By 27 September 2021, employers (other than small business employers) need to assess whether any existing casual employees (employed before 27 March 2021), are eligible to be offered to convert to permanent employment. Employers need to:
To accept an offer to convert, employees need to respond in writing within 21 days after getting the offer. If they don’t respond, employers can assume that they’ve declined the offer. Read more about casual employees becoming permanent. Watch the Fairwork video about the changes to casual employment laws, including how small business employers are affected and the Casual Employment Information Statement.
AFR – Wednesday, 15 Sep 2021 – Page 24
Michael Jiang’s grocery business has been given a boost by a federal government-backed scheme enabling cheaper loans to expand operations, including buying commercial property. Strategy Government-backed funding for pandemic relief can ease retirement plans, writes Duncan Hughes.
Michael Jiang’s grocery business has been given a boost by a federal government-backed scheme enabling cheaper loans to expand operations, including buying commercial property.
For business owners like Jiang, the scheme enables strategies to navigate businesses out of COVID-19 setbacks and creates the option of using commercial premises as an asset for superannuation.
The value of non-residential property in self-managed super funds, including anything from barristers’ chambers to manufacturing warehouses, has increased by 12 per cent to a record $80 billion in the 12 months to June, according to the Australian Taxation Office . The rise is more likely to reflect a sharp increase in property values than a surge in SMSF property investments, investment specialists say.
Jiang, who took over the family business in Pyrmont 15 years ago, has refinanced his business through NAB to pay for renovations , equipment and growing online food and drink deliveries. He also hopes to further community assistance through the Uniting Church’s CHEX program.
‘‘ I’ve been one of the lucky ones,’’ Jiang says of the impact of COVID-19 . ‘‘ People need to buy groceries and are drinking more takeaway alcohol because of the closures.’’
NAB says the new loans, backed by the federal government under the Recovery Loan Scheme, which guarantees 80 per cent of the borrowing, offer longer terms and extended loan-to-value ratios, with rates based on individual circumstances. Other lenders, such as Westpac and CBA, are finalising their new rates and conditions.
Jiang is also exploring options to fund retirement that might include setting up a self-managed super fund that would buy his commercial property, on the understanding it would provide income and capital growth.
Mortgage brokers say lenders are improving offers to small and medium enterprises after the government extended the Recovery Loan Scheme.
Business borrowing for property is booming , with lending topping $7.6 billion in July – up more than 5 per cent from the previous month and about 136 per cent year-on-year , according to government analysis.
COVID-19 has blown out vacancy rates in commercial sectors, such as CBD office towers, and some retail, including restaurants and entertainment sites.
But it has contributed to strong demand for logistics and industrial buildings used as storage and distribution networks for the growing digital economy.
‘‘ The government scheme recognises the degree of difficulty and cost that small businesses can experience in funding maintenance and expansion of their businesses in times of uncertainty,’’ says Steve Mickenbecker , group executive for Canstar, which monitors rates.
A business owner can buy work premises personally, via the business or an SMSF. There are different tax, cost and administrative liabilities, Mickenbecker says.
There are about 330,000 people running businesses with no employees and another 540,000 self-employed with a few employees , according to government statistics.
Super balances for self-employed males aged 60 to 64 average about $143,000, compared with $283,000 for male wage and salary earners, the Association of Superannuation Funds of Australia says. The numbers are based on a 2017 sample.
About one in five self-employed have no super, compared with 8 per cent of employees , says ASFA. A higher proportion of self-employed also have ‘‘ low’ ’ super balances of less than $40,000. That’s because the self-employed often put more energy and time into their businesses than preparing for retirement, an ASFA spokesman says.
The number of businesses setting up SMSFs has plunged during COVID-19 , says Paul Rafton, superannuation partner with accountancy, tax and advisory company BDO.
Big lenders no longer offer SMSF loans for commercial property, while other lenders have much higher rates and tougher terms to reflect the increased risk.
Regulators fear problems arising when SMSF investors leverage their super to invest in a single property because of a lack of diversification and potential loss in a falling property market, when it is difficult to find tenants. Systemic risk is low because the loans are non-recourse , which means they are secured by the property.
