Overview of the Federal Budget 2023 – 24

The following are all the links to the federal government's description of its 2023 Budget. At the bottom are the Budget Documents for those that love to get into the fine detail of a Budget.

Delivering cost-of-living relief

Growing the economy

Becoming a renewable energy superpower
A sustainable future
Modernising our industrial base
Building up our defence industry
Supporting small business
Data and the digital industry
A better trained workforce
A better targeted migration system
Supporting teachers and students
Investing in infrastructure

For those who really like to get into the fine detail, knock yourself out here.

Budget Paper No. 1
Budget Strategy and Outlook

Budget Paper No. 2
Budget Measures

Budget Paper No. 3
Federal Financial Relations

Budget Paper No. 4
Agency Resourcing

budget.gov.au

Holiday Home Tax

Many Australians own a holiday home, but according to the Australian Taxation Office, there
are a small number of holiday home owners who, on average claim deductions that are six
times higher than income earned from the property.

You can only claim deductions to the extent their holiday home expenses are incurred for the purpose of producing rental income.

Is there a commercial-like purpose to the availability for rental? An apportionment of expenses may be appropriate.

Some questions to answer can help ensure the claims are a valid rental deduction:-

How many days was it rented out and was the rent in line with market values?
Where do you advertise for rent and were any restrictions placed on tenants?
Have you, your family or friends used the property?

A reasonable level of experience and judgement (from your tax professional) can assist

satisfying these subjective issues.

Acctweb

Single Touch Payroll Reporting

The fine tuning of Single Touch Payroll is now endeavouring to disguise family violence
leave.

If an employee has taken a period of paid Family and Domestic Violence Leave (FDVL), employers should record this on their pay slip in a way that makes the pay slip look as close as possible to how it would have looked if the employee had not taken the leave.

FDVL must be reported in STP to align with how you would ordinarily show these amounts on the employee's payslip if they had worked, as:

part of gross as an employee’s ordinary hours of work or;
a payment made in relation to the performance of the employee’s work, including (but not limited to) an allowance, bonus or a payment of overtime or;
upon request by the employee, as an amount paid for taking a period of some type of leave (other than a period of paid family and domestic violence leave).

Super guarantee obligations still applies as ordinary times earnings.

Small business must race to beat instant asset write-off deadline

Small business will need to race to beat the cut-off date for the instant asset write-off scheme, says a tax principal at RSM Australia, or become ensnared in “significant red tape” once more onerous rules came back into force.

Brisbane-based Belinda Crowley said the deadline would catch many SMEs unawares and after 30 June they would need to depreciate any asset over $1,000.

For businesses with a turnover above $10 million, the threshold is $100.

“This is a significant burden of time and money, especially for small businesses,” Ms Crowley said. “Even if their accountants handle it for them, it’s still an additional expense.”

The instant asset write-off (IAW) for small business has been part of the landscape since 2015.

During the pandemic, the government introduced temporary full expensing as part of its support package for all businesses regardless of size.

Now both these popular initiatives, which encouraged owners to invest in their businesses, are coming to an end.

“Historically, business tax depreciation was cumbersome for smaller enterprises to administer,” she said.

“As a compliance initiative IAW has saved business owners significant dollars because depreciation became less complex to administer.

“Many business owners hoped these initiatives would be rolled forward but the new federal government has different priorities.”

One of the biggest issues was the massive difference between accounting for the occasional big-ticket item of say, $30,000, and doing the same for any asset over $1,000 (or $100 for larger businesses).

Ms Crowley said SMEs which did not need to write off assets this financial year should save the depreciation for when it was essential.

“It all depends on business results. If you’re going through a tough period right now and don’t need the deduction to reduce your tax bill, think really hard and seek professional advice on whether you should be taking it now,” she said.

“It’s also important to note that supply chain issues mean even if you wanted to access the instant asset write-off, you must ensure the asset is installed and ready for use by 30 June 2023 or you can’t claim it.

“This is certainly an issue in an environment in which some cars, and large farm machinery, are taking six months to arrive.

“You need to be confident the asset will definitely be on farm or on site and in use by June 30.”

Sectors that relied on physical assets, such as the agricultural, mining and construction industries, would be most heavily impacted.

Ms Crowley said initiatives such as the skills and training boost and technology investment boost had been announced, but these were unlikely to have the cut-through as the instant asset write-off.

