The post Leading Australian SMEs in 2023’s Changing Economy appeared first on TR - Tax Insight AU.
]]>The Australian economy is constantly evolving, which means that small and medium enterprises (SMEs) need to adapt in order to stay competitive. As an accountant, it’s important that you understand what this means for your clients – and how you can help them succeed.
Common themes emerged across a range of sectors – aged care, co-working office services, accounting, software development, manufacturing, and transport – including:
“The key themes presented in this paper were echoed by all the business owners and executives we interviewed. What was clear is that the status quo is no longer enough to effectively operate and thrive in business. Adapting and trying new things is key to navigating through this changing economic environment.”
Leading Australian SMEs in 2023’s Changing Economy
Challenges associated with these topics mean SMEs will rely more heavily on accountants for advice so it is important for accountants to pivot from their traditional areas of compliance and adapt to meet their clients’ changing needs.
Leading Australian SMEs in 2023’s Changing Economy unpacks some of these challenges and offers valuable insights and practical ways accountants can be more than just number-crunchers by diversifying their skill set so they can better serve their clients.
Access your copy of Leading Australian SMEs in 2023’s Changing Economy via the form on this page.
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]]>The post Fool’s Gold: GST and Precious Metals Fraud appeared first on TR - Tax Insight AU.
]]>The alert notes that law enforcement and regulatory agencies are continuing to see sophisticated arrangements that attempt to obscure transactions of recycled ‘investment form’ precious metals. In this regard the alert notes:
We believe there are groups or networks of industry participants, including refiners, bullion dealers, gold kiosks, dealers and buyers within established supply chains involved in gold recycling (or carousel type) arrangements, seeking to exploit the GST rules in relation to precious metals.
The operation of “the GST rules in relation to precious metals” is complex and exploitation may result in civil indirect tax consequences as well as criminal liability. The high-profile case of EBS & Associates was primarily concerned with potential civil liability to indirect taxes (rather than criminal liability for an indirect tax-related crime) although illegitimate behaviour was observed in relation to EBS & Associates’ suppliers.
EBS & Associates involved the acquisition and refining of scrap and other metal to produce precious metal for sale to dealers. EBS & Associates acquired gold that was not in investment form (scrap gold), which it converted or refined into precious metal (ie gold in investment form of at least 99.5% fineness). The gold was then sold by EBS & Associates to dealers in precious metal.
The Commissioner issued an assessment disallowing GST-related input tax credits (totalling approximately $122 million). The Commissioner’s position was that the relevant supplies of precious metals by EBS & Associates to the dealers were not taxable supplies for A New Tax System (Goods and Services Tax Act 1999 (Cth) (GST Legislation) and therefore were input taxed supplies. Accordingly, EBS & Associates was denied an entitlement to the relevant input tax credits in relation to its acquisitions of scrap gold. In the alternative the Commissioner sought to rely on anti-avoidance provisions.
EBS & Associates objected to the assessments. The objections were disallowed. EBS & Associates then applied to the Tribunal for review of the objection decisions. The Tribunal affirmed the decisions under review. EBS & Associates then appealed to the Federal Court. Ultimately, the Federal Court held that supplies of gold to the dealers constituted the “first supply of that precious metal after its refining by … the supplier” according to the GST legislation. They were, therefore, GST-free supplies and not input taxed supplies under the GST Legislation.
Although EBS & Associates was not a criminal case, it was observed therein that a number of the suppliers to EBS & Associates were illegitimately retaining amounts collected as GST that they should have been remitting to the Commissioner. It also transpired that a number of the suppliers of scrap gold were:
It is this kind of behaviour – ie “gold recycling” or “carousel type arrangements” – that is the subject of the Taskforce’s intelligence alert. According to the Financial Review, leaked ATO documents prepared for the newly elected government in May 2019 stated that:
The ATO is seeking recovery of GST that has been avoided in schemes related to the adulteration of gold bullion (there are in excess of $1.15 billion in assessments for primary tax and penalties in relation to these schemes).
