In this Sky Update, we bring you all the latest tax news along with some other items that may pique your interest.
Changes to Modern Awards in 2020
The Fair Work Commission has been completing their 4 yearly review of Modern Awards.
As part of that review, a number of Modern Awards will be changing this year. The Modern Awards that are changing range from the Clerks Award to the Restaurant and Hospitality Awards and everything in between. Full details of the Modern Awards that are changing can be found here.
Additionally, following a decision of the Full Bench, the Fair Work Commission has finalised arrangements for new annualised salary clauses to be inserted into a number of Modern Awards.
Depending on which Modern Award applies, the model clauses will impose a number of requirements on employers who pay employees an annual wage in satisfaction of specific Modern Award entitlements. For example, a requirement to advise employees in writing of:
- which provisions of the modern award that apply to them will be satisfied by payment of an annualised wage;
- the mathematical method by which the annualised wage has been calculated;
- the outer limit of hours which would attract the payment of a penalty rate under the award and the outer limit of overtime hours which the employee may be required to work in a pay period or roster cycle without being entitled to an amount in excess of the annualised wage; and
- any excess hours that will not be covered by the annualised wage for which separate payments under the award would apply.
Affected employers will need to implement systems to manage the new requirements, including:
- Annual calculations of what the employee would have been paid under the award compared with the annualised wage actually paid, and perform reconciliations and back-pay any shortfalls within 14 days;
- Keep a record of the starting and finishing times of work, and any unpaid breaks taken, of each employee subject to an annualised wage arrangement in order to perform the calculations and reconciliations; and
- Have employees sign-off on the records to acknowledged that they are correct.
Purchasing a Victorian Property in a Discretionary/Family Trust?
Foreign purchaser additional duty provisions were introduced with effect from 1 July 2015. The purpose of these provisions is to charge a higher rate of duty on Victorian property acquisitions by foreign purchasers.
Under a strict interpretation of the legislation, a discretionary/family trust will be considered to be a foreign purchaser in the absence of an express exclusion of foreign beneficiaries. The SRO had adopted a practical approach whereby these trusts would not be treated as foreign purchases where, based on available information, foreign beneficiaries are unlikely in the future to receive any distributions.
From the 1st of March 2020, the SRO has elected to no longer apply this practical approach. Trusts that purchased property under contracts entered into prior to the 1st of March will not be affected by this change. However, trusts looking to acquire Victorian property in future will need to review their trust deeds and contemplate amendments should they wish to avoid the additional duty.
Amending a trust deed can have potentially significant consequences for matters such as “re-settlement” of the trust that can trigger capital gains tax and duty obligations. As such, we urge trusts to seek advice to ensure that no unintended consequences arise.
2019 Research & Development Tax Incentive Deadline Fast Approaching
The R&D tax incentive offers benefits to companies undertaking eligible R&D activities, comprising:
- a 43.5% refundable tax offset to companies with aggregated turnover of less than $20 million; and
- a 38.5% non-refundable tax offset to all other companies.
Eligible activities being, Core Activities, that are:
And activities that are not themselves Core Activities, but that are directly related to Core Activities (Supporting Activities).
Companies wishing to claim the R&D tax incentive for activities undertaken in the 2018/2019 financial year, must apply to register those activities by no later than the 30th of April 2020.
With the due date fast approaching, companies wishing to claim the R&D tax incentive are urged to take action now as failure to meet the deadline will preclude a company from making a claim.
Fuel Tax Credit Rate
Businesses can obtain a Fuel Tax Credit (FTC) for the fuel tax (excise or customs duty) that’s included in the price of fuel used in:
- heavy vehicles and
- light vehicles travelling off public roads or on private roads.
Businesses that are claiming FTC are reminded that the rates have changed from 3 February 2020. Care is required to ensure that the correct rates are applied in submitting FTC claims via Business Activity Statements. To assist, the ATO have an eligibility tool and calculator.
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Phone: 1300 328 855
Office Address: 902 Howitt Street, Wendouree, Victoria 3355, Australia
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Phone: 03 97444522
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Postal Address: PO Box 270 Gisborne Victoria 3437