No images? Click here 19 October 2020 Synstrat Update - October 2020October 2020 update The first budget of the Commonwealth was delivered in October 1901. Since then it was typically handed down between July and September, with Paul Keating bringing it forward to May in 1994. This year has been unlike any other so it seems fitting that the budget should appear after the financial year has already begun. It was good to see some Parliamentary accord (for a change) to get the budget plans in action quickly. For example, the personal income tax cuts were passed within only a few days of being announced. A few of the key changes for 2020/21 that will impact your day are summarised below. Budget announcements Reduced personal tax rates Company tax rates for small businesses have reduced to 26% for the 2020/21 year. The reduction in personal tax rates will mean that more of the population can get a saving this year too. For those earning $90,000 (which is near enough to the average ordinary earnings for full-time adults in Australia) or more, there will be $2,430 more in their pocket. While the changes to the tax rates have effect from 1 July 2020, there is no opportunity to reverse out some of the taxes you have already paid this year. Payroll software tax tables will be adjusted on a prospective bases, ignoring what has already been paid for the last three months or so, so that most PAYG withholding credits will exceed what is required and will result in tax refunds when we lodge our 2021 tax returns. Perhaps we’re expected to spend some of this refund on a ‘democracy sausage’ if election day is called for this time next year? Asset write off unlimited until June 2022 Most businesses will now have a 2-year period of limitless asset write off deductions. Cars are the biggest question we’re receiving at the moment in this regard so I’ll spare you the suspense: the deduction limit for cars in 2020/21 is $59,136 and this is the maximum you can claim. Finding the cash for the asset purchase might be your main concern – particularly in Victoria. Once we get to July 2022, the original deduction limit of $1,000 is supposed to be reinstated. We’ll see what happens when the time comes as there have been many ‘temporary’ changes to depreciation that have been around for a long time. JobMaker credits The budget expects unemployment to peak at 8% by the end of the year. The JobMaker system is intended to minimise unemployment and get young people into jobs earlier, with the hope that they stay employed for longer over their working lives. Credits will be claimed quarterly from the Australian Taxation Office (ATO), beginning from February 2021. The claim system is expected to be similar to the current JobKeeper lodgements in that you will need access to the ATO via the Business Portal or MyGov to complete a form. No form, no credit. Records for eligible new employees will need to include a confirmation that the individual was receiving either JobSeeker, Youth Allowance or the Parenting Payment for at least one month out of the previous three before they started with you. Victorian Business Resilience Package grants now tax free There have been a few grants paid by the Victorian Government over the last six months or so. Government grants are intended to be used by businesses to cover the cost of deductible expenses, so it follows that the grant is taxable. The most recent Business Resilience Package grant (AKA Grant #3) has been specifically been given ‘Non Assessable, Non Exempt’ status, meaning it will not create a tax payment for the recipient. JobKeeper post 28th September 2020 The first round of JobKeeper took everyone by surprise and took a long time to understand. JobKeeper 2.0 is simpler, and will be used by far fewer businesses. If you are eligible, make sure you have allocated your staff to their respective Tiers to indicate if they work more than 20 hours per week, or less. This allocation is made in your payroll software, if you have one, or on the monthly report which will be due in early November 2020. September PAYG instalments The quarterly PAYG instalment amounts and rates issued by the ATO have been adjusted for the change to company tax rates, but not for the current business conditions. It may be appropriate for you to vary your instalment payment down for the September quarter to allow for fallen business and investment income. If you need help calculating or reporting a variation, contact your Synstrat adviser for assistance. A variation to your September payment need to be reported and accepted by the ATO by 28th October 2020. ATO Scam Emails The image below is an example of the latest email attempting to impersonate the ATO: We have never known the ATO to request documentation such as a drivers’ licence unless you are applying for a Tax File Number. Emails such as these should be deleted without action. If you receive a similar message, you can contact the ATO on 1800 008 540 or we can contact them on your behalf. For any questions that you have regarding the topics above, please contact Michelle de la Pierre, Paul Steel or David Willis. We wish you all well for the month ahead, and good luck for the up-coming grand finals – which ever code you follow. Best wishes, The Synstrat team The Synstrat Group provides Business Advice, Accounting and Financial Services. Prepared by Synstrat Accounting Pty Ltd for clients of Synstrat Group. 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