The ATO is paying increased attention to checking the validity of trust distribution minutes.

Points of interest by the ATO include:

1. Profit distribution is made to beneficiaries that are included beneficiaries under the trust deed.
2. If particular categories of income are allocated to different beneficiaries, this streaming of the different categories of income is allowable under the trust deed.
3. Decision is made by the appropriate parties who are actually the trustee/s of the trust or directors of the trustee of the trust.
4. Decision is made in time in accordance with trust law and the trust deed for that particular year. This is normally by 30 June each year unless there is some unusual wording in the trust deed.

To assist us with ensuring that the decision is documented by the trustees and that it is in time, we have this year introduced the drafting of the minutes through the CAS360 software. This software is what we use for maintaining the electronic updating of corporate registers for our client’s companies and trusts.

The CAS360 software also allows us to utilise sending out most of our client’s trust distribution minutes for electronic signing via FuseSign. FuseSign is an electronic method of signing of documents based on each signing parties’ unique email address or mobile. Essentially it means that the trustees will each receive a message with a link to review the documents and if they are in agreement to the distribution minute, it can be approved on the screen with a few clicks.

For our clients whom are receiving trust distribution minutes, please watch out for emails from asic@mgisq.com.au to access these distribution minutes. Please note if you have multiple trusts, you will be receiving a separate email for each trust.

Once all trustees or the sole trustee have signed via FuseSign, we are instantly advised that the trust distribution minutes have been signed for our records.

FuseSign (using the email address noreply@fusesign.com) also sends a signed copy via email to the trustee/s for their records.

Both MGI and the trustee/s will receive a detail report from FuseSign which advises per signing party the exact time and date they confirmed their acceptance to the trust distribution minute. It will mean that we will have these details available if the ATO requests it.

We ask that if you do receive emails from asic@mgisq.com.au that you attend to them promptly to ensure that your trust/s distribution minutes are completed on time.

If you have any questions, please do not hesitate to contact our MGI team at (07) 3002 4800 or asic@mgisq.com.au

As the end of tax year approaches, the Australian Taxation Office (ATO) has announced its 3 key areas of focus for Tax Time 2023. Landlords, those working from home and capital gains tax (CGT) will all be the subject of an ATO crackdown when it comes to tax returns this year. According to ATO Assistant Commissioner Tim Loh, the areas being targeted are due to the high number of common mistakes being made in these areas. With access to the financial information of 1.7 million rental property investors from 17 of the countries largest banks and mortgage lenders, the ATO will be able to use new data matching techniques to crosscheck claims made by landlords in 2023.

The ATO Targets For Tax Time 2023

Rental property deductions

As landlords (and homeowners) feel the pinch from mortgage interest rate hikes, many have been trying to push the boundaries with their claimed deductions. While there are a number of legitimate deductions available on rental properties, it’s vital that you stay within the law and understand what is acceptable and what’s not. As many as 9 out 10 rental property investors made mistakes on their annual tax returns and incorrectly claimed expenses.

The ATO is particularly focused on interest expenses and ensuring owners understand how to correctly apportion loan interest expenses where part of the loan was used for private purposes (or the loan was refinanced with some private purpose).

“You can only claim interest on a loan used to purchase a rental property to earn rental income – don’t forget, if your loan also includes a private expense, such as for a new car or a trip to Bali, you can only claim an interest deduction for the portion relating to producing your rental income,” Mr Loh said.

Work-related expenses

From March 1st taxpayers claiming working from home expenses are required to provide more detailed documentation and calculations. This means you can’t do a copy-paste from last year’s annual return. Previously you could choose from a number of different methods to calculate how much you could claim when working from home. However, as the working landscape changes and more people are working back in the office more frequently, the methods of calculation have changed and there are limits on what you can claim.

The ATO crackdown is particularly focused on ensuring taxpayers understand the changes to the working from home methods and are able to back up their claims.

