatically to eligible individuals from 31 March 2020.

The second $750 payment will be available to individuals who are residing in Australia and are receiving one of the eligible Government payments or are the holders of one of the eligible concession cards on 10 July 2020 (except for those receiving an income support payment that qualifies them to receive the $550 fortnightly Coronavirus supplement).  This payment will be made automatically to eligible individuals from 13 July 2020.

Each of the $750 payments will be exempt from income tax and will not count as income for the purposes of Social Security, the Farm Household Allowance and Veteran payments.

Early access to superannuation benefits

The Government will introduce a new compassionate ground of release that will allow individuals to access their superannuation entitlements where those benefits are required to assist them to deal with the adverse economic effects of the Coronavirus, but only where one or more of the following requirements are satisfied:

  • The individual is unemployed.
  • The individual is eligible to receive the Jobseeker Payment, Youth Allowance for jobseekers, Parenting Payment (which includes the single and partnered payments), Special Benefit or Farm Household Allowance.
  • On or after 1 January 2020 either:                   
  1. the individual was made redundant; or
  2. the individual's working hours were reduced by at least 20%; or
  3. if the individual is a sole trader – their business was suspended or there was a reduction in the business's turnover of at least 20%. 

Under this new compassionate ground of release, eligible individuals will be able to access (as a lump sum) up to $10,000 of their superannuation entitlements before 1 July 2020, and a further $10,000 from 1 July 2020 (subject to a six-month time frame).

Eligible individuals who are looking to access their superannuation entitlements under the above new ground of release will be able to apply directly to the ATO through the myGov website (at www.my.gov.au) and certify that the relevant eligibility criteria is satisfied.

Editor: Importantly, such lump sum superannuation withdrawals under this new compassionate ground of release will not be taxable to the recipient (i.e., they will be tax-free).  Also, according to the Government, the amount withdrawn will not affect Centrelink or Veteran's Affairs payments.

Reducing the minimum drawdown amounts for superannuation pensions

The Government will be temporarily reducing the superannuation minimum drawdown amounts for account-based pensions and similar products by 50% for the 2020 and 2021 income years. 

Editor: This basically means that the total minimum annual pension amount that a superannuation fund is otherwise required to pay to a member receiving a pension from the fund (e.g., an account-based pension) will be reduced by half for these two income years. 

Reducing social security deeming rates 

From 1 May 2020, the Government will be reducing both the upper and lower social security deeming rates by a further 0.25 percentage points.  This is in addition to the recent 0.5 percentage point reduction, resulting in an overall reduction to the social security deeming rates of 0.75 percentage points.

On this basis, as of 1 May 2020, the upper deeming rate will be reduced from 3% to 2.25%, and the lower deeming rate will be reduced from 1% to 0.25%. 

Editor: These reductions reflect the low interest rate environment and its impact on the income from savings.  Broadly speaking, the social security deeming rates apply (for 'income test' purposes) to determine the amount of income that an individual is 'deemed' (or taken to) earn from financial investments (e.g., cash deposits and listed securities), irrespective of the actual amount of income (e.g., interest income and dividend income) earned by the individual.  In most cases, the deeming rates apply for the purposes of applying the Age Pension 'income test'. 

 

Cash flow assistance for businesses 

The Government is also providing cash flow assistance for eligible businesses in the form of two separate measures.

Boosting cash flow for employers

Small and medium-sized businesses and not-for-profit entities, with an aggregated annual turnover of less than $50 million (usually based on their prior year's turnover) that employ people, may be eligible to receive a total payment (in the form of a refundable credit) of up to $100,000 (with a minimum total payment of $20,000), based on their PAYG withholding obligations in two stages:

Stage 1 payment (credit)

Commencing with the lodgment of activity statements from 28 April 2020, eligible employers that withhold PAYG tax on their employees' salary and wages will receive a tax-free payment equal to 100% of the amount withheld, up to a maximum of $50,000. 

Eligible employers that pay salary and wages will receive a minimum (tax-free) payment of $10,000, even if they are not required to withhold PAYG tax.

The tax-free payment will broadly be calculated and paid by the ATO as an automatic credit to an employer, upon the lodgment of activity statements from 28 April 2020, with any resulting refund being paid to the employer.  This means that:

  • quarterly lodgers will be eligible to receive the payment for the quarters ending March 2020 and June 2020; and
  • monthly lodgers will be eligible to receive the payment for the March 2020, April 2020, May 2020 and June 2020 lodgements. 

Note that, the minimum payment of $10,000 will be applied to an entity's first activity statement lodgement (whether for the month of March or the March quarter) from 28 April 2020.

