Practice Update - March 2021

Lowe Lippmann Chartered Accountants

Practice Update March 2021

SME Loan Guarantee Scheme extended and expanded

The Federal Government has renamed the scheme as the SME Recovery Loan Scheme , and will increase its guarantee from the current 50/50 backing between the government and the banks to an 80/20 split to encourage more banks to support small and medium enterprises.

The expanded scheme will also increase the size of eligible loans (which can be either secured or unsecured, excluding residential property), increasing from $1 million under the current scheme to $5 million.

The interest rate on loans will be determined by lenders, but will be capped at around 7.5 per cent, and lenders will also be allowed to offer borrowers a repayment holiday of up to 24 months.

The SME Recovery Loan Scheme is specifically targeted at SMEs currently receiving JobKeeper. The scheme is only open to recipients of the JobKeeper payment between 4 January 2021 and 28 March 2021.

Businesses with a higher turnover will have their maximum eligible turnover increased from $50 million to $250 million, while maximum loan terms will also be increased from five to 10 years.

Loans will be available from 1 April 2021 and must be approved prior to 31 December 2021.

There will be some restrictions on refinancing loans, for example by not allowing loans that are more than 30 days in arrears to be refinanced.

Phase 2 of the existing SME Guarantee Scheme will remain open to eligible borrowers until 30 June 2021. SMEs who already have SME Guarantee Scheme loans from Phase 1 (announced in March 2020) or Phase 2 (announced in October 2020) will be able to apply for loans under the SME Recovery Loan Scheme.

For more information and to apply for a grant – click here.

New Grants to support local manufacturing

The Federal Government has announced through its Advanced Manufacturing Growth Centre the establishment of a grants program called the AMGC Commercialisation Fund.

Commercialisation Fund grants will be between $100,000 and $1 million and must include collaboration with a research partner and a minimum of one industry partner. The fund will run over an 18-month period.

Grants will target six priorities, including: medical products, food and beverages, resources technology and critical minerals processing, recycling and clean energy, defence, and space.

The fund will be managed and administered by the Advanced Manufacturing Growth Centre (AMGC), in collaboration with the five other Industry Growth Centres AustCyber, Food Innovation Australia Ltd (FIAL), MTPConnect, METS Ignited and National Energy Resources Australia (NERA), and the CSIRO.

For more information and to apply for a grant – click here .

Changes to Single Touch Payroll reporting concessions from 1 July 2021

Small employers (19 or fewer employees) are currently exempt from reporting 'closely held' payees through Single Touch Payroll ( STP ), and a quarterly STP reporting option applies to micro employers (four or fewer employees). These concessions will end on 30 June 2021.

The STP reporting changes that apply for these employers from 1 July 2021 are outlined below.

Closely held payees (small employers)

From 1 July 2021, small employers must report payments made to closely held payees through STP using any of the options below. Other employees must continue to be reported by each pay day.

A 'closely held payee' is an individual who is directly related to the entity from which they receive payments. For example, this could include family members of a family business, directors or shareholders of a company and beneficiaries of a trust.

Payments to such payees can be reported via STP (from 1 July 2021) using any of the following options.

Report actual payments on or before the date of payment.
Report actual payments quarterly on or before the due date for the employer's quarterly activity statements.
Report a reasonable estimate quarterly on or before the due date for the employer's quarterly activity statements. Note that consequences may apply for employers that under-estimate amounts reported for closely held payees.

Small employers with only closely held payees have up until the due date of the payee's tax return to make a finalisation declaration. Employers will need to speak with these payees about when their individual income tax return is due.

Micro employers

From 1 July 2021, the quarterly reporting concession will only be considered for eligible micro employers experiencing 'exceptional circumstances'. Common examples of when the ATO would generally consider it to be fair and reasonable to grant a deferral due to exceptional or unforeseen circumstances include natural disasters, other disasters or events, serious illness or death.

Additionally, 'exceptional circumstances' for access to the STP quarterly reporting concession from 1 July 2021 may include where a micro employer has:

seasonal or intermittent workers; or
no or unreliable internet connection.

It should be noted that registered agents must apply for this concession and lodge STP reports, quarterly, on behalf of their eligible micro employer clients. The STP reports are due the same day as the employer's quarterly activity statements. If an employer prefers to report monthly, the STP reports must be lodged on or before the 21st day of the following month. Finalisation declarations will need to be submitted by 14 July each year.

Paper PAYG and GST quarterly instalment notices

The ATO has previously advised that it will no longer issue paper activity statements after electronic lodgment. Instead, electronic activity statements will be available for access online, three to four days after the activity statement is generated.

