Author: Harlan Marriott

Investment options in retirement explained

Getting the balance right between a safe spending rate and having enough income to enjoy retirement takes some careful planning. Investing for a reasonable return is one approach to helping your savings go the distance.

What is your risk appetite?

There’s a rule of thumb when it comes to investment risk. Generally speaking, the higher the expected return the higher the risk involved. But taking on investments with the least possible risk can make it difficult to earn investment returns that keep up with inflation and any rises in living costs.

On the other hand, taking on too much risk could lead to steep falls in the value of your investments. This can have an even bigger impact when you’re retired, because you can’t expect to replace these losses from your salary or other types of income. Plus, you’re relying on your ‘nest egg’ to provide at least some of your income. When you lose a portion of those savings to risky investments, you have less to spend for the rest of retirement and less to earn returns on over the long term.

Understanding the investments available to you, and their risks, will be crucial to looking forward with confidence in your retirement.

What is an asset class?

An asset class is a group of investments with similar characteristics and laws. They’re typically grouped into two broad categories, defensive and growth. Defensive assets offer less opportunity for growth, and generally provide you with income stability and security for your original investment and income. Growth assets carry more risk, and generally provide you with more potential to grow your investment over time.

Here are some of the assets in each category that you might come across when exploring your investment options:

Defensive assets

Defensive assets include investments like cash, term deposits, fixed interest securities, and annuities.

Cash is considered the safest form your money can take but it typically generates the lowest returns. However, it can be good to have some cash in a bank account because of the safety it provides and because you can access it right away when you need it.

Term deposits are held for a set period of time with a bank, building society or credit union. The rate of return is fixed, and you can be certain of your income, but you should be prepared to have your capital locked away for the full term. Whilst term deposits offer this security, there is a tradeoff. When markets perform strongly, your rate of return will remain fixed and you won’t benefit from higher returns.

Fixed interest securities, such as bonds, involve you usually loaning money to a company or entity. You receive regular interest payments and can expect to get back the original sum invested at the end of the term, known as the ‘maturity’. The underlying value of the fixed interest security can change with interest rate movements.

Annuities can also be viewed as a type of fixed interest investment. You invest a lump sum with an annuity provider and receive regular payments for either a fixed period or for the rest of your life depending on the type of annuity you choose. As with term deposits, your payment rate will remain fixed. So whilst you won’t be affected by share market falls, you also won’t benefit from higher returns when share markets perform strongly.

Growth assets

Growth assets include investments like property, shares and equities.

Property can provide you with rental income and potential for capital gains. In Australia property prices have generally performed well over the long term. However, property prices are notoriously difficult to predict due to the number of variables that impact them.

Investing in shares means buying a share of ownership in a company, usually on a stock exchange. The value of the shares are generally linked to a company’s value and as a shareholder, you can be paid a share of profits as a dividend. Shares are generally considered to be a higher risk asset class as their value tends to be more volatile. You can control the amount of risk you take on by investing in share portfolios that invest in companies that have delivered consistent returns over the long term.

Investment strategies for retirement

Everyone has different investment goals. However, a common objective for many people investing for their retirement is striking a balance between maximising available cash flow and protecting the remaining savings.

The importance of diversification

Diversification is a golden rule of investing. Spreading investments across different asset classes can strike a balance between security (defensive assets), and higher investment returns (growth assets). This can reduce your overall investment risk and the impact of significant market downturns, or poor returns from a particular business or sector.

Contact your Leenane Templeton financial adviser to discuss steps towards and investment strategy or to determine whether an annuity is right for you. Contact us here.

Your risk appetite will determine which investment strategy is right for you, and according to the Government website MoneySmart (1) may fall into one of the following four types:

(1) MoneySmart expected returns based on actuarial advice received in May 2018. Actual results can vary significantly

Source: Challenger

Important Information
The information in this guide is current as at 20 September 2019 and is provided by Challenger Life Company Limited ABN 44 072 486 938, AFSL 234670 (Challenger, our). The information is general only and has been prepared without taking into account any person’s objectives, financial situation or needs. Because of that, each person should, before acting on any such information, consider its appropriateness, having regard to their objectives, financial situation and needs. Each person should obtain and consider the Product Disclosure Statement (PDS) for the relevant product offered by Challenger before making a decision about whether to acquire or continue to hold the relevant product. A copy of the PDS can be obtained from your financial adviser, our Investor Services team on 13 35 66, or at www.challenger.com.au The information in this document does not constitute, and is not intended to constitute, social security or tax advice. Neither Challenger, nor any of its officers or employees, are a registered tax agent or a registered tax (financial) adviser under the Tax Agent Service Act 2009 (Cth) and none of them is licensed or authorised to provide tax or social security advice. Before acting, we strongly recommend that you obtain financial product advice, as well as taxation and applicable social security advice, from qualified professional advisers who are able to take into account your investor’s individual circumstances. You may also wish to contact Centrelink or other government agencies regarding eligibility for relevant benefits. To the maximum extent permissible under law, neither Challenger nor its related entities, nor any of their directors, employees or agents, accept any liability for any loss or damage in connection with the use of or reliance on all or part of, or any omission inadequacy or inaccuracy in, the information in this guide.

Source: Challenger

September 23, 2020
How to invest in the things you believe in

An increasing number of investors are now looking to invest sustainably. With multiple sustainable investment strategies it’s not always easy to immediately distinguish the differences between them. It is up to the investor to choose the approach that best suits their financial and sustainability goals, so we have compiled some information on common sustainable investing strategies to assist investors with understanding their choices.

ESG (environmental, social and governance) integration

ESG integration is a general approach to investing that incorporates environmental, social and governance (ESG) considerations alongside traditional financial analysis.

– Broadly speaking, environmental factors include issues such as climate change, deforestation, biodiversity and waste management.

– Social factors include issues such as labour standards, nutrition and health and safety.

– Governance includes issues such as company strategy, remuneration policies and board independence or diversity.

ESG integration is about understanding the most significant ESG factors that an investment is exposed to and making sure that you’re compensated for any associated risk.

Sustainable investing
Although sustainable investing involves ESG integration, it takes things further by focusing on the most sustainable companies that lead their sector when it comes to ESG practices.

Both the ESG integration and sustainable investing approaches are about engaging with company management to make sure the firm is being run in the best possible way. This can mean challenging a company on its sustainability practices to encourage improvements where necessary.

Screened investing
Screening is when you decide to invest, or not to invest, based on specific criteria.

Let’s say you only want to invest in companies that promote workplace diversity. Your criteria might be substantial representation of women and minorities in management level positions, and/or the existence of diversity and inclusion policies.

