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Lodgement deadline for tax returns

Lodgement deadline for tax returns is looming!

In the coming weeks there will be publicity regarding your income tax return lodgement for 2019/2020 by the 31st October 2020 deadline.

However, the good news is… this doesn’t apply to those who use a registered tax agent!

If you are on a tax agent’s list prior to 31 October, generally you will have an extended deadline to lodge your 2019/2020 tax return by 15 May 2021.

Could you benefit from the extended tax return lodgement deadline?  Then don’t delay!   CONTACT US before the 31st October 2020 deadline.

We can add you to our tax list and prepare your income tax return ready for lodgement by the tax agent deadline of 15 May 2021.

Remember, you must be on our tax list before the 31st October deadline to get the tax agent extension!

 

JobKeeper Titbits

Employer August reimbursements

The monthly business declarations to claim reimbursements for payments made to employees during August are required between 1 September and 14 September 2020.

Extension

Payments under JobKeeper have been extended to 28 March 2021 for eligible businesses (including self-employed) and not-for-profits

Tiered payment rates for JobKeeper extension periods

The following fortnightly payment rates will apply for eligible employees and business participants:

Jobkeeper Date

Tier 1

Full rate

Tier 2

Lower rate

Jobkeeper extension 1 28 September 2020 – 3 January 2021 $1,200 $750
Jobkeeper extension 2 4 January 2021 – 28 March 2021 $1,000 $650

The lower rate will apply to eligible employees and business participants working less than 20 hrs/week on average from 28 September 2020 – the average hours will be based on the four weekly pay periods before either 1 March 2020 or 1 July 2020, which ever produces the higher hours

Employers will be required to nominate the payment rate for each of their eligible employees or business participant.

Changes to eligibility
  • Employees’ eligibility for the JobKeeper Payment can now be assessed from 1 July 2020, rather than 1 March 2020.
  • Employees can now be nominated by new employers if their employment has changed since the JobKeeper Payment began. However, they can still only be nominated by one employer at any given time.
  • Employers have until 31 August 2020 to meet the wage condition for new eligible employees under the 1 July eligibility test for:

Fortnight 10 – commencing on 3 August;  and

 Fortnight 11 – commencing on 17 August 2020

Businesses can claim reimbursement for their new eligible employees between 1 and 14 September 2020, when they lodge their August monthly declaration.

Your eligible business and not-for-profit clients can still enrol at any time until the program closes.

Assessment of eligibility

Employers will be required to reassess their eligibility by reference to their actual GST turnover relative to a comparable period in 2019:

Jobkeeper extension 1 Actual GST turnover has fallen in the September 2020 quarter (July, August, September) relative to a comparable period (i.e. September 2019 quarter)
Jobkeeper extension 2 Actual GST turnover has fallen in the December 2020 quarter (October, November, December) relative to a comparable period (i.e. December 2019 quarter)

The requirement to reassess a business’ eligibility to the Jobkeeper payment from 28 September 2020 implies that if the decrease in turnover is not satisfied for the Jobkeeper extension periods then the business will be ineligible to claim Jobkeeper payments from the ATO even though the business was eligible to the Jobkeeper payment previously.

If you need assistance with JobKeeper payment enrolment or reporting, CONTACT US without delay!

PHOTO CREDIT: ATO

Tax Titbits – what you need to know

CASH FLOW BOOSTS

The cash flow boosts for employers are tax free payments which, nevertheless, represent reportable income for accounting purposes, but are not assessable income for tax purposes, for the recipient employer, self employed

COMPANY TAX RATES

The 2019/2020 company tax rate of 27.5% for “base rate”entities (turnover less than $25m, passive income less than 80%) falls in 2020/2021 to 26% and in the following 2021/2022 year to 25%.

EARLY ACCESS TO SUPERANNUATION

There are no tax implications for the “early access $10,000” coronavirus measures, and access now extended to 31 December 2020.