Having a commercial property for a self-managed super fund ‘‘ is an option’’ , Anne Graham, chief executive of Story Wealth Management, says. However, investors need to consider the risks.
‘‘ What happens if you have an office being rented to third parties that’s not quite up to scratch in current markets, where supply exceeds demand?’’ Graham asks.
There’s also a risk, with a chunky asset – like a factory or warehouse – in a super scheme coming up to retirement, if there is a financial crisis and prices fall.
Further, selling premises as part of a package can create difficulties , particularly if the person selling is the key asset.
‘‘ That said, people like to feel in control of their money by getting to choose their investments,’’ Graham says.
Mark Chapman, tax director for H&R Block, says: ‘‘ In general, investing in commercial premises rather than residential through an SMSF has some advantages. Commercial properties can, for instance, be sold to an SMSF by its members as well as leased to SMSF trustees or an individual or business related to them.’’
An investment must satisfy the sole purpose test, which is to provide retirement benefits for its members.
‘‘ When investing in commercial real estate, the SMSF trustees have the option of investing 100 per cent into commercial premises if a member of the fund runs a business,’’ Chapman says.
‘‘ This is an attractive proposition for small businesses who want to own the premises from which they operate. Investors or businesses that already own a commercial property can contribute the property to the SMSF,’’ he says.
It has to be done at market value and is subject to the annual contribution caps, which are $27,500 for concessional contributions and $110,000 for non-concessional .
‘‘ Transferring property may have capital gains, stamp duty and other tax implications , so always get advice before making concrete plans,’’ Chapman says.
Leasing property to a related party must be done on the same terms as an independent third party.
‘‘ If you were leasing to an independent third party, a lease agreement needs to be in place, outlining the terms and conditions of a standard commercial agreement,’’ he says.
That means market rent will need to be paid regularly and physically into the SMSF bank account. This generates a tax deduction to the business and taxable income – taxed at 15 per cent – in the SMSF. The property will need to be independently valued.
Copyright © 2021 The Australian Financial Review
Not so long ago it was commonplace for Self-Managed Superannuation Funds (SMSF) trustees to revalue their property assets every 3 years. This was simply long-standing industry practice, assuming the property values don’t change quickly and therefore getting a new valuation every 3 years was appropriate. Even then there was no specific rule stipulating that valuations each 3 years were required.
However, increasingly there are so many tax rules that depend on the reporting of asset values and therefore a members superannuation balance. This therefore requires trustees to place a true value on all assets of the fund. For example, the exact amount a member has in super can dictate how much they can contribute to super as non-concessional contributions, the amount they might have to withdraw from their pension each year for pension purposes, and how much of their fund can be converted into a pension. There are many more such laws. We have recently seen the Australian Taxation Office (ATO) and therefore your SMSF auditor taking a more active stance regarding investments valuations and requiring assets to be re valued more often.
Whilst we can easily revalue listed share investments other investment classes such as property assets and alternative asset classes will require trustees to consider valuations on an annual basis.
Ruling Reference TR 2010/1 does not require the trustees to obtain a formal, expensive valuation, but increasingly we expect to see auditors requiring some level of external support for the trustees view on asset values. That may simply be a property appraisal from a local real estate agent.
For PrincipleFocus clients please understand the reasoning, and the regulatory drivers, including audit requirements, for our team asking you more often for evidence supporting increasing asset values in your fund.
Primary producers impacted by the 2021 mouse plague may be eligible to claim a rebate for the purchase of zinc phosphide as part of the $150 million mice support package.
Farmers experiencing financial hardship due to the mouse plague may be eligible for assistance with purchasing costs of zinc phosphide to provide financial and cash flow relief.
If you are a primary producer in an eligible Local Government Area, you may be eligible to claim
The rebate covers purchases of zinc phosphide bait between 1 January 2021 to 17 December 2021.
Applications can be made through the NSW Rural Assistance Authority (RAA) and are open until 17 December 2021. All invoices must be submitted to the RAA by 28 January 2021.
