Reading this may save you tax and save you a lot of stress as a business owner. Between now and 30 June 2021, there are certain areas that we know you need our assistance with, and we want to raise these now so you can plan for them to occur in a specific order. To make it easier, we have combined all the key actions into our "2021 Year End Game Plan" approach outlined below. REDUCING YOUR TAX + PLANNING FOR YOUR TAX PAYMENTS Here is the order of the key tax planning services we recommend for you over the coming months: In May and June 2021 , we can provide you with a Tax Planning Report that will give you specific actions to reduce your tax, including the best way to spread business profits across family members to keep your overall group tax rate as low as legally possible. We'll update this, if necessary, with anything new from the 2021 Federal Budget. Based on our Tax Planning Report, we can then prepare your 2021 Trust Distribution Resolution for any Discretionary Trusts or Family Trusts that you have. You need to sign these before 30 June 2021 or the ATO may tax your Trust at the highest rate of 47% on any trust profits. In July 2021 we will prepare a TaxFlow Plan for you. The important report will outline your next 18 months of tax payments for all individuals and entities in your group – summarised in a cashflow format with totals. This makes it so much easier for you to plan for your tax payments, and discuss with us your options for reducing any PAYG instalments that the ATO may automatically assess for you. FBT – REDUCE ATO AUDIT PERIOD + FINALISING YOUR 2021 STP INFORMATION Here is the order of the key Fringe Benefits Tax (FBT) services we recommend for you over the coming months: In May 2021 we strongly recommend that we prepare 2021 FBT Return (including employee declarations) and lodge a 2021 FBT Return for you, even if it has NIL FBT payable. This restricts the ATO to a 3 year FBT audit period – otherwise the ATO can go back an unlimited number of years to audit your business for FBT. Nothing like having peace of mind! Prior to 14 July 2021 , you will be able to use the "reportable benefit" summary information included in our 2021 FBT Report to include for each employee in your Single Touch Payroll (STP) year end finalisation declaration. This information is required by the ATO so that it can be included in your employee's year end Income Statements. 2021 Tax Planning Report Our advice will help you to: Reduce your tax payable Work out the best way to distribute business profits to your family Have the information needed to prepare your Trust Distribution Resolutions Understand what your next 18 month's tax payments are and when they are due Lodgement of 2021 Fringe Benefits Tax Return If we prepare and lodge your 2021 FBT Return, then the length of time the ATO can audit you for FBT purposes is limited to just 3 years. By limiting this potential ATO audit period to just 3 years, the risk to your business of having to pay large amount of FBT and penalties in the future is vastly reduced. If anything in this update is urgent for you, please feel free to contact Collins Hume in Ballina or Byron Bay immediately for assistance.

To protect older Australians, the Government has moved to formalise 'granny flat arrangements' by providing an incentive to protect all parties in the arrangement. Typically, granny flat arrangements occur when an older person transfers some sort of consideration (often title to property or proceeds from the sale of property) to their adult child in exchange for the promise of ongoing care, support and housing. In some circumstances, it's a way for a parent to give their children access to their inheritance when it's needed not at a later point when the person dies. However, a 2017 Australian Law Reform Commission report highlighted the potential for elder abuse where granny flat arrangements fall apart. If the relationship breaks down, or other unforeseen circumstances arise, the older person can be left homeless. A central problem is a lack of formality in these arrangements. The tax system, in particular, the capital gains tax (CGT) system, acts as a disincentive to formalising a granny flat arrangement. Under the current rules, if a granny flat arrangement if formalised, this can lead to an upfront tax liability for the homeowners . Also, the children can potentially lose part of their main residence exemption when the parent pays for the right to live in the home depending on how the arrangement is structured. If the arrangement is left informal, and the money paid by the parent is merely a gift, the main residence exemption is generally unaffected. Recently released exposure draft legislation seeks to overcome the disincentive to formalising a granny flat arrangement by providing a CGT exemption. This does not mean that every separate dwelling built out the back of a house will have a CGT exemption. The legal meaning of granny flat is derived from social security law; it describes an arrangement rather than a type of accommodation and can arise whenever money or other consideration is given in exchange for a right to use the accommodation for life. The draft legislation provides that no CGT event will arise from a granny flat arrangement where certain conditions are met including where the individual with the granny flat arrangement has: Reached pension age or has a disability, and That the arrangement is in writing and is not of a commercial nature. Tax can be a major cost to your business. We work in partnership with you to minimise your tax and help you achieve your key objectives. Contact Collins Hume's tax specialists in Ballina or Byron Bay on 02 6686 3000.