Stage 2 payment (credit)

For employers that continue to be active, an additional (tax-free) payment will be available in respect of the June to October 2020 period, basically as follows:

  • Quarterly lodgers will be eligible to receive the additional payment for the quarters ending June 2020 and September 2020, with each payment being equal to 50% of their total initial (or Stage 1) payment (up to a maximum of $50,000). 
  • Monthly lodgers will be eligible to receive the additional payment for the June 2020, July 2020, August 2020 and September 2020 activity statement lodgements, with each additional payment being equal to a quarter of their total initial (or Stage 1) payment (up to a maximum of $50,000).

Again, the ATO will automatically calculate and pay the additional (tax-free) payment as a credit to an employer upon the lodgment of their activity statements from July 2020, with any resulting refund being paid to the employer.

Editor: It should be noted that eligibility for the above payments is subject to a specific integrity rule that is designed to stamp out artificial or contrived arrangements that are implemented to obtain access to this measure.  In particular, if an employer or an associate enters into a scheme with the sole or dominant purpose of obtaining or increasing any of the above payments for a particular employer, for a period, the employer will not be eligible for any such payments for the relevant period. 

Wages subsidies for apprentices and trainees

Employers with less than 20 full-time employees, who retain an apprentice or trainee (who was in training with the employer as at 1 March 2020) may be entitled to Government funded wage subsidies.

These will be equal to 50% of the apprentice's or trainee's wage paid during the nine months from 1 January 2020 to 30 September 2020. 

The maximum wage subsidy over the nine-month period will be $21,000 per eligible apprentice or trainee.

Employers can register for the subsidy from early April 2020.

 

Increasing the instant write-off threshold for business assets 

Broadly, the depreciating asset instant asset write-off threshold will be increased from $30,000 (for businesses with an aggregated turnover of less than $50 million) to $150,000 (for businesses with an aggregated turnover of less than $500 million) until 30 June 2020. 

The measure applies to both new and second-hand assets first used or installed ready for use in the period beginning on 12 March 2020 (i.e., the date on which this measure was announced) and ending on 30 June 2020.

Small Business Entities ('SBEs')

Editor: These are businesses with aggregated turnover of less than $10 million.

SBEs will be able to claim an immediate deduction for depreciating assets that cost less than $150,000, provided the relevant asset is first acquired at or after 7.30 pm on 12 May 2015, by legal time in the ACT, and first used or installed ready for use on or after 12 March 2020, but before 1 July 2020.

Additionally, SBEs will also be able to claim an immediate deduction for the following:

  • An amount included in the second element of the cost of (i.e., an improvement to) a depreciating asset that was first used or installed ready for use in a previous income year.  The amount of the second element cost must be less than $150,000 and the cost must be incurred on or after 12 March 2020, but before 1 July 2020.
  • If the balance of an entity's general small business pool (excluding current year depreciation) is less than $150,000 at the end of the 2020 income year, a deduction can be claimed for this balance.

Medium Business Entities ('MBEs')

Editor: These are businesses with turnover of at least $10 million and less than $500 million.

MBEs can immediately deduct the cost of an asset in an income year if the asset has a cost of less than $150,000 and it was first acquired in the period beginning at 7:30pm, by legal time in the ACT, on 2 April 2019 and ending on 30 June 2020, and the taxpayer starts to use or have the asset installed ready for use for a taxable purpose in the period beginning on 12 March 2020 and ending on 30 June 2020.

Additionally, MBEs can also claim a deduction for certain amounts included in the second element of the cost of a depreciating asset, where the amount of the second element cost is less than $150,000, and is incurred on or after 12 March 2020 but before 1 July 2020.

The threshold will generally be applied to the GST-exclusive cost of an eligible asset (i.e., assuming the relevant business is entitled to an input tax credit for any GST included in the acquisition cost).

Importantly, this increased threshold also continues to operate on a 'per asset' basis, which means that eligible businesses can immediately write-off multiple assets (as long as each of the assets individually satisfy the relevant eligibility criteria).

Currently, the instant asset write-off threshold is due to revert to $1,000 for small businesses (i.e., those with an aggregated turnover of less than $10 million) from 1 July 2020.

Accelerating depreciation deductions for new assets

Broadly, a new time-limited 15-month investment incentive (available for eligible assets acquired from 12 March 2020 up until 30 June 2021) will also be introduced to accelerate certain depreciation deductions for businesses with an aggregated turnover below $500 million.

The amount that an eligible entity can deduct in the income year in which an eligible depreciating asset is first used or installed ready for use is:

  • 50% of the cost (or adjustable value where applicable) of the asset; and
  • the amount of the usual depreciation deduction that would otherwise apply (if it were calculated on the remaining cost of the asset).