Although the above statement appears to relate to pre-EBS & Associates calculations, the illegitimate behaviour observed in that case by EBS & Associates’ suppliers hints at precious metals fraud nevertheless posing a serious risk to the revenue.
The Taskforce regards schemes that exploit GST rules using artificial arrangements to be fraud. Although this may be an oversimplification in terms of regulatory outcomes following an investigation, it does mean that the Taskforce is likely to use criminal coercive powers available to it, such as search warrants (as was the case in EBS & Associates), to facilitate investigations. The Taskforce also utilises data matching and analytics in its fight against these indirect tax crimes.
Precious metals fraud is one of a number of indirect tax fraud typologies. Generally, GST-related fraud involves one or all of the following:
Separate from the Taskforce, the ATO takes GST-related statements involving more than carelessness or accident (ie deliberate and deceitful behaviour) as fraudulent and takes them very seriously.
Despite the complexity of the application of the GST Legislation to precious metals, the Taskforce appears to be catching up with deliberate and deceitful attempts to use precious metals to engage in indirect tax fraud. EBS & Associates was a civil case in which the taxpayer was found not to have misstated its GST liability although its suppliers were observed to have engaged in “gold recycling” and/or “carousel type arrangements”. Offenders (and potential offenders) should now be on notice that the ATO, singularly and as part of the Taskforce, has focused its capability here and, like in the case of GST fraud generally, treats matters most seriously with ultimate sanctions ranging from repayment of illegitimate claims to gaol.
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]]>The post The clock is ticking: apply now for your Director ID appeared first on TR - Tax Insight AU.
]]>A Director ID is a unique 15-digit identifier assigned to directors to help prevent the use of false or fraudulent director identities, enable regulators to trace relationships across companies and identify and eliminate director involvement in illegal phoenix activity.
The Australian Business Registry Services (ABRS), which is a relatively new registry service, is responsible for delivering, and the Australian Securities and Investment Commission (ASIC) is responsible for the enforcement of, the Director ID initiative.
All directors of a company, registered Australian body, registered foreign company or Aboriginal and Torres Strait Islander corporation will need a Director ID.
The date on which you must apply for a Director ID will depend on the date on which you are first appointed as a director:
First appointed as a director | Date you must apply |
On or before 31 October 2021 | By 30 November 2022 |
Between 1 November 2021 and 4 April 2022 | Within 28 days of appointment |
From 5 April 2022 | Before appointment |
Directors of companies regulated by the Office of the Registrar of Indigenous Corporations and registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 have a different time frame in which to apply.
If you are unable to apply for your Director ID by the relevant due date, you may complete and submit an application form with the ABRS to request an extension.
You must apply for your own Director ID; it is a one-off application and the resulting Director ID is one that you will keep forever – even if you change companies, cease being a director, change your name or move interstate or overseas.
The fastest way to apply for your Director ID is online via the following steps:
Phone and paper application options are also available, and each process has its own requirements for verifying your identity. Applicants from outside Australia must submit a paper application.
ASIC is responsible for enforcing the following new Director ID offences that have been introduced under the Corporations Act 2001 (Cth), two of which relate to a failure to apply for a Director ID when required:
Offence | Legislative section | Maximum penalties for individuals |
Failure to have a director ID when required to do so | s 1272C | $13,200 (criminal); $1,100,000 (civil) |
Failure to apply for a director ID when directed by the Registrar | s 1272D | $13,200 (criminal); $1,100,000 (civil) |
Applying for multiple director IDs | s 1272G | $26,640, 1 year imprisonment or both (criminal); $1,100,000 (civil) |
Misrepresenting director ID | s 1272H | $26,640, 1 year imprisonment or both (criminal); $1,100,000 (civil) |
Failing to comply with the new Director ID initiative may result in serious consequences. To avoid the imposition of any of those consequences, we recommend that existing directors apply for a Director ID, and become familiar with their responsibilities in relation to their Director ID, as soon as possible, and before the relevant due date, which will be 30 November 2022 for many directors.
This article was first published as part of ClearLaw on www.cleardocs.com. You can read more ClearLaw articles here.