Australia is facing a shortage of skilled labour. When the supply of staff dry up the focus often turns to retention. But the first step is to understand why people you want to stay, choose to move on? Very few people will reveal the whole truth about why they leave an employer. Partly they don't want their previous employer to think badly of them, they don't want to hurt anyone's feelings, and for others, it's just not worth getting into it. However, there is almost always a catalyst for change. It might not always be the employer but it is very rare that it is "just time". Change in leadership - Leadership vacuum or concern about the impact of the change. Work not challenging - This is the classic reason for leaving that is behind the "it's just time" comment. The employee feels as if the company has nothing left to offer. Conflict with a supervisor - Your business can have the best retention policies and strategies in place but a conflict between Manager and subordinate is immediate and damaging. Change in company dynamics - Each company is generally made up of smaller sub groups. These might be based on age, gender, professional status or cultural identity. The loss of a popular team member from one of these groups will be more deeply felt by their subgroup. Unfavourable change in responsibilities - Changes in team structures, reallocation of resources or taking on new assignments that are not within the skills set or comfort level of the employee. Life work balance issues - Retention is about mutual respect for priorities. The employer respecting the employee's personal responsibilities and employees recognising that they have corporate responsibilities. Both need to be fulfilled. Poor recruitment - Professional or cultural misfits. Ever hired Mr Right now rather than Mr Right? Lack of recognition for perceived value - Overlooked for opportunities held out but not delivered. Sometimes, it's not all bad. We've all had them; that employee who is the cultural and professional misfit. Decisive action when there is a poor fit can improve team morale. Collins Hume Accountants and Business Advisers | Ballina & Byron Bay NSW | Ph 02 6686 3000

Key changes from 1 July 2021 to be aware of Changes to increase the super guarantee to employees and changes to single touch payroll (STP). Please read this 2-minute article to ensure you keep up to date with everything tax-related that affects you. Also, as a business owner there are many obligations that you need to consider and action just before and after 30 June each year. Some of these will help to minimise your tax. Others will reduce your exposure to an ATO tax audit. We have outlined these key areas below to assist you: Brief summary of key dates and actions over the next 2 months Key changes you need to be aware of Your 2021 End of Financial Year Reminders and Actions Please carefully consider this information and contact us immediately if you have questions we can answer or if we can assist. ACTION REQUIRED + UPDATES Pre 30 June 2021 Trusts: Trustee resolutions need to be in place to be able to distribute trust income for the2021 financial year to beneficiaries and avoid being taxed at default tax rates. Companies: Review shareholder loan accounts and make minimum loan repayments (may need to declare dividends). Employee Superannuation: Pay this 24 June 2021 to deduct contributions in the current financial year. Please note that your super payment must clear your bank account by 30 June2021 for it to be a tax deduction in 2021. Complete a stocktake where required. Write off bad debts and scrap any obsolete stock or plant and equipment. Ensure any inter-entity management fees have been invoiced in your accounting system with proper Agreements in place. 1 July 2021 Companies: Tax rate for base rate entities reduces from 26% to 25%. Employee Superannuation: Super guarantee rate increases from 9.5% to 10%. Single Touch Payroll: Commences for "closely held" employees (family members, Directors, etc). Professional Firms: New guidance applies for tax treatment on profits of professional services firms. 14 July 2021 (on or before) Single Touch Payroll Finalisation Declarations need to be made by 14 July 2021 (extensions can apply for "closely held" payees). 28 July 2021 Quarterly super guarantee payment due (1 April – 30 June 2021). 28 August 2021 Taxable payments annual report due for payments to Contractors. Key changes to be aware of Superannuation Guarantee Increases to 10% This is the biggest change that will affect you this year. From 1 July 2021, the Superannuation Guarantee rate will increase from 9.5% to 10%. It is planned to increase by 0.5% each year until it reaches 12% on 1 July 2025. If any employees who are paid wages or salary plus superannuation, then their take home pay will remain the same and the 0.5% increase will be added to their superannuation payments. ACTION STEP: All employers will need to give immediate action to managing this increase, and they will need to factor in this increase to their cash flow planning for 2022. Single Touch Payroll Changes From 1 July 2021, amounts paid to employees who are called "closely held" payees will need to be reported through STP. If you're a small employer you can report these amounts on or before each payday, or you can choose to report this information quarterly. All other employees need to be reported on or before each pay