Posts Categorized: Tips of the week

Extension of commercial rent relief scheme

It is important to understand the background to the rent relief scheme.  And as it is linked to JobKeeper, let us start there.

We have now entered what is best termed as JobKeeper Version 2.1.  Those that qualify based off the September quarter will receive payments through the December quarter.

As of Monday, this means that we now have four types of employers:-

  1. Those that qualified to continue to receive JobKeeper.

  2. Those that have now qualified to receive for JobKeeper for the first time.

  3. Those that have fallen out of the JobKeeper system and may not return for the March quarter.

  4. Those that have fallen out of the JobKeeper system and but may return for the March quarter.

Receiving JobKeeper has been critical to enabling employers to keep their employees engaged, productive and not otherwise on social security.

Having qualified for JobKeeper has also been critical to business survival as with it comes the ability to claim some state grants and qualify for commercial tenancy relief.

In itself, the rent relief scheme has been the biggest saviour of small businesses.  The scheme allows for rents to be reduced proportional to the fall in turnover.  At least half of the rent reduction must be waived, the balance is payable either over the longer of the duration of the lease or 24 months.

This scheme was due to expire on 28th September when JobKeeper was supposed to end.  However, legislation was finally passed this week by the state government which has extended this rent relief system to 31st December.

So businesses that qualify for JobKeeper through to the end of the December quarter can now re-apply for extended rent relief.

To do so, a business must provide to the landlord:-

  1. A statement confirming turnover is under $50million.

  2. A statement that the lease is eligible to be covered by the scheme.

  3. JobKeeper registration number.

  4. A statement stating decline in turnover support by one of:-

    – accounting record extracts or

     – BAS’s for the relevant periods (which means that those who lodge an Annual GST Return can’t use this method) or

     – Bank statements or

     – A letter from your accountant (for which we have supplied a number).

TIP   Make your application as soon possible as the relief only applies from application date.

Practically speaking, an application can’t fail.  It is true that a landlord can refuse an application.  But should they refuse the matter can then be referred to mediation.  And if they refuse to enter mediation, then the matter can be referred to VCAT.  Either way the landlord is bound to lose as there will be a hearing and they are acting outside the mandatory code.

It is beyond the scope of this blog to explore every nuance and possible scenario.  We do though welcome any query you may have.

 

Alternative ways to qualify for JobKeeper

Did you miss out on qualifying for JobKeeper? 

Maybe you don’t.

The 30% fall in turnover test where a small business compares its turnover for July, August and the September last year to this year is not the only test.  And yes, that test can yield some unexpected and unfair results as for most small businesses it measures what was banked during those two periods.  

There are many circumstances where that test is an improper measure.  In recognition of this, the ATO have released 7 alternative tests and include tests for:-

  1. A businesses started in the last year.

  2. Where there has been a substantial rise in turnover (which is often the case in a business progressing through its second or third year).

  3. Businesses with irregular turnover.

  4. Sole traders or small partnerships where there has been injury, illness or leave taken.

Maybe one of these four tests or the other three will see you qualify for another 7 fortnightly JobKeeper payments.

And if you do, you may then qualify for another $10,000 state grant.

And you will also qualify for extended commercial rent relief to the end of December.

Just as we achieved at the start of JobKeeper, working through these tests has resulted in clients qualifying for JobKeeper who failed the basic test.

So perhaps you do qualify for the extended JobKeeper period.  As we are passionate about helping small businesses survive (and which are after all the engine room of the economy) we welcome the opportunity to explore your situation.

 

 

 

10 key actions to claim JobKeeper v2.1

JobKeeper as we know finishes on Sunday 27th Sep. 

It is not automatic that current recipients will continue to receive this valuable government support.  On the other hand, employers who did not qualify previously may now do so.

You now have just 9 days to be able to claim from Monday 28th September.

