What’s happening across our client base
Lockdown continues and this one seems to be tougher than those that we have endued before. Our client service with telephone and online continues albeit with the office being physically closed. Our conversations with clients cover wide ranging topics and here are just a few.
Hardship Grants from Government have been available and procured for many eligible clients with our guidance.
The booming share and property markets have been extraordinarily good for investors at a time when interest rates have not much more to fall and inflation is low.
However, there are shortages of supply particularly in steel and timber. Labour is also in short supply and salaries are rising. Other countries of the world are receiving high demand for their locally manufactured product reducing the availability of their exports to our importers.
If interest rates cannot go down then presumably they can stay the same or go up. Rising interest rates generally have a negative influence on capital markets.
Good businesses have used these times to innovate with new ways of doing business. The use of the “zoom“ meeting has significantly reduced internal costs of travel and maybe improved overall communication. The use of on-line ordering with home delivery is becoming a common method of shopping. Strategic reviews of business models continue.
Tax rules to encourage investment and 100% write-offs continue. Corporate tax rates are reducing to 25% this year which sounds great for the reinvestment of after-tax profits but may not be as good for recipients of fully franked dividends.
New rules surrounding tax residency will start to affect our clients. Many families find themselves with a next generation member living in another country and no longer being a resident for Australian Tax purposes. Non residency affects income tax rates on Australian assets and can even extend to State Land taxes. Leaving certain assets in a Will to non-residents can be a taxable event. Changes in residency can be a Capital Gains Tax event.
Compulsory employer superannuation contributions (SGC) are now at 10%. Grey areas exist in relation to sub-contractors and whether SGC contributions are required because of fitting within the SGC definition of employee when they are not an employee for any other purpose.
We look forward to a return to the post COVID world – suspecting life will be different to what it was.
Mental Health Support for Business Owners
Running a business can be an isolating experience. And, with COVID-19 lockdowns and disruptions to trade, the pressure can be intense.
NewAccess for Small Business Owners is a free and confidential mental health program developed by Beyond Blue to give small business owners the support they need. Whether you’re just feeling stressed, or completely overwhelmed about everyday life issues, they can help.
Understandably, a lot of small business owners are reporting that COVID-19 has negatively affected their mental health.
NewAccess is designed to appeal to people who might not otherwise seek support for their mental health and to provide support early, preventing symptoms from potentially getting worse.
Coaches of the NewAccess for Small Business Owners program all have a small business background and are trained in Low-intensity Cognitive Behavioural Therapy - a structured, evidence based psychological treatment. Put simply, it allows us to recognise the way we think, act and feel.
The program is open to small business owners (under 20 employees) who are not currently seeing a psychologist or psychiatrist. The program starts with an initial assessment, then works with you over five sessions to tackle unhelpful thoughts and behaviours, using an individual plan that you develop with your coach. Together you will develop an understanding of what is causing distress and then work on practical tools and strategies that can be used in day-to-day life.
For more visit:
https://www.beyondblue.org.au/get-support/newaccess/newaccess-for-small-business-owners
COVID-19 business grants and programs
| The COVID-19 Disaster Payment has been expanded and increased on 28 July 2021. Eligible Victorian workers and sole trader business owners in lockdown in a Commonwealth hotspot from 6 August who lose work and do not qualify for Victorian Government support programs will be able to access:Payments of $750 pw (up from $600 pw) to individuals who lose 20 or more hours of work a week during the period of the lockdown
Payments of $450 pw (up from $375 pw) to individuals who lose between 8 and 20 hours of work, or a full day of work, during the period of the lockdown There is no liquid assets test to receive these payments. The payment will be available from day one of any lockdown, with claims made from day eight in arrears, with a weekly payment then made for the duration of the Commonwealth hotspot declaration. The vast majority of Victorian microbusinesses not registered for GST will also be eligible for the COVID-19 Disaster Payment. Micro-businesses and sole trader business owners can obtain assistance with their application by making an appointment with the Business Victoria Concierge Service on 13 22 15. The Victorian Government has assumed responsibility to fund payments in areas that are not declared a Commonwealth hotspot. The COVID-19 Disaster Payment is non assessable income and non exempt income for tax purposes. This applies to assessments for the 2020-21 income year onwards. In addition, the Business Continuity Fund provides $5,000 grants to businesses that remain impacted by capacity limits due to public health restrictions. Businesses located in the CBD will receive an additional $2,000 ($7,000 in total). All recipients must have received or been eligible for previous Business Cost Assistance Program Round Two (or extension), and no application is necessary (i.e. eligible recipients receive the payments automatically). |
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Divorce and Superannuation
New legislation will help prevent superannuation assets from being hidden during divorce proceedings.