You (or your fund manager) will use these factors to deliberately exclude investments that don’t meet these criteria (negative screening). Or they might purposefully include those that do (positive screening).

Ethical investing
Ethical investing is an example of where screening is commonly used. Investors screen out investments that they deem unethical because they don’t fit in with their ethics or values (it’s also called values-based investing).

People commonly exclude so-called “sin stocks” such as alcohol, gambling, weapons manufacturing, tobacco or adult entertainment companies because they view these activities as immoral.

Impact investing
Impact investing is about putting your money to work in a way that has a specific, measurable and positive benefit to society or the environment.

This isn’t to be confused with a charitable donation though. You also want to generate a return on your investment, as well as promote social good.

Let’s say you’re passionate about education in Africa. You can put your money into a fund that invests in companies or projects that are working towards delivering quality education in African communities. Or you can invest directly in these companies or projects yourself.

Impact investing is more common in private markets (i.e. not the stock market). Recipients tend to be small companies with clear social goals that otherwise may not have access to capital.

Thematic investing
This is about investing according to your chosen investment theme. Maybe your theme is ‘health and wellness’. In this case you’ll only want to consider funds that invest in healthy food brands or those companies focused on developing new vaccines.

Or perhaps your theme is ‘green investing’. If so, you’ll only invest in companies and technologies that you consider good for the environment (alternative energy generators or energy saving technology manufacturers, for example).

The above is not an exhaustive list of the sustainable strategies available out there. But it should serve as a good starting point to help you understand the differences between some of the common approaches.

For more information please speak with your LT financial adviser. Alternatively should you need a financial adviser please contact the LT team on (02) 4926 2300 or visit our contact us page.

Source: Schroders

Important Information
Opinions, estimates and projections in this article constitute the current judgement of the author(s) as at the date of this article. They do not necessarily reflect the opinions of Schroder Investment Management Australia Limited, ABN 22 000 443 274, AFS Licence 226473 (‘Schroders’) or any member of the Schroders Group and are subject to change without notice. In preparing this article, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was otherwise reviewed by us.

Schroders does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this article. Except insofar as liability under any statute cannot be excluded, Schroders and its directors, employees, consultants or any company in the Schroders Group do not accept any liability (whether arising in contract, in tort or negligence or otherwise) for any error or omission in this article or for any resulting loss or damage (whether direct, indirect, consequential or otherwise) suffered by the recipient of this article or any other person.

This article does not contain, and should not be relied on as containing any investment, accounting, legal or tax advice. Before making any decision relating to a Schroders fund, you should obtain and read a copy of the relevant disclosure document for that fund to consider the appropriateness of the fund to your objectives, financial situation and needs.

You should note that past performance is not a reliable indicator of future performance.

Schroders may record and monitor telephone calls for security, training and compliance purposes.

September 17, 2020
The Cycle of Investor Emotions
It is human nature to overreact. When things are going well, we feel that nothing can stop us. And when things go bad, we look to take drastic action. Since emotions pose a threat to our financial health, it is important that we are aware of them.

When financial markets experience an upward or downward spike it can be difficult to not get caught up in the hype. From attention-grabbing news headlines to predictions from industry economists – it seems everyone has a different opinion on what markets will do next, and the best action to take. But when it comes to your investments, the best strategy is to remain focused on the long term, and not be swayed by emotions.

Initially as investors, we all start with optimism. We commonly expect things to go our way and tend to expect a reward for the risk of investing.

As our expectations are met, we get excited about the possibility of even greater returns, and the excitement becomes thrilling as the returns exceed our expectations. We are at the top of the cycle when we experience euphoria. But it is at this point that we also experience maximum financial risk. When we believe everything that we touch turns to gold, we fool ourselves into believing that we can beat the market, that we cannot make mistakes, that excessive returns are commonplace, and that we can tolerate higher levels of risk.

This euphoria was experienced by many investors at the start of 2020, prior to the Covid-19 outbreak and subsequent economic fallout. Global stock markets were at all-time highs as a result of the longest bull market in history, and many investors expected this trend to continue.

The second phase of the cycle begins when the market stops meeting our new lofty expectations and begins to turn. At first, we anxiously watch the market for any signs of direction. Anxiety turns to denial and then to fear as the value of our investments decline. We start to act defensively and may think about switching out of riskier assets to more defensive investments such as bonds.

In the third phase of the cycle, the realities of a bear market come to the fore and we become desperate. Many of us panic and withdraw from the market altogether – afraid of further losses. Those who persevere become despondent and we wonder whether markets are ever going to recover, and whether we should be invested in them at all.

Ironically, at these times, we commonly fail to recognize that we are actually at the point of maximum financial opportunity.

The five most common behavioural pitfalls are:
- Overconfidence
  When investors overrate their ability to select winning shares or investment managers.
- Loss aversion
  Research indicates that a loss causes about twice as much pain as a gain causes pleasure. During periods of market volatility investors experience the sense of loss more acutely.
- Chasing past performance
  We see this time and time again, but unfortunately, individual investors who are abandoning a well-diversified portfolio for bonds, or even cash, may be jeopardising their future financial security.
- Timing the market
  Research shows that no-one can accurately time the market.
- Failure to rebalance
  The risk/return characteristics of an investor’s portfolio should be independent of what’s happening in the market and this means selling high and buying low
The temptation to fall into one of these traps can be resisted by developing and committing to a well-defined, long-term investment policy. This is the best way to protect yourself from your emotions.

Speak with Leenane Templeton Wealth Management’s financial advisors to discuss your long-term investment needs.

Source: Russell Investments
September 10, 2020
CGT rollover when transferring assets in a divorce

Transferring the ownership of assets from one party to another will typically attract CGT. However, in the event that a change in ownership occurs due to the breakdown of a relationship, you may be eligible for a rollover of the asset.

A rollover allows taxpayers to defer or disregard a capital gain or loss that would normally arise on a CGT event. Specifically, a same asset rollover can occur when an individual transfers assets to their exspouse, as the transferee already has an involvement with the asset. The spouse who receives the asset will make the capital gain or loss when they dispose of the asset in future. They will also receive the cost base of the asset (the cost of the asset at the time of its initial purchase), as well as expenses incurred when acquiring, holding and disposing of the asset.

The rollover applies to CGT events that occur as a result of:
• An order of a court or a court order made by consent under the Family Law Act 1975 (foreign laws with similar logistics may also apply).
• A court order under a state, territory, or foreign law relating to the breakdown of a relationship.
• A binding financial agreement, or a corresponding written agreement.

