May 2021 – de Kretser Chartered Accountants

Many people outside of the accounting field may find it difficult to imagine an accountant without a computer, a calculator or even a tax file report. Popular opinion may even focus on an accountant’s introverted qualities. But if you’re willing to take a few moments, you might discover that there is more to an accountant than meets the eye.

The truth is that behind every accountant is a relatable and humanitarian side and our team at de Kretser Chartered Accountants would like to share a little more about ourselves.

“There’s simply more to being a good accountant”

Accounting services and business advice is part of any Chartered Accountants position description but what our team actually accomplishes in one day may astonish you. In addition to our regular performed tasks, our professionals and Chartered Accountants will offer your canine companion complimentary services such as petting, rewarding and we even give them treats. Let’s just say that a large doggie-biscuit-filled jar does come in handy but definitely doesn’t last long. We do extend our love and appreciation to all pets, especially the ones that don’t have shelter, loving homes or access to proper veterinary care. We simply take these matters to heart.

Our team has a love and respect for animals, one that can be traced back to over 50 years ago when Suzie de Kretser, the matriarch of the family and the Administrative Assistant of the practice, cared for the sheep at her family farm in the Western District. This care and nurture of animals has been passed from one generation to the next and has now become contagious. The gentle Djamacia, the loyal office German Shepherd has recently been awarded the title of the “accountant’s best friend”.

“The de Kretser Chartered Accountants, give a dog a bone”

It is only natural that when Suzie came across Pets of The Homeless (POTH), that she would offer her support in any way she could think of. Since the beginning of 2020, Suzie has personally donated more than $1000 to the charity. She also encourages our team and clients to do the same. These funds have help POTH offer essential services such as nutritious meals and emergency veterinary care to pets that haven’t been so lucky in life.

“True animal lovers nurture and provide care to the most vulnerable pets”

Recently, we received great news from POTH notifying us that Tiger (cat) and George (dog), two beloved pets that once belonged to homeless individuals had been permanently transferred to palliative care due to their old age. Emergency care and health services were made available to these majestic creatures. Defenceless animals may not have a voice but as an accounting practice with philanthropic and humanitarian values, we make it our duty of care to show high levels of social responsibility.

Donations, fundraisers and volunteering do make a difference in the community. For more information on POTH or to find out more on how you can get involved, please visit https://petsofthehomeless.org.au/

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Rather, the Government has decided to put its foot on the accelerator with the hope that the growth in the economy over a long period of time will help to pay down the debt that has been central to theGovernment’s response to COVID-19. On personal taxation, in an expected announcement, the Government confirmed that it will extend the low and middle income tax offset (LMITO) beyond 2020-21 so that taxpayers will continue to receive the tax offset (between $255 and $1,080) in the 2021-22 income year.

In summary, the major tax-related measures announced in the Budget included:

■ LMITO retained for 2021-22 – the Government will retain the low and middle income tax offset for the 2021-22 income year. The LMITO provides a reduction in tax of up to $1,080.

■ Loss carry-back extended – the loss years in respect of which an eligible company (aggregated annual turnover of up to $5 billion) can currently carry back a tax loss (2019-20, 2020-21 and 2021-22) will be extended to include the 2022-23 income year.

■ ATO debt recovery – the AAT will be given the power to pause or modify ATO debt recovery action in relation to disputed debts of small businesses.

■ Employee share schemes – the Government will remove the cessation of employment as a taxing point for the tax-deferred employee share schemes.

■Loss carry-back extended – the loss years in respect of which an eligible company (aggregated annual turnover of up to $5 billion) can currently carry back a tax loss (2019-20, 2020-21 and 2021-22) will be extended to include the 2022-23 income year.

■ Personal tax rates – no changes were made to personal tax rates, the Government having already brought forward the Stage 2 tax rates to 1 July 2020. The Stage 3 personal income tax cuts remain unchanged and will commence in 2024-25 as already legislated.

■ Temporary full expensing extended – the Government will extend the 2020-21 temporary full expensing measures for 12 months until 30 June 2023. This will allow eligible businesses with aggregated annual turnover or total income of less than $5 billion to deduct the full cost of eligible depreciable assets of any value, acquired from 7:30pm AEDT on 6 October 2020 and first used or installed ready for use by 30 June 2023.

■ Employee share schemes – the Government will remove the cessation of employment as a taxing point for the tax-deferred employee share schemes.

■ Individual residency test reformed – the Government will replace the existing tests for the tax residency of individuals with a primary «bright line» test under which a person who is physically present in Australia for 183 days or more in any income year will be an Australian tax resident.

SUPERANNUATION AND RELATED MEASURES

The key superannuation and related measures announced in the Budget include:

■ Super Guarantee $450 per month threshold – to be removed from 1 July 2022.

■ Downsizer contributions – eligibility age to be lowered from 65 to 60.