You can find out more about the rebate, eligibility or submit an online application here.
Please contact our team if you require any help or assistance.
What follows are the just-announced stimulus measures from the NSW Government as well as a few others that have been around for a little bit that you might not be aware of. This support is now statewide and will, importantly, ensure regional NSW is looked after as well.
CASH BOOSTER (BUSINESS)
This is a fortnightly payment for NSW businesses that have experienced a 30% or more reduction in turnover as a result of the current lockdown. How this reduction in turnover will be calculated hasn’t been announced, but I’m guessing it’ll be similar to the method described below for the COVID-19 support grant for small business.
This payment is available to businesses that turnover more than $75,000 and less than $50 million. The payment will be equal to 40% of your payroll expense with a minimum weekly payment of $1,500 to a maximum of $10,000. One of the key requirements is that you cannot reduce your headcount compared to what you have on the books today.
Expressions of interest open on Wednesday 14th July via Services NSW with money to flow shortly thereafter.
If you have a micro-business which is defined as one turning over more than $30,000 and less than $75,000 and can demonstrate a turnover reduction of 30% or more then you might be eligible for a $1,500 a fortnight payment.
Expressions of interest open on Wednesday 14th July via Services NSW with money to flow shortly thereafter.
COVID-19 DISASTER PAYMENT (INDIVIDUALS)
This is currently available through Services Australia as a single lump sum payment made to individuals who have been affected by a lockdown (e.g. lost income, can’t go to work) and is available after day 7 of any lockdown event. Payments are $325 or $500 depending on how much work you’ve lost.
Now this is looking to change with the amount being paid increasing to $375 for anyone who has lost 8-20 hours of work a week or $600 for anyone who has lost 20+ hours per week and rather than being a one-off payment it will now be paid weekly for as long as the lockdown continues.
There are requirements you’ll need to meet to get this payment, but note the ‘liquid assets’ test has been removed. Check the link above at Services Australia for details.
You’ll be able to register with Services Australia from Friday 16th July.
NSW PAYROLL TAX EXEMPTION
Looks like there will be across the board payroll tax deferrals for the next three months and for any business that has had a significant fall in revenue they will have their payroll tax liabilities for the September 2021 quarter waived completely.
More information is available via Revenue NSW website.
COVID-19 SUPPORT GRANT (SMALL BUSINESS)
This grant is aimed at supporting businesses that have experienced a downturn in revenue as a direct result of the June/July 2021 lockdowns in NSW.
Three different grant amounts will be available for small businesses depending on the decline in turnover experienced during the restriction:
• $15,000 for a 70 per cent decline,
• $7,500 for a 50 per cent decline and
• $5,000 for a 30 per cent decline
The grants will be divided into two streams:
Businesses will be able to apply for the grants through Service NSW from 19 July and will need to show a decline in turnover across a minimum two-week period after the commencement of major restrictions on June 26.
PANDEMIC LEAVE DISASTER PAYMENT
If you’ve been told to self-isolate or quarantine by NSW Health because you’ve got COVID-19 or have been exposed in some way and have lost income as a direct result of this then you could be eligible for a $1,500 (per fortnight) payment. Visit the Services Australia website for more information.
SMALL BUSINESS FEES AND CHARGES REBATE
If your payroll bill is under $1.2 million then you may be eligible for up to $1,500 in rebates on state government fees and charges. Maybe get your rego refunded? This is also available to businesses without any payroll (i.e. sole traders with no employees).
MUSICKEEPER and CREWKEEPER
Earlier this year the Australian Government provided further funding to the good folk over at Support Act to enable them to broaden their support of the Australian music industry and this includes two support payments.
We note these payments have been around since late March, but it was just brought to my attention that plenty of industry people weren’t aware of them so we thought we should spread the word.
These two new grants offer cash payments to music industry workers suffering financially as a result of the COVID restrictions in place across the country. The payments are designed to step in and help after the Jobkeeper and Jobseeker taps were turned offer earlier this year.The grants are $2,000 for individuals and $2,700 for families with dependent kids.