Separating couples transferring assets in accordance with a binding financial agreement will not require court intervention, however, for rollover to apply, the following must be true at the time of transfer:
• the involved spouses are separated,
• there is no reasonable expectation of cohabitation resuming,
• the transfer of assets occurred for reasons directly related to the breakdown of the relationship. For example, the transfer may not be directly connected to the separation if the spouses already agreed to the transfer before the breakdown of their relationship.

Couples with informal or private agreements related to the transfer of assets will not be eligible for a rollover, and CGT will apply to these ownership transfers. The parties cannot choose whether or not the rollover applies to their situation.

For financial help through your divorce or seperation please contact our LT financial advisors. Call (02) 4926 2300.

September 2, 2020
Staying on track
As human beings, we have a natural preference for things to stay as they are. It’s a tendency psychologists refer to as status quo bias. But in a world where change is a daily reality, sticking to the status quo could mean getting left behind.

Regularly checking in on your retirement plan is always a sensible strategy. Keeping track of your finances becomes even more important in times of economic uncertainty. Given the changes we’ve seen due to Coronavirus, now is a good time to take a look at your retirement income plan with fresh eyes. We’ve put together a list of resources to help you.

Put your assumptions to the test

Making sure your retirement income is secure is an essential ingredient to a comfortable retirement. But many Australians rely on incorrect assumptions when making decisions about their money.

Are you 100% sure you’ve got the facts?

Learn how to protect your income from poor share market performance

Recent events in global markets have put money in the spotlight for many retirees. According to the ABC’s Covid-19 Monitor ¹, over half of the Australians surveyed are ‘very’ or ‘extremely’ concerned about the economic impact of the Coronavirus. In fact, they’re more worried about the economic impact than their own personal health risk.

The first quarter of 2020 has seen significant falls in both domestic and global share markets, which may have left you feeling concerned about the impact on your retirement income. The good news is, there are steps you can take to feel more confident about your money.

We explain the risk of poor share market performance in retirement and explore options to help you protect your retirement income.

Flex your budgeting muscles and keep spending on track

Chances are your spending patterns have changed since 2020 began. Research² for the first quarter of 2020 showed that overall, household spending behaviours were more conservative as significantly more consumers cut back on non-essentials. While many Australians are spending more on items like food and groceries, spending on eating out, holidays and travel has obviously fallen.

With less temptations for spending, now could be a good time to revisit your budget. Have any of your expenses gone down recently? Have you found there are things you can do without? What things have been essential to your lifestyle and wellbeing?

Staying on top of your budget is key to spending confidently in retirement.

Find out if your retirement income will last for your lifetime

With longer lifespans and less certainty in world markets, making sure your money goes the distance is more important than ever. It’s no wonder that 84% of older Australians rated the desire for regular and constant income as very important³. But how do you make that happen?

Put your retirement income to the test and get results that show:
- how long your retirement savings will last;
- whether you’re eligible for the Age Pension or an increase in payments; and
how much annual income you could guarantee for life by adding a lifetime income stream to your retirement income plan.

Get help from the experts if you’re feeling uncertain

At times like this, it can be hard not to worry. In fact, we’re hard wired to pay greater attention to bad news which can create anxiety for even the most confident investors. Talking to a financial planning professional can ensure you’re following a strategy to achieve your goals for your retirement income.

Call LT and speak with one of our financial advisors to day on (02) 4926 2300.

1 https://www.abc.net.au/news/2020-04-28/coronavirus-data-feelingsopinions-covid-survey-numbers/12188608
2 https://business.nab.com.au/nab-consumer-anxietysurvey-q1-2020-39188/
3 https://nationalseniors.com.au/uploads/09172675CRP_ChallengerReport_
RetirementIncome_FN_0.pdf
4 https://www.psychologytoday.com/au/articles/200306/our-brainsnegative-bias

Source: Challenger
August 25, 2020
Changes to business practices and TPAR

In response to the social distancing and sanitary requirements of COVID-19, it has become common for businesses to provide additional cleaning and courier services to customers. As a result, many businesses have taken on contractors to assist with the extra work.

Businesses who have made payments to contractors in the last year may need to lodge a Taxable payments annual report (TPAR) by 28 August. This applies to the following contractor services:

• building and construction,
• courier, delivery or road freight,
• cleaning,
• information technology,
• security, surveillance or investigation.

Delivery and cleaning services are particularly relevant for businesses operating through the COVID-19 pandemic. For example, businesses that are limiting access to their physical stores due to social distancing restrictions may have paid contractors providing courier services to deliver goods to customers on behalf of the business. If the payments received by the business for courier or cleaning services provided by contractors amounts to 10% or more of their total GST turnover, they will be required to complete a TPAR.

Businesses can still lodge a TPAR even if they don’t think they need to or if they are unsure if they meet the 10% GST turnover threshold. Businesses providing courier or cleaning services using their existing employees and not contractors will not need to lodge a TPAR.

TPAR lodgements can be made using SBR-enabled business software, the ATO Business Portal, through a tax or BAS agent, or by ordering a Taxable payments annual report (NAT74109) paper form.

For more information please speak with you LT accountant or call (02) 4926 2300.

August 19, 2020
Division 7A and private loans

It is not uncommon for businesses to provide loans to shareholders or associates of a company. However, business owners should know the conditions that their loan must satisfy under Division 7A, to avoid the amount being deemed a dividend.

Written agreement

Division 7A loan agreements need to be made under a written agreement before the private company’s lodgement date. As a minimum, the written agreement should:

• identify the parties,

• set out the essential terms of the loans (e.g. the amount and term of the loan, the interest rate payable under the loan), and

• be signed and dated by all parties involved

Minimum interest rate

Loans must have an interest rate greater than or equal to the annual benchmark interest rate outlined in Division 7A. The benchmark interest rate for 2020 is 5.35% and will be 4.52% in 2021. This interest rate needs to be applied for each year after the year in which the loan was made.

Maximum term

The maximum term for a loan agreement is seven years. If the loan is secured by a registered mortgage over real property, the maximum term is 25 years. For this maximum term, the market value of the property (not including any other liabilities for securing the property prior to the loan) must also be at least 110% of the amount of the loan.

Refinancing loans

From the 2007 income year onwards, loans that can be refinanced without resulting in a deemed dividend include:

• An unsecured loan which is converted to a loan secured by a registered mortgage over real property can have the loan term extended (with relative terms).

• A secured loan which is converted to an unsecured loan with a corresponding reduction in the loan term.

• A loan which becomes subordinated to another loan from another entity due to circumstances beyond the control of the original entity.

