Practice Update - May 2021

Lowe Lippmann Chartered Accountants

Practice Update - May 2021

Now that JobKeeper is officially over, where to from there?

The ATO is using its compliance resources to maintain the integrity of the JobKeeper scheme.   While most businesses and employees have done the right thing, the ATO has identified concerning and fraudulent behaviour as well as claims by a small number of organisations and employees, and will actively pursue these claims.

 

Some of the concerning behaviours the ATO is currently examining include:

  • businesses that have:
    • made claims for employees without a nomination notice, or have not paid their employees the correct JobKeeper amount (before tax);
    • made claims for employees where there is no history of an employment relationship;
    • amended their prior business activity statements to increase sales in order to meet the turnover test; or
    • recorded an unexplained decline in turnover, followed by a significant increase; and
  • individuals who have knowingly:
    • made multiple claims for themselves as employees or as "eligible business participants"; or
    • made claims both as an employee and an "eligible business participant".

 

The ATO encourages all JobKeeper applicants to review their applications and contact the ATO if they have made mistakes (and the ATO may not pursue repayment of an overpayment in certain circumstances, such as for honest mistakes).

 

Since JobKeeper officially ended at midnight on 28 March 2021, many commentators have warned that the end of JobKeeper will lead to higher unemployment numbers, and it makes sense to believe this will occur.   It is likely that not everyone has been able to keep their job, with even the Federal Government admitting to expecting up to 150,000 jobs to be lost due to JobKeeper ending.

 

The Government is still providing some more specific benefits to businesses in the form of tax advantages or business grants.   For example, you can access significant tax deductions for the purchase of new items and equipment, regardless of how much you spent.   Also, if you make a loss this year, it is possible to get a refund on tax you paid last year or the year before if you made a profit and paid tax in those years.

 

State Governments are providing grants and loans to affected businesses.   Each state has different loans and grants – more information about what is available for each state can be found at www.business.gov.au

 

The Government has also rolled out the JobMaker Scheme, which we have discussed in further detail next in this month's Practice Update.

JobMaker Hiring Credit Scheme

The JobMaker Hiring Credit scheme is an incentive for businesses to employ additional young jobseekers aged between 16 and 35 years.   The scheme will give employers up to $10,000 over the year for each young employee that is employed by them, but you need to be an eligible employer to receive the payments.

 

Eligible employers can access the JobMaker Hiring Credit for each eligible additional employee they hire between 7 October 2020 and 6 October 2022.

 

To be an eligible employer, you must operate a business in Australia or be a certain type of charity or not-for-profit organisation.   You need to be registered for PAYG withholding and be up to date with all your tax obligations, including all your Single Touch Payroll ( STP ) obligations.

 

Eligible employees must also be employed and to be eligible they must:

  • be an employee of the entity during the JobMaker period.
  • be between 16–35 years old (inclusive) when they started employment.
  • have started employment on or after 7 October 2020 and before 7 October 2021.
  • have worked or been paid for an average of at least 20 hours per week they were employed in the JobMaker period.
  • have completed a JobMaker Hiring Credit employee notice for the employer.
  • have not already provided a JobMaker Hiring Credit employee notice to another current employer.
  • have received one of the following payments for at least 28 consecutive days (or two fortnights) in the 84 days (or six fortnights) prior to starting employment.
    • JobSeeker Payment
    • Parenting Payment
    • Youth Allowance (except if they were receiving the allowance because they were undertaking full-time study or are a new apprentice).

 

To make a claim under the JobMaker Hiring Credit scheme you need to increase the number of your employees.   The number of employees as of 30 September 2020 must be provided.   Each time a claim is made, the number of employees must be disclosed and must be higher than the initial base number provided for 30 September 2020.

 

The maximum amount payable is based on your headcount increase, multiplied by the number of days in the JobMaker period.   You will receive more money for employing those under 30.

 

With particularly detailed rules and eligibility requirements, the JobMaker Hiring Credit scheme has a number of hoops to jump through – please contact our office if you require any assistance.

Fringe benefits tax time

As you may be aware, the Fringe Benefits Tax ( FBT ) Year does not line up with the normal income tax year ending 30 June, and fringe benefits must be reported for the FBT year ending on 31 March 2021.   This year's FBT Return is due soon.   It may be due as early as 21 May, but an extension can be obtained if we lodge on your behalf.

 

If you provide any fringe benefits for your employees, you must lodge a FBT Return.   It is even suggested that you should do so if the final value of the fringe benefits you provide is zero.

 

Recently the ATO published that there is a big tax gap in terms of the FBT, from what they receive and what they should be receiving, which has led to increased audit activity on fringe benefits.   The ATO has the right to amend your FBT Return for up to three years since they issued your assessment notice.   If you do not lodge a return, then there is no assessment notice, and the clock for the three year time limit does not start.   In other words, the ATO will have an unlimited amount of time to audit you and force you to lodge.

 

The most common types of taxable fringe benefits that employees may be provided are motor vehicles, meals and entertainment.   Some fringe benefits can be provided without incurring fringe benefits tax, such as parking (for small businesses only), laptops, mobile phones and minor or infrequent benefits (such as a Christmas lunch).

 

There was a recent audit done by the ATO where they matched the registration of a sports car with a company that was not lodging FBT Returns.   In the end, it turned out okay for the business, but it does demonstrate how much information the ATO has access to with their data-matching activities.   If you do, or think you may, provide fringe benefits – please contact our office to discuss your FBT obligations.

