This month we bring to you Top tax time myths 2020, announcement from ATO on extension of Minimum Repayment period. We also look deeper on New reporting requirements by AASB for SMSFs. Finally, we look at Reduced SMSF related-party LRBA Rate for FY2020-21.
ATO top tax time myths for 2020
- Bank details do not get updated automatically
- Home to work travel is not claimable
- You cannot just claim $300 if you had no expenses
- Work related expenses need to be work related
- Lodging earlier does not always mean getting your refund earlier
Div. 7A – Extended period to make the Minimum Repayment
- As a result of the COVID-19 situation, the ATO says it understands that some borrowers are unable to make their Minimum Repayment on or before 30th June 2020.
- To offer more support, the ATO has announced an extension of the repayment period.
- To avail the benefit of this extended period, borrowers can request the extension by completing a streamlined online application on the ATO website.
- Upon approval of the application, the Minimum Repayment shortfall must be made by 30th June 2021.
- An important point to be noted is that this extension does not alter/amend the loan agreement signed by the borrower.
Div. 7A – Benchmark Interest Rate
The ATO has set the benchmark interest rate for Div. 7A purpose at 4.52% for FY2020-21 (down from 5.37% in FY2019-20).
FBT Car Parking Threshold – FY2020-21
The ATO has increased the Car Parking Threshold from $8.95 to $9.15.
Effective Life of Depreciating Assets for Specific Industries
The ATO has registered ‘The Income Tax (Effective Life of Depreciating Assets) Amendment Determination (No 2) 2020’ commencing from 1st July 2020 and this will be applicable for tax payers in specific industries for the purpose of calculating the decline in the value of depreciating assets for tax purpose.
The ATO has set the rate of Car Expenses at 72 cents/km for the tax year commencing from 1st July 2020. This was previously 68 cents/km.
New reporting requirements by AASB for SMSFs
- The ATO has issued a reminder that the Australian Accounting Standards Board (AASB) has released a new amended accounting standard AASB 2020-2 which changes the reporting requirements for certain ‘For – Profit’ private sector entities from 1st July 2021.
- This change means new SMSFs set up after 1st July 2021 should ensure they do not have a clause in their trust deed that require their financial statements be prepared in accordance with AAS.
- By avoiding such a clause, the SMSFs can prepare ‘Special Purpose Financial Statements (SPFS)’ in accordance with the super laws without referring to AAS.
Reduced SMSF related-party LRBA Rate for FY2020-21
- The ATO has reduced the safe harbour interest rate for SMSF related- party ‘Limited Recourse Borrowing Arrangements’ from 5.94% to 5.10% for FY2020-21.
- If an LRBA does not meet the safe harbour rules, the SMSF trustees will need to otherwise demonstrate that their arrangement is consistent with an arm’s length dealing.