If these loan conditions are not met, Division 7A of the Income Assessment Act 1936 applies and the loan is deemed a dividend. This dividend is treated as taxable income and the company receives no tax deductions for its loan to you or your shareholders.

To find out more about Division 7a and private loans please speak with your Leenane Templeton accountant. Call (02) 4926 2300.

August 13, 2020
Super Guarantee Amnesty – Ends 7 September 2020

A super guarantee amnesty was introduced on 6 March 2020. Employers participating in the amnesty need to apply by 7 September 2020.

The ATO’s ability to identify underpaid Super Guarantee (SG) has increased through greater data visibility as a result of more frequent reporting requirements by super funds and employers. The ATO is increasingly using this capability to identify employers that have underpaid SG.

The Super Guarantee Amnesty is an opportunity to catch up on any unpaid super without the normal penalties applying. The Amnesty ends on 7 September 2020. If you have paid the right amount of super for your employees, you don’t need to do anything further.

On 6 March 2020, the government introduced a super guarantee (SG) amnesty. The amnesty allows employers to disclose and pay previously unpaid super guarantee charge (SGC), including nominal interest, they owe their employees, for quarter(s) starting from 1 July 1992 to 31 March 2018. Eligible disclosures will not incur the administration component ($20 per employee per quarter) or Part 7 penalty. In addition, payments of SGC made to the ATO after 24 May 2018 and before 11.59pm on 7 September 2020 will be tax deductible. Employers who have already disclosed unpaid SGC to the ATO between 24 May 2018 and 6 March 2020 don’t need to apply or lodge again

Employers who come forward from 6 March 2020 need to apply for the amnesty by 7 September 2020.

What to do now?

If you are worried you have not paid all your employees their super, you should talk to one of the Leenane Templeton tax professionals. Call (02) 4926 2300 or email success@LT.com.au

Further Information: For further information visit the ATO website: https://www.ato.gov.au/Business/Super-for-employers/Superannuation-guarantee-amnesty/

August 6, 2020
Are you eligible for the small business income tax offset?

The small business income tax offset can be used to reduce the tax you pay by up to $1,000 a year. Also known as the unincorporated small business tax discount, the offset is worked out on the proportion of tax payable on your business income.

The rate of offset is 13% for the 2020-21 financial year and 16% for the 2021-22 financial year and onwards. The offset is only available to entities with an aggregated turnover of less than $5 million (from 2016-17 financial
year onwards) and is capped at $1,000.

The ATO will work out your offset based on your income tax return and uses your:
• net small business income you earned as a sole trader, or
• share of net small business income from a partnership or trust.

Conditions for sole traders

The offset is calculated based on net small business income for sole traders (which is the sum of your assessable income from carrying on your business, minus any deductions). Sole traders are not entitled to the offset in the event that their net small business income is a loss.

Income and deductions that you need to include in your net small business income include:

• farm management deposits claimed as a deduction,
• repayments of farm management deposits included as income,
• net foreign business income related to your sole trading business, and
• other income or deductions such as interest or dividends derived in the course of conducting your business.

Conditions for partnership and trust distributions

You may be eligible for the tax offset if:

• you have a share of net small business income distributed from a partnership or trust that is a small business entity,
• you were a partner or beneficiary of that small business partnership or trust,
• the business income was derived by the small business partnership or trust from carrying on its own business activities, or
• your assessable income includes a distribution or share of net income from that partnership or trust.

Still confused? For more help with your business tax or business accounting and advice speak with your LT accountant and advisor.

Contact the team on (02) 4926 2300.

August 4, 2020
How COVID-19 may affect your tax return

The ATO has released a range of methods to make tax time easier for businesses and individuals under COVID-19 circumstances.

Working from home

The ATO has introduced a new ‘shortcut method,’ which applies from 1 March 2020 to 30 September 2020. Under this new method, employees working from home as a result of COVID-19 can claim expenses incurred at a rate of 80 cents for each hour worked from home. Employees must keep a record of the hours they worked from home as evidence to support their claim.

Deductible running expenses include:

• Utilities such as heating, cooling and lighting.
• Cleaning costs for your work area.
• Mobile or landline phone expenses for work calls.
• Internet connection.
• Computer consumables and stationery.
• Repair costs for home office equipment and furniture.
• Depreciation of home office equipment, computers, furniture and fittings.

Small capital items such as a computer (purchased for the purpose of working from home) can also be claimed if they cost under $300. If the cost exceeds $300, the decline in value can be deducted.

COVID-19 protective equipment

Occupations that require public interactions may be able to claim personal protective equipment (PPE), including face masks, sanitiser, antibacterial spray, and gloves. This would typically apply to industries such as healthcare, retail and hospitality. Many workplaces now have this PPE available for employees, however, employees who pay for their own COVID-19 PPE without reimbursement will be able to make a claim.

JobKeeper

Sole traders receiving JobKeeper payments on behalf of their business are required to include these payments as assessable business income in their individual tax return. Businesses that are a partnership, trust or company receiving JobKeeper do not have to include it as assessable income in the business owner’s individual tax return. However, these businesses will need to report JobKeeper payments as business income in their partnership, trust, or company tax return.

Employees under the scheme will have their JobKeeper payments automatically filled out in their tax return, and will not have to do anything differently. The payments will be included as salary and wages, or an allowance that appears on the regular income statement or payment summary provided by employers.

Government cash flow support

The support received by employers as part of the Government’s COVID-19 boosting cash flow for employers scheme is tax-free as it is considered non assessable non-exempt (NANE) income. Cash flow boost amounts should be included in tax returns in the same manner as other NANE income. Employers under the scheme will still be entitled to a deduction for the PAYG withholding paid.

Businesses may also be able to accelerate their depreciation deductions on the purchase of certain new depreciable assets if they have an aggregated turnover of less than $500 million. This applies to eligible assets that were held and first used, or installed and ready to use from 12 March 2020 to 30 June 2021.

For business tax advice speak with the LT tax team.

Call our team on (02) 4926 2300

July 29, 2020

Budget Update News

With the date for the Federal Budget 2020-2021 being delayed until 6 October, the Treasurer Josh Frydenberg today provided an update on Australia’s economic and fiscal outlook.

Mr Frydenberg revealed the budget will be in deficit by almost $86 billion in the 2020 financial year and is projected to grow to more than $184 billion in 2021. Unemployment is expected to reach 9.25% by the end of the year.

Individuals who are still financially impacted by the COVID-19 pandemic will have more time to apply for the early release of up to $10,000 of superannuation, with the application period extended from 24 September 2020 to 31 December 2020.