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]]>The post October 2022 Federal Budget Report: Powered by Weekly Tax Bulletin appeared first on TR - Tax Insight AU.
]]>This second Budget for 2022-23 updates economic forecasts and outlines the new Labor Government’s priorities following the May 2022 Federal election.
While the economy is expected to grow by 3.25% in 2022-23, it is predicted to slow to 1.5% for 2023-24, a full percentage point lower than forecast in March 2022. Inflation is expected to peak at 7.75% later in 2022, but is projected to moderate to 3.5% through 2023-24, and return to the Reserve Bank’s target range in 2024-25.
Against this backdrop, the Treasurer has sought to exercise fiscal “restraint” so as not to put more pressure on prices, and make the Reserve Bank’s job even harder. Rather, the Budget sets out a 5-point plan for cost-of-living relief in the areas of:
While the Budget does not contain major tax changes it does seek to begin some “Budget repair work” via tax integrity measures.
This can be seen as almost a ‘clearing of the decks’, setting the Government up to make big ticket changes in future Budgets.
This report is brought to you by the Thomson Reuters Tax Division for the Weekly Tax Bulletin. Download your complimentary issue via the form on this page.
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]]>The post Using On-demand Legal Documents: Aren’t They All The Same? appeared first on TR - Tax Insight AU.
]]>Why all the fuss? Poorly prepared legal documents can lead to uncertainties and cause all sorts of problems including incurring significant legal costs if interpretation issues result in legal action.
This article outlines some of the key areas to consider before using an on-demand legal document.
Whether you are varying the clauses of a trust deed, changing a trustee of a trust or changing the powers of trustee, it is critical to follow the correct procedure set out in the governing trust deed. This equally applies to all common legal documents such as those which relate to SMSFs, discretionary trusts, hybrid trusts etc.
When proposing to make a variation to a trust deed, it is important that this be done via a deed in preference to minutes of a meeting with parties resolving to make the change: and this is essential where the trust’s deed requires an amendment to be by deed. In Batmor Mortgages Pty Ltd v Arcuri [2017] NSWSC 84 the Court was required to consider the validity of a resolution which changed the trustee of a trust.
Should the parties have changed the trustee by way of deed, as was the case for a separate occasion in the same matter, it may have eliminated the need for litigation arising from ambiguities in relation to the variation.
Cleardocs products use deeds to effect changes to the terms of a deed, powers of the parties and when changing the trustee of a trust.
It is important that trust deeds are updated frequently to account for changes in the law and to prevent unfavourable outcomes which could have been avoided. One example is in the decision in BRK (Bris) Pty Ltd v Commissioner of Taxation [2001] ATC 4111 (BRK), which deals with distribution of trust income as further highlighted by an ATO publication on trust income distribution arrangements (Taxpayer Alert TA 2016/12)
An invalid distribution from a trust can have several negative consequences, including that the income could be taxed at the highest marginal rate in the hands of the trustee, or in the hands of one or more beneficiaries who receive the distribution under a default distribution clause in the trust deed.
In BRK, the trustee nominated two companies as general beneficiaries under provisions of the trust deed and made several trust distributions to those companies. The ATO argued that the distributions were invalid on the basis that the trustee did not have the power under the deed to make such a nomination. The Federal Court agreed with the ATO and decided that the trustee could not make the relevant distribution. Upon interpretation of the relevant clauses in the trust deed, the Court ruled that all undistributed income would be assessed against the trustee at the highest marginal rate.
The issue in BRK is addressed in the Cleardocs deed, and state that if the trustee fails to exercise its discretion to accumulate income by 30 June, then the income will be held in trust for the persons and subject to the rules in the default distribution clause. The Cleardocs default distribution clause sets out the default position for 30 June income distributions, which eliminates the possibility for income to be taxed at the highest marginal rate should a distribution fail.
The Bamford decision allows a trustee to adopt a different definition of income in the trust’s deed, either by stating that definition in the deed, or by the deed granting the trustee an express power to adopt a different definition in respect of different periods.