■ First Home Super Scheme – to be extended for withdrawals up to $50,000, plus some technical changes for tax and administration errors in applications.

■ Victims of domestic violence – the Government will not proceed with its previous proposal to extend the early release of super to victims of family and domestic violence.

■ Pension Loans Scheme – will be expanded to allow
access up to two lump sums in any 12-month period
(up to a total of 50% of the maximum annual Age
Pension); together with a Government guarantee that
“no negative equity” will apply

■ Superannuation contributions work test – to be repealed from 1 July 2022 for voluntary non con-cessional and salary sacrificed contributions for those under age 75. However, the work test will still apply for personal deductible contributions by those aged 67-74.

■ SMSF residency rules – to be relaxed by extending the central management and control test safe harbour from two to five years, and removing the active member test for both SMSFs and small APRA funds.

■ Conversions of legacy income streams – individuals will be permitted to exit certain legacy retirement income stream products (excluding flexipensions or lifetime products in APRA-funds or public sector schemes), together with any associate reserves, for a two-year period. Any commuted reserves will not be counted towards an individual’s concessional contribution cap. Instead, they will be taxed as an assessable contribution for the fund.

Temporary full expensing: extended to 30 June 2023

The Government will extend the temporary full expensing measure until 30 June 2023. It was otherwise due to finish on 30 June 2022.

Other than the extended date, all other elements of temporary full expensing will remain unchanged. The measure allows eligible businesses to deduct the full cost of eligible depreciating assets, as well as the full amount of the second element of cost.

A business qualifies for temporary full expensing if it is a small business (annual aggregated turnover under $10 million) or has an annual aggregated turnover under $5 billion.

Loss carry-back extended by one year

Annual aggregated turnover is generally worked out on the same basis as for small businesses, except the threshold is $5 billion instead of $10 million. Assets must be acquired from 7:30pm AEDT on 6 October 2020 and first used or installed ready for use by 30 June 2023.

Under the temporary, COVID driven, restoration of the loss carry back provisions announced in the 2020- 21 Budget, an eligible company (aggregated annual turnover of up to $5 billion) could carry back a tax loss for the 2019-20, 2020-21 or 2021-22 income years to offset tax paid in the 2018-19 or later income years.

The Government will extend the eligible tax loss years to include the 2022-23 income year. Tax refunds resulting from loss carry back will be available to companies when they lodge their 2020-21, 2021-22 and now 2022-23 tax returns.

This will help increase cash flow for businesses in future years and support companies that were profitable and paying tax but find themselves in a loss position as a result of the COVID-19 pandemic. Temporary loss carry-back also complements the temporary full expensing measure by allowing more companies to take advantage of expensing, while it is available.

Intangible assets depreciation: option to self-assess effective life

The Budget confirmed that the income tax law will be amended to allow taxpayers to self-assess the effective
life of certain intangible assets (such as intellectual property and in-house software), rather than being required to use the effective life currently prescribed. This amendment will apply to patents, registered designs, copyrights and in-house software for tax purposes

Taxpayers will be able to bring deductions forward if they self-assess the assets as having a shorter effective life to the statutory life. The self-assessment of effective lives will apply to eligible assets acquired following the completion of temporary full expensing (introduced in the 2020-21 Budget — ie to assets acquired from 1 July 2023).

The amendments, as they affect companies incorporated offshore, will have effect from the first income year after the date the enabling legislation receives assent, but taxpayers will have the option of applying the new law from 15 March 2017 (the date on which the ATO withdrew an earlier ruling).It not known whether the same arrangements will apply for the start date for trusts and corporate limited partnerships should they be brought under the new rules.

Extended consultation on corporate tax residency rules

In the 2020-21 Budget, the Government announced that it would amend the law to provide that a company that is incorporated offshore will be treated as an Australian tax resident if it has a “significant economic connection to Australia”. This test will be satisfied w here both the company’s core commercial activities are undertaken in Australia and its central management and control is in Australia.

The Government has now announced that it will consult on broadening this amendment to trusts and corporate limited partnerships. The Government will seek industry’s views as part of the consultation on the original corporate residency amendment.

Small businesses to be able to pause disputed ATO debt recovery

The Government will introduce legislation to allow small businesses to pause or modify ATO debt recovery action where the debt is being disputed in the AAT. Specifically, the changes will allow the Small Business Taxation Division of the AAT to pause or modify any ATO debt recovery actions – such as garnishee notices and the recovery of GIC or related penalties – until the underlying dispute is resolved by the AAT.

This measure is intended to provide an “avenue” for small businesses to ensure they are not required to start paying a disputed debt until the matter has been determined by the AAT.

Small business entities (including individuals carrying on a business) with an aggregated turnover of less than $10 million per year will be eligible to use the option. The AAT will be required to “have regard to the integrity of the tax system” in deciding whether to pause or modify the ATO’s debt recovery actions.