“The federal budget highlighted environment, digitisation and training as priorities, so SMEs should be aware of the new 20 per cent uplift deduction and take advantage of it if they can.

“This means businesses spending, for example, $100 to train an employee, or on digitisation, will get a $120 deduction, with this incentive backdated to March 29, 2022.

“The problem is this is very specific and only for training conducted with registered training organisations, so it is a much harder benefit for small to medium businesses to access.

She said access to the write-offs would be limited to businesses with aggregated turnover below $50 million and the training boost expires on 30 June 2024 while the technology scheme lasts only until the end of this financial year.

“It will also be inconsistently beneficial across sectors – for example, a lot of learning in the ag sector is on the job rather than sending employees on courses for a formal accredited structure.”

Philip King
09 March 2023
accountantsdaily.com.au

Small businesses need hands-on help with cyber security

Firms confront too much information but insufficient practical guidance when it comes to digital lockdown, says COSBOA.

Vulnerable small businesses need help with cyber security as part of the government’s push to make Australia the most digitally locked down nation by 2030, according to the sector’s representative body.

COSBOA chair Matthew Addison said the missing ingredient in the 2023–30 Australian Cyber Security Strategy was how small firms could implement appropriate systems.

“Small businesses tell us that they hear about cyber security risks but don’t know what to do or if they can do anything,” said Mr Addison.

“They also tell us there is so much information they don’t understand.”

He said COSBOA supported “action-based behaviour change information for small businesses” and that the development of its Cyber Wardens model was to “enable education and enhanced security for the people in small business.”

The council said the goal of its submission was to advocate greater education services, investment in cyber security infrastructure, and a balanced approach to its regulatory requirements for small businesses.

One of its recommendations was that any legislative changes or reforms regarding cyber security that the government enacted should be accompanied and supported by government-endorsed best practice guidelines to help small businesses understand how to follow the change.

COSBOA also recommended government support for educational programs such as Cyber Wardens — which it launched in association with CBA and Telstra — which would supply practical advice on how small businesses could ensure they were compliant with introduced regulations.

The organisation said an expansive roll-out of its Cyber Warden program as a designated cyber essentials certification scheme would strengthen and support the uptake of cyber security services and technologies in Australia.

“Subscription to the scheme would enable small businesses the capacity to protect the confidentiality, integrity, and availability of data stored on devices that connect to the internet,” said the submission.

“The Cyber Warden scheme would form a cornerstone of the strategy and would establish a set of baseline technical controls to help SMEs improve their cyber defences and publicly demonstrate their commitment to cyber security.”

COSBOA also advocated against the penalisation of firms for non-compliance, as the council sought to protect small businesses from further penalties as they recover from the pandemic and several economic challenges.

Family Business Australia’s acting chief executive Andrea Moody said the organisation supported an expanded role out of COSBOA’s Cyber Wardens program.

“Family Business Australia is proud to support the Cyber Wardens program, we believe this initiative will provide valuable training and resources to help individuals and organisations protect themselves against cyber threats,” said Ms Moody.

“As family-owned businesses are often targets of these threats, it is crucial to educate our members and the broader community about cyber security best practices.”

Josh Needs
19 April 2023
accountantsdaily.com.au

Changes to parental and workplace sexual harassment laws

New workplace changes to paid parental leave, and workplace sexual harassment laws.

Paid Parental Leave (PPL): What's changed?

CURRENT PROVISIONS
Under the current PLP scheme, eligible individuals who are the primary carer for a child who is born or adopted get up to 18 weeks’ pay at the National Minimum Wage (‘NMW’). This is fully funded by the Australian Government, though employers must process the payments through their payroll.

The first 12 weeks of PLP instalments must be received in one continuous period within 12 months of the birth or adoption of a child. The remaining 30 payable days can be taken flexibly within 24 months of the birth or adoption of a child. This coincides with an employee’s rights under the Fair Work Act 2009 (Cth) (‘FW Act’) to return to work after parental leave and the ability to take a maximum of 30 days’ parental leave flexibly within 24 months of the child’s birth or adoption date.

Eligible fathers and other partners can get up to two weeks’ payment (one-off) at the NMW under the Dad and Partner Pay (DAPP) scheme.