Different rules will apply where an SBE is using the general small business pool (i.e., for assets not qualifying for the instant asset write-off).  In this case, an SBE may deduct an amount equal to 57.5% (rather than 15%) of the business-use portion of the cost of an eligible depreciating asset in the year is it allocated to the pool. 

Unless specifically excluded, an eligible asset is a new asset that can be depreciated under Division 40 of the ITAA 1997 (i.e., plant and equipment and specified intangible assets, such as patents), where the asset satisfies all of the following conditions:

  • The asset is new and has not previously been held (and used or installed ready for use) by another entity (other than as trading stock or for testing and trialling purposes).
  • No entity has claimed depreciation deductions (including under the instant asset write-off) in respect of the asset.
  • The asset is first held, and first used or installed ready for use, for a taxable purpose, between 12 March 2020 and 30 June 2021 (inclusive).

Note that a depreciating asset is not an eligible asset where a commitment to acquire or construct the asset was entered into before 12 March 2020.

 

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information's applicability to their particular circumstances.

Covid 19 - Business Planning


COVID-19 – Business Planning

We are receiving a number of enquiries from clients worried about what impact COVID-19 will have on their businesses.

You may find the following information and ideas helpful in navigating your way through this period and as always we are here to assist you with your financial affairs.

Consider adopting a TCUP mantra – "Thinking Clearly Under Pressure" and remember "Worrying is not Thinking". (reference https://www.inc.com/business-insider/13-secrets-to-performing-well-under-pressure.html)

Consider your purpose – generally this would be to keep your business running normally through the crisis and beyond.

Consider your strategy – what is your strategy for keeping your business running.

It may be useful to understand that there are four possible stages that business owners will go through in the current crisis.

Stage 1 - Denial

-       Being cynical or believing the whole thing has been blown out of proportion and     is overdone. 

-      As business owners we need to accept that there is a crisis and therefore consider    what a worst case scenario might look like for our businesses.

Stage 2 – Recognising there is a Crisis

-       Identify the current conditions and parameters that your business is operating in.

-       Review your obligations including:

o  Government Requirements, i.e. what limitations and restrictions are being forced upon your business by Government.

o    Understand your obligations to employees.

o   Do you have contractual obligations to customers and/or suppliers eg provision of goods and services, leases etc.

-       What are the supply and demand implications for your business.

-       Where appropriate keep your employees and other stakeholders informed about     the steps you are taking to minimise interruption and harm.  Experts generally       agree that open communication is advantageous in times like this.

 

Stage 3 – Planning Stage

-       Scenario planning – what do your best, worst and probable scenarios look like.

-       Review financial modelling.

-       Prepare "What If" scenarios.

-       What is the likely timeline for the business interruption events.

-       Consider employee issues including, what are our leave obligations,  do we need    to stand people down, can we job share, can we make employees redundant, etc

(reference www.employsure.com.au/coronavirus and https://www.fairwork.gov.au/)

-       Will you need to fund business interruption – do you need to be talking to your      financiers.

-       Do you have ATO debt and if so what is the strategy for dealing with the ATO.

-       Can technology be better utilised in your business.

-       Generally do you have a business "Continuity Plan".

Stage 4 – Once the Threat has Passed

-       There will be opportunity for entrepreneurial thinking.

-       If you made changes through the crisis can any of these changes be used to your    advantage going forward eg staff working from home with less requirement for      office space.

-      Are there ongoing benefits of using different technologies after the crisis.

-       There may be less competitors in your industry, if so do you have strategies to      attract potential new business.

-     What lessons have been learnt from the crisis and what "risk mitigation" strategies    can be implemented in the event of future catastrophic events.


Currently the Federal and State Governments have outlined the following assistance to small business.

Boosting Cashflow for employers with <$50m turnover. 

  • The minimum payment is $2,000 with a maximum payment of $25,000 for businesses that employ staff.
  • Quarterly lodgers will be eligible to receive the payment for the March 2020 or June 2020 quarters.  The rules will apply differently for monthly remitters but they will still be entitled to the same benefits.
  • The payment is calculated as 50% of the pay-as-you-go (PAYG) withheld in the March quarter and refunded as part of the business activity statement (BAS).  If you don't reach the $25,000 based upon the March BAS then the balance will be paid on the June BAS.
  • Any payments received are tax free.