day. A closely held payee is an individual directly related to the entity from which they receive payments (eg. a family member, a Director of a company or a beneficiary of a Trust). Company Tax Rate Reduction From 1 July 2021, the company tax rate for base rate entities will reduce from 26% to 25%. This will also reduce the maximum franking rate that applies to dividends paid by base rate companies. Profits of Professional Service Firms The ATO has released draft guidance (PCG 2021/D2) that is planned to begin from 1 July 2021. This is designed to prevent structures being set up to divert income away from professionals and reducing their tax. The draft guidance includes a series of tests to identify a professional's risk level, looking at the structure of the business and how its profits are distributed, and whether the structure has any high risk features. ACTION STEP: All professional service firms (eg. doctors, medical specialists, architects, etc) will need to review their existing structure and possibly make changes from 1 July 2021. Some arrangements that were previously considered low risk may now fall into a higher risk zone. Please carefully consider this information and contact Collins Hume on 02 6686 3000 immediately if you have questions we can answer or if we can assist.

ATO Payment Deferrals We can liaise with the ATO and negotiate a deferral or repayment plan if you are having trouble paying any ATO liabilities. Please contact us immediately if you would like our assistance with this. Single Touch Payroll If you are reporting payments to employees to the ATO using Single Touch Payroll (STP), most businesses will need to lodge a STP Finalisation Declaration with the ATO by 14 July 2021. Employees will be able to access their Income Statement through their MyGov account. Small businesses with 19 or less employees and that employed family members were due to start reporting these employees (known as "closely held") through Single Touch Payroll (STP) from 1 July 2020. However, due to COVID-19 the start date of this has been extended to 1 July 2021. Your small business can start voluntarily using STP earlier than this date. All other employees should now be reported through STP. Reportable Fringe Benefits Where you have provided fringe benefits to your employees more than $2,000, you need to report the FBT grossed-up amount. This is referred to as a `Reportable Fringe Benefit Amount' (RFBA) amount, and it needs to be updated for each employee as part of your Single Touch Payroll finalisation procedure for 2021. Stocktake We can liaise with the ATO and negotiate a deferral or repayment plan if you are having trouble paying any ATO liabilities. Please contact us immediately if you would like our assistance with this. Businesses that buy and sell stock generally need to do a stocktake at the end of each financial year as the increase or decrease in the value of stock is included when calculating the taxable income of your business. If your business has an aggregated turnover below $10 million, you can use the simplified trading stock rules. Under these rules, you can choose not to conduct a stocktake for tax purposes if the difference in value between the opening value of your trading stock and a reasonable estimate of the closing value of trading stock at the end of the income year is less than $5,000. You will need to record how you calculated the value of trading stock on hand. If you do need to complete a stocktake, you can choose one of three methods to value trading stock: Cost price – all costs connected with the stock including freight, customs duty, and if manufacturing, labour and materials, plus a portion of fixed and variable factory overheads. Market selling value – the current value of the stock you sell in the normal course of business (but not at a reduced value when you are forced to sell it). Replacement value – the price of a substantially similar replacement item in a normal market on the last day of the income year. A different basis can be chosen for each class of stock or for individual items within a particular class of stock. This provides an opportunity to minimise the trading stock adjustment at year-end. There is no need to use the same method every year; you can choose the most tax effective option each year. The most obvious example is where the stock can be valued below its purchase price because of market conditions or damage that has occurred to the stock. This should give rise to a deduction even though the loss has not yet been incurred. Trust Distribution Resolutions Trustees (or directors of a trustee company) need to consider and decide on the distributions they plan to make by 30 June 2021at the latest. Decisions made by the trustees should be documented in writing, preferably by 30 June 2021. If valid resolutions are not in place by 30 June 2021, the risk is that the taxable income of the trust will be assessed in the hands of a default beneficiary (if the trust deed provides for this) or the trustee (in which case the highest marginal rate of tax would normally apply). ACTION STEP: If you haven't already signed your Trust Distribution Resolution for each Trust you have, please contact our office before 30 June 2021 so that we can properly prepare this document for you to sign. Div 7a Loan Agreement Minimum Repayments When a company makes a loan to a shareholder or an associate of