2024
2024
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Learn more about tax areas and issues that may impact you.
New standards at 31 December 2024 There are three new accounting standards to be considered for the first time for 31 December 2024 reporters. A summary of each of these standards has been considered below as well as potential impacts on our clients. Revised AASB 101 Presentation of Financial Statements provides additional guidance regarding presentation of liabilities as current or non-current. In particular, the standard includes more clarity around the existence of covenants and waivers / periods of grace in the event of a breach. Additional disclosures are required where covenants are tested after the reporting date. This is likely to have impact for many of our clients and we recommend that bank agreements are reviewed as soon as possible as well as identification of potential covenant breaches. AASB 2022-5 Amendments to Australian Accounting Standards – Lease Liability in a Sale and Leaseback clarifies how a seller-lessee should measure lease liabilities arising from a sale and leaseback transaction. It ensures that the leaseback does not lead to the recognition of gains that aren't aligned with the right-of-use asset retained. Expected to have little impact, generally if our clients enter sale and leaseback arrangements, there is a failed sale as control is not transferred from the selling entity. AASB 2023-1 Amendments to Australian Accounting Standards – Supplier Finance Arrangements (2024-1 for Tier 2) introduces new disclosure requirements to enhance transparency about the nature, timing, and amount of liabilities financed by suppliers in relation to the effects of such arrangements on an entity’s liquidity risk and leverage. Little impact expected, however disclosure amendment only.
What Should Be on the Board/Management Committee Agenda for NFP and Smaller Entities? We are fast approaching the end of the calendar year – the second most common reporting date for entities in Australia. Board and Management committees (Boards) of not-for-profits (NFPs) and small entities will be considering their annual reports and the 2025 outlook and as part of this project, it will be time to ensure the Board attention areas are appropriate. Boards should focus on current and emerging risks to ensure their organisations remain resilient and effective – the normal items of financial management, governance, and strategic planning remain relevant, however other key matters which should be included are: Cybersecurity: Ensure your organisation is protected against increasing cyber threats and has robust data protection measures in place, including knowing what data is collected and retained by the organisation. Climate Risk: Evaluate how environmental changes impact operations, funding, and long-term sustainability and whether there is impact from the mandatory climate-reporting risk regime on your suppliers which may impact you. Diversity & Inclusion: Ensuring your governance and decision-making reflect the community your organisation serves, and the appropriate voice is being heard. Digital Transformation: Discuss emerging technologies for operational efficiency and addressing any digital gaps. Ensure appropriate policies for the use of AI are in place. Staffing and Succession Planning: Regularly review staffing levels, development opportunities, and establish succession plans for key roles, such as the Chair of the Board, CEO or General Manager. Geopolitical situation: Consider any likely impacts from the current world uncertainty and overseas elections including supplier and beneficiary locations, changes in exchange rates and interest rates.
Christmas Parties & Gifts 2024 With the well-earned 2024 holiday season on the way, many employers will be planning to reward staff with a celebratory party or event. However, there are important issues to consider, including the possible FBT and income tax implications of providing 'entertainment' (including Christmas parties) to staff and clients.
Can staff celebrations attract FBT? With the holiday season coming up, employers may be planning to celebrate with their employees. Before they hire a restaurant or book an event, employers should make sure to work out if the benefits they provide their employees are considered entertainment-related, and therefore subject to fringe benefits tax ('FBT'). This will depend on: the amount they spend on each employee; when and where the celebration is held; who attends — is it just employees, or are partners, clients or suppliers also invited? the value and type of gifts they provide. Employers who do provide entertainment-related fringe benefits should keep records detailing all of this information so they can calculate their taxable value. We will be releasing a full Tax Alert on this topic next week.
We want to alert you to recent scams exploiting the myGovID name change. Scammers are using phishing emails, fake websites, and calls to steal your information. The below is an extract of a recent newsletter received from the ATO.
Australia's New Climate Reporting Laws: What Do They Mean for Small and Medium-Sized Entities? Australia's Senate has just passed a Bill introducing mandatory climate-related reporting for large entities, but what does this mean for small and medium-sized businesses? While you may not be directly required to comply, there is still a significant impact to consider. One of the key areas affected is Scope 3 emissions reporting, which includes the emissions generated along the supply chain. This means that if your entity is part of the supply chain of a mandatory reporter, they will likely need detailed information for you to accurately report their own emissions. This is where proactive preparation can benefit you. A first step is to identify which entities in your value chain may be affected and start the conversation with them. You can then consider your carbon footprint: including how much energy does your business consume and your main sources of emissions. By gathering and tracking this data now, you can provide the necessary information to your larger partners, helping them comply with the new requirements. For example, if you are a small manufacturer supplying products to a large retailer, that retailer will need to report the emissions associated with the production, transportation, and even the disposal of your products. Being able to provide them with accurate emissions data not only strengthens your business relationship but also positions you as a responsible and forward-thinking partner. Preparing now for these regulatory changes could give you a competitive edge. Climate-related reporting is gaining momentum globally, and staying ahead of the curve will ensure your business is ready to meet any new obligations.