“Keeping good records will give you flexibility to choose the right method that suits your circumstances and gives you the best deduction this tax time,” Mr Loh said.

Capital gains tax

Do you rent your home out for example on AirBnb or Stayz? Then you may need to pay capital gains tax (CGT). CGT is generally incurred when you dispose of assets such as shares, crypto, managed investments or properties.

The ATO wants to make sure that taxpayers have considered all their assets when calculating capital gains tax as well as apportionment of the main residence exemption if taxpayers have used their property to earn income.

It’s important that you have kept records of the income-producing period and the portion of the property used to produce income to calculate your capital gain.

“Generally, your main residence is exempt from CGT, however if you have used your home to produce income, such as renting out all or part of it through the sharing economy, for example Airbnb or Stayz, or running a business from home, then CGT may apply,” Mr Loh said.

Avoid an ATO Crackdown

By announcing it’s focus areas in advance, the ATO aims to promote fairness, transparency and greater compliance with tax laws through increasing awareness of the issues and providing guidance on how to avoid them.

Outside of these 3 main areas of focus, it has also been reported that income earned from the ‘gig economy’ or side hustles would attract greater scrutiny. This includes ride-share drivers and even social media influencers.

“If you’re running bootcamp sessions in addition to your nine-to-five job, well this is a side hustle and you need to declare this income to the ATO. If you’re an online content creator earning money or receiving gifts, you’re also likely to be running a business and there are tax obligations you need to comply with.” Mr Loh said.

A hobby crosses over to a business when there is an intention to earn a profit and the activity is planned and organised to achieve that goal.

The best way to avoid the issues highlighted as a focus in this ATO crackdown is to work with experienced tax accountants. Please contact the team at MGI if you need any assistance.

The Federal Government is investing $14 million in a centre for emerging Australian-made solutions to energy and emissions challenges. The Powering Australia Industry Growth Centre (PAIGC) aims to grow Australia’s renewables technologies industry and establish Australia as a leader in renewable energy. It will achieve this through:

• increasing the development and adoption of renewable technologies and processes across Australian industries and firms
• increasing domestic demand for renewable technologies
• increasing Australia’s competitiveness in international renewable technologies markets
• upskilling workers to service the renewable technologies industry
• uplifting capabilities of businesses to overcome battery regulatory barriers
• developing domestic end-to-end battery and other renewables supply chains.

Supporting locally developed and manufactured technologies, including batteries, that will help transform the nation into a renewable energy superpower, the plan is focused on creating jobs, cutting power bills and reducing emissions.

The new PAIGC will:

• support businesses looking to locally manufacture renewable technologies and commercialise local ideas
• encourage connection between critical minerals producers and renewables manufacturers
• facilitate partnerships between governments, research institutions, and industry to drive the development and adoption of renewable technologies in Australia
• support businesses in navigating battery regulatory barriers, and
• support First Nations businesses to contribute to the development of renewable technologies through engagement of a First Nations Business Advisor.

The program will run for 4 years until the 2026-27 financial year and Australian industry organisations, research institutions and partnerships with expertise in renewable technology are encouraged to apply for support.

The closing date for grant applications is June 19th 2023 at 5 pm AEST.

More details, including eligibility criteria, can be found on the Powering Australia Industry Growth Centre website.

Please contact the team at MGI if you have any questions or require further information.

The 2023 Federal Budget was announced on Tuesday 9 May 2023, with a focus on cost-of-living relief and modernising our economy. But what does it means for you as a business owner?

There were only a few tax and superannuation changes announced, which is good news. However, no mention was made of the previously announced Stage 3 Income Tax cuts that are planned to begin on 1 July 2024.