You can apply using the form here.
AND MORE …
• No evictions for small businesses or residential tenants for 60 days;
• A capped grant of up to $1,500 for residential landlords who are not liable to pay land tax who reduce rent for tenants;
• Land tax relief equal to the value of rent reductions provided by commercial, retail and residential landlords to financially distressed tenants ie – those landlords who give rent reductions will get a credit against their land tax obligations. You’ll need to check in with Revenue NSW for more information;
• A support package for the accommodation sector worth $26 million;
If any of these measures require a letter from your accountant to vouch for a reduction in turnover please get in touch with what you need and we’ll do what we can to help.
High-income tax cuts to stay
The federal Labor Party is set to go to the next election vowing to leave untouched the stage-three income tax cuts if it forms government, heading off a Coalition campaign to portray it as high taxing and anti-aspirational .
Following several days of conversations , Labor’s hierarchy has decided against trying to either unwind or amend the cuts if elected.
The decision is yet to be ratified by the caucus but sources said it was a safe bet it would remain unchanged.
The tax cuts have already been legislated to begin on July 1, 2024, and will cost an estimated $137 billion between then and the end of the decade. They will abolish the 37 per cent tax rate and apply a 30 per cent rate to all income between $45,000 and $200,000.
Labor supported the legislation for the tax cuts after the last election but, it argued, only because they were tied to the stage-two tax cuts for low- and middle-income earners which began on July 1 last year.
It always reserved the right to take a different position to the next election, depending on the state of the economy.
With debt headed towards $1 trillion and the budget deficit above $100 billion , Labor mulled revoking the cuts altogether but gave more serious consideration to capping them so the 30 per cent rate would apply to incomes up to $180,000, instead of $200,000.
It calculated the latter option would save $80 billion, which could be used variously to pay down debt and deficit and fund potential Labor election promises, such as a higher JobSeeker welfare payment.
Leader Anthony Albanese had always insisted Labor would not make a final decision on its position until closer to the election, but it was decided in May to make the decision during the parliamentary winter break and get it off the agenda.
Had Labor sought to amend the cuts, it would have faced a campaign by the Morrison government that it was for higher taxes and anti-aspirational , which were similar themes run against Labor at the 2019 election. Labor went to the last election with a number of policies aimed at curbing tax breaks, such as negative gearing and cash refunds for excess franking credits. It also went to the election opposing the stage-three tax cuts.
In May this year, after Labor refused to state its position, Prime Minister Scott Morrison gave notice of a similar campaign at the next election. ‘‘ If Labor wants to put taxes up, they need to tell you how many jobs it’s going to cost and how much it’s going to slow growth,’’ he said.
‘‘ They’re the ones who have to make the argument for change. We did at the last election, won an election and implemented it. It’s now law.
‘‘ If they want to put up taxes in the middle of a recovery from the worst recession since the Great Depression, they can make that case. This is the worst possible time.’’
There was strong support among Labor’s right faction to leave the tax cuts alone, more so given they were already legislated and factored into the budget bottom line. Unravelling them had the added potential of a messy Senate battle after the election.
The decision to leave the cuts unchanged will rob the government of a key attack line come the election, while emboldening the Greens, who oppose the cuts altogether.
The intergenerational report released in late June by Treasury found that even with the stage-three tax cuts factored in, personal income taxes would grow faster than other sources of revenue over the medium term, placing an increasingly larger burden on a smaller portion of workers.
Treasury projected the Coalition’s self-imposed tax-to-GDP ratio of 23.9 per cent would be reached in 2035-36 which, because of the impact of the pandemic, was four years later than forecast in the 2015 IGR.
This suggests that the stage-three income tax cuts could be the last for a long while.
AFR – Tuesday, 13 Jul 2021 – Page 1
Packhorse’s $1.5b fund secures first seed asset
Packhorse Pastoral Company, which is backed by Canberra Rich Lister Terry Snow, has closed its first capital raising and acquired its seed asset, a Queensland cattle station, as it embarks on a plan to muster a $1.5 billion cattle and carbon fund over the next five years.