Government proposal to modernise business communications

The Government has committed to modernising certain laws so that they are 'technology neutral', to enable easier communication between businesses, individuals and regulators.

 

The first phase of legislative reform will focus on key areas raised by stakeholders which are implementation-ready (ideally by the end of 2021), including:

  • expanding the range of documents that can be validly signed electronically;
  • increasing the range of documents that can be sent electronically to shareholders and amending requirements to contact lost shareholders;
  • improving flexibility for customers when changing address and consenting to electronic communication with credit providers;
  • removing prescriptive requirements for notices to be published in newspapers, where suitable alternatives have been identified; and
  • addressing provisions in Treasury legislation where only non-electronic payment options are in place.

Subsequent phases will consider reforms in additional areas that could benefit from greater technology neutrality, including communication with regulators, and product disclosure and recordkeeping requirements.

ATO asks businesses to check if they are still using their ABNs

The ATO has advised that, if a business has not used its ABN for a while, the ATO may contact them about cancelling their Australian Business Number ( ABN ).   The ATO may also contact them about their ABN if their business situation has changed.

 

To ensure businesses do not miss out on Government support (including during unfortunate events), it is essential that they regularly review their ABN details and keep them up to date (or cancel their 

ABN if the business is no longer operating, so that Government agencies can tailor their support to those that need it).

It is also important to check that the business has listed the physical address of the business, as otherwise it can be difficult for emergency services and Government agencies to make contact.  

 

A business' mailing address and physical location address can be listed separately on its ABN data, and these (and other ABN details) can be checked and updated online at any time.

Passenger movements: the focus of ATO data-matching program

In recent years, the ATO's data-matching program has been a successful program for the ATO to confirm specific details asserted by a taxpayer in their lodged income tax returns.  

 

The ATO has recently announced that they will be accessing data from the Department of Home Affairs on passenger movements during the 2016-17 to 2022-23 financial years, and match it with certain sections of ATO data holdings to identify taxpayers that can be provided with tailored information to help them meet their tax and superannuation obligations, or to ensure compliance with taxation and superannuation laws.

 

Details of the data-matching can include names, dates of birth, arrival and departure dates, passport Information, and status types (visa status, residency, lawful, Australian citizen).

 

The ATO estimates that records relating to approximately 670,000 individuals will be obtained each financial year.

Contractor agreements: the recent tax case of Dr Moffet

Dr Moffet is a dentist, and he sold his dental business to a big corporation (called "Dental Corporation") and stayed on as a contractor working for them.   He did not enjoy the new work arrangement, so he decided to leave.   After leaving Dr Moffet sued Dental Corporation for unpaid leave and unpaid super.

 

Dental Corporation claimed that because Dr Moffet was a contractor there was no need to pay leave or super.   Dr Moffet said that he was not really a contractor, but an employee "dressed up as a contractor", so he was actually entitled to all employee benefits.   This dispute ended up in the Federal Court twice, once for the initial complaint and then again on appeal.

 

On appeal, the Full Federal Court agreed with the trial judge.   The outcome concluded that Dr Moffet was considered a contractor, and thus was not an employee.

 

On the face of it, this might appear to be good news for Dental Corporation.  However, although Dr Moffet was a contractor, he was still under an "employment-like" arrangement.  In particular, under superannuation guarantee laws you only need to be in an "employment-like arrangement" to be entitled to superannuation.  Therefore, Dental Corporation is now required to pay superannuation on top of all the payments they had previously made to Dr Moffet.

It could also be read into that they are required to pay superannuation for all their dental contractors, which will have other, much larger repercussions throughout the country for all medical centres with contractual doctors.   This could clearly also extend to other industries.

 

There is a very fine line between contractors and employees.  Getting it wrong could result in large financial repercussions.  If you have contractors working for you want to revisit your contractor agreements – please contact our office if you require any assistance.

Director Identification Number regime starts to be rolled out

Registering a company today is done through ASIC.   A Tax File Number ( TFN ) and an Australian Business Number ( ABN ) must be obtained from the ATO.   In total, there may be up to 31 different business registers that a business/company may need to be registered with that are part of ASIC.   There is also the Australian Business Register with the Australian Taxation Office ( ATO ).

 

Some of these registers are now being brought together, in what will be known as the Australian Business Registry Services ( ABRS ).   The Commissioner of Taxation has just been appointed as the Commonwealth Registrar of the ABRS.   In the future, registering a company will be done through the ABRS instead of ASIC.   This is a part of the Federal Government's move towards a more efficient digital economy.

 

A significant change in this transition from ASIC to the ABRS is the introduction of a Director Identification Number ( DIN ).   Every company director in Australia will be required to have a DIN before 30 November 2022 , receivable through their MyGov account.   Directors of Indigenous Corporations have additional time to adhere, until 30 November 2023.

 

It is expected that around 10% of all Australians will need a DIN.   This has been brought in to stop phoenix directors from being appointed to companies, who then rack up massive debts that no one is held accountable for.

 

Following the DIN, the ARBS will then take over the Australian Company Register, the Business Names Register, and the Australian Business Numbers (currently on the Australian Business Register).

 

It is understood that this change will make the process cheaper, faster, and easier, as companies will no longer need to be first set up through ASIC before dealing with the ATO for an ABN and TFN.

 

If you currently have a company and do not already possess a MyGov account, it may now be time to rectify this in preparation for the move towards Director Identification Numbers.

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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