There were 2 very important things not mentioned in the 2023 Budget that may affect you as a business owner:

1. With Temporary Full Expensing finishing on 30 June 2023 and its replacement with a Small Business Instant Asset Write-off capped at $20,000, a business that sells or trades in a motor vehicle would have 100% of its sale price included in taxable income in the year it is sold if it fully expensed its purchase in an earlier year.For example, if a business trades in a vehicle (that was fully expensed) for $50,000 and purchases another vehicle for $60,000 in 2024, $50,000 will be included in its taxable income but only a portion of the $60,000 purchase price of the new vehicle will be allowed as a depreciation tax deduction. This may result in significantly higher tax payable by the business compared with previous years.
2. The Low and Middle Income Tax Offset was not extended by the Government. This means individuals who received up to $1,500 in extra tax refunds last year will not receive them again in 2023.

Here is a brief summary of the Budget updates relating to tax and superannuation.

Taxation Changes

Key Change	How This Will Affect You
Temporary Full Expensing is Ending Currently, most businesses that purchase business assets can claim 100% of its price in full, in the year that its purchased and ready for use. This will finish on 30 June 2023.	Purchase Business Assets Before 30 June 2023 If you need to purchase a business asset and have the cashflow to do so, we recommend you purchase it BEFORE 30 June 2023 to be able to claim 100% of its cost in the 2023 year.
Low and Middle Income Tax Offset (LMITO) has Ended The temporary LMITO was introduced in the 2019 Budget and then extended during the COVID-19 pandemic. It resulted in extra tax refunds of between $675 and $1,500 (depending on your level of income) for individuals. The Government didn’t extend the LMITO, so it has ended as at 30 June 2022.	Lower Tax Refund for 2023 Individuals who received an extra tax refund of up to $1,500 in 2022 will not receive it again this year in 2023.
Small Business Instant Asset Write-Off Small businesses, with a turnover of less than $10 million, will be able to immediately deduct the full cost of eligible assets costing less than $20,000 inc. GST that are first used or installed ready for use between 1 July 2023 and 30 June 2024.	Lower Asset Write Off Tax Deductions Compared with prior years, from 1 July 2023 a small business can only claim up to $20,000 inc. GST as an instant write-off. Any assets that cost more than this amount will be added into the small business simplified depreciation pool and depreciated at 15% in the first year and 30% each year thereafter. Remember, this is a tax deduction, and it is not $20,000 cash back to you.
Small Business Energy Incentive The Government is introducing a tax break to help small businesses electrify and save on your energy bills. Businesses with annual turnover of less than $50 million will have access to a bonus 20 per cent tax deduction for eligible assets supporting electrification and more efficient use of energy, from 1 July 2023 until 30 June 2024.	Extra $20,000 Tax Deduction Businesses will be able to make investments like: electrifying your heating and cooling systems upgrading to more efficient fridges and induction cooktops installing batteries and heat pumps. Up to $100,000 of total expenditure will be eligible for the incentive, with the maximum bonus tax deduction being $20,000 per business.
Small Business Tax Lodgement Penalty Amnesty This new amnesty will apply to small businesses with a turnover of less than $10 million to encourage them to re-engage with the tax system.	No Penalties for Certain Overdue Tax Lodgements A small business will not be charged failure-to-lodge penalties for outstanding tax lodgements that are lodged between 1 June 2023 and 31 December 2023 that were originally due between 1 December 2019 to 29 February 2022.
Pay As You Go (PAYG) Instalments Uplift Factor If you pay PAYG instalments towards next year’s tax, the Government bases these payments on last year’s tax increased by GDP “uplift”. The Government was happy to announce this GDP uplift for 2024 is only 6% and not the legislated 12%.	Plan for Higher PAYG Instalments in 2024 The 6% uplift for your 2024 PAYG tax instalments is higher this year due to high inflation. If you continue to make good business profits with tax to pay, you will need to plan for slightly higher PAYG instalments in 2024.