The $62.5 million raising helped Packhorse lock in its first acquisition, the 8360-hectare Stuart’s Creek near Roma, in a $30 million deal, bought from private owners. The deal also puts it on the way to its initial target in its first year of operations of $300 million in agricultural assets, with about 30 per cent of that total comprising debt.
‘‘ It’s in an ideal area. It’s got the right rainfall, it’s got the right soils, it’s got good logistics, close to the Roma sale-yards and 450 kilometres from Brisbane ,’’ Packhorse chairman Tim Samway told The Australian Financial Review.
‘‘ It’s been conservatively grassed and well-managed for 75 years by one family . So it’s a turnkey. It’s got good infrastructure . The opportunity for us is the pasture improvement.
‘‘ That is how we think you get the returns. You buy privately, you aggregate for scale, you improve the pastures, you change the grazing methods, you increase the carrying capacity.’’
Packhorse brings together some big names. The cornerstone investment from Mr Snow, whose Capital Airport Group owns Canberra Airport, has galvanised the platform’s start up, sparking interest from other investors. About 40 high net worth and family office investors have come on board for the first raising. Packhorse aims to conduct raisings, asset-by-asset , with a $160 million pipeline of potential acquisitions stretching from Coonamble in NSW to Taroom in Queensland.
Mr Samway is well known in the funds management world as the chairman of Hyperion Asset Management, an Australian and global equities fund manager with more than $10 billion in funds under management. Also on board as Packhorse’s managing director is agribusiness veteran Geoff Murrell, who previously managed Macquarie’s beef and sheep giant Paraway Pastoral’s northern Australian properties.
Central to the Packhorse strategy is the principle of regenerative agriculture – increasing biodiversity, enriching soils, improving carbon capture. It is a thematic with growing adherence in the sector, espoused by major players such as Tiverton Agriculture.
Stuart’s Creek will allow Packhorse to put those principles into practice, transforming the property into a rotational grazing model and introducing further grass and legume species – Rhodes, digit, gatton panic, desmanthus and others – to improve biodiversity.
Those improvements enable the return of carbon to the soil, providing the potential for the property to one day generate carbon credits.
‘‘ By making these changes we think we can double the carrying capacity. You can understand what that does to the revenue and to the valuation of the property,’’ Mr Samway said.
‘‘ What it does is it improves the soils and increases the ability to sequester carbon. Carbon sequestration is about coverage. It is about getting green matter across very inch of the land.’’
The carbon play is in effect an add-on benefit , although potentially a very material one. Packhorse is not banking on carbon offsets to make its returns stack up from its portfolio. At current prices – Australian carbon offsets have reached $20 a tonne for the first time since the carbon price was revoked in mid-2014 – carbon credits would generate 0.5 per cent to 1 per cent on Stuart’s Creek’s internal rate of return.
But there are expectations that carbon prices will surge in the lead up to the 2030 emissions reduction target. Prices for offsets in Australia lag well behind those in the European Union, where they have surged by more than 75 per cent this year. On a rough estimate , a carbon price of about $100 a tonne could deliver a 4 per cent internal rate of return on its own for grazing properties, according to Mr Samway.
While not betting on those outcomes , Packhorse will be well-prepared , taking baseline measures for soil carbon, followed by regular assays as pastures are improved.
‘‘ The reality is this is about running properties better, increasing their carrying capacity, increasing the biodiversity of the plant matter so we get superior cattle and people pay more for those cattle and to have them raised,’’ Mr Samway said.
The other major component to the Packhorse strategy is its focus on the land, rather than holding cattle itself. It is primarily an agistment model, where Packhorse will limit its ownership of livestock.
‘‘ This is a very focused strategy,’’ Mr Samway said. ’’ No feedlots, no abattoirs, no branded beef. We are a cattle motel.
‘‘ We’ll own some stock along the way but in the long term, we are basically supplying grass in a high-quality cattle motel for other’s people’s cattle.
