Year End Tax Planning in Uncertain Times - Webinar Q&A

Q1. Are charities that meet the aggregated turnover of less than $50m entitled to the Cash Flow Boosts? The charity in question has an ABN, is a company, and will be active to September 2020. All BAS/IAS have been submitted and they employ staff.
A1. Yes, a charity that has aggregated turnover of less than $50m is eligible to receive the Cash Flow Boost.

Q2. If a person becomes a tax resident prior to the date of sale does this mean the main residence exemption will apply? The slide states “Potentially entitled to main residence exemption if recommence residency before sale”?
A2. If you are an Australian tax resident at the time you enter into a contract to sell your home, you can apply the main residence exemption rules. Depending on your circumstances you may receive a part or full main residence exemption when you sell.

Q3. Am I able to write off my pool up to $150,000 for the 2020 year or is this only for specific purchases up to $150,000?
A3. If you have assets in a Small Business Pool and the balance of the pool (before depreciation) is less than $150,000 at 30 June 2020, the balance of the pool is written off as a tax deduction in FY2020.

Q4. Is it beneficial to withdraw $10,000 from superannuation and recontribute it as a tax deduction?
A4. In some circumstances, the general superannuation and taxation law would allow this. However, If you make an early withdrawal from superannuation with the intention of recontributing as a tax-deductible contribution, the general anti-tax avoidance provisions could be applied to deny the deduction. This strategy is not in line with the intention of the COVID-19 early superannuation release rules and we would not recommend this strategy. You should seek advice from a qualified financial advisor prior to making any decisions about superannuation.

Q5. If I am an Eligible Business Participant of a trust will the $750 form part of the business income and if any profit remains after the year, will I then pay tax on the surplus of the trust?
A5. Yes, the $1,500 per fortnight JobKeeper payments for an Eligible Business Participant will be treated as assessable business income of the trust. If the trust has a taxable profit for the year, the beneficiaries of the trust who are entitled to the income from the trust will be taxed on these amounts.

Q6. Can time spent managing an SMSF’s investments in home office qualify for the $0.80/hour as a deduction for the SMSF?
A6. The $0.80/hr COVID-19 home office deduction is only available to employees who have worked from home in the course of their employment. It is intended to be an estimate of the actual additional costs incurred by the employee as a result of working from home. You would not be eligible to claim this deduction in either your SMSF or your own name in relation to your time spent managing your SMSF from your home office.

Q7. Which is the best entity to hold shares which pay a good fully-franked dividend? Can I buy in company name, trust, personal etc?
A7. The right structure to hold investments such as shares will depend on your personal circumstances and goals. Trusts can provide flexibility to distribute franked dividends between family members and access the CGT discount when the shares are sold, however a trust is not always the right structure. You should talk to your Mazars advisor to determine the best structure for your circumstances.

For further information or assistance navigating your year end tax planning strategy, please contact your usual Mazars advisor or one of our offices below:

Brisbane: 07 3218 3900  |  Melbourne: 03 9252 0800  |  Sydney: 02 9922 1166

Published: 25/5/2020

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