From 1 April 2022, the Australian Taxation Office (ATO) will be able to release details of an individual’s superannuation information to a family law court.
The recently enacted laws are designed to ensure that there is procedural and economic fairness in divorce proceedings to prevent the under-reporting of superannuation assets. While a spouse’s superannuation information can be obtained now through legal action, if it is not provided willingly, it is often expensive and time consuming to obtain factual information through subpoenas or court orders.
From April 2022, when a couple have entered into divorce proceedings, if one of the parties believes the other is not being forthcoming about the value of assets held in superannuation, they can apply to a family law court registry to request their former partner’s superannuation information held by the ATO. They will then be able to seek up-to-date superannuation information from their former partner’s superannuation fund.
What happens to superannuation in a divorce?
In a divorce, superannuation is treated like any other asset and included in the division of assets in a property settlement or financial agreement. Depending on how the total assets of the couple are split, the superannuation balances of each individual may remain intact with each party taking their respective entitlement from the asset pool, or split between the couple.
For superannuation to be split, there must be:
If a superannuation account is split, it does not convert into cash unless the receiving spouse is aged 65 or over, or has reached preservation age and has retired. In most cases, the superannuation is immediately rolled over into the receiving spouse’s superannuation account and remains there until they are legally able to access it.
The tax-free and taxable components of the super payment to a receiving spouse will be calculated immediately before the payment is made with the relevant payment retaining the tax components of the account the funds are being transferred from.
For self-managed superannuation funds (SMSFs), generally SMSF cannot acquire assets such as residential property from a related party but there is an exemption when the acquisition is a result of marriage breakdown. Where a property like a residential rental property is involved, the superannuation rules allow an in-specie rollover under a court order or financial agreement rather than forcing the former couple to sell the property. For example, where a couple have an SMSF together, it’s common for one member to step down when they divorce (until that point it’s important to remember that the trustees are legally obliged to act in the best interests of all members). This same member might then set up their own SMSF and utilise the exemption to receive the residential rental property as an in-species rollover.
Capital gains tax relief is also available where property is transferred to a spouse’s superannuation fund as a result of divorce proceedings so that any potential capital gains tax does not apply on transfer. Instead, the spouse or former spouse who receives the asset will effectively ‘inherit’ the transferor’s cost base of the asset for CGT purposes. That is, when the property is transferred, the tax implications are generally the same as if the receiving spouse or their superannuation fund owned the property from the time it was acquired.
The superannuation divide
On average, women earn 14.2% less than men based on full time earnings. If you take overtime into account, the gap is 16.8%. When part-time work is taken into account, this figure blows out to 31.3%. And, the COVID-19 pandemic has only worsened the pay gap.
Given that 93% of all primary carer leave is taken by women, it’s not surprising that there is a divide between the superannuation balances of men and women on retirement. While the gap is diminishing over time reflecting the positive shifts in work participation and the earning potential of women, it is currently estimated to be around 42%. That is, when a woman retires, she retires with around 42% less superannuation than a man.
While the situation is much better in SMSFs, a gap remains. Over the five years to June 2019, the average member balances of women increased by 28% to $654,000, however the average balance of a male was $784,000.
The Federal Budget proposal to remove the $450 threshold on superannuation guarantee payments (the minimum amount someone needs to earn in a month before an employer is required to pay superannuation guarantee) will help reduce the superannuation divide, but this is not intended to commence until 1 July 2022.
Superannuation equalisation
Where couples have significantly different superannuation account values but are of a similar age, there are practical reasons why they might look at evening out any gap.
Where one spouse is close to or likely to reach their transfer balance cap (between $1.6m and $1.7m), redirecting superannuation contributions to the spouse with the lower balance means that together, they maximise their tax-free income in retirement. Together, the couple can accumulate between $3.2 and $3.4 million tax-free.
You can make a contribution to your spouse’s superannuation fund up to their non-concessional cap (currently up to $110,000 depending on their superannuation balance). If they are under 67 years of age, you might also be able to use the bring-forward rule and contribute up to 3 years’ worth of non-concessional contributions in one year (up to $330,000 depending on their superannuation balance).
