Practice Update - September 2022

Lowe Lippmann Chartered Accountants

More COVID-19 business grants are now tax-free


The Federal Government has expanded the list of State and Territory COVID grant programs that may be tax-free to eligible businesses.


A State or Territory Government COVID grant payment will generally be tax-free if:

  • the payment is received under a grant program that is formally declared to be an eligible program;
  • the recipient carried on a business and had an aggregated turnover of less than $50 million in the income year the payment was received, or in the previous income year; and
  • the payment was received in the 2021 or 2022 income year.


The following Victorian and ACT COVID-19 grant programs have recently been declared as eligible grant programs for these purposes:

  • Business Cost Assistance Program Round Two – Top Up (Victoria).
  • Business Cost Assistance Program Round Three (Victoria).
  • Business Cost Assistance Program Round Four (Victoria).
  • Business Cost Assistance Program Round Four – Construction (Victoria).
  • Business Cost Assistance Program Round Five (Victoria).
  • Commercial Landlord Hardship Fund 3 (Victoria).
  • Impacted Public Event Support Program Round Two (Victoria).
  • Licensed Hospitality Venue Fund 2021 – Top Up Payments (Victoria).
  • Live Performance Support Program (Presenters) Round Two (Victoria).
  • Live Performance Support Program (Suppliers) Round Two (Victoria).
  • HOMEFRONT 3 (ACT).


We previously released a special Tax Alert on this topic, to see click here.



ATO reminder about appointing an SMSF auditor


The ATO is reminding trustees of self-managed super funds (SMSFs) that they need to appoint an approved SMSF auditor no later than 45 days before the lodgment of their fund’s SMSF annual return (for example, for the 2022 income year).


In particular, the ATO says:


“Don't risk approaching an auditor the day before you need to lodge as it will result in an overdue lodgment. Approved SMSF auditors are an important part of your lodgment and reporting obligations. They review your fund's financial statements and make sure you're complying with super law.”


Importantly, an audit is required even if no contributions or payments were made to or from the SMSF in the financial year.



Super comparison tool updated


The YourSuper comparison tool helps individuals compare MySuper products and choose a super fund that meets their needs. 


It ranks the performance of these products by fees and net returns.


Each year, the Australian Prudential Regulation Authority (APRA) assesses the performance of each MySuper product, and this information is displayed in the comparison tool. Updated information for the 2022/23 year is now available.


The comparison tool provides one of the following results for each MySuper product:

  • Performing – the product has met or exceeded the performance test benchmark.
  • Underperforming – the product has not met the performance test benchmark.
  • Not assessed – the product had less than five years of performance history and has not been rated by APRA.


Individuals who are members of underperforming MySuper products will receive correspondence to notify them of the underperforming status.


Individuals can access a personalised version of the tool which allows them to view and compare their existing MySuper products by doing the following:

  • Log in to ATO online services through myGov.
  • Go to the 'Super' drop-down menu and select ‘Information’, then select ‘YourSuper comparison’.


To access a non-personalised version of the tool (without logging into myGov), visit:

www.ato.gov.au/yoursuper


Small business tax incentives back on the table


The Labor Government has confirmed its commitment to implementing two tax incentives aimed at supporting small businesses to train and upskill employees, and improve their digital and tech capacity.


The Technology Investment Boost and the Skills and Training Boost were announced in the 29 March 2022 Federal Budget but remain unlegislated. 


Small businesses with an annual turnover of less than $50 million will be able to claim a ‘bonus’ 20% deduction for eligible expenditure on:

  • external training of employees until 30 June 2024; and
  • the uptake of digital technologies until 30 June 2023.



The incentives will be backdated to 29 March 2022.


We note that these incentives are not yet law. 



Rental properties and second-hand depreciating assets


The ATO is reminding taxpayers that have a residential rental property, to take care when making claims for ‘second-hand depreciating assets’ used in their properties.


In most cases, these are items that existed in the taxpayer's property when they purchased it, or were in their private residence (which they later rented out), such as:

  • flooring and window coverings;
  • air conditioners, washing machines, alarm systems, spas, pool pumps; and
  • items used for both the rental property and the taxpayer’s own home.


