Newsletter - December Edition

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Cents & Sensibility | Tax News | Views | Clues 

 

09 December

Deep Cleaning Considerations (By Genevieve Rajakulendran)

 

With the alarming increase in Covid-19 cases and exposure sites throughout Victoria, it is absolutely crucial that you have considered the most effective and efficient process in managing this situation if your business is classified as an exposure site. Becoming an exposure site can be a stressful time for your business, so we have provided some key suggestions to assist you if you encounter this issue.

 

Communication 

Firstly, you must communicate to your employees, clients, and suppliers that you have been classified a Tier 1 exposure site. Effective communication is vital as it allows your key contacts associated with your business to immediately be aware of your circumstances and take the necessary precautions for themselves. We recommend that you pre-prepare an email that can be sent out to each of these three groups, so that in the chance you become an exposure site – you will be able to act immediately to inform your company’s stakeholders. Below is our advised structure:

 

  1. Advise staff immediately and inform them to go home
  2. Crisis Management Group to meet and confirm communication distribution
  3. Email all employees and inform them to get a test and isolate if they were in the office
  4. Email all clients and suppliers that had been in recent contact within the office, advising them to get tested and isolate 
  5. Email all other clients and suppliers, informing them that the company has become an exposure site and of the office’s temporary closure
  6. Ask staff to inform manager of their test results

 

Deep Cleaning Rebate

Once you have carried out your necessary communication measures, it is necessary to have the office disinfected. We advise you to approach commercial cleaners who can complete the ‘deep clean’ and completely disinfect your office. There is a rebate for this process and the following requirements determine whether your business is eligible.

 

Deep Clean Eligibility Requirements:

  • You must operate from a COVID 19 affected worksite in Victoria
  • Attest to have a confirmed onsite COVID 19 case
  • Have undertaken a deep clean of the affected worksite by a professional cleaning service in accordance with DHHS cleaning guidelines
  • Have evidence of the expenditure or the costs of decontamination

 

Further you must satisfy the following:

  • Have an ABN
  • Have an annual payroll < $3million in 2019/2020
  • Be registered with WorkSafe
  • Be registered as a trading business with Federal or State Regulator 

 

The rebate will provide you with an amount up to 80% of the decontamination costs capped at $10,000 excluding GST per worksite. Additionally, you will need the following evidence to qualify for the rebate.

 

Evidence to Provide for the Rebate: 

  • Evidence you had a confirmed COVID 19 case
  • You used an external professional cleaning service with itemised invoices showing evidence of payment and the nature of clean undertaken
  • If you are using an internal professional cleaning service carried out by staff already engaged in the business and they are not required to isolate- you will need to supply evidence of itemised internal costs incurred for the cleaning the worksite under the DHHS COVID 19 guidelines.

 

The link below leads you to the online application attaching all the requested documentation.

 

https://business.vic.gov.au/grants-and-programs/covid-safe-deep-cleaning-rebate#how-to-apply 

 

Windfall Gains Tax (By Andrew Freeman)

 

What is the Windfall Gains Tax?
After the announcement of the Windfall Gains Tax (“WGT”) in the 2021-2022 Budget, the Government are committed to the implementation of WGT.

 

The WGT is a new state-based tax that is proposed to commence in Victoria from 1 July 2023. WGT can accrue to owners of land when their land value increases by more than $100,000 due to rezoning (other than excluded rezoning). The maximum tax payable is 50% of the uplift.

 

How is WGT Calculated?
The WGT will be calculated using the Capital Improved Value of the land as provided by the Valuer-General Victoria. The difference between the pre-rezoning value and the post-rezoning value of the land is used to determine the value elevation of the land. The WGT is then calculated using this value elevation. Valuations are generally dated 1st January (however the Commissioner can request a supplementary valuation from the Valuer-General for WGT purposes)

 

Tax Rates

  


When is it payable?  

The landowner will be liable for the WGT at the time of the rezoning event and will be issued a notice of assessment by the Commissioner of State Revenue for the WGT liability. The WGT will be payable by the due date specified on the notice of assessment.

 

Can You Defer the Payment of WGT?

If it is before the due date of the notice of assessment, the landowner will have the ability to elect for deferral payment of the WGT up to 100%. However, please keep in mind the deferral is only until:

 

  • A dutiable transaction occurs in relation to the land; or
  • A relevant acquisition takes place in respect of a landholder who is the owner of the land; or
  • The day that is 30 years after the WGT event,

 

The deferral payment will exist until one of the above circumstances occurs.