a shareholder, a Loan Agreement needs to be entered into and minimum annual repayments for the loan need to be made before 30 June each year. If these steps aren't taken, then the loan amounts are treated as a deemed unfranked divided and are taxable at the taxpayer's marginal tax rate – which could be as high as 47%. ACTION STEP: Ensure that you have made all minimum repayments for any Div7A Loans that you have before 30 June 2021. Please contact us immediately if you are unsure of this, as you may need to declare a dividend from the company before 30 June 2021 to assist with your minimum annual loan repayment. Reporting Payments to Contractors A "Taxable Payments Annual Report" (TPAR) is due for lodgement with the ATO by 28 August 2021 for the following industries: Building and construction services Cleaning services Courier services Road freight services Information technology (IT) services – including software development Security, investigation or surveillance services Mixed services (providing one or more of the services listed above) This report includes a listing and total of all payments and non-cash benefits made to contractors during the year. Payroll Tax Payroll tax applies to all entities that have an Australian payroll that exceeds state-based limits. You should note that in addition to normal salaries and wages, the following items are generally also included in payroll expenses if payroll tax applies: fringe benefits based on the grossed-up taxable value of fringe benefits; all employer contributions to superannuation on behalf of employees; and some contractor or sub-contractor fees. For more detailed information about whether payroll tax applies to your business, please contact our office. ACTION STEP : The Annual Return/Reconciliation for payroll tax must be lodged by 21 July 2021 (Queensland, Victoria, Northern Territory, Tasmania and WA) or by 28 July 2021 (NSW and South Australia) with your State Revenue Office. WorkCover/WorkSafe Your WorkCover/WorkSafe insurer sends an annual reconciliation to all registered employers at the end of the financial year. In completing your annual reconciliation, you will need to include the following items in addition to normal salaries and wages: fringe benefits based on the taxable value of fringe benefits (do not gross-up); all employer contributions to superannuation on behalf of employees; and some contractor or sub-contractor fees. For more detailed information about what items to include in the reconciliation statement, please contact our office. Once the reconciliation is received and processed by your WorkCover/WorkSafe insurer, you will be issued with a final assessment or a refund depending on the instalments you have paid during the year. ACTION STEP: Complete and lodge the Annual Reconciliation with your WorkCover/WorkSafe insurer by the due date. Goods and Services Tax (GST) A reconciliation of GST should be performed as at 30 June 2021 to determine if there has been an under or over-payment of GST in the 2021 tax year. If a discrepancy has arisen, then it is possible to adjust a subsequent Business Activity Statement (BAS) to rectify the error, however there are limits imposed on adjustments that can be made in this way. Income declared on your BAS should be reconciled to income declared on your income tax returns. Also, please note that you are required by law to substantiate all Input Tax Credit claims with a complying Tax Invoice, and you need to retain these documents for a minimum of 5 years. ACTION STEP: Complete the annual GST reconciliations, and check that you have all required tax invoices and other supporting documents. ATO Audit Activity Please note that the ATO and State Revenue Office are constantly increasing their audit activities. There has been an increase in audit activity for PAYG Withholding, Payroll Tax, WorkCover, GST, Division 7A loan accounts from companies, and Trust distributions from Discretionary Trusts. We can offer a review of your records and record-keeping procedures if you are concerned about your ability to satisfy an audit. ACTION STEP: Please contact our office if you would like to request this service. 8 Last Minute Tax Minimisation Tips Here are some final reminders about ways to reduce your tax for 2021: Write-off Bad Debts in your computer system before 30 June 2021 Write-off any trading stock that is damaged or obsolete Review your Asset Register and scrap any obsolete plant and equipment Pay for marketing materials, repairs, consumables, office stationery, and donations before 30 June 2021 Ensure employee superannuation contributions are made and received by your employees' superannuation fund/s by 30 June 2020 to allow a tax deduction this 2021 financial year Realise any capital losses you have before 30 June 2021 to offset against any capital gains you may have made Pass a properly authorised resolution to commit to the payment of a Director's Fee or employee bonus before 30 June 2021, even if it paid within a reasonable time after 30 June 2021 Raise management fees between entities by 30 June 2021 and ensure that you have a signed Management Fees Agreement / Services Agreement in place to support the transaction and to ensure they are commercially reasonable. Do You Need Any Assistance from Us? Feel free to contact our office anytime by phone in Ballina or Byron Bay on 02 6686 3000 or email us - we're here to help.