The JobTrainer Skills Package establishes the JobTrainer Fund to provide additional low and no fee training places for job seekers and school leavers, and extends the Supporting Apprentices and Trainees wage subsidy for a further 6 months to 31 March 2021 and expands it to medium-sized businesses from 1 July 2020.

The Government is extending the COVID-19 SME Guarantee Scheme to loans written until 30 June 2021 and making targeted amendments to ensure that the loans available suit the evolving needs of SMEs.

Income support for individuals will continue with the Coronavirus Supplement being extended to 31 December 2020, at a lower payment rate.

The JobKeeper Payment (JKP) Scheme is being extended at a tapered level for an additional 6 months as was announced by Treasury on 21 July 2020.

TREASURY ANNOUNCEMENT – 21 JULY 2020 – EXTENSION OF THE JKP SCHEME – Extension to 28 March 2021

The JKP, which was originally due to run until 27 September 2020, will now continue to be available to eligible businesses, including the self-employed, and not-for-profits until 28 March 2021.

JKP rates
From 28 September 2020 to 3 January 2021, the JKP rates will be:

– $1,200 per fortnight for:

– all eligible employees who, in the four weeks of pay periods before 1 March 2020, were working in the business or not-for-profit for 20 hours or more a week on average, and

– for eligible business participants who were actively engaged in the business for 20 hours or more per week on average in the month of February 2020; and

– $750 per fortnight for:

other eligible employees and business participants.

From 4 January 2021 to 28 March 2021, the JKP rates will be:

– $1,000 per fortnight for:

– all eligible employees who, in the four weeks of pay periods before 1 March 2020, were working in the business or not-for-profit for 20 hours or more a week on average; and

– business participants who were actively engaged in the business for 20 hours or more per week on average in the month of February 2020;

– $650 per fortnight for other eligible employees and business participants.

You will be required to nominate which payment rate you are claiming for each of your eligible employees or business participants.

Alternative tests

Alternative tests may be announced where an employee’s or business participant’s hours were not usual during the February 2020 reference period.

Guidance will be provided by the ATO where the employee was paid in non-weekly or non-fortnightly pay periods and in other circumstances the general rules do not cover.

The JKP will continue to be made by the ATO to employers in arrears. Employers will continue to be required to make payments to employees equal to, or greater than, the amount of the JKP (before tax), based on the payment rate that applies to each employee.

Eligibility – additional turnover tests

There will be an additional decline in turnover test for each of the two periods of extension, as well as meeting the existing eligibility requirements for JKP.

If you do not meet the additional turnover tests for the extension period, this does not affect your eligibility prior to 28 September 2020.

28 September 2020 to 3 January 2021

You will be required to satisfy the decline in turnover test in both the June and September 2020 quarters based on your actual GST turnover relative to the corresponding quarters in 2019 (or another comparable period if applicable).

4 January 2021 to 28 March 2021

You will be required to satisfy the decline in turnover test in each of the June, September and December 2020 quarters based on your actual GST turnover relative to the corresponding quarters in 2019 (or another comparable period if applicable).

Alternative testing periods

Alternative testing periods may be announced where it is not appropriate to compare actual turnover in a quarter in 2020 with actual turnover in a quarter in 2019.

No change to existing decline in turnover threshold

You will need to demonstrate that you have experienced a 30% decline in turnover during the additional testing periods. (50% for businesses with an aggregated turnover of more than $1billion, and 15% for registered charities).

Employers will need to assess in advance of lodging BAS

You will generally be able to assess your eligibility based on details reported in your Business Activity Statement (BAS).

Alternative arrangements will be put in place for businesses and not-for-profits that are not required to lodge a BAS (for example, if the entity is a member of a GST group).

As the deadline to lodge a BAS for the September quarter or month is in late October, and the December quarter (or month) BAS deadline is in late January for monthly lodgers or late February for quarterly lodgers, you will need to assess your eligibility for the JKP in advance of the BAS deadline in order to pay your eligible employees before receiving the JKP (i.e. to meet the wages condition).

An extension of time to pay your employees may be announced so that you have time to first confirm your eligibility for the JKP.

Interaction with existing rules

The JKP will remain open to new recipients, provided they meet the existing eligibility requirements and the additional turnover tests during the extension period. Other eligibility rules for businesses and not-for-profits and their employees remain unchanged.

Need help? To discuss your business or personal accounting, advisory and tax needs please contact the LT Team.

July 24, 2020

ATO increases car expense deduction rate

Small businesses with low annual travel distances will benefit from the ATO’s new increased cents per kilometre rate for cars, from 68 cents to 72 cents. The new rate has been effective since 1 July 2020.

What is the cents per kilometre method?

You can claim car deductions using the cents per kilometre method if you are a sole trader or partnership. The cents per kilometre method is calculated using a set rate for each kilometre travelled for business purposes. This rate takes all of your vehicle running expenses (including registration, fuel, serving and insurance) and depreciation into account, and currently sits at 72 cents per kilometre for 2020-21.

Claiming requirements

The ATO allows you to claim a maximum of 5000 business kilometres per car in a year and does not require written evidence to show the exact distance travelled. However, the ATO may ask you to show how you worked out your business kilometres, for example, with diary records.

To make sure your claim is eligible, records you need to keep include:

• Details of the kilometres travelled for business and private use.
• Receipts for fuel, oil, repairs, servicing and insurance over.
• Loan or lease documents.
• Tax invoices.
• Registration papers.
• Details of how you calculated your claim.

Keep in mind that the cents per kilometre method is only applicable when using a car. According to the ATO, a car is a motor vehicle designed to carry both a load less than one tonne and a maximum of nine passengers.

For help with your business tax meet with one of the LT tax advisors.

Contact our team on (02) 4926 2300

July 22, 2020
Conducting a business health-check

As our economy heads towards a recession, now is the perfect time to conduct a business ‘health check’ so that you come out the other side improved and ready to go.

Analyse your relationships with your business stakeholders so that you can make immediate improvements in preparation for when the economy starts to recover.

Clients and customers

Client and customer loyalty is something all businesses should aim for, but if your clients’ values are misaligned with yours, conflict is inevitable. Hence, now is the time to re-evaluate which clients you want to keep loyal and which ones you can see a cooperative future with.

Re-assessing your target audience and deepening your understanding of the wants and needs of your clients would help improve your marketing and sales strategies. If you have clients who frequently struggle to pay you on time or are rude to your employees, assess whether your attention is worthwhile and if you would like to continue to work with them when the economic situation improves.