Individuals must claim PLP or DAPP through Centrelink and eligibility for the schemes is assessed by Services Australia (formerly the Department of Human Services) in which relevant work, income and other eligibility tests under the Paid Parental Leave Act 2010 (Cth) (‘PPL Act’) must be met.

New changes

From 1 July 2023, PLP and DAPP will be combined into one scheme which will provide eligible parent couples or single parents up to 20 weeks of PLP at the NMW. DAPP will no longer exist as a separate scheme. Eligible parents must not be working during this time or must be on leave (paid or unpaid).

Additionally,

the whole 20 weeks of PLP instalments can be received flexibly in multiple blocks within 24 months of the child’s birth or adoption date (removing the requirement of the 12 weeks of PLP instalments being received in one continuous period and the 30 days’ cap previously mentioned);
parents will be able to access PLP even when on paid leave (e.g. employer-funded parental leave, annual leave or long service leave), and in between periods of paid work;
birth mothers or first adoptive parents will have to give approval to share any PLP days, and if shared with a partner, parents will be able to access PLP at the same time;
for PLP that is shared between a couple, at least two weeks will be reserved for each partner to use with any unused amount of PLP days lost if not used within 24 months of the child’s birth or adoption date;
if a person does not meet the individual income limit of $156,647 (i.e earns more than this amount), there will be a combined family income limit of $350,000 which will be applied instead (this limit will be used whether a person is single or partnered); and
there will be special circumstance exceptions to the work test for individuals whose ability to work during the ‘work test period’ are impacted by family and domestic violence, a serious medical condition (for either you or an immediate family member you care for), or a natural disaster declared by the Commonwealth or a state or territory.

New workplace sexual harassment laws

Prohibiting workplace sexual harassment
The Fair Work Act has been amended to prohibit (or ban) sexual harassment in connection with work, including in the workplace. These changes apply from 6 March 2023 and expand the previous protections around sexual harassment in the workplace.

The protection applies to:

workers including employees, contractors, work experience students and volunteers
future workers
people conducting a business or undertaking.

The protection won’t apply to sexual harassment that starts before 6 March 2023.

New Fair Work Commission powers
The Commission now has greater powers to deal with workplace sexual harassment.

In addition to its existing ‘stop sexual harassment order’ powers, the Commission can deal with disputes about sexual harassment by:

conciliation
mediation, or
making a recommendation or expressing an opinion.

Fair Work Commission

Preparing for EOFY tax scams with business and cyber resilience

Every end of financial year (EOFY) season involves a rush by Australians wanting to get their tax returns completed. Increasingly, though, this period is seen as an opportunity for bad people to take advantage of us.

Too often the EOFY rush involves hastily clicking on links, giving personal information to the wrong person, or submitting documents to insecure portals or sites. One in four Australians experience a scam related to EOFY or tax matters, and these scams are not just limited to the June 30 date. In the months leading up to and following, scammers are leveraging a broad range of tactics from texting links to fake ads offering the recipient a tax refund.

For businesses, the threats are just as severe. Yet, half of organisations lack a comprehensive approach to assessing cyber resilience. In response to the growing threats and need for businesses to take preventative measures, the recent federal budget included a $23.4 million investment into a Cyber Wardens program, which aims to train up to 60,000 wardens in SMBs within the next three years.

While this is a progressive step, more needs to be done to ensure every business across Australia is equipped to mitigate the impact of cyber threats, particularly organisations managing Australians’ finances ahead of the EOFY period.

While the government initiative is welcome the best steps for any business, as a starting point, are:

Ensure two factor authentication is turned on wherever it is available. This should apply to platforms such as cloud-based e-mail systems, client portals, and payments systems.
Change your passwords. It is a fact that many of us use the same password for a lot of logins. The reason for this is simply, so many passwords!! However, the best answer is to use an identity & password manager solution such as Dashlane, LastPass, NordPass, or 1Password. This way you only need to remember one password to gain access to all the others.
Your Internet connection (router) is a point of significant threat. Few routers are actively managed which leaves many opportunities or hackers. The best solution is to ask your existing IT supplier, if they have the expertise, to ensure your router’s firewall(s) are shutting out the outside world.
A person within the business does need to be able to provide oversight that proper strategies are actually implemented and who can understand what their IT people are saying about their routers and firewall(s). The government initiative noted above may help small businesses train such a person. This is not saying a staff member needs to be an IT expert, but they do need to be able to understand what they are told and/or read. Basic education and training can be enough but extra and ongoing training is increasingly important.