On 1 July 2021, the Superannuation Guarantee (SG) rate will rise from 9.5% to 10% - the first rise since 2014. It will then steadily increase each year until it reaches 12% on 1 July 2025. The 0.5% increase does not mean that everyone gets an automatic pay increase, this will depend on your employment agreement. If your employment agreement states you are paid on a 'total remuneration' basis (base plus SG and any other allowances), then your take home pay might be reduced by 0.5%. That is, a greater percentage of your total remuneration will be directed to your superannuation fund. For those paid a rate plus superannuation, then your take home pay will remain the same, but your superannuation fund will benefit from the increase. If you are used to annual increases, the 0.5% increase might simply be absorbed into your remuneration review. Employers will need to ensure that they pay the correct SG amount in the new financial year to avoid the superannuation guarantee charge. Where employee salaries are paid at a point other than the first day of the month, ensure the calculations are correct across the month (i.e., for staff paid on the 15th of the month they are paid the correct SG rate for June and July in their pay and not just the June rate). Superannuation salary packaging arrangements will also need to be reviewed – employers should ensure that the calculations are correct and the SG rate increase flows through. Annual superannuation guarantee rate changes Date SG rate 1 July 2020 – 30 June 2021 9.5% 1 July 2021 – 30 June 2022 10% 1 July 2022 – 30 June 2023 10.5% 1 July 2023 – 30 June 2024 11% 1 July 2024 – 30 June 2025 11.5% 1 July 2025 – 30 June 2026 12% New stapled superannuation employer obligations for new staff Currently, when an employer hires a new staff member, the employee is provided with a Choice of Fund form to identify where they want their superannuation to be directed. If the employee does not identify a fund, the employer directs their superannuation into a default fund. When someone has multiple funds, it often erodes their balance through unnecessary fees and often insurance. And, as at 30 June 2020, there was $13.8 billion of lost and unclaimed superannuation in accounts across Australia. From 1 July 2021, where an employee does not identify a fund, legislation before Parliament will require the employer to link the employee to an existing superannuation fund. That is, an employee's superannuation fund will become 'stapled' to them. An employer will not simply be able to set up a default fund, but instead will be required to request that the ATO identify the employee's stapled fund. If the ATO confirms no other fund exists for the employee, contributions can be directed to the employer's default fund or a fund specified under a workplace determination or an enterprise agreement (if the determination was made before 1 January 2021). Legislation enabling this measure is currently before the Senate. Single touch payroll reporting Single touch payroll will apply to most businesses from 1 July 2021, this will include small businesses (those with 19 or fewer staff) and businesses with closely held employees (e.g., directors of family companies, salary and wages for family employees of businesses). No further extensions will be granted. For employers with closely held employees, there are some concessions on how reporting is managed with the option to report one of three ways: reporting actual payments in real time, reporting actual payments quarterly or reporting a reasonable estimate quarterly. These concessions allow a level of flexibility in relation to determining and making payments to closely-held payees. However, if your business is impacted, it will be important to plan throughout the year to prevent problems occurring at year end. If anything in this update is a priority for you, please feel free to contact Collins Hume in Ballina or Byron Bay immediately for assistance.

