Profit Sense in Sunbury, Victoria | Financial service

Profit Sense

Locality: Sunbury, Victoria

Phone: +61 3 9744 9444

Address: 10/33-35 Macedon Street 3429 Sunbury, VIC, Australia

Website: http://www.profitsense.com.au

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24.01.2022 Our office will be closed from the 21st December 2020 and reopening on the 11th January 2021. We wish all our clients and family a Merry Christmas and a safe & prosperous 2021.

23.01.2022 JobMaker Hiring Credit passed The government has passed legislation to establish the JobMaker Hiring Credit, which is part of the government’s economic response to the COVID-19 pandemic. The JobMaker Hiring Credit is specifically designed to encourage businesses to take on additional young employees and increase employment.... It does this by providing employers with a fixed amount of $200 per week for an eligible employee aged 16 to 29 years and $100 per week for an eligible employee aged 30 to 35 years, paid quarterly in arrears by the ATO. To be eligible, the employee must have been receiving JobSeeker Payment, Youth Allowance (Other) or Parenting Payment for at least one of the previous three months, assessed on the date of employment. Employees also need to have worked for a minimum of 20 hours per week of paid work to be eligible, averaged over a quarter, and can only be eligible with one employer at a time. The hiring credit is not available to an employer who does not increase their headcount and payroll. Employers and employees will be prohibited from entering contrived schemes in order to gain access to or increase the amount payable. Existing rights and safeguards for employees under the Fair Work Act will continue to apply, including protection from unfair dismissal and the full range of general protections.

22.01.2022 Superannuation guarantee rate increase update Recently, arguments both for and against increasing the rate of compulsory superannuation guarantee ('SG') have continued to be tossed around! The SG is the compulsory amount of superannuation an employer must pay into an eligible employee’s chosen super fund. ... The rate of SG has been frozen at 9.5% of an employee’s ordinary wages since July 2014, but from 1 July 2021 it is due to incrementally increase (by 0.5% each financial year) until it ultimately reaches 12% in July 2025. As a result, the superannuation guarantee rate is currently set to increase to 10% from 1 July 2021.

21.01.2022 Tax cuts pass Parliament The Government announced various tax measures in the 2020 Budget on 6 October 2020, and it was able to secure passage of legislation containing some of the important measures very shortly afterwards, as summarised below. Tax relief for individuals... The Government brought forward 'Stage two' of their Personal Income Tax Plan by two years, so that, from 1 July 2020: the low income tax offset increased from $445 to $700; the top threshold of the 19% tax bracket increased from $37,000 to $45,000; and the top threshold of the 32.5% tax bracket increased from $90,000 to $120,000. In addition, in 2020/21, low and middle-income earners will receive a one-off additional benefit of up to $1,080 from the low and middle income tax offset. Tax relief for business Businesses with a turnover of up to $5 billion are now able to immediately deduct the full cost of eligible depreciable assets as long as they are first used or installed by 30 June 2022. To complement this, the Government will also temporarily allow companies with a turnover of up to $5 billion to offset tax losses against previous profits on which tax has been paid. Also, businesses with an aggregated annual turnover between $10 million and $50 million will, for the first time, be able to access up to ten small business tax concessions. Under the changes passed by the Parliament, the Government will also enhance previously announced reforms to invest an additional $2 billion through the Research and Development Tax Incentive.

21.01.2022 Regulations confirm no SG obligation on JobKeeper payments where work is not performed The federal government has registered the Superannuation Guarantee (Administration) Amendment (Jobkeeper) Payment Regulations 2020. These regulations ensure that amounts of salary or wages that do not relate to the performance of work and are only paid to an employee to satisfy the wage condition for getting the JobKeeper payment are prescribed by the Regulations as excluded salary or wages.... The effect is that these amounts are excluded from the calculations of an employer’s superannuation guarantee shortfall and the minimum compulsory superannuation contribution an employer is required to make in respect of an employee to avoid a superannuation guarantee charge liability. Likewise, the Regulations recognise that an employer is only entitled to a JobKeeper payment for its employees if the business has suffered a substantial decline in turnover. In these circumstances, it is appropriate to require employers to only make minimum superannuation contributions in respect of amounts that are required to be paid to an employee for the performance of work. Employers would not be required to make contributions in relation to additional amounts paid to satisfy the wage condition (for example, the amount by which $1,500 exceeds an employee’s normal pay).

21.01.2022 COVID-19 and Division 7A relief The ATO has announced some limited relief for private companies that have loans to their shareholders or related parties that are governed by what are referred to as complying loan agreements. A complying loan agreement is entered into to avoid triggering an assessable deemed dividend that could potentially be equal to the amount of the loan from the private company.... When there is a complying loan agreement between a private company and a borrower, the borrower must make the minimum yearly repayment (MYR) by the end of the private company’s income year. This avoids the borrower being considered to have received an unfranked dividend, generally equal to the amount of any MYR shortfall. As a result of the COVID-19 situation, the ATO understands that some borrowers are facing circumstances beyond their control. To offer more support, the ATO will allow an extension of the repayment period for those borrowers who are unable to make their MYR by the end of the lender’s 201920 income year (generally 30 June).