Trust deeds which confer power on the trustee to adopt a different definition should also pay attention to the decision of Forrest v Commissioner of Taxation [2010] FCAFC 6 (Forrest), which read down the trustee’s powers in a clause designed to utilise the Bamford reasoning. In Forrest, the court held that such a power was a power to make an administrative determination only, and that it was not an unconfined discretion to determine whether a receipt represents realised or unrealised capital gains.
Several clauses in the Cleardocs deed have been redrafted with Bamford and Forrest in mind, granting the trustee the flexibility to determine whether receipts are to be treated as capital or income.
The Cleardocs discretionary trust deed grants the trustee the power to determine whether to adopt an alternative definition in respect of a particular income year, which is unconfined and not merely an administrative power. The document package allows you to choose whether you wish to limit distributions of income and capital, by excluding foreign persons as beneficiaries.
The decision of the Western Australian Court of Appeal in Mercanti v Mercanti (2016) WASCA 206 (Mercanti) confirms the importance of having a trust deed which uses plain language.
In Mercanti, the Court was required to consider the validity of the variation of the schedule to the trust deed (which changed the trust’s appointor) and whether the trustee was allowed to make such a variation in the first place. Ultimately the decision turned on the wording of the trust deed and the Court’s interpretation of the word “hereinbefore”. The wording of clause 28, the clause in dispute, allowed the trustee to revoke, add to or vary ‘all or any of the trusts terms and conditions hereinbefore contained’.
The argument was whether “hereinbefore” meant:
It was argued that because the schedule appeared after this clause, it was not a term or condition “hereinbefore” contained. The trial judge concluded that the variation of the appointor in the schedule was valid and the change was within the trustee’s power.
On appeal, the Court held that the wording of the empowering clause did not restrict the trustee’s ability to vary the Appointor in the deed. In particular:
The use of plain language is designed to avoid matters of interpretation needing to be determined by successive judicial decisions at great cost to the parties. The Cleardocs deeds are constructed using plain English and clear language therefore avoiding issues such as those raised by Mercanti.
If the intention of the documents is to distribute the member’s death benefits to the member’s ‘legal personal representative’ – then using the words ‘executors and estate, ‘trustee of the deceased estate’ etc in the clause which makes the distribution would render the document invalid.
The law requires, and the Queensland Supreme Court has confirmed in Munro & Anor v Munro & Anor [2015] QSC 61, that the document must refer to a ‘legal personal representative’ in the relevant clause and not anything else: ss 55A(1) and 31 of the Superannuation Industry (Supervision) Act 1993 (Cth), reg 6.22 of the Superannuation Industry (Supervision) Regulations 1994 (Cth).
The Cleardocs Death Benefit Nomination (DBN) and Death Benefit Agreement (DBA) use the words ‘legal personal representative’.
Some DBN’s and DBA’s do not allow for different tiers of distributions – for example – where a first level beneficiary predeceased the member, then it is prudent for a DBN/DBA to allow for distributions to be made to a second level beneficiary. If a DBN/DBA does not allow for this contingency, then it would render the entire document of no effect and a waste of time and money.
The Cleardocs DBN and DBA use a two tier distribution mechanism.
Documents which are not updated can impose unnecessary restrictions on a company. For example, the sections of a company’s constitution which deals with the ability to declare and pay dividends are informed by section 254T of the Corporations Act 2001 (Cth). Section 254T was last changed in 2022 to:
The Cleardocs Constitution was updated when this change was first introduced. However, companies which have not updated their constitutions since 2010 may have an unnecessary restriction on the declaration of dividends in place.
This article was first published as part of ClearLaw on www.cleardocs.com. You can read more ClearLaw articles on related topics here.
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]]>The post How the ATO GST fraud crackdown can impact legitimate refund claims appeared first on TR - Tax Insight AU.
]]>The ATO issued a media release, estimating more than $800 million of fraudulent refund claims have been made, with fraudsters relying on the self-assessment process in the BAS lodgement system to claim and be paid for false GST refunds, all before the fraudulent return is picked up by the ATO.