Employees

Your employees are another stakeholder to check up on during this downtime. Your employees will always be your business’ representatives so make sure they are up to standard and help them improve on their skills.

Teach your employees more about your business goals and strategies and improve the team atmosphere by introducing team recreational activities. Your relationship with your employees now during a global crisis will dictate how they feel about you as a leader and if they can rely on you in the future. Foster respectful, strong and healthy bonds between you and your employees and only good things will come your way.

Suppliers

The key question to ask when reviewing your suppliers is whether or not you are getting what you need from them at a reasonable cost. If you feel that your suppliers are asking too much from you or letting you down with their product quality, take the time now to look for other options. As businesses struggle through current economic conditions, suppliers are becoming competitive and there are more options to consider. Do your research and decide on the suppliers you want to work with for the long-term future.

Financing

Managing your finances is always a difficult task but it is now more important than ever. Your budget and profit predictions for this year are likely going rogue so reevaluate your finances and research other
funding options such as commercial rent, interest rates and banking services.

Consider how you can minimise cost while maximising efficiency and productivity, save as much money as you can during these downtimes, and review your investments in detail to determine whether or not they are worthwhile

Business Advisors & Accountants

Your LT business advisor and accountant can help to review last years accounts and plan for this year, review your structure, discuss tax savings and strategies, bench mark your business, review key performance indicators and much more.

Book a business health check today. Call our team on (02) 4926 2300 or email success@LT.com.au

July 15, 2020
What home office expenses are allowed?
If you performed some of your work from your home office during the 2020 financial year, you may be able to claim a deduction for the costs you incur in running your home office, even if the room is not set aside solely for work-related purposes

COVID-19 IMPACT – NEW ARRANGEMENTS

The Australian Taxation Office (ATO) has announced special arrangements this year due to COVID-19 to make it easier for people to claim deductions for working from home. The new arrangement will allow people to claim a rate of 80 cents per hour for all their running expenses, rather than needing to calculate costs for specific running expenses.

Multiple people living in the same house can claim this new rate. For example, a couple living together could each individually claim the 80 cents per hour rate. The requirement to have a dedicated work from home area has also been removed.

This new shortcut arrangement does not prohibit people from making a working from home claim under existing arrangements, where you calculate all or part of your running expenses.

Claims for working from home expenses prior to 1 March 2020 cannot be calculated using the shortcut method, and must use the pre-existing working from home approach and requirements.

The ATO will review the special arrangement for the next financial year as the COVID-19 situation progresses.

WORKING FROM HOME CLAIMS FOR 1 MARCH TO 30 JUNE 2020

There are three ways that you can choose to calculate your additional running expenses for the 1 March – 30 June period:
- claim a rate of 80 cents per work hour for all additional running expenses.
- claim a rate of 52 cents per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture, plus calculate the work-related portion of your phone and internet expenses, computer consumables, stationery and the decline in value of a computer, laptop or similar device, or
- claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.
The ATO has stated that the three golden rules for deductions still apply. Taxpayers must have spent the money themselves and not have been reimbursed, the claim must be directly related to earning income, and there must be a record to substantiate the claim.

WORKING FROM HOME BEFORE 1 MARCH 2020

Claims for working from home expenses prior to 1 March 2020 should be calculated using the existing approaches and are subject to the existing requirements.

RUNNING EXPENSES

A deduction can be claimed for home office running expenses comprising of electricity, gas and depreciation of office furniture (e.g. desk, tables, chairs, cabinets, shelves, professional library) in the amount of:
- The actual expenses incurred; or
- 52 cents per hour
Like making a motor vehicle claim, diary/logbook evidence should be maintained for a 4-week period to establish a pattern of working from home and justify the number of hours you are claiming.

No deduction is allowed where no additional costs are incurred e.g. you work in a room where others are watching TV, or the income producing use of the home is incidental e.g. 52c per hour would not be allowed for a fax machine permanently left on to receive documents.

You will need receipts for:
- home office equipment used for work purposes
- repairs relating specifically to the home office or furniture and equipment used for work purposes
- cleaning expenses of home office
- any other day-to-day running expenses for the home office
- diary entries to record your small expenses ($10 or less) totalling no more than $200
TELEPHONE (INC. MOBILES) + INTERNET COSTS

If work or business calls can be identified from an itemised telephone account, then the deduction can be claimed for the work or business-related portion of the telephone account. A representative four-week period will be accepted as establishing a pattern of internet and telephone use for the entire year.

Telephone rental expense may be partly deductible if you are “on call” or required to contact your employer or client on a regular basis.

DEPRECIATION ON EQUIPMENT

Depreciation on home office equipment including office furniture, carpets, computer, printer, photocopier, scanners, modem etc. used only partly for work or business purposes can be apportioned.

The claim is based on a diary record of the income related and non-income related use covering a representative four-week period. The diary needs to show:
- The nature of each use of the equipment
- Whether that use was for an income producing or non-income producing purpose
- The period for which is was used
OCCUPANCY EXPENSES

Claims for occupancy expenses are allowed only if the home is used as a place of business. Occupancy expenses include rent, mortgage interest, water rates, repairs, house insurance premiums.

The claim can be made as an apportionment of total expenses incurred on a floor area basis.

Warning: Being able to claim theses expenses may affect your ‘main residence exemption’ for capital gains tax purposes if you sell your house in the future.

WHEN IS A HOME A PLACE OF BUSINESS?

The following factors, none of which is necessarily conclusive on its own, may indicate whether, or not, an area set aside has the characteristics of a place of business:
- the area is clearly identifiable as a place of business
- the area is not readily suitable or adaptable for use for private or domestic purposes in association with the home generally
- the area is used exclusively, or almost exclusively, for carrying on a business, or
- the area is used regularly for client or customer visits.
If you use your home to carry out income producing activities as a matter of convenience, you are not entitled to a deduction for occupancy expenses. It would be rare for an employee to be able to claim occupancy expenses.

WHAT NEXT

For further information and expert assistance to prepare your tax return and maximise your tax refund, contact our office today!

T: (02) 4926 2300 or email: success@LT.com.au
July 3, 2020
Market volatility and how it is affecting your super

In recent weeks, investment markets around the world have continued to experience significant volatility as investors try to assess the impact of the coronavirus (COVID-19) outbreak – an event that no-one anticipated for 2020. If your super is invested in the Australian and/or international share markets, it’s likely you would have been affected by this.

How much of your super is invested in shares is also important. For example, if you’re invested in a high growth strategy, or are in a lifestage fund and not looking to retire any time soon, it’s likely you’ll have more of your super invested in shares.

