If you ’re looking to claim a deduction for assets purchased for your business, the $150,000 instant asset write-off threshold has been extended to 31 December 2020. This means, if eligible, you can claim an immediate deduction for the business portion of an asset first used or installed ready for use from 1 July to 31 December 2020, in your 2020-21 tax return.

If the asset was first used or installed ready for use between 12 March to 30 June 2020, and your business is eligible, you can include it as an immediate deduction in you 2019-20 tax return.

Eligibility depends on:

• aggregated turnover of less than $500 million
• the date you purchased the asset
• when the asset was first used, or installed, ready to use
• the cost of the asset being less than the $150,000 threshold.

If you decide to use the simplified depreciation rules, the instant asset write-off applies to all eligible assets you own. Exclusions and limits apply in certain instances, e.g, passenger vehicles.

Instant asset write off for eligible businesses

The ATO has announced So if your business has a lease agreement with your SMSF for its premises / property being forced to pay market rent at while being impacted by Coronavirus is one less thing for business owners to worry about.

ATO Announces SMSF Rent Relief

The ATO has announced that it will allow SMSFs that have a lease agreement in place with a related-party business tenant to temporarily reduce rent due to the business and economic impact of Coronavirus / COVID-19. ATO will not be taking compliance action for the 2020 and 2021 financial years where an SMSF provide rent relief to a related party business leasing commercial property from the fund.

The following has been provided from the ATO on their website in regards to SMSF Rent Relief COVID-19 Temporarily Reducing Rent:

ATO said, we understand that during the extreme business and economic conditions relating to COVID-19, many businesses would have already stopped paying their SMSF landlord rental under their current lease agreement to help ensure their survival of their business.  This announcement on the ATOs approach to SMSF rent relief is welcomed and provide some minor, but potentially important relief for SMSFs trustees that have a rental agreement in place with a related party business or company.

SMSF Rent Abatement Periods

It will be possible for an SMSF landlord to provide rent relief (such as a rent free period) under their lease agreement provided the SMSF can establish it is in the best interests of the SMSF. The specific adjustments to the rental agreement between the SMSF and the related party business tenant will depend on:

• the circumstances of each business tenant, including its cash flow, operations and the restrictions imposed by COVID-19
• the terms of the existing lease
• the property the subject of the lease, including its location and the ability for it to be leased to another tenant
• comparative rent relief (and other incentives) being offered by arm’s length landlords.

Because of the seriousness of the SIS Act compliance risks, obtaining sufficient evidence to justify the rent relief (or other incentive) will be vital. It is also essential the new arrangement is properly documented.

It’s extremely important that SMSF trustees document and provide evidence of their decisions to provide their related party business SMSF rent relief as this will be utilised by the independent auditors of the fund to determine whether the SMSF rent relief is appropriate and at arms-length for the situation.

SIS Act compliance issues

The following has been provided by Cooper Grace Ward: SMSF landlords: can you agree to COVID-19 rent relief?

An SMSF that provides rent relief (or other incentives), risks breaching a number of SIS Act compliance provisions, including the following:

• Sole purpose test – as the reason for offering the rent relief (or other incentive) could be viewed as to assist the tenant, not increasing the retirement benefits of the SMSF members.
• Financial assistance – as the rent relief (or other incentive) will provide a financial benefit to the member or relative personally (either directly or indirectly) outside the SMSF.
• Arm’s length dealing – as it could be difficult to establish the SMSF is dealing with the tenant in the same manner as they would an unconnected tenant

A strict interpretation of these rules requires the SMSF to enforce the terms of an existing lease, including taking all necessary steps to collect the full rent payable, potentially down to taking possession or enforcement action. This is the case even if this would have a detrimental impact on the tenant or the members (personally).

Standard provisions in leases regarding the ability to amend the lease term and charging interest on rent shortfalls, will not help the SMSF overcome the potential SIS Act compliance consequences.

If rent relief (or other incentive) is provided without obtaining sufficient evidence or properly documenting the arrangement, there is a high risk of the ATO taking adverse action against the SMSF, such as administrative penalties of up to $12,600 per breach per trustee or non-compliance.

It is critical that rent relief (or other incentive) is not provided by an SMSF without them first obtaining proper advice in relation to the SIS Act compliance consequences.