The investigation includes audits of Business Activity Statement (BAS) returns, highlighting customers who have set up ABN’s without actually operating a business. These customers are then creating and submitting fictitious BAS returns to get a GST refund.
As part of this increased scrutiny and investigation, the ATO has introduced protocols to closely review all GST refund claims, both legitimate and false, and are putting extra controls in place, such as reviewing bank accounts and requesting further information on specific BAS statement items, to ensure the legitimacy of the claims being made.
Because of the tightening of controls, we are seeing much more time being taken to resolve those queries, and as a result, the time taken to refund legitimate GST claims is increasing and leading to lengthy delays in payment. For businesses that may rely on the GST refund claim coming in to purchase goods, pay other bills or otherwise be reliant on the cash flow for business purposes, this is understandably causing some concern.
In the months where irregular transactions or situations occur, (e.g., a spike in purchases for a particular month) this can cause fluctuations between lodgements from a GST payment to a GST refund position. With the increased ATO scrutiny, this may cause delays in GST refunds and summon questions for the taxpayer to explain.
Investing in an automated tax compliance solution which contains a series of transaction and verification testing will warn users of anomalies prior to the lodgement of the BAS return. This provides users with the confidence that they are lodging accurate returns and helps to validate the claim with the ATO, ensuring any delay in the payment of the GST refund is proactively minimised.
With the increasing proliferation of fake businesses and fraudulent ABNs, businesses are obligated to check the ABNs quoted by their suppliers prior to lodgement of the BAS return. There are implications for the business if the ABN quoted is not valid or if the details do not match the supplier. This checking process can be time consuming, especially when there are large volumes of suppliers from month to month.
An automated solution can help ease this burden by connecting directly to the Australian Business Register in real time, making it simple to check ABN status and GST registrations. The platform can produce a report of any credit claims for a supplier that is not registered for GST and will allow uploads of historical data to ensure all possible credits are being claimed from registered vendors.
As the GST fraud crackdown continues, there is no better time to leverage an indirect tax compliance platform like ONESOURCE from Thomson Reuters, which offers organisations the solutions to tackle the growing burden of GST and other corporate tax charges.
ONESOURCE technology gives you the control you need to ensure transparency in meeting your ongoing GST compliance obligation by delivering accurate, reliable results. This is not just an indirect tax product that solves all your problems. With ONESOURCE you are teaming up with a business partner that is 100% dedicated to your organization’s success.
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]]>The post What Accounting Clients Want Now: Successful Leaders Share Insights appeared first on TR - Tax Insight AU.
]]>The pandemic forced the profession into a new way of working, accelerating the use of technology like never before. Businesses pivoted to offer online trading in an effort to survive during lockdowns and clients also adapted by communicating via Teams or Zoom.
The 2022 whitepaper, How Successful Accounting Professionals are Deepening Client Relationships, features candid interviews with 13 Australian accounting professionals and reveals how firms and their clients have adapted to these new ways of working. The whitepaper highlights both the successes and the failings, offering valuable insights for the wider profession.
Accounting firms have always delivered an important professional service to Australian businesses but the long existing demands to deliver more strategic and value-added advisory services to clients have been brought to the forefront. Embracing automation to do routine and tedious tasks unburdens accountants to focus on the things that technology can’t do – build stronger client relationships.
The whitepaper reveals valuable and easy to digest insights on:
Access your copy of How Successful Accounting Professionals are Deepening Client Relationships via the form on this page.
The post What Accounting Clients Want Now: Successful Leaders Share Insights appeared first on TR - Tax Insight AU.
]]>The post Top Three Areas CIOs Can Improve Operations In 2022 appeared first on TR - Tax Insight AU.
]]>During the pandemic we witnessed an accelerated transformation towards digitisation. The role of the CIO consequently garnered more influence and visibility in these last two years, evolving beyond the scope of core IT responsibilities.
In order to keep up, CIOs must upgrade their IT systems and prepare their organisation for operational excellence. Introducing automation within the tax function of an organisation allows CIOs to be less dependent on manual tasks in their role, making way for more strategic thinking.