Be on your toes. While cyber threats are often assumed to come externally from an aggressive attack by someone in a hoodie in a bunker overseas, the reality is many risks come from employees skipping over seemingly complicated approval processes, subscribing to popular apps or products that may not meet compliance requirements, or not checking whether they actually need to use a third party tool or if the same outcomes could be reached with an approved tool already used within the organisation. Make sure your own people aren’t opening the gates to the enemy.

Finally, don’t stop with the above. Cyber criminals around the world are savvy, persistent, and increasingly well-resourced. While they may be targeting consumers and accountants at tax time today, they will quickly find another way to get Australians’ attention tomorrow. Keep your plans, cyber champions, and staff – all the way to the Board level – updated regularly to ensure everyone is ready for the next threat.

05 June 2023

How Long Could You Survive Drinking Only …….

Here's how long you'd live consuming only this liquid, and nothing else.

Early intervention ‘critical’ as insolvencies surge

Tough conversations and engaging clients proactively will be key to minimising fallout, say insolvency specialists.

Interest rate rises, inflation and cost of living pressures are starting to have an impact on the Australian economy, leading many businesses to cut back or close entirely, a specialist law firm warns.

Taylor David Lawyers partner Scott Taylor cautioned that business conditions will likely deteriorate further throughout 2023, with 50 per cent of fixed rate mortgages expected to expire this year.

“These increased mortgage repayments will have a significant impact on households and the wider economy” he said.

In addition, Mr Taylor said the ATO is now back in enforcement mode after showing leniency during the Covid period.

The ATO has been chasing businesses that have not paid tax in the past two years, he said.

“It’s inevitable that many of these businesses will be turning off the lights for good. In a practical sense, there are consequences for business owners who have swept their financial turmoil under the rug,” he stated.

Insolvency Australia director Gareth Gammon explained that insolvency rates that were artificially supressed during the Covid period with Jobkeeper payments and the insolvency trading memorandum, are now bouncing back again.

“There was always going to be an increase in the number of insolvencies as things returned to normal,” he noted.

While insolvency rates haven’t yet reached pre-Covid levels, Mr Gammon said increased pressure from rising interest rates and the ATO now taking a more pro-active stance on chasing tax debts, there will be more company directors assessing where their business is at and what they should be doing.

“As a result of that, there is now greater pressure on accountants to assist those directors, reach out to insolvency practitioners and come up with a plan to deal with these challenges,” Mr Gammon stated.

The first half of 2022-23 had already seen a 62 per cent increase in the rate of insolvencies compared with the previous year.

The increase in NSW has been particularly dramatic with the state recording 2153 administration in the first half of the year compared to 2402 in the previous year.

ASIC’s company statistics reveal that this trend has continued into the first quarter of this year.

All appointments over a company including the first, subsequent and transitional appointments have already climbed to 1,575 for the March quarter as at 20 March 2023.

This brings the total number for 2022-23 to 6,415, almost as high as the 6,477 insolvencies recorded over the entire 2021-22 financial year.

The worst hit sector is by far construction, with a total of 1,741 insolvencies.

While the impact of insolvencies this year will be felt across most economic sectors, Mr Taylor said construction, manufacturing and logistics are typically the most prone to insolvency.

Data from the Australian Financial Security Authority (AFSA) has shown that personal insolvencies are also on the rise.

During January 2023, there were 772 new formal personal insolvencies, rising from 612 in December 2022, noted Mr Taylor.

Given the current economic conditions, Mr Gammon said accountants need to reviewing client files on a more regular basis and having tough conversations with their business clients.

“We would like to see accountants being more engaged in reviewing client files not just annually for their tax returns, but maybe once every six months or once a quarter,” he recommended.

“There is a perennial issue where directors either aren't aware [of the issues] or put their head in the sand when things get tight and accountants are very well advised to help them review their liabilities and to look at their cash flow forecasting.

“We are encouraging accountants to reach out proactively to their clients with a view to establishing some dialogue and having these tough conversations.”

Where issues are identified in the business, the accountant can then work with the business to develop potential solutions, he said.

Mr Gammon also advised accountants to reach out to an insolvency practitioner earlier on for technical advice and options in terms of how things could play out further down the track.