If you’re invested in a lifestage fund and are closer to retiring, or have selected defensive strategies, your exposure to the share market and any risks associated with it may be lower than a high growth strategy.

What this means for you

Our message at this time is to stay calm and don’t panic.

Super is a long-term investment, so while investment markets can be unpredictable over the shorter term, they typically recover over the longer term.

If you’re approaching or are in retirement, it’s still important to stay focused on your long-term investment strategy and consider all your options before making any significant changes.

You should consider keeping the following things in mind when looking at your super and what’s happening in global markets.

Stay Calm
Over time, the value of your super investment can fluctuate, depending on a range of factors, including market conditions. Reacting to short-term market conditions may mean you’re missing out on subsequent market improvements.

Diversification
Most members in super funds (including MySuper) are invested in a variety of asset classes, not just the share market. Different asset classes perform differently over time which helps to even out the highs and lows of market volatility in a particular asset class.

Long-term investing
Super is a long-term investment so many investment objectives focus on a 10-year period. It is expected that there will be periods of volatility, but over the longer term, markets may recover
from short-term movements.

Stick you your plan
Understand how much risk you’re comfortable with taking when it comes to how your super is invested and build this into your financial plan. You may want to consider regularly reviewing your financial plan to make sure it still reflects your current needs. For instance, if you’re moving towards retirement and your super is invested in a high-growth investment strategy your level of risk may be too high.

Seek advice
If you need assistance with determining the level of risk you’re comfortable with taking on, or if your financial plan is still meeting your needs, you may wish to consider seeking the advice of a qualified financial planner. With a well-formulated plan, you may be better placed to withstand periods of volatility.

Below, you’ll find some insights about the market and what is happening right now.

This may help you learn about the impact markets may have on your super.

Common Questions and Answers

What does it mean for my super?

The value of your super can change daily depending on how your super is invested. The value and performance of each investment option is linked to the underlying asset classes (types of investments e.g. shares, property, fixed interest etc) it invests in and these fluctuate in line with the performance of these assets and the market.

As your super may be invested in the Australian and/or international share markets, you may have experienced a fall in your super balance.

What does it mean for my investments?

Depending on where your super is invested and whether it’s in a high growth strategy, your super is typically invested into one or more asset classes (typically Australian and international shares, property, bonds and cash). You may have experienced a fluctuation in your investment value which reflects the performance of the assets your super is invested in. Long term growth assets such as shares and property tend to fluctuate and are more volatile in the short term, but over the long term generally produce higher returns than other asset classes.

What should I do?
Super is a long-term investment. Changing your asset allocation as a reaction to short term market fluctuations is an important decision and depends on a number of factors including your age, life stage and risk appetite. You should seek advice before changing your long term investment strategy.

The article was prepared by BT – Part of Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian Credit Licence 233714 (Westpac), and is current as at 02 March 2020. This article provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such. This information does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness, having regard to these factors before acting on it. Superannuation is a means of saving for retirement, which is, in part, compulsory. The government has placed restrictions on when you can access your investments held in superannuation. The Government has set caps on the amount of money that you can add to your superannuation each year and over your lifetime on both a concessional and non-concessional tax basis. There will be tax consequences if you breach these caps. For more detail, speak with a financial adviser or registered tax agent or visit the ATO website.
Source: BT

June 30, 2020
Embracing the fear

Sharemarkets are the most volatile they’ve been in the past 20 years. Increased uncertainty, fear, forced and panic selling, as well as reduced liquidity, are all contributing factors to currently elevated levels of volatility.

A simple measure using intraday price fluctuations can be used to understand the extent of the current volatility in the market. The graph below charts intraday volatility since 2000, with the average being 2.8%. In March 2020, the intraday volatility however, was greater than at any other time and significantly exceeded the peaks during the period of the
Global Financial Crisis (GFC) between 2007 and 2009.

In March this year there were nine trading days with volatility above 10%, seven of them consecutive. During the GFC there were only four days in total with greater than 10% intraday volatility and no consecutive trading days. Recent volatility has far exceeded other extreme world events which are represented by the peaks in the chart below, including the September 2001 terrorist attacks, the collapse of Lehman Brothers during the GFC, Black Monday on 8 August 2011 (which followed the credit rating downgrade of US sovereign debt), the US and Chinese flash market crashes of 24 August 2015 and news on Donald Trump’s likely election victory on 9 November 2015.

Despite having fallen from its peaks, volatility currently remains about twice the average.

Don’t fear volatility. Embrace it

With elevated volatility, you could be forgiven for looking at this graph and wanting to run for the hills. But the reality is that volatility is your friend when investing for the long term – with the at times extreme fluctuations in price presenting excellent (long-term) buying opportunities.

The causes of the current bout of volatility are certainly different and it is unclear if they warrant the elevated levels of volatility we’ve seen relative to other cycles. But in each of the previous bouts of market volatility, significant opportunities were presented to long–term, patient investors. It is hard to believe that this will be any different today.

Looking for an investment strategy or need help from a financial planning professional? Call the LT team to see how we can help.

Source: Allan Gray

June 23, 2020
Don’t wait until your 60s to see a financial adviser

Ask most 30 year olds who their financial planner is and the typical response might be ‘huh?’ After all, financial advisers are for older people with plenty of money to invest, aren’t they?

Well, yes, people nearing or in retirement will benefit from sound advice. But so will younger people. With the benefit of having time on their side, and with some help from an adviser, a 30-something can easily establish a wealth creation plan that can deliver a big payoff in the future.

Harness compound interest

It’s been called the most powerful force in the universe, and compounding returns – earning interest on your interest – can deliver dramatic results.

Imagine that, at age 30, you commence a simple savings plan. You contribute $2,000 each year to an investment that delivers an after-tax return of 6% pa. After 30 years you will have contributed a total of $60,000, but your investment will be worth $158,116. The magic of compound interest will have delivered you an effortless $98,116! The longer you go and the more that you contribute the bigger the ultimate balance.

Manage debt

The wrong sort of debt can have a huge impact on your future wealth. High interest debt such as credit cards and payday loans should be avoided if at all possible. Consolidating several debts into one lower interest loan can help get debt under control and save you heaps of interest.

Even with ‘good’ debt, such as a home loan, simple strategies can pay big dividends.

For example, repayments on a $500,000 mortgage at a 4% pa interest rate over 30 years will be $2,146.90 per month. Increase mortgage repayments by $166.67 per month ($2,000 per year) and the loan will be repaid in just under 25 years, saving $80,144 in interest.

