Yesterday the Government announced their plan for the winding back of the JobKeeper program.  The impact of the program finishing abruptly on the 27^th September has been a talking point in business circles for quite some time now, especially with the rise of COVID-19 infections in the eastern states.  The changes announced will hopefully assist businesses to prepare for the end of the program and plan their future with some certainty.

Highlights include:

• There will be no changes to the JobKeeper payments businesses are receiving between now and 27 September
• The program has been extended until 28 March 2021
• There will be new eligibility criteria for businesses to access JobKeeper from 28 September 2020
• From 28 September 2020 the JobKeeper payment will become a “two-tiered” payment

No changes to the original JobKeeper

Businesses that have qualified for JobKeeper will continue to receive the payments based on their initial qualification.  Businesses will be required to continue to complete the Monthly Business Declaration and to ensure eligibility of employees e.g. not claiming JobKeeper when employees leave their employment.  Business are also still eligible to enter the program based on the current rules.

The current payment of a flat rate of $1,500 per fortnight per employee will not change before 28 September 2020.

From 28 September 2020

From 28 September, businesses will be required to reassess their eligibility to continue to access JobKeeper.  To be eligible, businesses will be required to show an actual reduction in turnover of 30% or more for both the June quarter and the September quarter.  This is a quantitative test that can be objectively measured.

From this date, JobKeeper payment rates will become a two-tiered payment system:

• $1,200 per fortnight for employees who work more than 20 hours per week on average; or
• $750 per fortnight all other employees or eligible business participants

From 4 January 2021

From 4 January 2021, businesses will again be required to reassess their eligibility to continue to access JobKeeper to the close of the program on 28 March 2021.  To be eligible for this quarter, businesses will be required to show an actual reduction in turnover of 30% or more for the June, September and December quarter.

The JobKeeper payment rates will reduce again at this point:

• $1,000 per fortnight for employees who work more than 20 hours per week on average; or
• $650 per fortnight all other employees or eligible business participants

Comments

Overall the announcements are welcome and will help provide businesses with some certainty.  The extension of JobKeeper is a good decision, along with tailoring eligibility for businesses still impacted by COVID-19.  A two-tiered payment structure and the reduction in payment amounts means that businesses can plan with certainty knowing the level of support they are likely to receive for the next 3, 6 or 9 months.

As we approach the end of the financial year it’s a good time to start thinking about what you could do to minimise your tax liability.

We have prepared a summary of our tax planning tips for the 2020 financial year. Some of the items covered need to be actioned ahead of 30 June. Other items that are not necessary to complete ahead of 30 June, but are worth considering over the next couple of months.

Plant & Equipment

• Consider whether you have any obsolete plant & equipment to write off
• Consider new asset purchases. If your business has turnover of less than $500 million, for assets purchased between 12 March and 30 June 2020, you are able to claim:
  • an immediate tax deduction for assets costing less than $150,000 (GST exclusive amount)
  • accelerated depreciation (50% in the first year) for assets costing more than $150,000

Trading Stock

• Conduct a stocktake at 30 June
• Write off any obsolete or damaged stock
• Choose your stock valuation method. You can use cost, market selling value or replacement value, and this can be changed each year

Other Considerations

• Reduction in tax rate from 1 July 2020 for small companies (drop from 27.5% to 26%)
• Prepay expenses. If your business is a small business entity, you are entitled to a tax deduction where expenses covering a period of up to 12 months are prepaid
• Defer income. If possible, invoice after year-end
• Review and write off bad debts

COVID Considerations

• JobKeeper & Cash Flow Boost payments: ensure that records are kept to prove eligibility
• Double check the accounting and tax treatment of payments (if required)

Trust Specific

• Under ATO guidelines all trusts have to resolve where they would like to distribute their income for the 2020 financial year prior to 30 June 2020. We prepare trustee resolutions for our clients and will send these out ahead of 30 June
• Landholdings held by trusts need to be reported to Revenue SA by 31 July 2020

Capital Gains Tax

• If you have made a capital gain during the 2020 financial year, you may consider realising a capital loss (if appropriate) on another asset to offset the capital gain

Cash Flow

• Vary PAYG instalments for the June 2020 quarter (if appropriate). This is best done in conjunction with an estimate of your 2020 tax position

Superannuation

• Pay your super before 30 June. In order to get a tax deduction for the 2020 financial year, super contributions need to have been received by the superannuation fund by 30 June
• Any unpaid or late superannuation payments between 1 July 1992 and 31 March 2018 can be paid and disclosed to the ATO under the superannuation guarantee amnesty (applications close 7 September 2020). Further guidance is available from the ATO here