The above case is related to whether a working holiday maker was required to pay tax at the minimum 15 per cent tax rate, applying to working holiday maker income, or at the rates that otherwise apply more generally to Australian residents.
Earlier this year, the Federal Court ruled the government’s working holiday maker tax invalid, stating that the tax was a “form of discrimination based on nationality”.

Catherine Addy, who the case was mounted on behalf of, came to Australia on a working holiday visa in 2015, and worked in various roles in the hospitality industry before returning to the UK in 2017.
The Tax Office hit her with a tax bill for her work in Australia, which she disputed as part of the case.
It was argued that Ms Addy was in fact a resident for tax purposes because she lived at a permanent address, and therefore should not have been taxed as a working holiday maker. The judgement means she will be entitled to a refund of more than $2,200.

The ATO announced this week that it will continue to administer the working holiday maker income tax rates in line with current practice until the appeals process is exhausted.
“Employer obligations have not changed and employers should apply the PAYG withholding tax rate in accordance with their employees Tax File Number declaration,” the Tax Office said.
“If a worker identifies themselves as an Australian resident for tax purposes, and our records indicate they are a working holiday maker, we will notify both the employer and worker of their working holiday maker status and advise them to apply the relevant tax rate.”
It advised working holiday makers, who may potentially be entitled to a refund, to wait until the appeal has been decided before seeking a refund, amending their return or objecting.

The ATO assured that working holiday makers will not be disadvantaged in such circumstances as they will be able to lodge an amendment request with the commissioner at a later time.
In the event that a taxpayer’s amendment period has expired, the commissioner will give favourable consideration to any requests to extend the time for lodgement of an objection.

The Court’s decision and any appeal is limited to working holiday makers from Chile, Finland, Germany, Japan, Norway, Turkey and the UK; who also qualify as residents of Australia for tax purposes.

A former TV presenter and beauty queen,  has been accused of failing to register for GST and lodge BAS despite flipping properties for profit.
According to the ATO, beauty queen was knowingly carrying on an enterprise, Semco Developments Pty Ltd, as a property development company to purchase, renovate and sell houses, and has dishonestly evaded paying over $1.7 million in GST.
“This wasn’t a one-off property sale; this is a case of someone deliberately carrying on an enterprise without meeting their tax obligations,” assistant commissioner Ian Read said.
“People like this are obtaining an unfair advantage over Australians who are doing the right thing and robbing the Australian economy of revenue that could have been spent on essential services. Tax crime is not victimless and we will not tolerate when people try to cheat the tax system.”

The Tax Authority reported that between 2005 and 2011, she purchased, developed and sold 10 luxury properties in Toorak, Portsea and Caulfield North for profit. She sold these properties for more than $20 million and made a total profit of more than $4.4 million.

She claimed the properties were for personal use, but according to the ATO she should have been registered for GST, lodging business activity statements (BAS) and reporting the property sales.

“If you are buying, selling or developing a property that isn’t your primary residence, you have tax obligations,” Mr Read said.

Beauty was convicted of 10 offences of dishonestly causing a loss to the Commonwealth contrary to section 135.1 (5) of the Criminal Code (Commonwealth).

The Australian Taxation Office (ATO) has revealed that it will be requesting a further five years’ worth of policy information from over 30 insurance companies about taxpayers who own marine vessels, thoroughbred horses, fine art, high value motor vehicles and aircraft.
The ATO expects to receive information about assets owned by around 350,000 taxpayers from 2015-16 to 2019-20 as part of its data-matching program.
Insurers will be required to provide the ATO with detailed policy information where the value of assets is equal to or exceeds the following thresholds:
•    Marine vessels – $100,000;
•    Motor vehicles – $65,000;
•    Thoroughbred horses – $65,000;
•    Fine art $100,000 – per item; and
•    Aircraft – $150,000.
According to the Tax Office, information provided by insurers will be used as part of its compliance profiling activities.
Deputy commissioner Deborah Jenkins said knowing who owns these lifestyle assets helps the agency get a more complete picture about the actual financial situation of taxpayers as compared with what is reported on tax returns.
“If a taxpayer is reporting a taxable income of $70,000 to us but we know they own a $3 million yacht then this is likely to raise some red flags,” Ms Jenkins said.
“Regardless of your level of wealth, we all need to pay the correct amount of tax, and this data will allow us to ensure those people who can afford these kinds of items are doing the right thing, along with everyone else.