Practice Update - July 2021

Lowe Lippmann Chartered Accountants

PRACTICE UPDATE - JULY 2021

Special Topic: Summary of NSW COVID-19 assistance measures


On 13 July 2021, the NSW and Federal Governments announced their economic support package aimed at supporting businesses and residents to deal with the recent COVID-19 lockdown.


The key economic support measures being offered to those impacted economically by the health and safety requirements currently being experienced by the community have been summarised here:


Economic support measure

Summary of Government assistance

NSW 2021 business grant


Administered by Service NSW at service.nsw.gov.au with registrations open from 19 July 2021.


The Federal Government has indicated that these payments will not be taxable.


Eligible NSW businesses (including sole traders and not-for-profit organisations) with Australian wages below $10 million can claim grants between $7,500 and $15,000 as a result of the COVID-19 restrictions.


Three different grant amounts will be available depending on the decline in turnover experienced during the restrictions, being:


  • $7,500 for a decline of 30% or more;
  • $10,500 for a decline of 50% or more; or
  • $15,000 for a decline of 70% or more.

Saving Jobs – NSW small and medium business support payments


Administered by Service NSW at service.nsw.gov.au


The Federal Government has indicated that these payments will not be taxable.

Eligible NSW businesses with an annual turnover of between $75,000 and $50 million that can demonstrate a 30% reduction in turnover (compared to an equivalent two-week period in 2019) will be entitled to business support payments from week four of the lockdown.


Eligible entities will receive 40% of their NSW payroll payments, at a minimum of $1,500 and a maximum of $10,000 per week.


Assistance will cease when the current lockdown restrictions are eased, or when the Commonwealth hotspot declaration is removed.


To receive the payment, entities will be required to maintain their full time, part time and long-term casual staffing level as of 13 July 2021.


For non-employing businesses (ie. eligible sole traders) the payment will be set at $1,000 per week.


Micro business grants


Administered by Service NSW at service.nsw.gov.au


The Federal Government has indicated that these payments may not be taxable.

Eligible 'micro businesses' (including sole traders) with a turnover of between $30,000 and $75,000 that have experienced a decline in turnover of at least 30% will be eligible for payments of $1,500 per fortnight of restrictions from late July 2021.

NSW Payroll concessions


Administered by Revenue NSW at revenue.nsw.gov.au

NSW payroll tax concessions include


  • Payroll tax waivers of 25% for businesses with grouped Australian wages of between $1.2 million and $10 million that have experienced a 30% decline in turnover.
  • Payment deferrals and interest-free repayments.


NSW Land tax concessions


Administered by Revenue NSW at revenue.nsw.gov.au

NSW Land tax relief concessions include:


  • Land tax relief equal to the value of rent reductions provided by commercial, retail and residential landlords to financially-distressed tenants is available for up to 100% of the 2021 NSW land tax year liability.
  • A capped grant up to $1,500 for residential landlords who are not liable to pay land tax who reduce rent for tenants.

Short-term eviction moratorium and other tenant safeguards


More information available at Fair Trading NSW at fairtrading.nsw.gov.au

The NSW Government will introduce a short-term eviction moratorium for rental arrears where a residential tenant suffers loss of income of 25% due to COVID-19 and meets other eligibility criteria.


In addition, it will restrict recovery of security bonds, lockouts or evictions of impacted retail and commercial tenants prior to mediation.

Targeted industry support

Other targeted industry support measures include:


  • The deferral of gaming tax assessments for clubs until 21 December 2021 and hotels until 21 January 2021.
  • A $75 million support package for the performing arts sector (administered by Create NSW).
  • A $26 million package for the accommodation sector. 

COVID-19 Disaster Payment Support for individuals


Administered by Services Australia at servicesaustralia.gov.au


This payment is assessable income to the individual recipient.

The COVID-19 Disaster Payment was originally introduced in response to the previous two-week Victorian lockdown (and was made applicable to all future Commonwealth-declared COVID-19 hotspots).


The payment is not applicable for the first seven days of an eligible lockdown (ie. it is payable to eligible recipients from the second week) and now, in response to the current NSW lockdown, the Federal Government has extended this support for individuals who have lost work (and pay) as a result of the COVID-19 lockdowns.


Specifically, from week four of the lockdown, the COVID-19 Disaster Payment will increase:


  • from $500 to $600 each week if a person has lost 20 hours or more of work a week; or
  • from $325 to $375 each week if a person has lost between 8 and 20 hours of work (or a full day of their usual work hours per week).


This will be a recurring payment for approved recipients for as long as the Commonwealth-declared hotspot and lockdown restrictions remain in place.


Furthermore, from 18 July 2021, this payment will be available to eligible NSW residents outside Commonwealth-declared hotspots (which will be funded directly by the NSW Government).


Businesses can register their interest in the key business support measures that are administered by Service NSW – click here.

Tax treatment of different COVID-19 support payments


Now that 30 June 2021 has passed and many taxpayers are preparing their tax records to complete their 2021 income tax returns, it is important to be aware of the different tax treatments of the various COVID-19 support payments. Here is a quick summary:


JobKeeper


  • JobKeeper payments received as an employee will be included in the employee's income statement as either salary and wages or as an allowance, and the ATO will automatically include this information on their online tax return.
  • Income statements can be accessed in ATO online services through the individual's myGov account and should be finalised by 14 July (tax agents also have access to this information).
  • Sole traders who have received JobKeeper payments on behalf of their business will need to include the payments as assessable income for the business.