If your spouse is not working or a low income earner (assessable income less than $40,000), there is also a tax offset of up to $540 available on contributions you make on their behalf.
If your spouse is under 65 and not retired, you can split your superannuation with them. Up to 85% of your concessional superannuation contributions from your employer or salary sacrifice each year, can be directed to your spouse’s fund.
Actively addressing the value of each spouse’s superannuation account might also help to manage some of the issues that can occur when a spouse dies. While superannuation will pass to the beneficiary nominated in the death benefit nomination or estate, this does not always occur in the most practical or tax effective way. The superannuation rules in this area are complex, particularly when there have been family breakdowns in the past. It’s important to seek advice to ensure your superannuation is managed in a way that delivers the best possible outcome for your beneficiaries.
What lockdown support is available to Victorian business?
Support is available if you are impacted by the Victorian lockdowns.
A series of grants and top-up grants are available to support Victorian business. There are two main streams for grants in Victoria:
New grants - Grants or grant extensions for businesses that previously did not qualify or did not access the available grants:
New and existing grant beneficiaries – top-up support for those who successfully qualify for the:
As many of the Victorian support programs are industry specific, it’s important that your business’s ANZSIC classification is correct (this is the industry category identified when your registered your business’s ABN). This code can be updated on the Australian Business Register through your MyGovaccount.
New and Open Grants
Licensed Hospitality Venue Fund 2021 July Extension
Grant applications close Friday, 20 August 2021. Liquor licensees without an eLicence email address need to set one up on their VCGLR Portal by 11.59pm on Monday, 16 August 2021.
The $10,400 July extension grant is for businesses that did not apply or qualify for the June Licensed Hospitality Venue Fund 2021. Successful businesses will also be eligible for the August top-up payment.
Eligibility
To be eligible for the Licensed Hospitality Venue Fund 2021 July Extension, you must:
If your business is an employing entity, your business must also attest that the business is supporting its workers to access any paid leave entitlements, or that if a person can work from home, to work from home during the COVID-19 restrictions, and supporting their casual workers, where possible.
Businesses that are eligible for any other support packages launched on or after 27 May 2021, will not be eligible for grants under the July extension fund. In addition, organisations that operate a private gender-exclusive club where membership is only by invitation or nomination by an existing member are not eligible for assistance under the Program.
The grant might also be denied to businesses subject to adverse findings by a Government agency or local council, is subject to external administration or a petition for bankruptcy or deregistration, or becomes deregistered.
How to apply
Eligible liquor licensees with an eLicence email address registered with the Victorian Commission for Gambling and Liquor Regulation (VCGLR) should receive an email containing their grant application link from Business Victoria. Liquor licensees without an eLicence email address need to set one up on their VCGLR Portal by 11.59pm on Monday, 16 August 2021 to receive their grant application link.
Applications for a grant can only be submitted through the link emailed by Business Victoria and close on Friday, 20 August 2021. If you have not received your link, call the Business Victoria hotline on 13 22 15.
Business Costs Assistance Program Round Two July Extension
Grant applications close Friday, 20 August 2021 or until funding is exhausted.
The $10,400 July extension grant is for businesses that did not previously receive funding through the Business Costs Assistance Program Round Two (May and June 2021).
Eligibility
To be eligible for the Business Costs Assistance Program Round Two July Extension, you must:
Be registered with the responsible Federal or State regulator (ASIC, ACNC or Consumer Affairs Victoria).
If your business is an employing entity, your business must also:
Organisations that operate a private gender-exclusive club where membership is only by invitation or nomination by an existing member are not eligible for assistance under the Program. The grant might also be denied to businesses subject to adverse findings by a regulator, is subject to external administration or a petition for bankruptcy or deregistration, or becomes deregistered (including a lapse in registration).
How to apply
Applications are made online through the Business Victoria website and close on 20 August 2021 or until funds are exhausted.
Small Business COVID Hardship Fund
Grant applications close 10 September 2021.
The Small Business COVID Hardship Fund offers grants of up to $10,000 to businesses that have been severely impacted by COVID-19 experiencing a decline in turnover of at least 70% but are ineligible for other business grants programs.
Eligibility
To be eligible for the hardship fund, you must:
If your business is an employing entity, your business must also:
Businesses that are eligible for any other support packages launched on or after 27 May 2021 will not be eligible for the hardship fund. In addition, organisations that operate a private gender-exclusive club where membership is only by invitation or nomination by an existing member are not eligible for assistance under the Program.