Major new COVID-19 support package to help NSW businesses The NSW Government has announced a major new grants package and Dine & Discover changes to help small businesses and individuals across NSW impacted by the current COVID-19 restrictions. The package includes grants of between $5,000 and $10,000 for small businesses, payroll tax deferrals for all employers, an extension of the Dine & Discover program to 31 August 2021 and the ability for people to use Dine & Discover vouchers for takeaway delivered directly to their home by the venue itself. The centrepiece of the package is the small business support grants which will help businesses by alleviating cashflow constraints while trading is restricted. This can be used for business expenses such as rent, utilities and wages, for which no other government support is available. Three different grant amounts will be available for small businesses depending on the decline in turnover experienced during the restrictions: $10,000 for a 70% decline $7,000 for a 50% decline, and $5,000 for a 30% decline. Unfortunately businesses continue to incur costs such as rent, power and lost produce whilst the current restrictions are in place. The new grants will be available across NSW and available to sole traders and non-profit organisations, with expanded criteria to assist most hospitality and tourism operators impacted by COVID-19 restrictions during the school holiday period. Businesses will be able to apply for the grants through Service NSW from later in July and will need to show a decline in turnover across a minimum two-week period after the commencement of major restrictions on 26 June 2021. Business grants will be divided into two streams: 1. Small Business COVID-19 Support Grant Available to businesses and sole traders with a turnover of more than $75,000 per annum but below the NSW Government 2020-21 payroll tax threshold of $1,200,000 as at 1 July 2020. These businesses must have fewer than 20 full time equivalent employees and an ABN registered in NSW or be able to demonstrate they are physically located and primarily operating in NSW. 2. Hospitality and Tourism COVID-19 Support Grant Available to tourism or hospitality businesses that have a turnover of more than $75,000 and an annual Australian wages bill of below $10 million as at 1 July 2020. These businesses must have ABNs registered in NSW or be able to demonstrate they are physically located and primarily operating in NSW. NB: Full criteria for both streams will be available in coming days on the Service NSW website. Other key elements of the announced package Dine & Discover vouchers will be able to be used for takeaway from eligible and registered Dine businesses during the restriction period, but food must be delivered direct to the home by the restaurant or café and not picked up. Dine & Discover vouchers cannot be redeemed for takeaway using third party delivery platforms. A further one-month extension of Dine & Discover vouchers until 31 August 2021 to allow more time to use them. Optional deferral of payroll tax payments due in July 2021 and the deferral of hotel June quarter gaming machine tax, with the Chief Commissioner of State Revenue able to provide for appropriate repayment arrangements on a case by case basis. More information on small business support grants including Dine & Discover program changes will be available on the Service NSW website soon. To prepare a grant application or check proof of identity and auditing requirements, contact the team at Collins Hume on 02 6686 3000. Source: NSW Government

Australia has had its fair share of disasters over the last few years. Drought, bushfires and floods have ramped up the volume of insurance claims. Most people would assume that if and when they need to claim on their insurance, the insurance payout covers the damage and is not income assessed for tax purposes - but this is not always the case. Insurance payouts for damaged or destroyed personal items are generally not taxed. For example, any insurance payout you receive for your family home won't necessarily be taxed. But, the rules are different if you have used your home to produce an income, for example, you have used part of your home as a home business or you have rented out part of your home. The rules are also different if the item is a personal asset costing more than $10,000 or if the asset is a collectible that cost more than $500. Where the insurance proceeds exceed the original cost of the asset, that is, the asset appreciated in value, then capital gains tax might apply. And, if the asset damaged is related to a business or an income producing asset like a rental property, the rules are also different. Business premises, trading stock and depreciating assets For businesses that have had trading stock damaged or destroyed, any insurance payout is taxable. For example, the payouts on claims coming through from the enforced lockdowns for spoiled perishable stock would need to be included in the business's tax return. This is because the insurance premiums would have been claimed by the business as an expense. It is just a question of how the insurance is taxed. If your business premises are damaged and the insurance covers repairs, then the amount you receive is generally taxed as income if you can claim a deduction for the repair costs. Where the premises are damaged or destroyed, then