Tax Alert - Reminder of changes to Vacant Residential Land Tax rules in Victoria from 1 January 2025
Reminder of changes to Vacant Residential Land Tax rules in Victoria from 1 January 2025 Background Vacant residential land tax ( VRLT ) may apply to residential land that is vacant for more than 6 months in the preceding calendar year (ie. from 1 January 2024 to 31 December 2024). Residential land can include: land with a home on it; land with a home which is being renovated or where a former home has been demolished and a new home is being constructed; or land with a home on it that has been uninhabitable for 2 years or more. Residential land does not include land without a home on it (sometimes called unimproved land), commercial residential premises, residential care facilities, supported residential services or retirement villages. The scope of what types of residential property will be exposed to the VRLT rules is being expanded over time, as follows:
Hiring employees for the festive season As the festive season approaches, employers that hire new employees to help with their business should remember the following when it comes to their employer tax and super obligations: Employers should make sure they are withholding the right amount of tax from payments they make to their employees and other payees, especially as this will help their employees meet their end-of-year tax liabilities; Employers must pay super guarantee (currently at 11.5%) to all eligible employee's super funds in full and on time to avoid paying the super guarantee charge; and If employers are still not reporting through single touch payroll (STP) and they do not have an approved exemption, deferral or concession in place, they should start reporting now. If they have just started a business or recently employed staff, they will need to report through STP from their first payday.
Are Special Purpose Financial Statements Still Acceptable for Not-For-Profit (NFP) Entities? Following on from our post 23rd October 2024 which addressed special purpose financial statements in relation to for-profit entities, we have received a number of questions regarding the same topic for not-for-profit entities. Not-for-profit entities may continue to choose to prepare Special Purpose Financial Statements (SPFS) if they assess themselves as non-reporting entities. Per Statement of Accounting Concepts 1 (SAC 1), a non-reporting entity is one where users, such as donors, members, creditors, or regulators, are not reliant on general-purpose financial reports for making decisions. This assessment is not static; it must be revisited annually by the governing body to ensure it remains accurate. Although NFPs self-assess their reporting status, it is crucial to remember that there may be legislation governing financial statements which can vary depending on the type of entity, the State of incorporation and ACNC registration. For instance, SPFS prepared under the ACNC Act must comply with either: The full presentation and disclosure requirements in the compulsory standards for SPFS listed in section 60.30 of the ACNC Regulations (AASB 101, AASB 107, AASB 108, AASB 124, AASB 1048, AASB 1054) or the relevant paragraphs from AASB 1054 and AASB 1060 being paragraphs 8, 11, 14-103, 106-110, 189-203 of AASB 1060 and paragraphs 1 to 6, 9, 9A, 9B and 17 of AASB 1054. The Australian Accounting Standards Board (AASB) is also developing a new Tier 3 standard specifically for smaller not-for-profits, we are expecting an exposure draft of the proposals by the end of 2024. This upcoming standard and proposed changes to the Conceptual Framework aims to simplify reporting requirements while mandating general purpose financial statements for more NFPs. In conclusion, while SPFS might still be permissible, not-for-profits should carefully assess their reporting obligations and the needs of their users to ensure that your financial reporting remains relevant, compliant, and transparent while serving the best interests of your organisation and its stakeholders. Monitoring the proposed developments from the AASB will allow you time to prepare for changes that might be needed.
Audit Lowe Down – Are Special Purpose Financial Statements Still Acceptable for For-Profit Entities?
Are Special Purpose Financial Statements Still Acceptable for For-Profit Entities? The financial reporting landscape in Australia has seen significant changes over the last few years, particularly in the acceptability of special purpose financial statements (SPFS) for for-profit entities. Historically, many for-profit entities prepared SPFS to meet specific needs without adopting the full suite recognition, measurement and disclosure requirements of accounting standards. We continue to receive lots of questions about whether for-profit entities can continue to prepare special purpose financial statements. The AASB introduced new requirements for assessing whether a for-profit, private sector entity needs to prepare general purpose financial statements through amendments released in AASB 2020-2 Amendments to Australian Accounting Standards – Removal of Special Purpose Financial Statements for Certain For Profit Private Sector Entities. In summary, from 30 June 2022, a for-profit private sector entity must prepare general purpose financial if one of the following criteria is met – the entity complies with: A legislative requirement to prepare financial statements in accordance with Australian Accounting Standards or accounting standards – this would include, for example Companies required to financial statements under the Corporations Act, e.g. all large proprietary companies, small foreign owned companies, public companies greater than $250k revenue OR A constituting or other document that requires the preparation of financial statements in accordance with Australian Accounting Standards. This might include documents such as constitution, trust deed, joint venture agreement, bank loan agreement. If this requirement exists and the agreement was created / amended prior to 1 July 2021 then an entity can continue preparing special purpose financial statements with some extra disclosures the document was created or amended after 1 July 2021 then then general purpose financial statements must be prepared. While SPFS might still be permissible in specific cases, entities should evaluate whether their current financial statements are appropriate given the change in accounting standards.
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