We take a look at the top three areas today’s technology leaders are focussing on to create more efficient operations in 2022 and beyond.
Indirect tax is a complex area and organisations need to keep up with compliance, legislation and the updated rules and regulations provided by tax authorities. With increased tax authority focus on transactional taxes such as indirect tax and VAT, multiple legacy systems and manual/excel driven processes can overwhelm resources by having to keep this updated, in both the finance function and the technology department. To ease this burden, CIOs are prioritising automation by increasing their use of technology-driven compliance.
Companies will be required to work more closely with their tax department than ever before, to allow for real time filing. This means aligning their chosen technology solution with the tax authority’s compliance initiatives to future-proof the indirect tax team. The implications of non-compliance are not limited to increased costs, liability and reputational damage but can impact profitability and the business overall.
Indirect taxes are calculated on a transaction-by-transaction basis but as the volume of data continues to increase comes a need for a new way to calculate tax effectively.
The benefits of investing in indirect tax technology include:
As cybercrime continues to surge, with fraud and scams occurring daily, one of the top challenges facing organisations is information security.
Data and services continue to transition and expand to cloud platforms, attack touchpoints are also growing, creating a more complex organisational perimeter for CIOs to secure. With the ongoing hybrid working model and people continuing to work across multiple devices, access to sensitive information is more readily available.
These mounting vulnerability points need to be addressed with new tools and strategies for visibility and defense. A Gartner survey of over two thousand CIOs, revealed that cyber and information security is at the top of the list of investments for 2022. More than three in five (66%) of all CIO respondents expect to increase associated investments in the next year.
One of the main benefits of automating the tax process is to share data across systems to improve productivity, gain insights and create a single source of truth, which is achieved through ERP integration. However, CIOs need to ensure they are protecting their servers and mitigate their IT risks by choosing secure web APIs and embedding mature processes that address the constantly evolving regulatory landscape with governance frameworks.
With automation and digitisation on the rise, organisations are seeking to evolve in a variety of business sectors, including reshaping the role of the tax and finance functions. One key challenge hindering this potential growth is attracting and retaining top talent. A 2022 KPMG report revealed key concerns of over 400 business leaders, and talent acquisition, retention, and re/upskilling to meet a more digitised future was overwhelming seen as the biggest challenge for the year ahead, with 69% nominating this issue.
Increased transparency in tax legislation and regulatory reforms has made it essential for organisation’s to attract top tier professionals with a profound understanding of how to work within this face-paced dynamic environment. Not having the right people in place puts pressure on how fast a company can accelerate, regardless of strategic priorities or budget.
In order to remain competitive, enhancing an employee’s core skill set beyond technical reporting is becoming just as important. A deep understanding of data analytics, technology transformation and data governance empowers the employee to become an asset in identifying, evaluating and responding to changing tax laws and regulations.
As the increased pressure on tax talent is expected to significantly grow, CIOs must also consider that to fully make their business model work as efficiently as possible their needs be a balance between finding the correct talent and investing in automation by leaning on specialised tax technology solution providers.
Organisations by nature are ever-changing and this has been exacerbated by the increased pressure due to the rise of digitisation. How does a CIO navigate this accelerated uncharted landscape? In short, it’s with scenario planning.
With the new hybrid working model here to stay, now is the right time for organisations to develop an effective and strategic roadmap to handle emerging issues. The CIO must reimagine the way they approach tax functions and look to invest in attracting and maintaining the correct tax talent to exceed the business needs of today and beyond.
For more information on investing in the right tax software can ensure confidence in building the foundation of your organisations tax compliancy and credibility, speak with a Thomson Reuters specialist today.
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]]>The post 2022-23 Federal Budget Report: Powered by the Weekly Tax Bulletin appeared first on TR - Tax Insight AU.
]]>The Budget offers new incentives for SMEs which rewards skills, training and digital adoption. Meanwhile, big businesses now have the broadened scope of the concessional tax treatment of what is termed patent box income and the extended operation of the ATO’s Tax Avoidance Taskforce to consider.