20.01.2022 Deduction for work-related vehicle expenses disallowed In a decision of the Administrative Appeals Tribunal, a taxpayer, Mr Bell, was a denied a deduction for $21,565.73 of work-related vehicle expenses for the 2016 income year. Mr Bell, was a construction worker who predominantly worked on a construction site in an eastern suburb of Melbourne and lived approximately 100 kilometres away from that worksite.... Mr Bell owned a ute that had a load carrying capacity of more than one tonne so it fell outside the definition of a 'car' for the purposes of the ITAA 1997. Mr Bell claimed a total deduction for $24,865.73 for motor vehicle expenses and received an allowance under his Enterprise Bargaining Agreement. This allowance did not vary with the amount of travel undertaken and totalled $15,221 for the year. Mr Bell contended that he was required to use his vehicle to transport heavy/bulky goods (tools) between his home and his workplace and to collect supplies and equipment from hardware stores while travelling between his workplace and his home. Ordinarily, travel from home-to-work (and back again) is considered non-deductible. However, if an employee is required to carry heavy/bulky equipment for which there are no secure storage facilities at work, the travel between home and work with the heavy/bulky equipment can be considered deductible. Unfortunately for Mr Bell, evidence before the Tribunal indicated that there were safe and secure storage facilities for his tools (the bulky/heavy equipment) at the worksite. Accordingly, Mr Bell was unable to rely upon the ‘bulky goods’ exception to recharacterise home-to-work travel as being a deductible work expense. Instead, it retained its ordinary private and non-deductible status. Mr Bell was unsuccessful in advancing the argument that he was entitled to a deduction in relation to the motor vehicle expenses because he was in receipt of an allowance. However, Mr Bell was able to convince the ATO that he had undertaken at least some work-related travel using his vehicle. The ATO allowed Mr Bell a deduction under the 'cents per kilometre method' up to the maximum dollar amount for 5,000 kilometres for the 2016 income year of $3,300.

20.01.2022 Employees on JobKeeper can satisfy the ‘work test’ The Australian Prudential Regulation Authority ('APRA') has confirmed that, where an employer is receiving the JobKeeper wage subsidy for an individual, superannuation funds should consider the individual to be ‘gainfully employed’ for the purpose of the ‘work test', even if that individual has been fully stood down and is not actually performing work. As such, superannuation funds can assume that all members in receipt of the JobKeeper subsidy satisfy the ‘work test’ when determining whether they can make voluntary superannuation contributions.

18.01.2022 Companies holding meetings and signing documents electronically The Government has made another determination extending the time frame within which companies can hold meetings electronically and enabling electronic signatures to be used, to relieve companies from problems they face due to the Coronavirus situation. This determination is intended to be in effect until (and will be repealed from) 22 March 2021, unless the Government determines otherwise.

17.01.2022 Testamentary trusts and minors This legislation contains amendments to ensure the tax concessions available to minors in relation to income from a testamentary trust only apply in respect of income generated from assets of the deceased estate that are transferred to the testamentary trust (or the proceeds of the disposal or investment of those assets). Broadly speaking, when a trustee distributes income to a minor it is taxed at the highest marginal rate (plus Medicare levy).... However, there are certain exceptions to this rule. One such exception is where the trust is a testamentary trust being a trust that was established as a result of the will of a deceased individual. Income from a testamentary trust is a type of ‘excepted trust income’ that is generally taxed at ordinary rates. Prior to this legislation being passed, the previously existing law did not specify that the assessable income of the testamentary trust be derived from assets of the deceased estate (or assets representing assets of the deceased estate). As a result, assets unrelated to a deceased estate that were injected into a testamentary trust may, subject to anti-avoidance rules, generate excepted trust income that was not subject to the higher tax rates on minors. This was an unintended consequence, which allowed some taxpayers to inappropriately obtain the benefit of concessional tax treatment. This legislation clarifies that excepted trust income of the testamentary trust must be derived from assets transferred to the testamentary trust from the deceased estate or from the accumulation of such income. This change will apply in relation to assets acquired by or transferred to the trustee of a testamentary trust on or after 1 July 2019.