we'll need to work with you to identify if you have made a taxable gain or loss. When it comes to depreciating assets like machinery, then it starts getting more complex. In general, if the insurance payout exceeds the written down value, then the payout is included in the business's assessable income, and if less, you can claim a deduction for the difference. However, there are also special rules for work cars, small businesses, and where a replacement item is purchased. Rental properties A rental property is an income producing asset and, in most cases, the cost of insurance policies relating to the property would have been claimed as an expense. For example, if you receive a payout for your rental property as a result of a disaster, generally, you will need to include at least part of this amount as income in your tax return. This could include insurance payouts for loss of rental income, repairs, replacements of destroyed assets, or money received from a relief fund. The treatment of the insurance proceeds depends on what the payout is for, how the insurance is used, and whether the rental property was vacant or in use. A recent case before the Administrative Appeals Tribunal (AAT) shows how tricky this area of the tax rules can be. In this case, the taxpayer initially received insurance proceeds of $24,000 for lost rental income after their property sustained storm and flood damage. The taxpayer had declared this amount as income. All good so far. Then, the taxpayer received an additional $250,000 from the insurer with the payment described as "in consideration of the taxpayer releasing the insurer from all liability past, present and future under the insurance policy". The taxpayer did not believe this money was for him to repair his property so did not claim it in his tax return. But, he did claim a deduction for repair costs totalling $130,000 in two income years. The ATO subsequently audited the taxpayer and issued an assessment for the full $250,000. The AAT agreed with the ATO even though the taxpayer had only claimed $130,000 in repairs. It's possible this case will go to appeal but it serves as a warning that any lump sum payouts need to be very carefully assessed and dealt with. If you have been impacted by a disaster and are uncertain of how any insurance proceeds will be taxed, please talk with Collins Hume and we can work with you to help you understand your position on 02 6686 3000 (Ballina and Byron Bay).

South East Queensland Floods February 2022 Help for people directly affected by a natural disaster event, such as flooding, in disaster declared areas. The Australian Government Disaster Recovery Payment (AGDRP) is a one-off, non-means-tested payment of $1,000 per eligible adult and $400 per child adversely affected by a major disaster either in Australia or overseas. The AGDRP may be activated when the impact of a disaster on individuals and families requires an additional Australian Government response to support short-term recovery needs. Current status The Australian Government has announced support for people seriously affected by floods in South East Queensland . Claims opened at 1 pm AEST Monday 28 February 2022. The Australian Government has announced support for people seriously affected by floods in NSW. More information will become available. The Australian Government has announced the Disaster Recovery Allowance for people who’ve lost income due to the South East QLD Floods. More information will become available. How to claim There are 3 steps to claim the Australian Government Disaster Recovery Payment. Read all the details at Steps to claim Australian Government Disaster Recovery Payment . Also watch the government websites for any updates as new LGAs are added.

Australian Government Disaster Recovery Payment (AGDRP) of $1,000 per eligible adult and $400 per eligible child is now available for people impacted by a flooding event. Residents in 26 flood-affected local government areas across New South Wales and Queensland can start applying for Commonwealth financial support through Services Australia from 9am today. Eligible residents can claim support via myGov or by calling Services Australia on 180 22 66 Claims for AGDRP and DRA for NSW local government areas will be open at 2pm (AEDT) from 1 March 2022 Affected Queensland local government areas can claim AGDRP from 9am (AEST) and can claim DRA from 1pm (AEST) from 1 March 2022 The DRFA assistance provides grants of up to $180 per person, to a maximum of $900 for a family of five or more. Financial support has now been activated for Northern New South Wales local government areas of Ballina, Bellingen, Byron, Clarence Valley, Coffs Harbour, Kyogle, Lismore, Richmond Valley and Tweed. Queensland residents in Brisbane, Fraser Coast, Gold Coast, Ipswich, Lockyer Valley, Logan, Moreton Bay, Noosa, Redland, Scenic Rim, Somerset, South Burnett, Southern Downs, Sunshine Coast and Toowoomba local government areas are also included. These communities are in addition to the local government areas of Gympie and North Burnett, who became eligible to apply on 28 February 2022. Payments are available in Gympie and North Burnett local government areas and the Queensland Government is responsible for activating these payments. The AGDRP is a one-off, non-means tested payment and is available to eligible people in those affected local government