 

Superannuation Changes

Key Change	How This Will Affect You
Extra Tax on Super Account Balances Above $3 million The Budget confirmed the Government’s intention to apply an additional 15% tax on total superannuation balances above $3 million from 1 July 2025.	Extra Super Earnings Tax to Pay If your super member balance is less than $3 million, then this won’t affect you. If it is more than $3 million from 1 July 2025, then your super will be taxed 30% on its earnings, up from the current rate of 15%.
Super Payable by Employers on Pay Day Currently, employers must make employee superannuation payments quarterly. From 1 July 2026, employers will be required to pay their employee’s superannuation at the same time as they pay their salary and wages.	Plan for this Additional Cashflow Requirement While this won’t begin for 3 years, you need to be aware of this and factor this into your future cashflow planning.

 

To get the maximum benefits from the new measures announced in the 2023 Federal Budget, please contact us immediately to book in your 2023 Tax Planning meeting with us. We also have a federal budget 2023 overview for individuals.

Here is a brief summary of the Federal Budget 2023 updates relevant for individuals:

• The Low and Middle Income Tax Offset was not extended by the Government. This means individuals who received up to $1,500 in extra tax refunds last year will not receive them again in 2023.
• Increasing JobSeeker: Income support payment base rates will be increased by $40 per fortnight from 20 September 2023.
• Expanded Eligibility for JobSeeker: The minimum age for which older people qualify for the higher JobSeeker payment rate will be reduced from 60 to 55 years.
• Energy Price Relief: The $1.5 Billion Energy Bill Relief Fund will deliver $500 rebates to 5 million low-income households.
• Single Parent Payment Increase: An estimated 57,000 single parents will also be able to claim the Single Parent welfare payment benefit from September 2023, with the Government lifting the eligibility age for the youngest child in a family from 8 to 14 years.
• PAYG Instalment Uplift: If you pay PAYG instalments towards next year’s tax, the Government bases these payments on last year’s tax increased by GDP “uplift”. The Government was happy to announce this GDP uplift for 2024 is only 6% and not the legislated 12%. You may need to plan for higher PAYG instalment payments in 2024.

Superannuation

• Increased Tax on Super Earnings: The Budget confirmed the Government’s intention to apply an additional 15% tax on total superannuation balances above $3 million from 1 July 2025. If your super member balance is less than $3 million, then this won’t affect you. If it is more than $3 million from 1 July 2025, then your super will be taxed 30% on its earnings, up from the current rate of 15%.

To get the maximum benefits from the new measures announced in the 2023 Federal Budget, please contact us immediately to book in your 2023 Tax Planning meeting with us. We also have a 2023 Federal Budget overiew for business owners.

The Queensland Government has released the details of round 5 of the Business Growth Fund grant program. The Business Growth Fund (BGF) targets high-growth businesses who can accelerate growth, drive Queensland’s economy and employ more Queenslanders.

It is open to small to medium sized businesses with between 5 and 49 employees and provides funding for high growth businesses to buy specialised equipment, enabling them to unlock growth potential, increase production, expand their workforce, and maximise economic returns to move them to the next stage of growth. Grants between $50,000 and $75,000 are available and successful applicants must co-contribute at least 40% of project costs.

Each grant round has specific information that businesses should be aware of to help them manage their applications.

Successfully funded businesses are expected to:

• increase confidence for growth, transitioning from small to medium-sized
• increase productivity, turnover, profit and/or employment by 20%
• improve confidence to automate, scale up, increase market share, diversify and/or exploit exporting opportunities.

The program is administered by the Department of Employment, Small Business and Training (DESBT).

Eligibility Criteria

You must be an established, financially sound, small to medium-sized Queensland business with the potential for high-growth within the next 2 years. High-growth is defined as an average annualised 20% increase in turnover, and/or employment in the last 2 years.

To be eligible the minimum cost of the project, taking into account the co-funding required, must be $83,333 and is focused on specialised equipment  which is “considered an independent or additional piece of complex machinery that will have a direct impact on the operations of the business to increase, automate or enhance productivity and presents a significant investment to the business. The impact of the equipment unique to the growth of the business and local economy will be taken into consideration.”