To claim for JobKeeper v2.1, you will need to have 10 key actions completed (and pronto):-

  1. Have your accounting file up to date with correct GST allocations

  2. Assess your decline turnover under the new definition of GST turnover

  3. If you fail re-assess under newly set alternative tests

  4. Work out which employees will qualify

  5. Work out which of the two new rates apply to each employee

  6. Issue and collect completed newly qualified employees with a JobKeeper Payment Employee Notification form

  7. Advise employees what their rate will be

  8. Register new employees

  9. Attend to same process for eligible business participants

  10. Update payroll system

If you want to know more, you can enrol in our free webinar which will be held at 5.30pm on Monday 28th September – to do so click here

We welcome any question you may have – please e-mail accountants@mrsaccountants.com.au

 

CGT hit on those who sell their home whilst living overseas

Late last week, a highly contentious bill passed which levies a Capital Gains Tax (CGT) hit on those who sell their home whilst living overseas.

It doesn’t matter how long you lived in your former Australian home.  If you sell it whilst loving overseas, you pay tax on the whole gain.  There is neither a reduction for:-

  • The time it was your home, nor
  • The 50% general CGT tax discount which non-residents are not entitled to since 2012.
We will set out more later.

In the meantime, if this affects you, family or friends, keep the following two tips front of mind:-

  • It doesn’t apply to house owned since May 2017 which are sold before July 2020.
  • Normal CGT treatment applies if the house is sold when you again become a tax resident of Australia.

In the meantime we welcome any question you may have.

 

Binding death benefit nomination

For a binding death benefit nomination to be binding:-
  • It must be made in favour of a tax dependent.

  • It must be done using the approved form for the fund.

  • It must be witnessed.

  • It must be made whilst having mental capacity (so an elderly person may be wise to have their GP assess their cognitive powers).

A binding death benefit nomination only holds for 3 years.  After 3 years, it loses its validity.

Whilst a binding death benefit nomination must be followed by the super fund trustees and therefore creates certainty, it may not be the best option for you.  

You should not execute a binding death benefit nomination until you have completed a full estate planning review and done so with the input of your accountant, financial planner and estate planning lawyer.

Tips to stay positive in the face of COVID-19

We are doing all we can to help our clients.  With this in mind, we publish below a series of tips to stay positive in the face of COVID-19. 

We give thanks to the UK’s James Ashby who has allowed this document to be openly shared.

COVID-19 matters

We are sorry to have not posted over recent weeks.

In the face of various COVID-19 matters, we have been flat out:-

  • Helping our clients with their challenges,

  • Creating a Business Continuity Plan and support program,

  • Creating and delivering Friday’s business survival webinar, 

  • Undertaking necessary precautions internally, and

  • Preparing ourselves for a possible office closure.

We can now return to providing more regular blogs and if you aren’t an existing client, welcome the opportunity to assist you to be informed and in control in these volatile and uncertain times.

 

SG amnesty – prior reported breaches

An employer who is late in paying their super must pay it to the ATO on an SG Super Charge Statement

An admin charge and lost earnings component are added to the amount payable.  Worse still, the total amount paid is not tax deductible.  As we always say super liabilities are the liabilities you pay first.

Last week the SG Amnesty laws were passed by Parliament.  This amnesty allows employers to report and pay any underpaid super and do so without the usual penalties. 

What it also enables is those that have previously lodged a SG Super Charge Statement to seek a refund.

We welcome the opportunity to assist you with this and will provide guidance once we have been trained on the amnesty.

 

 

ATO focusing in on investment strategies

The ATO is focusing in on investment strategies. 

Last September they wrote to, and scared the life out of, 17,700 self managed super fund (SMSF) trustees. 

Last week they released their guidelines.  We will explain their approach and demands as we study these guidelines.

We will also be in discussion with our SMSF auditor.

We do not believe any major shift will be applied retrospectively. 

Reducing tax on the former home

An often over looked way to reduce the tax paid on the sale of a former home is to use the six year absence rule.

The net rent you receive is assessable (or deductible if negatively geared) but the gain itself can be disregarded.

However, you must take care when choosing to use this method when you live in another home.  One is only entitled to one principal residence (family home) exemption so choose carefully

We would welcome the opportunity to discuss what is best for you.  We welcome your call.