- the introduction of an optional simplified method (from 1 March 2020 to 30 June 2020) to claim 80 cents for each hour you work from home to cover all deductible running expenses;
- specific advice on the tax treatment of employment payments made because of COVID-19 (for example, if you take leave, are stood down or lose your job); and
- specific advice on the tax treatment of residential rental property income and expenses.
COVID-19 MEASURES AND SUPPORT – BUSINESS AND EMPLOYERS
New rules follow the government's economic response to novel coronavirus (COVID-19).
If you as an employer received a cash flow boost under the boosting cash flow for employers measure, the amount is tax free (non-assessable non-exempt income) and you are entitled to a deduction for the PAYG withholding paid.
From 12 March 2020 until 31 December 2020:
- the instant asset write-off threshold is $150,000 (up from $30,000); and
- the eligibility range covers businesses with an aggregated turnover of less than $500 million (up from $50 million).
Businesses with an aggregated turnover of less than $500 million are able to accelerate their depreciation deductions on the purchase of certain new depreciable assets. This applies to eligible assets held and first used or installed ready for use from 12 March 2020 until 30 June 2021.
Businesses may be eligible to receive the JobKeeper Payment for:
- eligible employees; and
- an individual who is an eligible business participant.
Any amount you received is assessable income of the business.
NET MEDICAL EXPENSES FOR DISABILITY AIDS, ATTENDANT CARE OR AGED CARE
From 1 July 2019, the tax offset for net medical expenses for disability aids, attendant care or aged care is no longer available.
NO DEDUCTIONS FOR VACANT LAND
You can no longer claim tax deductions for the cost of holding vacant land, such as:
- interest incurred on loans to acquire the land
- land taxes
- council rates
- maintenance costs.
These changes apply to costs incurred from 1 July 2019, even if you held the land before that date.
However, deductions for vacant land can still be claimed where, for example:
- the land is used by you in a business carried on for the purpose of gaining or producing assessable income
- the land is used or available for use in carrying on a business (for example, primary production)
- the land is vacant due to an exceptional circumstance (such as fire, flood, or substantial building defects) that occurred within the last three years.
CAPITAL GAINS TAX CHANGES FOR FOREIGN INVESTORS
On 12 December 2019, the government passed amendments to the law for the capital gains tax (CGT) main residence exemption for foreign residents. The changes impact certain foreign residents for property held before 7.30pm (by legal time in the ACT) on 9 May 2017, the CGT main residence exemption can be claimed only for disposals that occur on or before 30 June 2020, provided other existing exemption requirements are satisfied.
- For disposal of property that occurs from 1 July 2020, foreign residents will no longer be entitled to the exemption. That is unless any of the following events occur within six years of the individual becoming a foreign resident:
- the foreign resident, their spouse, or their child who was under 18 years old, has a terminal medical condition
- the foreign resident's spouse, or their child who was under 18 years old at the time of their death, dies
- the CGT event involves the distribution of assets between the foreign resident and their spouse because of their divorce, separation, or similar maintenance agreements.
For properties acquired at or after 7.30pm (by legal time in the ACT) 9 May 2017, the CGT main residence exemption no longer applies to disposals. That is unless any of the events listed above occur within six years of the individual becoming a foreign resident.
EXPANDING TAX INCENTIVES FOR INVESTMENTS IN AFFORDABLE HOUSING
On 9 May 2017, the government announced that it will provide an additional CGT discount of up to 10% for Australian resident individuals who provide affordable rental housing to people earning a low to moderate income. This will increase the CGT discount to up to 60% for qualifying investors.
On 12 December 2019, the change became law and will apply to CGT events occurring on or after 1 January 2021. These residential rental properties must have been provided on or after 1 January 2018 for a period or periods totalling to a minimum of three years (1,095 days), which may be aggregate usage over different periods. The number of days affordable housing was provided before 1 January 2018 will not be counted.
CGT SMALL BUSINESS CONCESSIONS – PARTNERSHIPS
Partners in partnerships who alienate their income by creating, assigning, or otherwise dealing in rights to the future income of a partnership will no longer be able to access the small business CGT concessions in relation to these rights.
These changes apply to CGT events occurring after 7.30pm (by legal time in the ACT) on 8 May 2018.
EXTENDING ANTI-AVOIDANCE RULES FOR CIRCULAR TRUST DISTRIBUTIONS TO FAMILY TRUSTS
From 1 July 2019, trustees of family trusts are liable to pay trustee beneficiary non-disclosure tax (TBNT) on circular trust distributions. Family trusts are trusts that have a valid family trust election in place, have made a valid interposed election, or are part of a family group.
When trustees of those trusts become presently entitled to a circular trust distribution, TBNT is imposed on the untaxed part of that distribution at the top marginal tax rate, plus the rate of Medicare levy.