13.01.2022 Tax treatment of JobKeeper Payments Broadly, JobKeeper Payments received by an employer are assessable income to the employer. Likewise, the payments an employer subsequently makes to an employee that are funded (in whole or in part by the JobKeeper Payment) are generally allowable deductions to the employer. ... The ATO has recently issued some guidance for employers in receipt of JobKeeper Payments. For sole traders, they will need to include the payments as business income in their individual tax return. For partnerships or trusts, JobKeeper payments should be reported as business income in the relevant partnership or trust tax return. For a company, report JobKeeper payments as income in the company tax return. For a taxpayer that has repaid (or is in the process of repaying) any of their JobKeeper payments to the ATO, these amounts do not need to be included in their tax return. The normal rules for deductibility apply in respect of the amounts a taxpayer pays to their employees, even where those amounts are subsidised by the JobKeeper payment. That is, if the underlying salary is deductible, then it is still deductible to the employer where it has been subsidised by a JobKeeper payment. For employees who have received JobKeeper payments, these will be included as salary and wages (or an allowance) in their income statement (or payment summary) as provided by their employer.

07.01.2022 Deferrals of interest due to COVID-19 Many lenders have recently allowed borrowers with investment property loans to defer repayments for a period of time. While repayments are being deferred, interest (and fees) will usually be added to the loan balance (i.e., the deferred interest will be 'capitalised'). ... However, it is important to recognise in such situations that, while repayments are not being made during the relevant period, borrowers continue to ‘incur’ the interest during that time. Further, interest will continue to be calculated and will accrue on both the unpaid principal sum of the loan and the unpaid (i.e., capitalised) interest. The interest that accrues on the unpaid or capitalised interest is referred to as ‘compound interest’. Importantly, the ATO has previously acknowledged that, if the underlying, or ordinary, interest is deductible, then the compound interest will also be deductible. Accordingly, interest expenses (including any compound interest) will generally be deductible to the extent the borrowed monies are used for income producing purposes (such as where the borrowed funds are used to purchase a rental property). However, interest on a loan will not be deductible to the extent to which the

04.01.2022 ATO Visa Data Matching Program The ATO will acquire visa data from the Department of Home Affairs for 2020/21 through to 2022/23, relating to approximately 10 million individuals for each financial year. The data will be used to identify non-compliance with obligations under taxation and superannuation laws, including registration, lodgement, reporting and payment responsibilities.

04.01.2022 Employers need to apply recent tax cuts as soon as possible The ATO has now updated the tax withholding schedules to reflect the 2020/21 income year personal tax cuts the updated schedules are available at ato.gov.au/taxtables. The ATO has said that employers now need to make adjustments in their payroll processes and systems in order for the tax cuts to be reflected in employees’ take-home pay. ... Employers must make sure they are withholding the correct amount from salary or wages paid to employees for any pay runs processed in their system from no later than 16 November onwards. Employees should be aware that any withholding on the old scales will be taken into account in their tax return.

03.01.2022 Improvements to be made to full expensing measure The government will expand eligibility for the temporary 'full expensing measure', which temporarily allows certain businesses to deduct the full cost of eligible depreciable assets in the year they are first used or installed. The government initially announced in the 2020/21 Budget that businesses with a turnover of up to $5 billion would be able to immediately deduct the full cost of eligible depreciable assets as long as t...hey are first used or installed by 30 June 2022. The government will also allow businesses to opt out of temporary full expensing and the backing business investment incentive on an assetbyasset basis. This change will provide businesses with more flexibility in respect of these measures, removing a potential disincentive for them to take advantage of these incentives (For example, where the automatic application of full expensing might cause the entity to make a loss).

02.01.2022 Requesting the extension A request for a 12-month extension can be made through the completion of an online application. Borrowers will be asked to confirm the shortfall, that the COVID-19 situation has affected them and that they are unable to pay the MYR as a result. When the ATO approves an application, it will let the borrower know they will not be considered to have received an unfranked dividend. This is subject to the shortfall being paid by 30 June 2021. It will not... be necessary to submit further evidence with the application. This particular streamlined process established by the ATO only applies to applications for an extension of up to twelve months for COVID-19 affected borrowers. It is still open to a borrower to apply to obtain a longer extension of time outside the streamlined process.

02.01.2022 Special COVID-19 Superannuation Condition of Release Extended Regulations that extend the time frame of the special condition of release to access $10,000 from superannuation for individuals experiencing financial difficulties due to COVID-19 have been formally registered. The ability to withdraw up to $10,000 from superannuation (if certain conditions are met) was initially set to expire on 24 September 2020. ... The newly registered Regulations to the SIS Act will now enable an eligible individual to withdraw up to $10,000 from superannuation (which is not assessable to the individual) until 31 December 2020. To be eligible, a citizen or permanent resident of Australia (and New Zealand) must require the COVID-19 early release of super to assist them to deal with the adverse economic effects of COVID-19. I

02.01.2022 Simplified home office expense deduction claims due to COVID-19 Given that many Australians continue to work from home due to COVID-19, the ATO has updated its Practical Compliance Guideline which allows taxpayers working from home to claim a rate of 80 cents per hour, by keeping a record of the number of hours they have worked from home, rather than needing to calculate specific running expenses. The application of the Guideline has been extended so that it now applies from 1 March 2020 until 31 December 2020.