How to apply
To apply for the hardship grant, you can:
Alpine Resorts Winter Support Program
Grant applications close Friday, 20 August 2021 or until funding is exhausted.
The Alpine Resorts Winter Support Program provides funding though two streams: on-mountain and Dinner Plains; or off-mountain businesses. Eligible businesses should have received a phone call from the Department of Jobs, Precincts and Regions to assist with the application process. If you believe your business qualifies but you have not been contacted, contact alpineprograms@ecodev.vic.gov.au.
The program is open until Friday 20 August 2021 or until funding is exhausted.
Funding amounts are less any funding received through the Business Costs Assistance Program Round Two and Licensed Hospitality Venue Fund 2021 (capped at a deduction of $7,000, top-up funding through these programs is not deducted from the total amount).
To be eligible, your business must:
Funding may be denied to businesses subject to adverse findings by a regulator, is subject to external administration or a petition for bankruptcy or deregistration or becomes deregistered (including a lapse in registration).
On-mountain and Dinner Plain stream
The On-mountain and Dinner Plain stream provides funding of:
To be eligible for this program, in addition to the general eligibility criteria, your primary business must be:
Located within a Victorian Alpine Resort or Dinner Plain, and
Operate:
A business is responsible for managing lift operations at an Alpine Resort is not eligible for funding under this program.
WorkSafe registered employers can apply for funding for up four premises. Non-WorkSafe businesses are limited to one per ABN.
Off-mountain stream
The Off-mountain stream provides funding of up to $18,000.
To be eligible for this program, in addition to the general eligibility criteria, your business must be:
Located within one of the following regional Local Government Areas: Alpine Shire; Mansfield Shire; Murrindindi Shire; Baw Baw Shire; East Gippsland Shire; and provide:
Top-up support for existing grant beneficiaries
The Victorian Government is using the existing grant funding channels to provide top-up and additional funding for those that receive support through the:
Business Costs assistance program top-up
Top-up payments are made automatically to businesses that qualified for the Business Costs Assistance Program Round Two or the Business Costs Assistance Program July Extension.
A round 3 top-up payment of $2,800 was announced on 12 August 2021 and is expected to be paid within 7 days.
In addition to the ‘top-up’ payments, 24 sectors including gyms, cafes, restaurants, catering services and hairdressers, will automatically receive a business continuity fund payment of $5,000 with an additional separate $2,000 paid to businesses located in Melbourne’s CBD. The 24 sectors are based on ANZSIC classifications (see the full list here). Recipients will be contacted by Business Victoria from mid-August to confirm they will receive a payment.
The top-up and business continuity payments are made automatically.
Licensed Hospitality Venue Fund 2021 top-up.
Top-up payments are made automatically to businesses that qualified for the June Licensed Hospitality Venue Fund 2021 and the Licensed Hospitality Venue Fund 2021 July Extension.
On 12 August, additional payments were announced for licensed hospitality venues in metropolitan Melbourne. The value of the payments is based on venue capacity:
| Top-up payment | Venue capacity |
| $5,000 | Up to 99 patrons |
| $10,000 | 100 to 499 patrons |
| $20,000 | 500 plus patrons |
Support for commercial tenants and landlords
From 28 July, commercial landlords must provide rental relief to eligible tenants that matches the tenants’ COVID-19 impacted decline in turnover under the reintroduced Commercial Tenancy Relief Scheme.
To be eligible for relief, commercial tenants must have:
To support landlords, the Victorian Government will create a Landlord Hardship Fund.
Where an agreement cannot be reached between the tenants and landlord, the parties are encouraged to enter negotiations directly, with the Victorian Small Business Commission (VSBC) available to provide mediation if required. See Commercial tenancy relief for Victorians in small business, for further details.
The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information. If expert assistance is required, professional advice should be obtained.
Lockdown support: Update
The support available to individuals and business has been constantly evolving and changing. Here’s a summary of where support stands around the country.
We note that offers of government support are changing constantly and care should be taken in assuming applicability for ant particular grant
For individuals
From 2 August 2021, the Federal Government COVID-19 Disaster Payment has increased to a maximum of $750 per week for those who have lost 20 hours of work or more, and $450 for those who have lost between 8 and 20 hours of work. In most cases, the payment now applies from day 1 of a lockdown. In general, you need to be living in, or impacted by Commonwealth declared lockdown to receive the payment although some States have funded an extension of the payment beyond hotspot areas.