 

Example

 

An example scenario outlined by the Victorian Government has been provided below to highlight how the tax will operate.

 

‘Company ABC owns industrial land on the outskirts of a regional town which was purchased for $250,000 in 2015. Over time the town has grown and in anticipation of future residential developments the value of land around the town increases.

 

ABC’s land is rezoned in 2025 from Industrial 1 Zone to Neighbourhood Residential Zone. At the point of rezoning, the pre-rezoning value (V1) is $400,000 and the post-rezoning value (V2) is $600,000, generating a value uplift of $200,000 and a Windfall gains tax liability of $62,500. ABC later sells its property to a developer for $1,000,000 in 2030. ABC can pay the Windfall gains tax liability of $62,500 when assessed or defer the liability, accruing interest until the next dutiable transaction (that is not an excluded dutiable transaction) occurs in 2030.

 

If you have any questions about the WGT and its process, please reach out to your knp adviser for further information. 

 

Documenting gifts or loans from related overseas entities

 

Editor: The ATO is currently reviewing certain arrangements where Australian taxpayers seek to disguise undeclared foreign income as a gift or loan.

 

Genuine gifts or loans received from related overseas entities (including family members and friends) are sometimes used to fund businesses or to acquire income producing assets.

 

In this context, a genuine gift or loan is one where:

  • The characterisation of the transaction as a gift or loan is supported by appropriate documentation;
  • The parties’ behaviour is consistent with that characterisation; and
  • The monies provided are sourced from funds genuinely independent of the taxpayer.

 

Having good contemporaneous record keeping practices is desirable in case the ATO seeks to verify whether an amount is a genuine gift or loan.

 

The ATO has published detailed information to help taxpayers properly document genuine gifts or loans received from related overseas entities that are used for income purposes. 

 

The information can be accessed from the ATO website by searching for ‘Gifts or loan from related overseas entities’.

Additional ATO support during COVID-19

 

The ATO is providing additional support to taxpayers having difficulty meeting their tax and superannuation guarantee charge obligations for employees because of COVID-19.

 

Available support includes the following:

  • Lodgment or payment support options – for example, payment plans or remitting interest and penalties.
  • Varying PAYG instalments – The ATO will not apply penalties or charge interest on varied instalments that relate to the 2022 income year where taxpayers have taken reasonable care to estimate their end of year tax liability.
  • Moving from quarterly to monthly GST reporting for quicker access to refunds.
  • Applying for administrative relief for Division 7A minimum yearly repayments.

 

Editor: If you are struggling with your tax or super obligations, we can assist with identifying your options and apply to the ATO on your behalf.

Paid Parental Leave changes support parents in lockdown

 

The Paid Parental Leave (‘PPL’) scheme has been amended to enable expectant parents whose work has been affected by COVID-19 lockdowns to access Parental Leave Pay or Dad and Partner Pay under the scheme.

 

Many people who would otherwise have qualified for PPL, may no longer meet the ‘work test’ condition to be eligible for payment because of continued lockdowns across much of Australia.

 

For example, this could apply to a person who has been stood down, had their hours of work reduced or ceased work entirely as a result of a lockdown.

 

The changes to the PPL ensure that the period a person receives an Australian Government COVID-19 payment or the COVID-19 Disaster Payment (that is, because their work has been impacted by lockdowns) counts towards the work test, so that they may still receive Parental Leave Pay or Dad and Partner Pay.

knp’s Movember Fundraising

 

We have come to the end of another fantastic Movember from our very own knp team. The 2021 knp Mo-Lutions team has once again excelled in their contribution to this important foundation.

 

As it stands, we have raised $3,077, surpassing our target for the month. Every contribution has helped the foundation in their endeavours to improve men's lives through projects focused on prostate cancer, testicular cancer, mental health and suicide prevention.

 

Take a look at the brilliant Mo’s our team grew across the 30 days below! A special mention should also be made to Zoe Austen who ran 60 kilometres throughout the month in her ‘Move for Movember’ – another tremendous way to contribute to this cause.

 

It’s never too late to make a contribution. If you would like to donate, please follow the link below!

 

https://au.movember.com/team/2236621