Since 1 July 2017, taxpayers generally cannot claim the decline in value of second-hand depreciating assets (some limited exceptions do apply). 


However, this rule does not apply to a property that was rented out before this date, or if it is newly built or substantially renovated (conditions apply).


If you have a residential rental property, to help us get your claim right, please answer the following:

  • When did you purchase the property?
  • Was it a new or existing build?
  • Did you live in the property before renting it out?
  • When did you start renting the property?
  • Was the asset already in the rental property when you bought it?
  • Is the property used for business purposes?


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




Tax Alert - Chalmers backs down on Superannuation reform

October 13, 2025
In response to continuing criticism and significant industry feedback, Treasurer Jim Chalmers has announced substantial revisions to the proposed Division 296 tax. The government has decided not to apply the tax to unrealised capital gains on members superannuation balances above $3 million. The removal of the proposed unrealised capital gains tax is undoubtedly a welcome change. Division 296 was initially set to take effect from 1 July 2025. The revised proposal, effective from 1 July 2026, still imposes an additional tax but now only on realised investment earnings on the portion of a super balance above $3 million at a 30 percent tax rate To recover some of the lost tax revenue, the Treasurer announced a new 40 percent tax rate on earnings for balances exceeding $10 million. It is also anticipated that both tax thresholds will be indexed in line with the Transfer Balance Cap. We will provide more details and guidance on the new proposal as they become available.

Practice Update – October 2025

October 3, 2025
ATO interest charges are no longer tax deductible – What you can do As we explained in our Practice Update for September, general interest charge ( GIC ) and shortfall interest charge ( SIC ) imposed by the ATO is no longer tax-deductible from 1 July 2025. This applies regardless of whether the underlying tax debt relates to past or future income years. With GIC currently at 11.17%, this is now one of the most expensive forms of finance in the market — and unlike in the past, you won’t get a deduction to offset the cost. For many taxpayers, this makes relying on an ATO payment plan a costly strategy. Refinancing ATO debt Businesses can sometimes refinance tax debts with a bank or other lender. Unlike GIC and SIC amounts, interest on these loans might be deductible for tax purposes, provided the borrowing is connected to business activities. While tax debts will sometimes relate to income tax or CGT liabilities, remember that interest could also be deductible where money is borrowed to pay other tax debts relating to a business, such as: GST; PAYG instalments; PAYG withholding for employees; and FBT. However, before taking any action to refinance ATO debt it is important to carefully consider whether you will be able to deduct the interest expenses or not. Individuals If you are an individual with a tax debt, the treatment of interest expenses incurred on a loan used to pay that tax debt really depends on the extent to which the tax debt arose from a business activity: Sole traders: If you are genuinely carrying on a business, interest on borrowings used to pay tax debts from that business is generally deductible. Employees or investors: If your tax debt relates to salary, wages, rental income, dividends, or other investment income, the interest is not deductible. Refinancing may still reduce overall interest costs depending on the interest rate on the new loan, but it won’t generate a tax deduction.

Audit Lowe Down – Costs incurred in acquiring / forming a business

September 9, 2025
Costs incurred in acquiring / forming a business. Further to the recent blog about capitalisation of costs when acquiring an asset, we have received a number of questions in relation to costs incurred in setting up / purchasing a business. Formation costs on establishing a business: These costs would include: Incorporation fees ASIC registration fees Legal fees Business name registration Pre-operating costs Pre-opening costs. The relevant standard for these costs is AASB 138 Intangible Assets and paragraph 69a confirms that these start-up costs are expensed when incurred. There is no identifiable asset controlled by the entity when the costs are incurred as the entity does not exist. Business acquisition costs These costs would include: Legal and accounting fees Due diligence and valuation costs Stamp duty Advisory or brokerage fees Project management costs related to the acquisition Internal costs allocated to the transaction In contrast to the asset acquisition discussed previously, AASB 3 Business Combinations requires all acquisition costs to be expensed as incurred. This means that they are not included as part of the consideration paid and therefore do not affect calculated goodwill.  Entities purchasing businesses should be aware that these costs are not able to be capitalised as they can often be substantial, and purchasers often do not expect the costs to be taken directly to the income statement
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