Examples of eligible highly specialised equipment include (but are not limited to):

• production equipment to meet otherwise unachievable growth demand
• advanced manufacturing or digital equipment and systems
• advanced logistics systems and equipment.

Expressions of Interest (EOI) are now open.

The application process involved 3 stages:

• Stage 1 – Expression of interest (EOI)
• Stage 2 – Full application
• Stage 3 – Pitch

The Closing Date for Stage 1 is 5.00pm, Friday 2^nd of June, 2023.

You can check your elgibility here and further details of the program and how to apply can be found here.

Please contact the team at MGI if you have any questions or require further information.

Cyber security is the practice of protecting computer systems, networks, and sensitive information from unauthorized access, theft, damage, or disruption.

The Financial Review recently published an article outlining that the recent Latitude breach was one of the biggest in Australia’s history even eclipsing the Medibank Private breach in October 2022. The cyber attack on Latitude Financial breached 7.9 million licenses from Australia and NZ. This includes some but not all of names, addresses, dates of birth and telephone numbers. The breach also affected 53,000 passport numbers. The breach began when staff logins were used to access two third party service providers.

Here are some reasons why cyber security is important:

1. Protecting sensitive information: Cybersecurity helps protect this information from unauthorized access, ensuring that it remains safe and secure.
2. Preventing cyber attacks: such as malware, phishing, and ransomware, are becoming more common and sophisticated. Effective cybersecurity measures can help prevent these attacks, reducing the risk of data breaches and financial losses.
3. Ensuring business continuity: Cyber attacks can disrupt business operations, leading to financial losses and reputational damage. Cybersecurity measures help ensure business continuity by protecting critical systems and data.
4. Meeting legal and regulatory requirements: In Australia, we have the privacy act, the security of critical infrastructure act & the crimes act which cover laws and regulations relating to cyber security. The ACSC have guidelines to provide practical guidance on how to protect systems and data from cyber threats.

There are several measures that individuals and organizations can take to safeguard themselves from cyber threats:

1. Use strong passwords: Ensure that you use strong passwords that are difficult to guess or crack. Also, avoid using the same password for multiple accounts.
2. Keep your software up to date: Make sure that you regularly update your software, operating system, and applications to ensure that any known security vulnerabilities are patched.
3. Use antivirus software: Install and regularly update antivirus software on all devices, including computers, smartphones, and tablets.
4. Be cautious of phishing scams: Be wary of emails or messages that ask you to click on links or download attachments. Avoid clicking on suspicious links or entering personal information on untrusted websites.
5. Regularly back up important data to an external hard drive or cloud-based service to ensure that you can recover your data in case of a cyber attack.
6. Use two-factor authentication: Enable two-factor authentication for all online accounts that support it. This adds an extra layer of security.
7. Educate yourself and your employees on cyber threats and best practices for online safety. This can include training on identifying phishing scams, safe password practices, and how to respond to a cyber attack.

MGI can assist your business to implement cyber security safeguards and reduce the risk of your systems being breached. Contact the MGI IT team for more information.

The application process has now opened for the Federal Governments scheme to support small and medium businesses deal with rising power bills. The first round of the Energy Efficiency Grants for Small and Medium Sized Enterprises (EEGSME) scheme opened on Monday 6th March and closes on Wednesday 19th April at 5 pm (AEST).

Up to $25000 is available for eligible businesses to upgrade or replace existing equipment to improve energy efficiency and reduce costs and there is a total $16 million on the table for this grant opportunity.

The objectives of the program are to:

• improve energy efficiency practices and increase the uptake of energy efficient technologies
• assist small and medium businesses to manage their energy usage and costs
• reduce greenhouse gas emissions.

To apply, businesses must have a headcount of 199 people or fewer and plan energy-focused expenditure of $10,000 or more. Grant funding will be distributed between states and territories and on a first come first served basis until funding is exhausted in each jurisdiction.

