Tax Measure Changes (By Ronald Cheng)

 

In the 2021-22 Federal Budget, the government announced a one-year extension to the following two tax measures that were introduced in 2020-21 to provide support to businesses during the Covid19 pandemic:

 

Temporary full expensing

This tax measure allows eligible business entities to claim an immediate deduction in full (for the business portion) on their capital expenditure in the year it is first used or installed ready for use for a taxable purpose. Instead of depreciating the assets over several years, the immediate deduction encourages businesses to invest and improve on their own operations.

 

Eligibility:

 

  • A business with an aggregated turnover of less than $5 billion or a corporate tax entity that meets the alternative income test.
  • Eligible new assets first held, first used or installed ready for use between 7:30pm (AEDT) on 6 October 2020 and 30 June 2023
  • Eligible second-hand assets first held, first used or installed ready for use between 7:30pm (AEDT) on 6 October 2020 and 30 June 2023 and the entity’s aggregated turnover is less than $50 million.
  • Improvements incurred between 7:30pm (AEDT) on 6 October 2020 and 30 June 2022 to the eligible assets or existing assets that are held before 7:30pm (AEDT) on 6 October 2020.

 

Loss carry back tax offset

This tax measure allows eligible business entities to carry back tax losses incurred during FY2020, 2021, 2022 and 2023 to offset tax paid in FY2019 or later years, thereby assisting businesses with their cashflow through refunding taxes paid in an earlier income year.

 

Eligibility:

 

  • A company, corporate limited partnership or a public trading trust that chooses to carry the loss back and claim the tax offset
  • The entity is also a small business entity in the loss year
  • It made a tax loss and had an income tax liability (tax payable) in FY2019, 2020, 2021 or 2022
  • It has lodged its tax returns

 

Please contact your knp representative for more information.

Tax deductibility of COVID-19 test expenses

 

After much speculation, the Government announced that COVID-19 tests, including Polymerase Chain Reaction (‘PCR’) and Rapid Antigen Tests (‘RATs’), will be both:

  • tax-deductible; and
  • exempt from FBT;

 

broadly where they are purchased for work-related purposes.

 

This will require the introduction of new specific legislation (i.e., to clarify that work-related COVID- 19 test expenses incurred by individuals will be tax-deductible or FBT exempt where employers provide the tests to their staff) which will apply both where an individual is required to attend the workplace or has the option to work remotely.

 

The Government intends that these changes take effect from the beginning of the 2022 income year and will apply permanently once enacted.

Super changes and full expensing 12-month extension now law

 

A plethora of superannuation law tweaks has recently been made  (via recent legislative reforms) which include:

  • Removing the $450 monthly super guarantee threshold.
  • Reducing the eligibility age for making downsizer contributions from 65 to 60.
  • Changes to facilitate the removal of the work test for those aged between 67 and 75 regarding non-concessional and salary sacrificed contributions.  In addition, the bring-forward rule will now be available for people under the age of 75 (rather than 67, as is currently the case).
  • Increasing the maximum releasable amount under the First Home Super Saver scheme from $30,000 to $50,000.
  • Allowing super fund trustees to choose not to use the segregated assets method in certain circumstances.

 

Furthermore, the Government has also ‘made good’ on their promise to extend accelerated depreciation with legislation passing to allow  current Temporary Full Expensing measures to continue for another  12 months (i.e., to 30 June 2023).

12-month extension of the temporary loss carry-back measure

 

As announced in the 2020/2021 Federal Budget, legislation has now passed to allow eligible corporate entities (i.e., with, amongst other things, an aggregated turnover of less than $5 billion) a 12-month extension to claim a loss carry-back tax offset in the 2023 income year.  

 

The temporary loss carry-back rules were initially implemented in 2020 to promote economic recovery by providing cash flow support to previously profitable companies that fell into a tax loss position due to the COVID-19 pandemic.

 

The law allows eligible companies to carry-back tax losses from 2020, 2021, 2022 and now the 2023 income year to previously-taxed profits in the 2019 or later income years.

 

A company that does not elect to carry back losses under this temporary (yet extended) measure is still eligible to carry losses forward as usual.

knPeople

 

International Women’s Day

Tuesday the 8th March marked International Women’s Day (IWD). knp is extremely grateful and appreciative for all our amazing women who create such a fantastic work environment for us all.

 

Here’s a great shot of some of the ladies enjoying the IWD morning tea we held!

 

 

 

Newsletter - March 2022 Edition 2

 

22 March