As part of its digital improvement program, the ATO stopped issuing paper quarterly PAYG and GST instalment notices (forms R, S & T), where taxpayers had a digital preference on ATO systems. The September 2020 notice was the last one issued to these taxpayers.

However, the ATO has received feedback from tax professionals that issues have arisen for some of their clients as a result of this change. For example, some taxpayers who are self-lodgers rely on the receipt of the paper statements as a reminder that their instalments are due.

As an interim solution, the ATO said it will issue paper PAYG and GST quarterly instalment notices starting with the March 2021 quarterly notices.

For taxpayers impacted by this change, the ATO will work with their registered agents to take their circumstances into account. The ATO has a range of practical support options available, including lodgment deferrals and payment plans that agents can access online, on behalf of their clients.

For self-lodgers, the ATO has issued an email notification reminding them that their December 2020 PAYG and GST instalment notices were due for payment by 2 March 2021.

The ATO said it will continue to work with the tax profession to develop a digital solution for the PAYG and GST instalment notices that is workable for registered agents and their clients.

Avoiding disqualification from Superannuation Guarantee amnesty

The superannuation guarantee ( SG ) amnesty ended on 7 September 2020. Employers who disclosed unpaid SG amounts and qualified for the amnesty are reminded that they must either pay in full any outstanding amounts they owe, or set up a payment plan and meet each ongoing instalment amount so as to avoid being disqualified and losing the benefits of the amnesty.

The ATO will be sending employers reminders to pay disclosed amounts, if they have not previously engaged with the ATO. Employers will have 21 days to avoid being disqualified from the amnesty.

Registered tax agents can assist their employer clients who qualified for the SG amnesty avoid disqualification. In particular, if an employer needs to set up a payment plan, registered tax agents can do this (online) on their behalf, if the employer:

has an existing debit amount under $100,000 (total balance or overdue amounts);
does not already have a payment plan for that debit amount; and
has not defaulted on a payment plan for the relevant account more than twice in the past two years.

The ATO has advised that employers who are disqualified from the amnesty will

be notified in writing of the quarter they are disqualified for;
be charged an administration component of $20 per employee for each disqualified quarter;
have their circumstances considered when deciding a Part 7 penalty remission (this is an additional penalty of up to 200% of the unpaid SG amount that may be imposed under the SG laws); and
be issued with a notice of amended assessment.

Employers who continue to qualify for the SG amnesty are reminded that they can only claim a tax deduction for amounts paid on or before 7 September 2020 (ie. the amnesty end date).

Extension of virtual AGMs and electronic document measures

The Government is extending from 21 March 2021 to 15 September 2021, the expiry date of temporary relief introduced during the COVID-19 pandemic allowing companies to hold meetings such as AGMs, distribute meeting-related materials and validly execute documents using electronic means or other alternative technologies.

Extension of this temporary relief will allow businesses to continue to comply with their regulatory requirements as they continue to deal with and emerge from the COVID-19 pandemic.

Under the pre-COVID laws, company documents were required to be executed by all parties physically signing the same static document and there were constraints on companies' ability to conduct meetings using alternative technologies.

The Government intends to make permanent changes to allow electronic signing and sending of documents. It will also conduct a 12-month opt-in pilot for companies to hold hybrid annual general meetings (that is, where shareholders can attend meetings in person or virtually) to enable a proper assessment of the shareholder benefits of virtual meetings. These changes will be in place when the temporary arrangements end.

We note that many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information's applicability to their particular circumstances.

Please do not hesitate to contact your Lowe Lippmann Relationship Partner if you wish to discuss any of these matters further.

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Practice Update – September 2026