‘‘ A lot of businesses are exposed to the livestock. We think by taking that exposure out, you get to prioritise the land. What we want to do is prioritise the soil and the grass. When you don’t own the cattle, you don’t have that problem.’’
AFR – Monday, 12 Jul 2021 – Page 34
China rides on our sheep’s back as farmers anticipate bumper season
Despite trade embargoes and a diplomatic deep freeze, there is an Australian export which is being warmly welcomed in the Chinese market. And it is not iron ore, which is booming anyway.
It is the product which iron ore replaced as the source of much of Australia’s prosperity – wool.
China this year lifted its quota on duty-free Australian wool imports by 5 per cent from 36,000 tonnes to 38,000 tonnes and it accounts for close to 90 per cent of Australia wool exports, up from 70 per cent about a decade ago.
The next largest export market for Australian wool is Italy, which accounts for about 3 per cent of exports.
Wool and sheepskin exports lifted 8 per cent, or $47 million, over the March quarter, hitting $633 million, according to the Australian Bureau of Statistics.
Australia is also China’s largest source of imported wool, with a 74 per cent market share, ahead of South Africa (8 per cent), according to the Department of Foreign Affairs and Trade.
New Australian Wool Innovation chairman Jock Laurie sees similarities between the natural fibre and iron ore exports to China.
If China wants big volumes of wool, Australia is the logical, trusted and only real option. And like iron ore, Chinese mills and manufacturers add massive value to the raw commodity.
China is also by far the biggest buyer of both commodities. Those trading relationships survived COVID-19 , although wool suffered for a period, and is now going strong despite the frosty relationship between Beijing and Canberra.
Wool prices have started the new financial year slightly softer but are up about 65 per cent since bottoming out last September – and that is good news for Mr Laurie and his family, who will shear about 10,000 sheep this year.
The tough-talking former National Farmers’ Federation president has been farming for decades and has never seen it so good, barely 18 months on from one of the worst droughts in the country’s history. ‘‘ I’ve been involved in the game all my life and the run we are having at the moment is as good as I’ve seen,’’ he said.
‘‘ It is a combination of commodity prices – certainly at record levels from a meat industry point of view and from a wool industry point of view recovering after COVID – and interest rates being really low.’’
Mr Laurie said China had a big wool processing industry that made more than 50 per cent of its sales on the domestic market.
‘‘ The wool industry has very strong relationships there and has done for a long time,’’ he said. ‘‘ It is great to see that progressing well under current circumstances.’’
The Lauries spread the commodity risk on their farms at Walcha, Bendemeer and Gunnedah in NSW, raising sheep and cattle, and growing grain.
The cattle price continues to go from strength to strength, as meat processors and farmers looking to restock post drought compete for limited numbers.
The eastern young cattle indicator (EYCI) reached a record of 951.5¢ a kilogram this week, up from 752.25¢ a year ago and from 492¢ in July 2019.
Mr Laurie said red-hot cattle prices were starting to work in favour of sheep. ‘‘ The drought had a tremendous impact on sheep numbers, but we are starting to see a strong rebuild now,’’ he said.
‘‘ A lot of people are taking the opportunity to get into sheep, be it sheep meat or wool, sheep of any sort.
‘‘ The cattle market is red hot. You are talking large amounts of money, if you want to start buying cattle. People can see value in sheep.’’
Mr Laurie said all farmers had to make decisions on the best use of their acreage and this year Australia is on track to produce a massive winter grain crop with prices at solid levels.
Victorian farmer and Grain Growers Limited chairman Brett Hosking said crops across most of Australia were in good shape mid-way through winter.
‘‘ There is potential for a big crop, particularly if Victoria and parts of South Australia get a good finish ,’’ he said.
‘‘ Northern NSW is looking good, a fair bit of NSW where there is no mouse damage is looking good. Southern Queensland and Western Australia are looking good.’’
Mr Hosking said some mixed farmers had swung back towards livestock on the back of strong prices, but crops covered plenty of ground that was used for sheep and cattle before the drought.