JobSeeker


  • JobSeeker payments will also be included in a recipient's tax return at the Government Payments and Allowances question once it is ready. However, if an individual lodges their tax return before this information is input, they will need to add it themselves.


Stand down payments


One-off or regular payments received from an employer after being temporarily stood down due to COVID-19 are taxable and should appear in the income statement and will be automatically included in the stood-down employee's return.


COVID-19 disaster payment for people affected by restrictions


  • The Australian Government (through Services Australia) COVID-19 disaster payment for people affected by restrictions is taxable and must be included as income in the return.


Tax treatment of other assistance


  • The tax treatment of assistance payments can vary; the ATO website outlines how a range of disaster payments impact tax returns – click here.
  • The ATO website also includes guidance on COVID payments, including the taxable pandemic leave disaster payment – click here.


Early access to superannuation


  • If an individual accessed their super early under the special arrangements due to COVID-19, they do not need to declare this in their tax return, as any eligible amounts withdrawn under that program are tax-free.


Lost, damaged or destroyed tax records


The ATO knows that many taxpayers are facing lasting impacts left in the wake of natural disasters, so if they find their records have been lost or destroyed, whether in cyclones, floods or bushfires, the ATO can provide special assistance.


 According to ATO Assistant Commissioner Tim Loh:


"If you have a myGov account linked to the ATO, you'll be able to view some of your records, including income tax returns, income statements and previous notices of assessments. If you lodge through a registered tax agent, they can also access these documents on your behalf."


Government agencies, private health funds, financial institutions and businesses provide information to the ATO which is available to tax agents and automatically included in returns by the end of July.


If taxpayers have lost receipts due to a natural disaster, the ATO can accept reasonable claims without evidence, provided it is not reasonably possible to access the original documents (although the taxpayer may be required to explain to the ATO how they calculated their claim).


Super guarantee contribution due date for June 2021 quarter


The due date for employers to make super guarantee contributions for their employees for the June 2021 quarter is 28 July 2021.


We note that the super guarantee rate in relation to salary and wages paid on or before 30 June 2021 is 9.5%, but the new super guarantee rate is 10% in relation to salary and wages paid from 1 July 2021 (even if they are paid in relation to work performed before that date).


Contributions made (and received by the fund) after 30 June 2021 will not be deductible in the 2021 income year, even if they are made in relation to work performed during the 2021 income year.


Extension of time to make repayments on Division 7A loans


Under a complying Division 7A loan from a private company, the borrower must make minimum yearly repayments (MYR) before the end of the lender's income year to avoid the loan being treated as an assessable dividend.


MYR for the year ended 30 June 2021

To offer more support due to the ongoing effects of COVID-19, an extension of the repayment period is now available for those who were unable to make their MYRs by the end of the lender's 2020-21 income year (generally 30 June).


 The borrower can apply for this administrative relief using the ATO's streamlined online application. Note that they must still make up the shortfall of their 2020-21 MYR by 30 June 2022.


MYR from the year ended 30 June 2020

A similar extension was also available for the MYR for the 2019-20 year, and borrowers who obtained this extension needed to have made up that shortfall by 30 June 2021.


If they did not meet this deadline, they will need to either obtain a further extension of time for the 2019/20 MYR from the ATO outside of this streamlined process or amend their 2019-20 tax return to include a dividend.


Rent or lease payment changes due to COVID-19


The ATO has provided updates regarding the tax implications when a landlord gives, or a tenant receives, rent concessions (such as waivers or deferrals of rent) as a result of COVID-19.


Rent waivers relating to "past periods of occupancy"

For example, for tenants that have received a rent waiver, if it relates to a past period of occupancy that the tenant has already incurred and claimed a deduction for, they are still entitled to that deduction.


However:


  • if they have already paid the incurred rent and it has been waived and refunded to the tenant, they will need to include this amount in their assessable income when they receive it; or
  • if they have not already paid the incurred rent and it has been waived, the amount of the rent waived will be a debt forgiveness. When such a debt is forgiven, the tenant will make a gain. The amount is not usually included in the business's assessable income, instead it is offset against amounts that could otherwise reduce the business's taxable income.

 

Rent waivers relating to "a future period of occupancy"

If the waived rent is related to a future period of occupancy, they will not be entitled to a deduction for that amount.


We note that these types of rent concessions can give rise to some complicated tax treatment (including GST implications) and the ATO has recently updated their guidance for both Landlords (click here) and Tenants (click here). If you require any special assistance in this regard, please contact your Lowe Lippmann contact.


New ATO data-matching programs


The ATO has advised that it will engage in two new data matching programs, as outlined below:


  • the ATO will acquire novated lease data from McMillan Shakespeare Group, Smartgroup Corporation, SG Fleet Group, Eclipx Group, LeasePlan, Toyota Fleet Management, LeasePLUS and Orix Australia for the 2018-19 through to 2022-23 financial years (relating to approximately 260,000 individuals each financial year); and
  • the ATO will acquire account identification and transaction data from cryptocurrency designated service providers for the 2021 financial year through to the 2023 financial year inclusively (relating to approximately 400,000 to 600,000 individuals each financial year).

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

Tax Alert - Draft legislation offers alternative to restructuring and avoid the 30% minimum trust tax

September 4, 2026
Yesterday, Treasurer Jim Chalmers released draft legislation to implement the key components of the 30% minimum trust tax on discretionary trusts announced in the Federal Budget during May 2026.

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.
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