A special separate $200 a week ‘top-up’ payment has been added for those currently receiving an income support payment through social security, ABSTUDY Living Allowance, Dad and Partner Pay or Parental Leave Pay in addition to their existing payment, if they can demonstrate they have lost more than 8 hours of work and meet the other eligibility requirements for the COVID-19 Disaster Payment. The payment was put in place because people receiving income support payments are not eligible for the COVID-19 Disaster payment.
More funding for Victorian SMEs
There are two main streams for grants in Victoria:
If your business previously received the Business Costs Assistance Program Round Two or the Licensed Hospitality Venue Fund 2021, additional grants of $2,800 for the Business Costs Assistance Program Round Two and up to $20,000 for the Licensed Hospitality Venue Fund 2021 have been announced. Your business cannot retrospectively apply for these grants. See Helping Victorian Businesses Who Need It Most.
For businesses that did not access previous grants, the Business Costs Assistance Program Round Two July Extension offers new grants of $4,800 for employing and non-employing business depending on your sector. For those in the hospitality sector, a new Licensed Hospitality Venue Fund 2021 July Extension is available offering grants of up to $7,200 for each eligible premises. Applications for both grants close 13 August 2021.
A new Small Business COVID Hardship Fund grant of up to $8,000 has been announced for businesses that are not eligible for existing support funding. To access the grant, your business must be severely impacted by the COVID-19 lockdowns with a decline in turnover of 70% or more. No further details are available at present.
Other support
For Alpine businesses, additional grants between $5,000 and $20,000 will be available to 430 Alpine based businesses. See the Alpine Resorts Winter Support Program (closes 20 August 2021).
Rent relief for commercial tenants is also now in place for businesses that have suffered a decline in turnover of at least 30% as a result of COVID-19. Landlords will be required to provide proportional rent relief in line with a business’s reduction in turnover and mediation is available through the Victorian Small Business Commission. A hardship fund will be established for landlords providing rent relief although no details are available as yet.
Please contact us if you would like support to prepare for, or to access, the support you need.
New South Wales business
In New South Wales, the following grants and payments are accessible:
Up to $100,000 in weekly JobSaver cashflow support payments. Payments are based on 40% of your NSW payroll payments. Eligible businesses without employees that meet the eligibility criteria (such as sole traders with no employees), can access a payment of $1,000 per week.
The decline in turnover test required for the JobSaver, COVID-19 business and micro-business grants has been causing a lot of angst but some additional flexibility has been provided. Businesses and non-profit entities can now pass this test if they can show a decline in turnover of at least 30% due to the Public Health Order over a minimum 2-week period within the relevant test period compared to:
The test period depends on which payment you are looking at:
This additional flexibility is helpful for businesses that started after the comparison period in 2019 and for those that have undertaken an acquisition, disposal or restructure.
Queensland business
$5,000 Business Support Grants are available for those impacted by the lockdown from Saturday, 31 July 2021. Your business does not have to be in the local government areas locked down but needs to be impacted by it. To access the grant, you will need to show a decline in turnover of at least 30%. The grants are available to businesses with a turnover of $75,000 or more and annual Queensland payroll of less than $10 million. Applications open mid-August. See Business Queensland for details.
South Australia
Grants of $3,000 for employing businesses and $1,000 for non-employing businesses are available to businesses that experienced a decline in turnover of at least 30% as a result of the health restrictions from 20 July 2021. The grants are available to those with a turnover of $75,000 or more and Australia wide payroll of less than $10 million. See COVID-19 Business Support Grant – July 2021 for details
Are COVID-19 grants and funding tax free?
Most people would think that money provided by the Government to support people and business during a crisis would be tax free? Otherwise, it’s like giving money with one hand and then taking it away with the other, isn’t it?
But, the tax laws don’t work like that. To make a payment tax-free, legislation is required to enable it to be classified as exempt income or non-assessable non-exempt income. In general, any income received will be assessable unless the Government has legislated for it to be tax-free. JobKeeper for example was not tax free and anyone who received it in 2020-21 will need to declare it in their income tax return. Businesses also will need to declare JobKeeper income in their tax return even if the full amount flowed directly to employees.