He would normally grow out some steers for sale but stayed out of the cattle market this year and focused on his main game of grain and sheep.
‘‘ They say the best cure for good prices is good prices,’’ he said of the cattle market.
In WA, farmer-controlled CBH Group has started its annual harvest recruitment drive a month earlier than normal after a wet winter across the state’s vast wheat belt that promises to deliver a bumper harvest.
The giant grain handler and exporter is looking to hire 1800 seasonal workers but could struggle to hit that target in a state with a hardline border closure policy and already in the grip of a labour shortage affecting both mining and agriculture.
A shortage of truck, train and machinery drivers continues to hamper CBH’s ability to get grain to its port fast enough to keep up with demand from overseas customers.
Exports suffered another blow this week when WA authorities refused to let a bulk carrier berth at the Kwinana Grain Terminal after a crew member was transferred ashore with COVID-19 .
The MV Emerald Indah turned back to Indonesia without the 50,000 tonnes of wheat it was chartered to carry out of Kwinana.
Copyright © 2021 The Australian Financial Review
There are few changes to the way employees and areas relating to your employees, that as a business owner, need to be across this new financial year.
Minimum Wage Increase – 1 July 2021
The national minimum wage increased on 1 July by 2.5% to $20.33 per hour (or $772.60 per week). The minimum wage increase applies to employees if an award or national minimum wage defines their pay rate.
This year, the Fair Work Ombudsman (FWO) has implemented minimum wage increases to awards in a staggered approach. Most awards increase on 1 July; however, the Retail Award will increase from 1 September, and a few awards will increase on 1 November. For full details of award increases, visit Fair Work Ombudsman Annual Wage Review 2021.
Changes to Casual Employment
The Fair Work Act has been amended to include a Casual Employment Information Statement (CEIS), a formal definition of casual employment, and a pathway for casual employees to become permanent employees. Employers must now provide the CEIS to all casual workers upon starting with the employer, along with the National Employment Standards and Fair Work Information Statement. Visit the FWO Casual Employment Information Statement webpage for details and to download the form for your employees. For more information about casual employment definition and the options for becoming a permanent employee, visit FWO Changes to Casual Employment to check if you have to offer permanent positions to your employees.
Superannuation Increase from 1 July 2021
The superannuation guarantee statutory rate increased to 10% from 1 July. Your payroll software should automatically capture the changes, but check the rate is correct when you do your first pay runs in July. Review any agreements or annualised salary arrangements you have with employees that may be inclusive of superannuation.
Single Touch Payroll Finalisation
The ATO recognises the impacts of COVID-19 on the Australian community. If you need additional time, you can complete your STP finalisation up until 31 July.
For an employer with a mixture of both closely held payees and arms-length employees, the due date for end-of-year STP finalisation for closely held payees is 30 September each year. All other employees are due 14 July each year.
Small employers (fewer than 19 employees) that only pay closely held payees have until the payee’s income tax return due date.
Review Your Payroll Systems
The start of the financial year is the best time to review your payroll setup, policies and costs. Talk to us if you need help with payroll or your STP.
Over the past couple of months PrincipleFocus has completed tax planning for many of our clients – a process of determining an approximate net income position and then helping our clients with strategies to optimise their tax position and develop a plan to achieve this outcome. This can include a mixture of utilising the Primary Production tax provisions (including FMD’s, deferral of profit from forced sales, PP Averaging), considering timing of income and expenditure, superannuation contributions and structuring with different entities and family members.
Your 2021 EOFY Reminders & Action Items
Reportable Fringe Benefits
Where you have provided fringe benefits to your employees in excess of $2,000, you need to report the FBT grossed-up amount. This is referred to as a `Reportable Fringe Benefit Amount’ (RFBA) amount it needs to be updated for each employee as part of your Single Touch Payroll finalisation procedure for 2021. Please call should you have any queries regarding fringe benefits you may have paid to your employees.
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 determined the value of trading stock on hand.
A simple list of stock categories or lines as well as number on hand and the value of the stock should be recorded at 30 June 2021 for your financial and taxation records.
