Client Communication

COVID-19 Support for SA Businesses

The 7-day statewide snap lockdown, which started at 6pm on Tuesday, has many businesses and employees wondering what support might be available to them to compensate for lost income. Thankfully there are some income supports available for individuals and businesses.

Support for individuals

Firstly, Metropolitan Adelaide, Gawler and Adelaide Hills were declared a “COVID-19 Hotspot” by the Federal Government on Tuesday 20 July. This opens up availability to the Commonwealth COVID-19 support payments. The SA Government then announced on Wednesday that they would be proving the same support to all eligible workers in SA who are outside of the Commonwealth declared Hotspot.

These payments will provide a weekly lump sum payment of $375 for workers who lose between eight and 19 hours of work and $600 for those who lose 20 hours or more for those in the federally declared hotspots while the South Australian Government will provide the same compensation for those in other areas of South Australia (regional SA). This means all South Australians will have support available to them.

Applications for the payment cannot be made until next Tuesday, 27 July and where the eligibility criteria are met, the payments will be made weekly in arrears. You can follow the link here for further information around eligibility and timing.

Support for businesses

The Treasurer, Rob Lucas, announced a $3,000 emergency cash grant for small and medium South Australian businesses that suffer a significant loss of income or have been forced to close as a result of the lockdown. There will also be a $1,000 emergency cash grant for non-employing businesses (essentially sole traders).

To be eligible to meet the criteria for the one-off payment, the business must:
• Be located within South Australia
• Have an annual turnover of $75,000 or more in 2020-21 or 2019-20, and be registered for GST
• Employ people in South Australia
• Have an Australia-wide payroll of less than $10 million in 2019-20
• Have a valid Australian Business Number (ABN)
• Experienced at least a 30 per cent reduction (compared to the week prior) in turnover due to the restricted trading conditions

You can register your interest in the grant here however, applications will not be open until next week. Will we provide further details as they become available.

If you have any questions in relation to the above, please contact your Holman Hodge Adviser.

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Writing Off Business Assets

A large part of the COVID stimulus packages announced by the Government last year was intended to encourage businesses to invest in capital assets.  They did this by announcing the “temporary full expensing of depreciating assets” provisions on 6 October 2020 for businesses with aggregated turnover of less than $5 billion.  Prior to this, the instant asset write-off threshold had been increased to $150,000 for businesses with aggregated turnover of less than $50 million.

These changes have resulted in many businesses investing in assets throughout this financial year with the view to claiming a full tax deduction for the asset.  Alternatively, businesses may still be considering purchasing an asset prior to 30 June 2021 in order to claim the tax deduction.  There are some tricks and opportunities to these depreciable asset write off provisions that you should be aware of.

These include (but are not limited to):

  • To be entitled to use the temporary full expensing, the asset must be first held and used, or installed ready for use, between 6 October 2020 and 30 June 2021
  • If you have ordered an asset but it hasn’t been received by 30 June 2021, the deduction will not be available – although it may well be deductible in the 2022 year
  • If your business’ aggregated turnover is less than $50 million, assets purchased between 1 July 2020 and 5 October 2020 which cost $150,000 or less will be eligible to be written off in full using the instant asset write off rules
  • You may be entitled to write off second hand depreciating assets (where aggregated turnover less than $50 million)
  • The deduction for a new car is limited to the depreciation cost limit for cars which is $59,136
  • A vehicle which is designed to carry more than one ton (has a payload capacity of more than 1,000 kg) is not considered to be a car and is not subject to the depreciation cost limit
  • Capital works, including structural improvements are NOT included
  • The backing business investment rules (essentially an accelerated depreciation regime) may be relevant for your business for assets purchased between 1 July 2020 and 5 October 2020 whose cost was greater than $150,000 (assets not subject to the immediate write off)

The number of changes to these provisions since 2015 means there are a number of thresholds, asset values and timeframes to be aware of to ensure deductibility for your investments.

You may have noted in the most recent Federal budget that the temporary full expensing measures have been extended from 30 June 2022 to 30 June 2023.

If you would like to discuss the above in more detail to determine your business’ eligibility, please contact your Holman Hodge adviser.

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SA Land Tax Update – 2021

Over the last 12 months there have been significant changes to South Australia’s land tax regime.  Below we provide an update to the changes and highlight some key deadlines.

Land held in discretionary trusts – Beneficiary Nominations – Due date extended to 30 June 2022

Under the new land tax rules, where land is held by a discretionary trust on or before 16 October 2019, the trustee has the option to nominate a designated beneficiary.  This option was only available up until 30 June 2021, however Treasurer Rob Lucas recently announced that the due date would be extended to 30 June 2022.

Trustees of discretionary trusts will now have up until 30 June 2022 to nominate a designated beneficiary for land held by a discretionary trust on or before 16 October 2019, and that nomination can apply to their 2020/2021 land tax assessment and future years.

The land tax implications of nominating or not nominating a beneficiary may vary across groups and there are a number of requirements which must be considered before a nomination is made.  Determining whether a nomination should be made may take time and as such we urge you to contact us if you believe a nomination could or should be made.

Once this deadline passes, there will be no further opportunity to make a nomination and if the trustee does not make a nomination by this date, any taxable land will be assessed at the trust surcharge rates. Where a beneficiary is nominated, the land held by the trust will be assessed at the general land tax rates (aggregated with any other land they hold).

