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    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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    Before you complete your tax return for 2020, there are some changes you should be aware of in case they affect you.

    In this section:

    New measures – economic response to novel coronavirus (COVID-19)

    A number of new rules are now in place following the Government's economic response to novel coronavirus (COVID-19).

    If an entity as an employer receives a cash flow boost under the 'Boosting cash flow for employers' measure, the amounts will be tax free (non-assessable non-exempt income) and the entity will still be entitled to a deduction for the PAYG withholding paid.

    From 12 March 2020 until 30 June 2020, the instant asset write-off:

    • threshold is $150,000 (up from $30,000)
    • eligibility range covers businesses with an aggregated turnover of less than $500 million (up from $50 million).

    Businesses with an aggregated turnover of less than $500 million are able to accelerate their depreciation deductions on the purchase of certain new depreciable assets. This applies to eligible assets held and first used or installed ready for use from 12 March 2020 until 30 June 2021.

    Businesses may be eligible to receive the JobKeeper payment in respect of eligible employees and an individual who is an eligible business participant. Any amount received by the entity will be assessable income of the business.

    See also:

    Application of significant global entity penalties to subsidiary entities

    The government has announced its intention to amend legislation to correct an anomaly in the law by ensuring the increased penalties applicable to significant global entities (SGEs) apply to all members within an income tax consolidated group.

    The existing SGE penalty trigger rules only capture those entities who lodge an income tax return and have an assessment of income tax.

    The proposed change will ensure that a subsidiary member of a consolidated group or a MEC group will also be subject to the SGE penalty trigger rules.

    At the time of publishing, this change had not yet become law.

    See also:

    Significant Global Entity (SGE) definition amendment

    In the 2018–19 budget, the government announced amendments to the definition of significant global entity. The amendments broaden the definition to ensure consistent application across all types of entities, irrespective of whether they are a member of a group that is consolidated for accounting purposes.

    From 1 July 2019, an entity is an SGE for a period if it is:

    • a global parent entity with an annual global income of A$1 billion or more
    • a member of a group of entities consolidated for accounting purposes, and one of the other group members is a global parent entity with an annual global income of A$1 billion or more
    • a member of a notional listed company group, and one of the other group members is a global parent entity with an annual global income of A$1 billion or more.

    A notional listed company group is a group of entities that would be required to be consolidated as a single group for accounting purposes if a member of that group was a listed company. Any exceptions in accounting principles that may permit an entity not to consolidate with other entities are disregarded.

    An entity is also an SGE if it, or any other member of the actual or notional accounting consolidated group of which the entity is a member, has been given a notice by the Commissioner determining that its global parent entity would have an annual global income of A$1 billion or more for any period during the income year.

    The SGE status of an entity must be recorded in the relevant income tax return. If an entity is an SGE and lodges a Company tax return, it should print X at G1 at item 3 Status of company.

    If an entity is a SGE for an income year that commences earlier than 1 July 2019, that is, an early balancer, it must answer item 5 in the Company tax return. To ensure that item 5 can be completed, the entity must also print X at G2 at item 3 Status of Company.

    See also:

    Country by country reporting entity definition

    As a result of the legislative changes to the definition of an SGE, the scope of an SGE is wider than the scope of entities required to undertake country by country reporting. A new definition of ‘country by country reporting entity’ (CBC reporting entity) has therefore been introduced. In effect, a CBC reporting entity is an entity that would be an SGE, had the definition of an SGE permitted the exception to consolidation related to investment entities in the accounting principles.

    For income years commencing on or after 1 July 2019, an entity is a CBC reporting entity if it is not an individual, and is:

    • a country by country reporting parent
    • a member of a country by country reporting group and one of the other group members is a CBC reporting parent with an annual global income of A$1 billion or more

    A country by country reporting group may be a group that is consolidated for accounting purposes as a single group or a notional listed company group. A notional listed company group is a group of entities that would be required to be consolidated as a single group for accounting purposes if a member of that group was a listed company. Unlike the SGE definition, the exception to consolidation in the accounting principles related to investment entities is not disregarded; that is, if applicable, when determining whether an entity is a CBC reporting entity, the investment entity exception in the accounting principles should be applied.

    If an entity is a CBC reporting entity, it will have CBC reporting and general purpose financial statement (GPFS) obligations. From 1 July 2019:

    • CBC reporting obligations depend on whether an entity was a CBC reporting entity at any time in the preceding income year. This is a change from previous years where CBC reporting obligations depended on whether an entity was an SGE at any time in the preceding income year.
    • GPFS obligations depend on whether you meet the definition of a CBC reporting entity for that income year. This is a change from previous years where GPFS obligations depended on whether an entity was an SGE for the income year.

    The CBC reporting entity status must be recorded in the relevant income tax return. If an entity is a CBC reporting entity and lodges a Company tax return, it should print X at G2 at item 3 Status of company.

    If you are a CBC reporting entity and are required to lodge a Company tax return, you must also complete item 5.

    If an entity is a SGE for an income year that commences earlier than 1 July 2019, that is, an early balancer, it must answer item 5 in the Company tax return. To ensure that item 5 can be completed, the entity must also print X at G2 at item 3 Status of Company.

    See also:

    Disclosure of business tax debt

    On 28 October 2019 the Disclosure of business tax debt measure received royal assent, allowing the ATO to disclose tax debt information of businesses to registered credit reporting bureaus (CRBs). Under this law, from 21 February 2020 the ATO will only be able to disclose tax debt information of a business where certain criteria are met. The Commissioner is not obligated to disclose tax debt information and will apply administrative safeguards above and beyond the legislative safeguards, before reporting the tax debt information of a business.

    Research and development tax incentive amendments

    The government has announced its intention to amend the Research and development (R&D) tax incentive to reward additional investment in R&D, while ensuring the integrity and fiscal affordability of the incentive. These changes are expected to apply from the first income year commencing on or after 1 July 2019. For information on the progress of these changes, see New legislation – Treasury Laws Amendment (Research and Development Tax Incentive) Bill 2019External Link.

    The ATO will accept tax returns as lodged during the period up until the proposed law change is passed by parliament. After the new law is enacted, you will need to review your position and, if required, seek an amendment.

    International taxation – hybrid mismatch rules

    On 13 December 2019 the government released exposure draft legislation to clarify the operation of the hybrid mismatch rules.

    See also:

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    Last modified: 09 Dec 2020QC 62685