At the Federal Government level, the Prime Minister recently announced that the COVID-19 Disaster Payment will be tax free and legislation enabling this change is before Parliament. Prior to this, disaster recovery grant payments to primary producers and small businesses for floods between 19 February and 31 March 2021 were also made tax-free. Other payments however, such as Pandemic Leave Disaster Payment, are taxable.
The Treasurer has also been granted the power to make COVID-19 relief provided by the States and Territories tax-free but only from 13 September 2020, and only if they request the Commonwealth Government to make it tax free. If you’re confused, it’s not surprising. The result is a mix of tax treatments depending on what support you received and from whom.
To date, only a series of Victorian business grants are tax-free. The recent business grants in New South Wales, Queensland and South Australia have not as yet been declared tax free (but we expect that this will change).
The general rule is that grants are likely to be taxable unless they are specifically excluded from tax. If the grant relates to your continuing business activities, then it is likely to be included in assessable income for income tax purposes. The position can be different in cases where the payment is made so that the entity can commence a new business or cease carrying on a business but there will still often be some tax implications.
Margaret Thatcher, former British Prime Minister
Welcome to our first newsletter update on useful information for directors and senior management of Not-for-Profit Enterprises.
At MVA Bennett, celebrating 80 years in 2021, we have a rich history of supporting the needs of Not-for-Profit Enterprises with accounting, governance, risk, audit and assurance services. In addition, despite the sector being income tax exempt, there is an increasing need for advice on other taxes including GST and Fringe Benefits.
With the onset of COVID and resulting restrictions on the movement of people, we have also seen an increased need for Not-for-Profit Enterprises to access advice on issues ranging from accessing government grants, to business continuity and cyber-security to solvency and cashflow management.
In this newsletter we focus on current governance matters of interest. The team at MVA Bennett stands readily available to support directors and senior management through the challenges of their ever-changing responsibilities.
In this newsletter:
Director Identification Number (DIN)
As part of the Treasury Laws Amendment (Registries Modernisation and Other Measures Act) 2020, directors, including alternative directors and those of registered foreign companies and companies governed by the Corporations (Aboriginal and Torres Strait Islander) Act 2006 will be required to apply for a director identification number (DIN).
DINs hope to combat illegal phoenixing by providing more effective tracking of directors and their corporate histories. The move also improves data integrity and security.
A DIN will be a permanent unique identifier and will be issued only once a director has established his or her identity to the satisfaction of the registrar of the Australian Business Registry Services. The registrar is the commissioner of taxation.
DIN provisions began on 4 April, and testing, which ends on 31 October, aims to ensure their effective operation.
Deadlines set by Treasury through various legislative instruments for DIN implementation are:
Penalties for non-compliance, such as applying for several DINs or misrepresenting a DIN, include infringement notices and civil and criminal penalties, including imprisonment.
Governance Institute – Board papers Guidance
The Governance Institute of Australia has released Board papers guidance aiming to arm decision-makers with clear, relevant information.
Well-prepared board papers are vital in equipping directors with the information they need to make effective, timely decisions.
Too often board papers are overwhelming in volume and information while providing insufficient detail for good decision-making.
Sub-standard board papers can cause serious consequences, recent corporate crises having highlighted inadequate information flows as contributing to failures.
The guidance outlines:
Ancillary Funds must lodge returns
Public and private ancillary funds must lodge annual information returns.
Ancillary funds that are ACNC-registered charities must complete an online ACNC annual information statement. Funds that are not registered as charities with the ACNC must continue to lodge a return with the ATO and might also need to lodge an income-tax return.
Funds must meet respective ancillary-fund guidelines, and failure to comply might mean penalties.
Self-assessment changes on the way
Non-charitable Not for Profit (NFP) entities may self-assess their eligibility for income-tax exemptions without an obligation to report to the Australian Taxation Office (ATO)
From 1 July 2023, the ATO will require income-tax-exempt NFPs with an active Australian Business Number to submit online annual self-review forms with the information they ordinarily use in self-assessing.
NFPs will need to ensure that as part of governance they satisfy requirements to retain income-tax exemptions.
Salary and Wages Compliance
Paying in accord with legislated requirements is a hot top for management and governance. The laws are complex and vary from State to State and include the Commonwealth.
The Fair Work Ombudsman is reminding employers that the national minimum wage increases to $20.33 an hour (up from $19.84) or $772.60 a week (up from $753.80).