Livestock on hand – Numbers of all categories of livestock on hand as at 30 June 2021 will be needed to prepare year end livestock accounts. Ensure that you note down numbers of head for reconciliation / completion of your livestock trading accounts for the 2021 financial year – it’s often harder to get this information right as you get further away from 30 June and the numbers change.
Grain on hand – The value of grain on hand at the end of the financial year should be recorded for your business. A simple listing of the tonnages on hand this week will make this process easier than having to work back or estimate at a later date.
Here’s a few other 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
EOFY is also a good time to consider whether or not there are strategic opportunities for your business and to set some goals for the future. This could include some of the big picture items such as succession and estate planning, purchase of another property, evaluating your mix of enterprises or considering property improvements.
Despite a bumper harvest, record commodity prices and rising rural land values , annual returns generated from prime farmland fell for the fourth consecutive quarter in the three months to March as the strongly performing cropping and grazing sector was offset by weak returns from permanent farmland.
Over the first quarter of 2021, total annual returns fell to 8.5 per cent from 11.7 per cent in the December 2020 quarter and 14.5 per cent a year ago, according to the Australian Farmland Index. Income returns fell to 5.2 per cent from 7.3 per cent while capital growth moderated to 3.2 per cent from 4.1 per cent in the December quarter.
Compiled by the Asian Association for Investors in Non-Listed Real Estate Vehicles (ANREV), the index tracks the performance of a $1.06 billion portfolio of 39 farming properties owned by agricultural investors and managers including Gunn Agri Partners, Aware Super and Rural Funds Management.
The index showed a sharp divergence between the strong returns generated from cropping and grazing farmland, which have benefited from soaring commodity prices and bumper harvests, and the weaker returns from permanent plantings like nuts, grapes and citrus. Over the 12 months to March 31, cropping and grazing farmland delivered 25.3 per cent – above the index’s average since inception of 19 per cent, though down from the record near-30 per cent return generated across the 2020 calendar year.
Amid fierce competition for large livestock and crop aggregations, annual capital values rose more than 15 per cent, while income returns were just under 9 per cent.
Such strong conditions are expected to fuel competition for the 31,975-hectare Kaiuroo Aggregation in the beef-producing Mackenzie River district of Central Queensland, which has been listed for sale by global asset manager The Rohatyn Group. Price expectations are understood to be in excess of $55 million, excluding livestock .
Situated 221km west of Rockhampton , the aggregation supports breeding and fattening operations and benefits from high-quality homegrown grain, forage and cotton crops. It includes 1650ha of organic certified cropping area, of which 917ha is irrigated.
Elders real estate general manager Tom Russo, who is marketing Kaiuroo alongside colleagues Andrew Williams and Virgil Kenny, said quality agricultural holdings of scale remained highly sought after while supply remained constrained, albeit with some increase in new listing volumes entering the market.
‘‘ The Kaiuroo Aggregation enjoys both quality and diversification , and is well established for resilient returns throughout the cycles,’’ Mr Russo said.
While prime horticultural assets continue to be sought after – as seen by the $50 million sale last month of McWilliam’s Wines – total annual returns from permanent farmland fell to just 3.1 per cent in the March quarter, down from 4.8 per cent in the December quarter and well below the 13 per cent return recorded a year ago.
Annual capital values contracted by 1.2 per cent while annualised income returns were 4.3 per cent.
Index founder and farming funds veteran Frank Delahunty said the contrasting fortunes of cropping farmland versus permanent farmland reflected the ‘‘ cyclical nature’ ’ of agriculture.
A few years ago, Mr Delahunty said, permanent farmland was the outperformer.
Commenting on the latest index performance, Rural Funds Management chief operating officer Tim Sheridan said agriculture had performed relatively well despite the disruption of the pandemic, the higher Australian dollar and the trade issues with China.
‘‘ This is reflected in the ongoing uplift in annualised farmland values, as the demand for agricultural property remains high,’’ Mr Sheridan said.
Copyright © 2021 The Australian Financial Review
AFR – Monday, 21 Jun 2021 – Page 31
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