“The earlier that engagement is, the more options that will be available for restructure and a better likelihood of a positive result,” he said.

The Australian Restructuring Insolvency & Turnaround Association has also stressed that having frank discussions early on in the distress cycle is vital for accountants and their clients.

“If you want to keep that client as a long-term client, you need to help them confront the reality of what they're dealing with as soon as possible,” ARITA chief executive John Winter.

“If you suspect that a client is in trouble, try and organise a meeting to sit down with them and talk about what's happening in their business, make sure that they're doing things like keeping their books and records absolutely up to date, so that they know their trading position, make sure that they're not too far behind on their loan and other debt obligations.

“If they are, get them into see a registered liquidator as quickly as possible.”

Mr Winter said by addressing it earlier on, this can potentially provide businesses with more options such as small business restructuring.

“While the small business restructuring regime is not perfect, it is a tool that’s available,” he said.

“For larger clients, there's always the tools like voluntary administration. There are ways through this and the absolute experts in this area are registered liquidators. They turn around businesses all the time.

“So, if you're able to get a registered liquidator in there early enough, you will keep that client as a long-term client and you will have been a critical part of saving them. That's a relationship that will endure,” he stated.

Mr Gammon said it is also important that accountants handle these conversations with clients with sensitivity and empathy.

“Whilst we're encouraging accountants to reach out and have those tough conversations, accountants should also be aware that it can take a personal toll on the director dealing with some of these difficult issues,” he explained.

“These can be very difficult times so having that degree of empathy and sympathy is very important.”

Miranda Brownlee
23 March 2023
accountingtimes.com.au

ATO warns businesses to check FBT claims as deadline nears

Electric vehicles become exempt from the levy for the first time and Mazars expects an influx of salary packaging requests.

The ATO has advised businesses and their tax practitioners that as the FBT year draws to a close they should already be working on what items they can claim in their lodgement.

The tax office said for businesses not lodging through a tax practitioner the lodgement date would be 22 May, while for those lodging electronically via a tax practitioner the due date would be 26 June.

The ATO also warned businesses that if it was the first time they would be lodging with a tax practitioner to contact them before 21 May as they would need to add them to their FBT client list by then to ensure they were eligible for the later June lodgement and payment date.

The biggest change to FBT within the 2023 FBT year – which spans from 1 April 2022 to 31 March 2023 – was the introduction of the electric car exemption.

The Treasury Laws Amendment (Electric Car Discount) Act 2022 received royal assent on 12 December 2022 which meant EVs provided to employees for private use are now exempt from FBT.

Mazars said it expected many employers to receive an influx in requests for EVs to be a part of their salary packaging and cautioned businesses to understand the added impact it could have.

“Given the potential savings available and the popularity of EVs, we expect many employers will receive requests for EV salary packaging arrangements and business owners may also consider their own arrangements,” said Mazars.

“While purchasing a car predominantly for private use through a trading entity may not have been an attractive option in the past, this tax-saving opportunity will cause some to reassess.”

Even though the legislation had gone through, EVs must still meet a strict criteria to be eligible for the ATO’s FBT exemption.

The criteria included that the EV must have been first held and used after 1 July 2022 and satisfy zero or low emissions vehicle conditions by being a battery electric vehicle, a hydrogen fuel cell electric vehicle, or a plug-in hybrid electric vehicle.

The selected vehicle must also be used by a current employee or their associates and it cannot be used by past or future employees.

The EV must also never have had luxury car tax paid on the supply or importation of it. For the 2022-23 financial year, the luxury car tax threshold for fuel-efficient vehicles was $84,916 meaning any new EVs purchased must be cheaper than this amount.

If the EV was a secondhand vehicle then the onus was on the employer to research prior sales to determine whether the luxury car tax was ever applicable to it.

The ATO also clarified that home charging stations would not be an exempt expense, with employers who were planning to provide an employee with one at their home the fringe benefit must be handled separately, even if packaged in the leasing arrangement.

However, charging stations provided on the business premise would be FBT exempt along with the electricity provided to charge the vehicle there.

The ATO also reminded those that previously registered for FBT but do not need to lodge this year, they must send the tax office a notice of non-lodgment by the time the return would normally be due to prevent it from seeking a return at a later date.

Josh Needs
22 March 2023

accountantsdaily.com.au