The Fair Work Commission announced on 16 June a 2.5 per cent increase to the national minimum wage following its annual review. This increase applies from the first full pay period starting on or after 1 July.
Employees covered by awards will also have base rates increased by 2.5 per cent, the increases beginning on different dates for different groups of awards.
Victoria pioneers wage-theft laws
Victoria has become the first Australian state to pass laws – the Wage Theft Act 2020 (Vic) – establishing criminal penalties for employers who deliberately underpay or don’t pay their workers.
On 1 July, it became a crime for an employer in Victoria to deliberately underpay employees or dishonestly withhold employee entitlements.
Wage-theft offences involve deliberate and dishonest conduct. Honest mistakes made by employers who exercise due diligence in paying wages and entitlements are not included.
It becomes a crime for an employer in Victoria to:
Wage crimes are punishable by a fine of up to $198,264 or up to 10 years’ jail for individuals, and a fine of up to $991,320 for companies.
Wage Inspectorate Victoria will educate businesses and workers about their rights and obligations, investigate wage theft, prosecute offenders, and respond to reports and tip-offs about wage theft.
For more information visit www.vic.gov.au/vHYPERLINK "http://www.vic.gov.au/victorias-wage-theft-laws"ictorias-wage-theft-laws.
Other States have their own legislation.
Super-guarantee rate rises
The rate of the Superannuation Guarantee Charge (SGC) rose on 1 July from 9.5 to 10 per cent. Entities will need to ensure that payroll and accounting systems are updated to incorporate the increase.
Grey areas on the eligibility for SGC contributions exist particularly in respect of contractors.
The super rate is scheduled to progressively increase to 12 per cent by July 2025.
ASIC focus areas for 30 June financial reports
ASIC has highlighted key focus areas for financial reporting for periods ending 30 June 2021.
ASIC expects directors, preparers of financial reports, and auditors to pay particular attention to asset values, provisions, solvency and going-concern assessments, events occurring after year end and before completing reports.
The Commission has extended the deadline for both listed and unlisted entities to lodge financial reports under chapters 2M and 7 of the Corporations Act 2001 by a month for balance dates from 23 June to 7 July.
The extended deadlines will assist with any pressures on smaller entities’ resources and provide adequate time for completing audits given COVID-19.
When deciding whether to depart from normal statutory deadlines directors should consider the information needs of shareholders, creditors, and other users of their financial reports. They should ensure that they meet borrowing covenants and other obligations.
Pandemic-related rent concessions extended
AASB 2020-4 Amendments to Australian Accounting Standards – Covid-19-Related Rent Concessionsamends AASB 16 Leases to extend by a year the application period of a practical expedient.
The expedient permits lessees not to assess whether rent concessions that occur as a direct consequence of the COVID-19 pandemic are lease modifications.
The standard extends the practical expedient to rent concessions that reduce lease payments originally due on or before 30 June 2022, provided other conditions for applying it are met.
This standard applies to annual periods beginning on or after 1 April.
Transitioning to simplified disclosures
The Australian Accounting Standards Board has issued AASB 2021-1 Amendments To Australian Accounting Standards – Transition To Tier 2: Simplified Disclosures For Not-For-Profit Entities.
It provides entities with optional relief from presenting comparative information in the notes to financial statements where they failed to disclose comparable information in their most recent general-purpose financial statements.
NFP definition stays
The AASB has decided to discontinue an attempt to redefine ‘not-for-profit entity’ and will retain the current definition in Australian accounting standards.
The board noted that initial feedback to the invitation to comment ITC 37 The AASB’s Standard-Setting Frameworks for For-Profit Entities and Not-for-Profit Entities amounted to a request for more guidance. It failed to indicate significant issues with the current definition.
The AASB also recognised that while the majority of the respondents to exposure draft ED 291 Not-For-Profit Entity Definition and Guidance supported the proposals, many raised reservations about the clarity of the implementation guidance, the level of judgement required, and the expected transition effort and cost for some entities.
The board acknowledged stakeholders’ concerns and concluded that the potential benefits of the proposals were unlikely to justify the cost of their implementation.
MVA Bennett team is available to support your needs, or if you wish for further information.
Shaun Evans – 0439 355 654
David Gibbs AM – 0488 488 707
MVA Bennett acknowledge the Traditional Custodians of the land on which we work and live, and recognise their continuing connection to land, water and community. We pay respect to Elders past, present and emerging.