Over the last couple of weeks, various Bills have received Royal Assent and various measures which were announced in last year’s Federal Budget have now become law.
INDIVIDUALS
Employee share schemes (ESS) – removal of cessation of employment as a taxing point
Prior to this change, a taxing point for ESS subject to deferred taxation included when an employee ceased employment with the employer. To make Australian companies more competitive in the global market, the cessation of employment in no longer considered a taxing point. For example, under the “old” rules, where an employee leaves employment but has shares that are still subject to forfeiture because they are outstanding key performance indicators, the employee would get taxed at the point they leave employment. This change ensures the employee would now generally be taxed when there is no risk of forfeiture in relation to the shares.
The other taxing points for shares or rights acquired under ESS (e.g. 15 years from acquisition or when there is no real risk of forfeiture) remain in place.
Superannuation changes
The following changes have been legislated and will apply from 1 July 2022:
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Downsizer contributions – the minimum age to make downsizer contributions has dropped to 60. This means that retirees aged 60 and over who downsize their home are allowed to make a $300,000 ($600,000 per couple) non-concessional contribution to superannuation even if they have reached the $1.7m super balance cap.
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Bring forward rule – individuals aged between 67 and 75 will be allowed to make non-concessional superannuation contributions under the bring forward rule.
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Repeal of work test – individuals aged between 67 and 75 will no longer be required to pass the work test for non-concessional and salary sacrificed superannuation contributions. The work test continues to apply when making personal deductible contributions.
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First Home Super Saver Scheme – the maximum number of voluntary contributions that can be released by a superannuation fund under the FHSSS will be increased to $50,000 (from $30,000). Voluntary contributions available for release are capped at $15,000 each year up to a maximum of $50,000.
BUSINESSES
Temporary full expensing – extended to 30 June 2023
The temporary full expensing provisions will be extended by a further year to 30 June 2023. As a reminder, under these provisions, the full cost of an eligible depreciating asset that is acquired after 7:30pm AEDT on 6 October 2020 and first used or installed ready for use by 30 June 2023 may be fully deducted. This deduction is available for any business with an aggregated annual turnover of less than $5 billion. Furthermore, companies that do not meet the $5 billion aggregated turnover test, can access temporary full expensing if they satisfy the alternative test.
The full deduction will be available in the income year the eligible capital asset is first used or installed ready for use. The outright deduction may also be available for the cost of improvements to existing eligible depreciable assets during the full expensing period. An eligible depreciable asset of any value is eligible for full expensing.
Superannuation Guarantee – removal of $450 income threshold
From 1 July 2022, the $450 monthly minimum income threshold will be abolished, and employers will be required to pay superannuation guarantee on all their employees' salary and wages.
Companies - loss carry back extended to 30 June 2023
The company loss carry back provisions has now been extended by a further year to 30 June 2023. Eligible companies (those with an aggregated annual turnover of up to $5 billion) can “carry back” a tax loss for the 2019-20, 2020-21, 2021-22 or 2022-23 income years to offset tax paid in the 2018-19 or later income years. The loss carry back is optional.
Companies- use of technology for meetings and execution of documents
The Corporations Amendment (Meetings and Documents) Bill 2021 makes permanent changes allowing companies and registered schemes to hold hybrid meetings and use technology to execute company documents, sign meetings-related documents and provide those documents to their members.
The Bill allows certain documents to be signed in flexible and technology neutral manners. This change applies to:
- the signing of certain documents (including deeds) by or on behalf of a company; and
- the signing of documents which relate to certain meetings or resolutions.
Furthermore, in relation to meetings, the Bill allows companies to hold physical and hybrid meetings. Hybrid meetings give shareholders the option of either attending in person or remotely. Wholly virtual meetings may also be used if they are expressly required or permitted by the constitution.
MORE INFORMATION
Contact your local Moore Australia advisor if you would like to discuss any of the above in further detail.