Employees and Individuals

• Personal superannuation contributions can be made up to your $25,000 cap (which includes contributions from your employer). To claim, your super fund will need to have received the contribution prior to 30 June and you will need to provide them with a notice of intent to claim a deduction
• Home office expenses: You can claim 80 cents per hour for the period 1 March to 30 June 2020. Further guidance is available from the ATO here
• Retain receipts for any expenses you would like to claim
• If you travel over 5,000kms in your motor vehicle for work, consider maintaining a new logbook (to be completed every five years)
• Consider varying your PAYG instalments for the June 2020 quarter (if appropriate)

Primary Producer Specific

• Specific concessions are available to primary producers, including the use of farm management deposits and accelerated depreciation for the purchase of certain farming assets

If you would like any further detail on the above, or for an estimate of your tax position for the 2020 financial year, please contact your Holman Hodge advisor.

Registration of land holdings with RevenueSA

With the changes to land tax that come into effect from midnight 30 June 2020, RevenueSA is verifying the information they have for your land holdings in South Australia. The recent changes also introduced new requirements about what information you need to provide RevenueSA in relation to your land holdings.

RevenueSA has started this process by sending letters to corporate land holders regarding the information they require about land they have identified that the company has an interest in.   As per the letter, you are required to login to the ReveueSA Online portal to review and confirm your land holdings information that they have recorded is correct.  We understand that corporate land holders have been sent the letters either as a single land holder (including as a trustee company) or as the head of a group of related corporations.

We are able to assist you with this registration process if you would like us to.  Alternatively, you can work through the process yourself and let us know if you have any questions.  Please see below for further details.

If the company is a trustee company, additional information needs to be provided to RevenueSA.

Confirming this information will ensure RevenueSA calculates your land tax correctly for your next Notice of Land Tax Assessment.

Holman Hodge to register your land holdings

Following is the process if you would like Holman Hodge to register your landholdings:

Register your own land holdings

Trustee Company

Once you log into the RevenueSA Online portal you will be asked to do the following:

• Confirm your land holdings
• Advise RevenueSA of land that is held in trust (that is in your ownership as the trustee)
• Upload evidence of the trust and land ownership (see below)
• Nominate beneficiaries (if nominating – refer below)
• Confirm your contact details
• Advise preferred billing method (email or post)

Evidence of the land ownership in the trust

Sufficient supporting evidence is required to satisfy the Commissioner of State Taxation (the “Commissioner”) that the land was acquired on behalf of the Trust or otherwise vested in the Trust. Evidence needs to be provided for each property and must clearly state the trust name and either the property address or certificate of title reference.  This can be in the form of the following:

• a copy of the stamped Memorandum of Transfer document, showing that the consideration was paid by the Trust; or
• a copy of the completed and lodged Income Tax Return for the Trust, clearly showing the property as an asset of the Trust.

If neither of the above documents can be provided, the applicant will need to provide a minimum of two other types of evidence in order to satisfy the Commissioner.

The other types of evidence which may be considered include:

• a stamped Transfer document showing “with no survivorship” or “WNS”
• a copy of the Title showing “with no survivorship” or “WNS”
• a copy of the signed Minutes of Trust Meeting evidencing the purchase of the property on behalf of the Trust
• a copy of the Balance Sheet of the Trust showing the property as an asset of the Trust
• a copy of the Settlement Statement showing the purchaser as trustee for the Trust
• a copy of the signed Contract of Sale showing the purchaser as trustee for the Trust

Evidence of the trust

Where it is stated that the land holding is held in a trust, you must also attach, for each trust:

• a copy of the original executed Deed of Trust in its entirety; and
• a copy of each Deed of Variation, where there have been variations or amendments made to the original Deed of Trust since its execution

Nominating beneficiaries

There is the ability to nominate beneficiaries of the trust.  You have until 30 June 2021 to nominate a beneficiary of the trust so our advice at this point in time is to NOT nominate as yet unless the property is owned in a trust and is your principal place of residence.

For corporate land holders

For corporations, the registration process is much simpler.

Please note however, if you are the nominated group head (as per the letter you received), you can also:

• Nominate a different corporation to complete the review of the corporate group.
• Confirm that all related corporations have been included in the corporate group.
• Add any related corporations that have not been included.
• Advise where we have included corporations incorrectly.

It is important that all related companies are included and all land holdings are detailed in the registration process.

If you would like to discuss this further, please contact your Holman Hodge adviser.