areas who have suffered a significant loss, including a severely damaged or destroyed home or serious injury. Disaster Recovery Allowance The Disaster Recovery Allowance (DRA) will also be provided into the 26 affected local government areas. The DRA assists employees, small business persons and farmers who experience a loss of income as a direct result of a major disaster. This allowance provides for a maximum of 13 weeks payment from the date you have or will have a loss of income as a direct result of a disaster. The DRA payment is set at the maximum equivalent rate of Jobseeker Payment or Youth Allowance, depending on your personal circumstances, and is taxable. Australian Defence Force personnel continue to support the emergency response efforts and will do more once the water recedes and the recovery effort starts. This includes the arrival of the ADF in Lismore to assist NSW. For more information on support available, visit servicesaustralia.gov.au/disaster Source: pm.gov.au

Temporary full expensing enables your business to fully expense the cost of the following in the first year of use: new depreciable assets improvements to existing eligible assets, and second-hand assets Introduced in the 2020-21 Budget and now extended until 30 June 2023, this measure enables an asset’s cost to be fully deductible upfront rather than being claimed over the asset’s life, regardless of the cost of the asset. Legislation passed by Parliament last month extends the rules to cover assets that are first used or installed ready for use by 30 June 2023. Some expenses are excluded including improvements to land or buildings that are not treated as plant or as separate depreciating assets in their own right. Expenditure on these improvements would still normally be claimed at 2.5% or 4% per year. For companies it is important to note that the loss carry back rules have not as yet been extended to 30 June 2023 – we’re still waiting for the relevant legislation to be passed. If a company claims large deductions for depreciating assets in a particular income year and this puts the company into a loss position then the tax loss can generally only be carried forward to future years. However, the loss carry back rules allow some companies to apply current year losses against taxable profits in prior years and claim a refund of the tax that has been paid. At this stage the loss carry back rules are due to expire at the end of the 2022 income year, but we are hopeful that the rules will be extended to cover the 2023 income year as well. How to contact us Start your year-end tax planning now. Contact Collins Hume Accountants & Business Advisers in Ballina on Byron Bay on 02 6686 3000. The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.

COVID-19 test expenses From 1 July 2021, if you're an employee, sole trader or contractor and you pay for a COVID-19 test for a work-related purpose, you can claim a deduction. When you can claim COVID-19 testing From 1 July 2021, to claim a deduction for the cost you incur to pay for a COVID-19 test, you must: use the test for a work-related purpose, such as to determine if you can attend or remain at work get a qualifying COVID-19 test, such as a polymerase chain reaction (PCR) test through a private clinic other tests in the Australian Register of Therapeutic Goods, including rapid antigen test (RAT) kits pay for the test yourself (that is, your employer doesn't give you a test or reimburse you for the cost) keep a record to prove that you incurred the cost (usually a receipt) and were required to take the test for work purposes. You can only claim the work-related portion of your expense on COVID-19 tests. For example, if you buy a multipack of COVID-19 tests and use some for private purposes (such as by other family members or for leisure activities), you must only claim for the portion of the expense you use for a work-related purpose. When you can't claim COVID-19 testing You can't claim the cost of a COVID-19 test where any of the following apply: you use the test for private purposes – for example, to test your children before they return to school or daycare you receive a reimbursement for the expense from your employer or another person you work from home and don't intend to attend your workplace. You also can’t claim a deduction for the travel or parking expenses you incur to get your COVID-19 test because these expenses don't have a sufficient connection to you using a COVID-19 test. Keeping records for COVID-19 tests You need to keep records of COVID-19 tests to demonstrate that you paid for the test and the test was required for work-related purposes. This may include a receipt or invoice, and correspondence from your employer stipulating the requirement to test. If you don't have a record of your expenses before the law changed on 31 March 2022, the ATO will accept reasonable evidence of your expenses. Reasonable evidence is documentation that shows the cost of the test and the requirement to take it for work purposes. This may include: bank and credit card statements a diary or other documents, including receipts, that show a pattern of buying COVID-19 tests after the law change that could reasonably have applied from 1 July 2021. How to contact us We’re available to assist you with tax planning including tax deductions. Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000. Source: ATO