JOBKEEPER PAYMENTS

The support payments to employers and the self-employed are assessable income for employers and the self-employed, and subsequent payments of Jobkeeper to employees are also assessable.

PAYG WITHHOLDING

From 1 July 2019 payments to employees, directors, contractors are only deductible if the PAYG withholding obligations as to payment and ATO reporting have been met.

WORKING FROM HOME

The shortcut claiming method of 80c/hour available from 1 March 2020 to 30 June 2020 has now been extended into the 2020/2021 financial year, to 30 September 2020.

If you have need assistance with any of these , CONTACT US today without delay!

 

Salary sacrifice – employer superannuation obligations

 Salary sacrifice – employer superannuation obligations

Where an employee has an effective salary sacrifice arrangement in place, it is now mandatory for employers to calculate the superannuation guarantee charge of 9.5% on the gross, before salary sacrifice salary of the employee eg.

PREVIOUSLY NOW
Salary $2,000.00 $2,000.00
Salary sacrifice to superannuation    $250.00    $250.00
Salary after salary sacrifice

$1,750.00

$1,750.00

Salary for SGC calculation $1,750.00 $2,000.00
SGC @ 9.5% $166.25 $190.00

Notes:

  1.  The salary sacrificed superannuation needs to be recorded on the annual payment summary as reportable employer superannuation contributions (RESC)
  2. The salary sacrificed amount can not be included as part of the employer’s superannuation guarantee charge.

The changed basis for calculation of an employer’s superannuation guarantee charge was introduced from 1 January 2020 hence adjustment may need to be made in respect of any salary sacrifice arrangement in place on and from that date.

Superannuation Contributions 2019/2020

Superannuation remains a tax advantaged long term investment which will benefit from compounding over the years for retirement.

 

Concessional/deductible contributions by employers for employees

Maximum contributions for each employee up to 75 years of age, including “salary sacrifice” (needs to be proactive) and superannuation guarantee payments without incurring excess concessional contributions tax:   $25,000

Condition:

Between 65 – 74 years must satisfy the work test and only contributions received before the 28th day after the end of the month in which member turns 75 are deductible.

Concessional/deductible personal contributions by individual taxpayers, including investors

Maximum contribution by each individual up to 75 years of age without incurring excess concessional contributions tax:   $25,000

Conditions:

  • The individual must notify the fund of intention to claim a deduction (form NAT 71121) and the fund must acknowledge the notice.
  • Contribution cannot create or increase a loss (deduction cannot exceed taxable income).
  • Over 65 years must satisfy work test.
  • For individuals turning 75, only contributions received before the 28th day after the end of the month in which member turns 75 are deductible.

High income earner contributions (Division 293)

From 1 July 2017, an additional 15% “contributions tax” is applied to those with adjusted taxable incomes (broad definition) exceeding $250,000.

Non-concessional/non-deductible contributions by individual taxpayers

Maximum contribution by each individual up to 75 years of age without incurring excess non-concessional contributions tax: $100,000 subject to individual’s total superannuation balance.

Note:   Over 65 years the work test will need to be satisfied.

Note:    An individual taxpayer who is under 65 years of age in an income year can bring forward two years’ entitlements and make one contribution of $300,000 without exceeding the cap ─ i.e. no further contributions over the three years.

Note:    The annual maximum amount will be indexed and remain at six times the concessional amount.

Note:   If an individual’s total superannuation balance at 30 June 2017 was $1.6 million or higher, the non-concessional cap will be nil.

Excess concessional/deductible and non-concessional/non-deductible contributions

From 1 July 2013 excess concessional (only) contributions will be taxed at the member’s marginal tax rate with tax offset and an interest charge applied. The excess may be withdrawn from the fund.

The punitive tax rate of 47% remains for excess non-concessional contributions.

