Question:
March 2012 - A day in the tax life of ...
Answer:
Recent changes are outlined below:
July 1, 2022
- Loss carry back for eligible companies extended to cover 2023 income year.
- Professional firm profits diverted to the professional's spouse or other associates to be reviewed under new Tax Office guidance.
- Corporate collective investment vehicle legislative regime introduced.
- Temporary full expensing of depreciating assets extended to include 2023 income year.
- Depreciable assets of a company joining a tax consolidation group have tax costs setting rules modified for assets depreciated under temporary full expensing rules.
December 9, 2021
- Reduced Pandemic leave disaster payment of $750 per week made available through to 30 June 2022.
August 5, 2021
- COVID-19 Disaster Payments are non-assessable non-exempt income in 2021 income year and later. Payments phasing out as vaccination rates increase.
July 1, 2021
- New Investment Engagement Service launched for businesses planning significant new investments in Australia.
- Tax Office small business independent review service made permanent for businesses with turnover < $10m, for income tax, GST, exercise, luxury car tax, wine equalisation tax and fuel tax credits. Requested before amended assessment issued.
- Small business income tax offset for individuals increased to provide a reduction of 16% for a tax payable up to $1,000.
- Self-managed superannuation funds can now have six members, increased from four members previously.
July 1, 2021
- Some COVID -19 state and territory business grants received by small and medium enterprises are non-assessable, non-exempt income for 2021 and 2022 income years.
- Certain state, territory and local government financial support for individuals and businesses suffering COVID-19 impacts made exempt where businesses have turnover less than $50 million and only in eligible programs.
March 31, 2021
- JobKeeper payments scheme ended.
October 5, 2020
- Boosting apprenticeship commencements subsidy (up to 50% of apprentice's wages) is assessable income.
June 4, 2020
- Homebuilder grant for new home or substantial renovation construction is not subject to income tax.
April 1, 2020
- COVID-19 cash flow boost payments are not subject to income tax
A MODERN DAY SOAP (TAX) OPERA
… previously on tax life …
The business had been on foot for over a year now and things were coming together with a long term financial plan. Sam’s 18 year old daughter Rachel had dropped her bombshell about wanting to take her boyfriend down to Melbourne with her when she went to University. Careful family negotiations were abating that problem.
Reducing business risk
The cleaners had been through Sam’s office giving it an annual spring clean. There was a slight eucalyptus smell and the environment felt cleansed. Sam was in a clinical frame of mind weighing up her business risks in a calculated yet cautious series of thoughts.
The first year of business had exceeded all expectations and the profits generated, particularly in the second half, had enabled Sam to pay down a reasonable portion of the bank debt.
Sam knew that there were always significant risks for any start-up business and after talking things through with her accountant husband Joe last night, she was determined to take progressive and practical steps to reduce her business risk.
Joe had pointed out a series of asset protection steps that he generally advised for his clients and, of course, they should apply to Sam’s family business. Joe considered these to be a set of principles to be worked towards over a period of time.
The first and most important step was to make sure the business was strong and consistently and predictably generating positive cash flows and that sufficient cash funds were put aside to cover any short-term downturn in trade. Joe thought that Sam should plan towards holding three to six months cash flow in reserve.
Sam had already put in place the necessary income protection/key man insurances through her financial planner. Sam’s and Joe’s self-managed superannuation fund carried the necessary life and TPD insurances.
The original structuring of the business had been sound as it operated through a discretionary trust with a company as the trustee and was separated from their home and other personal assets. Unfortunately, to obtain the bank finance it was necessary to provide a fixed and floating charge over the business and a second mortgage on their holiday house together with personal guarantees from Sam and Joe. This was a key target for Sam and she was determined to chip away at these bank conditions by reducing her bank debt and negotiating each annual renewal.
They had been careful to ensure their business lending was through a different bank to their home lending. Sam’s first target was the personal guarantee from Joe in support of the business loan. She had been very clear with the bank relationship manager that she wanted that condition removed in the near future.
Sam was conscious that she should not hold assets (except for her home which she owned jointly with Joe) in her personal name.
Supplier accounts had been a constant issue for Sam and she flatly refused to provide the personal guarantees that were on supplier account forms. She simply crossed those parts out and if the supplier refused to open the account, Sam purchased the items on credit card.
The next big step was to remove Joe’s personal guarantee in support of the business loan from the bank.
… Stay tuned …