Eligibility for Energy Efficiency Grants

You can apply for Energy Efficiency Grants if you are an entity incorporated in Australia, a partnership or a sole trader and you must:

• have an Australian business number (ABN)
• be a small or medium sized business with an employee headcount from 1 to 199 employees averaged over any consecutive 12-month period since 1 July 2019
• have consent from the owner of the project location to undertake the project, if the entity is not the owner of the project location.

Eligible projects may include:

• an energy audit of your site or part of your site
• purchase or hire of equipment to measure, monitor and record energy use or to monitor a process, where this facilitates optimisation or energy management
• purchase of equipment to replace existing equipment, where the new equipment is higher energy efficiency
• costs to decommission, remove and dispose of the old equipment that is replaced
• purchase of equipment or components to help an existing system run more efficiently in regard to energy
• design, and reasonable installation costs of eligible equipment, including any necessary wiring or other electrical work required to enable the project
• building permits or approval costs to install equipment, where required
• the cost of suppliers, consultants and contracted labour undertaking eligible project activities.

Examples of projects that are eligible for energy efficiency grants include installation of LED lighting, new energy-efficient refrigerators and air conditioners, water boiler replacements, insulation around ovens and pipework, and double-glazed windows.

You can apply for the Energy Efficiency Grant here.

Please reach out to the team at MGI, if you need support in preparing your application.

 

If you haven’t yet applied for a Director ID Number (DIN) now is the time to do it or risk a civil penalty of up to $1.1 million.

The Australian Taxation Office (ATO) has started the process of chasing some 500,000 company directors who have not yet registered. Despite the official deadline of 30 November 2022, the ATO has said that penalties won’t apply to anyone who registered for their Director ID before 14 December 2022.

It is estimated that there are 2.5 million directors in Australia and only 2 million have so far registered, according to a statement made by the ATO to InnovationAus.

The system was launched by the ATO and Australian Business Registry Services (ABRS) in 2021 and is designed to help prevent illegal ‘phoenixing’. Phoenixing is the process by which a new company is established to continue the operations of a business that has been liquidated to avoid paying debts, employees and creditors.

What is a Director ID?

The Director ID is a 15-digit director identification number that is unique to each individual director who has verified their identity with the Australian Business Registry Services (ABRS).

If the director changes companies, stops being a director, changes their name or moves interstate or overseas, the unique identifier will remain with them forever.

Every director is required to apply for a DIN under the Corporations Act 2001 and you will need to have a myGovID to apply for the director ID,

MGI first alerted our clients of the need to apply for the Director ID back in October 2021 and provided a further reminder of how to apply for a Director ID in September 2022.

If you have yet to apply for a DIN, we urge you to start the process now as the ATO has indicated that it will take a light touch with directors who are merely lagging behind.

“The ATO has now commenced contacting directors who have not met their obligations to apply for a director ID. In the first instance, directors will be provided with guidance on how to apply.”

The ABRS has now also published a video guiding company directors through the process.

How to apply

The fastest way to apply for a DIN is by using the myGovID app to log in to ABRS online and verify your identity with information the ABRS has on record. You can check if your business is registered as a company with the Australian Securities and Investments Commission at ASIC Connect. Details of how to apply can be found here on the ABRS website.

Once you have received your DIN please forward this to our team to insert into our Corporate Secretarial software.

If you have any questions, please contact the team at MGI on

asic@mgisq.com.au

The Business Basics Grant Program provides support to businesses to increase core skills and adopt best practice.

This support includes funded activities in 5 priorities:

• Training & coaching    • Website build or upgrades    • Professional business advice

• Strategic marketing services    • Business continuity & succession

You may be eligible for a single up-front fixed grant payment of $5,000 (excluding GST).

Registrations of interest (ROI) for small businesses to apply open on the 24th of November 2022. For those selected ROI applicants only, full applications open on the 12th of December 2022.

Visit the Queensland Government website for more information on the application process and the eligibility criteria for the business basics grant.

Please reach out to the team at MGI, if you need support in preparing your application.