We suggest contacting your Holman Hodge adviser before making any nominations.

For more information on nominations and land held on trust, please visit the RevenueSA website: https://www.revenuesa.sa.gov.au/landtax/lt_trusts

 Land Tax Assessments 2020/2021

You may have already received your 2020/2021 Land Tax Assessment from RevenueSA. If not, you should expect to receive your assessment in the near future.  RevenueSA has said they hope to have all 2020/2021 assessments issued by 30 June 2021.

We suggest you review your Land Tax Assessment to ensure that it is correct. Examples of items to look out for include:

  • Checking that the land included on the assessment is actually owned by the entity receiving the assessment – Comparing the assessment with the Land Holding Declaration submitted to RevenueSA may assist with this
  • Ensuring your principal place of residence is exempt and that the site value is not included in the Land Tax calculation
  • For companies, ensuring that any aggregation is correct – Comparing the assessment with the Land Holding Declarations and Corporate Group Declaration submitted to RevenueSA may assist with this

Transitional relief

Following the changes in the aggregation of land, transitional relief will be available to taxpayers who have an increase in their Land Tax Assessment for 2020/21, 2021/22 and 2022/23 because of the changes.  The transitional fund for year 1 has been extended to 31 December 2021 given not all assessments have yet been issued.

For more information on the transitional funds, including eligibility criteria, please visit the RevenueSA website: https://www.revenuesa.sa.gov.au/landtax/lt_transitionfund/guidelines

Can we give you a hand?

If you have any questions or require any assistance in relation to Land Tax matters, please contact your Holman Hodge adviser.

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Superannuation

What you need to know

There haven’t been many changes in superannuation over the last few years but it’s always good to make sure that you are across what is available to you with regards to your super.

Concessional superannuation contributions

The concessional superannuation cap for the year ended 30 June 2021 is $25,000.  This means that total tax deductible contributions which can go into your superfund cannot exceed this amount – this includes any amounts that have been contributed by your employer including salary sacrifice.  If you were to choose to “top up” any employer contributions, you can claim a deduction for the top up to $25,000.

As in prior years, the contribution must be received by your fund before the 30 June 2021 to claim a tax deduction for it in the 2021 year and you must notify your super fund of your intention of claiming a deduction.

Carry-forward unused concessional contributions

Individuals can “carry forward” unused concessional contributions from the 2019 and 2020 financial year.  If your total superannuation balance is less than $500,000, this provision allows you to make contributions this year to use up any unused concessional cap from the 2019 and 2020 financial years. Unused cap amounts can be carried forward for up to five years before they expire.

For example, if in the year ended 30 June 2020, concessional contributions had been made into a fund of $15,000, the “unused” portion of the concessional cap of $10,000 can now be carried forward.  This means an additional contribution of $10,000 could be put into superannuation with a tax deduction claimed for it, along with $25,000 for the current 2021 financial year.

Budget announcements

In the recent Federal budget there were two notable changes announced with regards to superannuation – please note, these are only announcements and are not yet legislated.  It is anticipated that both of these changes will apply from 1 July 2022.

  • The “downsizer contribution” will now be available for individuals who are over 60 years (rather than 65 years) to contribute up to $300,000 into superannuation from the proceeds of the sale of their home
  • The work test for people aged between 67 and 74 will no longer apply to non- concessional and salary sacrifice contributions. However, the existing $1.6 million cap on lifetime superannuation contributions will continue to apply (increasing to $1.7 million from 1 July 2021). Access to concessional personal deductible contributions for individuals aged between 67 and 74 will still be subject to meeting the work test.

Changes to caps and thresholds

From 1 July 2021 (so effective for the 2022 year financial year) the caps and thresholds with regards to superannuation will be indexed.  The most notable changes are:

  • The concessional superannuation contribution cap will increase from $25,000 to $27,500
  • The non-concessional superannuation contribution cap will increase from $100,000 to $110,000 (with the 3 year bring forward rule for non-concessional contributions increasing to $330,000)
  • The transfer balance cap will increase from $1.6M to $1.7M
  • The Division 293 threshold will stay at $250,000
  • The Capital Gains Tax cap amount for superannuation contributions will increase from $1.565M to $1.615M

As always, if you have any questions in relation to the above, please contact your Holman Hodge adviser.

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Year-End Bookkeeping

Top Tips

As always, here are a lot of things to consider before the end of the financial year.

Here are our top 5 bookkeeping tips to help make year-end run a smoothly as possible.

  • Process and make superannuation payments for employees before 30th June to ensure you get a tax deduction for the payment.
  • Once you’ve run your last payroll for the financial year reconcile payroll liability accounts (wages payable, superannuation payable & PAYG withholding payable) and finalise your Single Touch Payroll reporting. You can also reconcile, prepare and lodge WorkCover, payroll tax & Taxable Payments Annual Report (if applicable).
  • Review aged debtors & creditors to ensure all amounts being carried are recoverable or payable.
  • Reconcile all bank, credit card, loan and petty cash accounts.
  • Perform a stocktake if applicable on 30th June to ensure correct stock valuation.

If you have any questions in relation to the above or any other bookkeeping matters, please contact your Holman Hodge adviser.

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