In these examples the savings plan delivers the bigger result due to the higher interest rate. However, paying down the mortgage is a low risk strategy. The higher return from a long-term savings plan is likely to come with a higher level of risk. An adviser can help you find your investment risk comfort zone.

Where will the money come from?

While many people in their 30s can easily find a couple of thousand dollars a year for savings and debt reduction, for other that’s not such an easy task. However, significant savings may be hiding in plain sight. For example, the average Australian household throws away over $1,000 dollars worth of food every year. There’s half the target already. Buying lunch each day can easily cost over $2,000 a year. Taking lunch from home occasionally could easily provide the rest.

Don’t forget protection

Regardless of age, bad things can happen. The financial consequences of death, illness or disability can be devastating, and the younger you are the bigger the potential impacts. How will your retirement look if you’re no longer able to earn an income or contribute to super?

Most Australians have much less life and disability insurance than they need. Your adviser can help you ensure that your family’s wealth creation plans are well protected.

Who’s your financial planner?

Simple savings plans or increases in mortgage repayments are simple strategies that anyone can put in place. However, we live in a complex financial environment, and expert advice can really help you make the most of the wide range of opportunities available. This includes choosing the right savings structures (superannuation or non-superannuation), and investment products that suit your resources and priorities. A planner can also help you find hidden savings, and run the numbers to help you choose between different strategies.

Ready to meet your financial planner? Just give Leenane Templeton a call.

June 10, 2020
Varying PAYG instalments

Businesses experiencing financial difficulty due to COVID-19 may be over-paying their PAYG instalments if their current rate no longer reflects their estimated tax for the year. This can cause further cash flow problems for businesses already in distress.

In response to this, the ATO is providing increased flexibility towards varying PAYG instalments for businesses who have experienced an adverse change in trading conditions. As part these measures, taxpayers with PAYG instalments are entitled to:

• Vary PAYG instalment amounts (including varying to zero if it is predicted that you will have significantly less income than expected, or it is expected that deductions against your business or investment income will be higher than the income itself for a year) for the March 2020 quarter.

• Claim a refund for instalments made for the September 2019 and December 2019 quarters. This can be done by claiming a 5B credit on your activity statement. If you do not claim back a credit for these instalments, overpaid PAYG instalments will be credited back to you after your tax return has been processed.

Businesses wishing to vary instalments will need to:

• Lodge a revised activity statement (before the due date and before the yearly tax return is lodged) that varies their PAYG instalment for the March 2020 quarter to up to nil.

• Provide the reason for variation (change in trading conditions) on their BAS.

Regular interest and penalties will not apply to PAYG instalments that have been varied as a result of COVID-19. However, the initiative is intended to support cash flow, and will not affect your net liability for the 2020 income year.

Miscalculations made regarding PAYG instalments can be rectified by lodging a revised activity statement, or varying a subsequent instalment.

For help with your business PAYG, tax and accounting contact the LT team.

May 20, 2020
Working from home: what deductions can you claim?

Many employees are now being required to work from home to meet social distancing requirements placed on them by COVID-19, and are now faced with meeting some of the costs associated with their job, such as heating, lighting and internet; costs that are normally paid by their employer.

Expenses incurred by employees that are related to their job can typically be claimed as a tax deduction. Deductible running expenses include:

• Utilities such as heating, cooling and lighting.

• Cleaning costs for your work area.

• Mobile or landline phone expenses for work calls.

• Internet connection.

• Computer consumables and stationery.

• Repair costs for home office equipment and furniture.

• Depreciation of home office equipment, computers, furniture and fittings.

• Small capital items such as a computer (purchased for the purpose of working from home) can be claimed if they cost under $300. If the cost exceeds $300, the decline in value can be deducted.

The ATO has introduced a new ‘shortcut method,’ where you can claim additional running expenses at a rate of 80 cents for each hour you work from home as a result of COVID-19. The shortcut will apply from 1 March 2020 to 30 June 2020. A record of hours worked such as timesheets or rosters must be kept as proof. If you only undertake minimal work tasks from home such as occasionally checking emails or taking calls, then you are not eligible for the deduction. To claim the deduction, you must specify your claim with the note “COVID-hourly rate” when lodging your upcoming 2019-20 tax return.

Individuals can also choose to deduct working from home expenses using the pre-existing methods, which may prove to be more tedious.

• The actual cost method: individuals claim the actual portion of running expenses incurred for work by keeping a diary that details the work portion of your household running expenses. This can include receipts and documents supporting your claim.

• The fixed-rate method: a fixed rate of 52 cents per hour worked can be claimed. This applies for electricity and decline in furniture expenses, but the actual work-related portion of expenses must be calculated for phone and internet costs, the depreciation of office equipment and computer consumables and stationery.

Expenses such as rent, mortgage and insurance cannot be claimed unless you have a permanent home office.

For more information chat to your LT tax accountant.

May 5, 2020
JobKeeper: what to do now

Most businesses have now determined their eligibility for the JobKeeper payment, but with the scheme about to commence, the questions are turning to what steps are next to administer the claim.

The ATO has clarified the process to claim for eligible businesses. The steps include:

• Register your interest and subscribe for JobKeeper payment updates through the ATO website.

• Continue to pay eligible employees at least $1,500 each per fortnight (the first JobKeeper fortnight is from 30 March to 12 April), or make a single combined payment of $3,000 by the end of the month.

• Notify eligible employees of your intention to claim JobKeeper payments and confirm that they are not also claiming the payment through another employer.

• Provide nominated employees with the JobKeeper employee nomination notice to complete before the end of April if you intend to claim JobKeeper payment for April.

• Enrol for the JobKeeper payment on or after 20 April 2020 through the ATO’s Business Portal.

• Fill out the online form with your bank details and entitlement claims based on business participation, e.g. sole traders.

• State number of employees who will be eligible for the first two JobKeeper fortnights (30 March -12 April and 13 April – 26 April).

Despite providing undeniable benefits, the JobKeeper scheme also presents risk. Cash flow risks can occur because businesses must ensure all eligible employees are paid a minimum $1,500 per fortnight to all nominated employees. To receive the first payment in May 2020, employees must have been paid the minimum from 30 March 2020. In addition, employers who apply for the scheme but fail to pay their eligible employees may face penalties up to $126,000 for individual employers, or $630,000 for corporations as a breach of the Fair Work Act.

The ATO is also closely monitoring businesses seeking to profit from the scheme. Remedies that are available include clawing back funds (with interest) which it deems to be improperly paid. They will also require monthly reports of current and projected sales as part of the compliance process with the JobKeeper scheme.

For more information about JobKeeper chat with your LT accountant.

April 23, 2020