Mr Frydenberg said economic growth forecasts have been revised upwards, driven by stronger-than-expected momentum in the labour market and consumer spending. The unemployment rate has also fallen to 4%, and is expected to reach 3.75% in the September 2022 quarter.
Since the Mid-Year Economic and Fiscal Outlook (MYEFO) in December 2021, the underlying cash
balance has improved by $103.6bn over the 5 years to 2025-26. Nevertheless, the Government is
expected to record a deficit of $79.8bn for 2021-22 and $78.0bn for 2022-23 (down from $134.2bn in 2020-21). Net debt of $714.9bn for 2022-23 is forecast to rise to $864.7bn in 2025-26.
The major tax-related measures announced in the Budget include:
This expertly written report is brought to you by the Thomson Reuters Tax Division for the Weekly Tax Bulletin. Download your complimentary issue via the form on this page.
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]]>The post Federal Budget for SMEs: Advising small businesses on skills, training and digital adoption incentives appeared first on TR - Tax Insight AU.
]]>The following information is a curated version of the Weekly Tax Bulletin by the Thomson Reuters Tax News Division.
The Treasurer announced a range of cost of living measures, including a one-off $420 cost of living tax offset for low and middle income earners, and a $250 payment for pensioners and welfare recipients. The fuel excise will also be reduced by 50% for six months, starting from midnight on Budget night.
For small businesses, a Skills and Training Boost will provide a new 20% bonus deduction for eligible external training courses for upskilling employees from Budget night. In addition, businesses will receive a similar 20% bonus deduction for expenditure on digital technologies (eg cloud computing, eInvoicing, cyber security and web design) for investments of up to $100,000 per year.
The Treasurer announced that economic growth forecasts have been revised upwards, driven by stronger-than-expected momentum in the labour market and consumer spending. The unemployment rate has also fallen to 4%, and is expected to reach 3.75% in the September 2022 quarter.
Since the Mid-Year Economic and Fiscal Outlook (MYEFO) in December 2021, the underlying cash balance has improved by $103.6bn over the 5 years to 2025-26. Nevertheless, the Government is expected to record a deficit of $79.8bn for 2021-22 and $78.0bn for 2022-23 (down from $134.2bn in 2020-21). Net debt of $714.9bn for 2022-23 is forecast to rise to $864.7bn in 2025-26.
The Government announced two support measures for small businesses (ie those with aggregated annual turnover less than $50 million) in the form of a 20% uplift of the amount deductible for expenditure incurred on external training courses and digital technology.
An eligible business will be able to deduct an additional 20% of expenditure incurred on external training courses provided to its employees. The training course must be provided to employees in Australia or online, and delivered by entities registered in Australia.
Some exclusions will apply, such as for in-house or on-the-job training.
The boost will apply to eligible expenditure incurred from 7:30pm (AEDT) on 29 March 2022 until 30 June 2024.
The boost for eligible expenditure incurred by 30 June 2022 will be claimed in tax returns for the following income year. The boost for eligible expenditure incurred between 1 July 2022 and 30 June 2024, will be included in the income year in which the expenditure is incurred.
An eligible business will be able to deduct an additional 20% of the cost incurred on business expenses and depreciating assets that support its digital adoption, such as portable payment devices, cyber security systems or subscriptions to cloud-based services.
An annual cap will apply in each qualifying income year so that expenditure up to $100,000 will be eligible for the boost.
The boost will apply to eligible expenditure incurred from 7:30pm (AEDT) on 29 March 2022 until 30 June 2023.
The boost for eligible expenditure incurred by 30 June 2022 will be claimed in tax returns for the following income year. The boost for eligible expenditure incurred between 1 July 2022 and 30 June 2023 will be included in the income year in which the expenditure is incurred.
Source: Budget Paper No 2 [p 26-27]
This material was prepared by the Thomson Reuters Tax Division. Visit Thomson Reuters for further information about our services for Tax and Accounting Professionals.
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