September 2, 2026

Discretionary trusts and the proposed 30% minimum tax Discretionary trusts, often referred to as family trusts, have been a popular structure for Australian families and businesses for many decades. They are commonly used to operate family businesses, hold investments and assist with succession planning. Their flexibility, together with asset protection and estate planning benefits, has made them an attractive option for many groups. In the 2026–27 Federal Budget, the Government announced a significant proposed change. From 1 July 2028 , trustees of discretionary trusts would generally be required to pay a minimum tax of 30% on the trust's taxable income . According to the Government, the proposal is intended to better align the tax paid on trust income with that paid by salary and wage earners, while reducing opportunities to split income between family members. However, the announcement has generated considerable debate. Professional bodies, business groups and tax advisers have expressed concerns that the changes could increase complexity and compliance costs for many genuine family businesses and investment structures. How the proposal is expected to work Under the proposal, the trustee would generally pay the minimum 30% tax on the trust's taxable income. Where trust income is distributed to individual beneficiaries or certain other non-corporate beneficiaries , those beneficiaries would generally receive a non-refundable tax offset recognising the tax already paid by the trustee. This is intended to reduce the risk of the same income being taxed twice, but while maintaining the impact of the 30% minimum tax rate. Importantly, the minimum tax would not apply to every trust . The Government has indicated that a number of trusts would be excluded, including fixed trusts, widely held trusts, complying superannuation funds, charitable trusts, deceased estates, special disability trusts and genuine testamentary trusts. Primary production income and certain income relating to vulnerable minors would also be excluded. The Government has also stated that more than 90% of small businesses are not expected to be affected. While that may be reassuring for some taxpayers, there are still some important issues that could affect family groups using discretionary trusts. What could this mean in practice? One area likely to receive close attention is the use of companies as beneficiaries of family trusts. Many family groups have historically distributed some trust income to a company. This can provide flexibility in managing cash flow, retaining profits within the business and funding future growth. Under the proposed rules, however, the corporate beneficiary would not receive a tax offset for the tax already paid by the trustee . In many cases this will mean that income distributed from a discretionary trust to a company would be subject to double taxation. Another practical impact of the proposed change is that some family groups may find it more difficult to fully utilise existing tax losses. While the impact will depend on each group's circumstances, the proposed minimum tax is likely to reduce some of the flexibility that currently exists when managing taxable income across a family structure within many groups. The Government has also proposed a temporary three-year rollover period, commencing from 1 July 2027, to help restructure into alternative business structures , such as companies or fixed trusts, without triggering immediate income tax or capital gains tax consequences. While this may assist some groups, restructuring is rarely straightforward. Depending on the circumstances, it might be necessary to consider things like stamp duty, loan approvals, financing arrangements, contract changes, licensing requirements and professional advice. Even relatively simple restructures can involve significant time and cost, so careful planning will be important. The rules are not yet final At this stage, the proposal remains subject to consultation . Treasury released a consultation paper in July 2026 seeking feedback on a range of design issues, including how the new rules would operate in different situations. Final legislation has not yet been introduced , meaning aspects of the proposal could still change before the rules become law. For this reason, most groups utilising discretionary trust structures should avoid making major structural decisions based solely on the announcement. Instead, it is sensible to monitor developments while considering whether existing structures are likely to remain appropriate if the proposal proceeds. What should you do now? For many families, discretionary trusts are about much more than tax. They can continue to provide valuable asset protection, succession planning and business flexibility. The proposed changes do not remove those benefits, nor do they prevent discretionary trusts from continuing to be used. However, the proposal does have the potential to change the tax outcomes for some family groups, particularly those with more complex structures or those that regularly distribute income to companies. With the proposed start date still some time away, there is an opportunity to pause and carefully understand how the changes may affect your circumstances and consider whether any planning or restructuring might be appropriate. As the legislation develops, we can help you assess the impact on your business or investment structure and determine whether any action is warranted.

Practice Update – August 2026

August 4, 2026

Government to permanently extend $20,000 instant asset write-off The Government has recently introduced legislation that would make the $20,000 instant asset write-off permanent for small businesses (as announced in the 2026 Federal Budget). If enacted, the changes would: permanently set the instant asset write-off threshold at $20,000 (instead of $1,000) for eligible depreciating assets first used, or installed ready for use, for a taxable purpose from 1 July 2026; and permanently set the general small business pool threshold at $20,000 from 1 July 2026. The changes would also further suspend the 'lock-out rule' until 30 June 2027. This rule otherwise prevents a business that has chosen not to use the simplified depreciation rules from re-entering the regime for five years.

Tax Alert - High Court decision and ATO statement on Bendel’s Case

July 7, 2026

High Court decision and ATO statement on Bendel’s Case The High Court recently handed down its decision in Bendel’s Case, confirming that an unpaid present entitlement (or UPE) between a discretionary trust and a beneficiary company does not fall within the extended definition of a “loan” for Division 7A purposes. The Australian Taxation Office released a Decision Impact Statement in response to the High Court findings, concluding the High Court's reasoning makes it clear that where a beneficiary company is entitled to a share of trust income that remains unpaid (a UPE) and the company takes no positive actions to call for payment of the entitlement, this will not fall within the expanded definition of a "loan" for Division 7A purposes. This is in contradiction to the ATO’s historical position that treated UPEs as "loans".