Government co-contributions

The co-contribution made by the Government of up to $500 is available to employees and the self-employed less than 71 years of age at the end of the income year who make non-concessional/undeducted personal superannuation contributions of up to $1,000 and whose total income (assessable, reportable employer superannuation contributions and reportable fringe benefit amounts) is less than $53,564; the lower threshold of $38,564 allows for the full co-contribution 50c/$1.

Conditions:

  • 10% or more of the person’s total income is attributable to employment or carrying on of a business.
  • Total superannuation balance at 30 June 2017 must be less than $1.6 million.

Government contributions for low income earners

From 1 July 2017, concessional contributions made by or on behalf of individuals with adjusted taxable incomes of up to $37,000 will be matched by the Government up to an annual maximum amount payable of $500.

Contributions for spouse – tax offset

A taxpayer making a personal non-concessional/non-deductible contribution for his/her non working or low income spouse is eligible for a tax offset of up to $540 where a contribution of up to $3,000 is made for a spouse whose assessable income, reportable fringe benefit and reportable superannuation contribution amounts do not exceed $37,000. The offset is phased out at $40,000.

Condition:

No work test is applied if the spouse is under age 65, but between 65 and 70 years the spouse must satisfy the work test. No offset over 70 years of age.

Fund acceptance of contributions – age and work test

A regulated superannuation fund may accept contributions as follows:

If the member is under age 65

  • all contributions made

If the member is 65 or more but under 70 years

  • mandated employer contributions
  • employer or member contributions provided the work test is satisfied

If the member is 70 or more but under 75 years

  • mandated employer contributions
  • employer or member contributions up to the 28th of the month in which the member turns 75 and the member satisfies the work test

If the member is 75 years or more

  • mandated employer contributions

A person satisfies the work test if gainfully employed at least 40 hours in a period of not more than 30 consecutive days in that financial year.

Superannuation guarantee contribution rate

From 1 July 2014, the contribution rate has increased from 9.25% to 9.5%, and will remain so until 1 July 2021 when it will increase by 0.5% each year until the rate is 12%.

Reportable employer super contributions

From 1 July 2014, the payment of salary sacrifice superannuation and other additional* superannuation over and above the compulsory superannuation guarantee charge of 9.5%, paid by employers for employees, will need to be recorded on employees’ year end PAYG summaries.

*where employee influences the rate or amount of employer contributions.

An employee is considered to have the capacity to influence if he or she can directly negotiate the rate or amount of employer contributions.

As a guideline, the capacity to influence may be shown by:

  • The employer’s relationship with the employee. For example, the employee is the spouse of the employer.
  • The employee’s involvement in negotiations/preparation concerning the terms of any industrial agreement governing super contributions.
  • The amount contributed for the employee relative to the compulsory contributions the employer is required to make.
  • The employer’s super contribution arrangements for other employees.
  • Any non-arm’s length dealings.

 Unused concessional/deductible contributions (both for employers and individual taxpayers, including investors)

From 1 July 2018, where an individual’s superannuation fund balance is less than $500,000 (as at previous 30 June), unused concessional contributions (up to the maximum $25,000 each year) may be aggregated and claimed on a rolling five year basis. The unused contributions are available for a maximum of five years, expiring after five years. The unused contributions can be accessed from 1 July 2019 and contributed in addition to the $25,000 cap already allowed.

Notice of intention to claim “catch up” needs to be provided to the fund and, if over 65 years, the work test needs to be satisfied.

 Home proceeds (known as “downsizing”, one-off contribution, not subject to usual cap)

From 1 July 2018 proceeds from sale of home may be contributed, subject to:

  • Individuals aged 65 years or more
  • Proceeds from sale of primary dwelling / main residence
  • Lived therein and owned for at least 10 years
  • Provided house sells for at least $600,000, each joint owner may contribute up to $300,000
  • Contribution must be made within 90 days of settlement
  • Contract must be signed on or after 1 July 2018
  • Usual age and work tests not applicable