Supporting Apprentices

  • The Government is supporting small business to retain their apprentices and trainees.
  • Eligible employers can apply for a wage subsidy of 50% of the apprentice's or trainee's wage paid during the 9 months from 1 January 2020 to 30 September 2020.
  • Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer.
  • Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
  • The subsidy will be available to small businesses employing fewer than 20 full-time employees who retain an apprentice or trainee.
  • The apprentice or trainee must have been in training with a small business as at 1 March 2020.
  • Employers of any size and Group Training Organisations that re-engage an eligible out-of-trade apprentice or trainee will be eligible for the subsidy.
  • Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network (AASN) provider.
  • Employers can register for the subsidy from early-April 2020.
  • Final claims for payment must be lodged by 31 December 2020.
  • Further information is available at:

Plant & Equipment

  • From 12 March 2020, the instant asset write-off threshold has been increased from $30,000 to $150,000 (for businesses with <$500m turnover) until 30 June 2020.
  • A time-limited 15 month investment incentive (through to 30 June 2021) which will operate to accelerate certain depreciation deductions.
  • Businesses with <$500m turnover will be able to deduct 50% of the cost of the eligible asset on installation, with existing depreciation rules applying to the balance of the assets cost.

Administration

The Government have stated that they will offer relief on some tax obligations for businesses affected by the COVID-19 to be determined on a case by case basis.

  • There are a string of measures which include up to a four-month deferral of the payment date of amounts due through the business activity statement, including PAYG instalments, income tax assessments, fringe benefits tax assessments and excise
  • The ATO will also allow quarterly GST reporting businesses to opt into monthly GST reporting in order to get quicker access to GST refunds they may be entitled to.
  • Businesses will be allowed to vary PAYG instalment amounts to zero for the April 2020 quarter.
  • Businesses that vary their PAYG instalment to zero will also be allowed to claim a refund for any instalments made for the September 2019 and December 2019 quarters.
  • The ATO will also look to remit any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities, and allow affected businesses to pay their existing and ongoing tax liabilities by allowing them to enter into low-interest payment plans.
  • Speaking at the Tax Institute's annual Tax Summit, commissioner Chris Jordan said his office would do its part to help the community through a "harrowing" start to the year.  "Our message to businesses feeling the impact of the COVID-19 is simply this: let us know. Reach out to us. We can help," Mr Jordan said. "The ATO will work shoulder to shoulder with businesses to assist them through this difficult period and do what we can to ease the pressure."
  • Unlike the bush fire relief measures, which applied automatically to particular geographic areas, assistance measures for those impacted by COVID-19 will not be automatically implemented. Instead, businesses and their advisers will be required to contact the ATO on its 1800 806 218 Emergency Support Info Line to discuss their situation.
  • Planning tip: It is vital to keep lodging your BAS on time, but some of the ATO tax relief options allow you/us to contact the ATO to explain how you've been affected by the COVID-19 and negotiate payment arrangements. Maybe set up a second bank account, put all tax withholdings, super payments into that and use it as an emergency fund that can be used to dip into if needed. If you are having problems paying the ATO please contact us before you make any payments and we can discuss some scenarios with you. We can help you focus on keeping the business alive.

WA State Government Assistance for Business

  • Small to medium businesses with a payroll of between $1m and $4m will receive a one off grant of $17,500.
  • Changes to the payroll tax exemption threshold are being brought forward, in an effort to support 11,000 businesses. The threshold was previously lifted from $850,000 to $950,000 with an increase to $1m scheduled for January 2021. This will now happen six month earlier on 1 July 2020.
  • Small businesses that pay less than $7.5m in taxable wages each year can apply to defer their payroll tax payment to 21 July 2020.

This is obviously fluid environment and we would expect to see more announcements and assistance being delivered by Government and will attempt to keep you updated as and when these occur.


Other assistance from Smith Thornton

  • Finance and Debt Management – The banking and debt markets are experiencing significant change with government lead interest rate easing and quantitative easing. Refinancing opportunities and debt structuring are things to consider as you experience cash flow difficulties. We can help you assess options, liaise with your bank and collate the necessary information in dealing with your bank.
  • Planning Cashflow Needs – We can help you develop action strategies to improve you bottom line by preparing accurate, timely and informative cashflow forecasting reports.


What happens when a Discretionary Trust Vests?

There is a lot of confusion as to what happens when a Discretionary Trust reaches its vesting date, in particular:

  • Does the trust automatically wind up?
  • What happens to the assets of the trust?

Interestingly enough, from a legal position it is in fact the beneficiaries' interest that vests on vesting date, not the trust itself.

On that date, the beneficiaries' interests in the assets of the trust become fixed. The trustee then holds the trust property for the absolute benefit of those beneficiaries who are specified in the Trust Deed as the takers on vesting. This does not mean that the trust itself comes to an end. In other words, the trust becomes a fixed trust rather than a discretionary trust.

Read more…

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Albany, WA 6332
Australia

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Email mail@smiththornton.com.au

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