News & Updates in the Accounting World
Risen Accounting makes it a point to keep abreast of relevant industry news, trends and changes. Maybe that’s how we stay ahead of the game in what we do. Here, in our News Center, our team shares all of this with you. Check out some of the latest industry news as well as our helpful accounting hints and other financial management articles.
Director identification number
Company directors need to verify their identity as part of a new director identification number (director ID) requirement.
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A director ID is a unique identifier that a director will apply for once and keep forever – which will help prevent the use of false or fraudulent director identities.
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All directors of a company, registered Australian body, registered foreign company or Aboriginal and Torres Strait Islander corporation will need a director ID.
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When you must apply depends on when you were appointed as a director:
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Existing directors have until 30 November 2022 to apply.
New directors appointed between 1 November 2021 and 4 April 2022 must apply within 28 days of their appointment.
From 5 April 2022, intending directors must apply before being appointed.
Step 1 – Set up myGovID
You will need a myGovID with a Standard or Strong identity strength to apply for your director ID online. If you live outside Australia and can’t get a myGovID with a Standard or Strong identity strength, you will need to apply with a paper form and provide certified copies of your identity documents. If you live in Australia and:
don’t have a myGovID, you can find information on how to download the app at How to set up myGovID
already have a myGovID, you can apply for your director ID now.
Step 2 – Gather your documents
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You will need to have some information the ATO knows about you when you apply for your director ID:
your tax file number (TFN)
your residential address as held by the ATO
information from two documents to verify your identity.
Examples of the documents you can use to verify your identity include:
bank account details
an ATO notice of assessment
super account details
a dividend statement
a Centrelink payment summary
a PAYG payment summary (this is different to your income statement, and/or your PAYG instalment activity statement).
Step 3 – Complete your application
Once you have a myGovID with a Standard or Strong identity strength, and information to verify your identity, you can log in and apply for your director ID. The application process should take less than 5 minutes.
Temporary full expensing of depreciating assets
The government announced a temporary full expensing incentive to support businesses and encourage new investment.
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Businesses with an aggregated turnover of less than $5 billion can immediately deduct the business portion of the cost of eligible new depreciating assets. Corporate tax entities unable to meet the $5 billion turnover test may be eligible for temporary full expensing under the alternative income test. The eligible new assets must be first held, and first used or installed ready for use for a taxable purpose, between 7:30pm AEDT on 6 October 2020 and 30 June 2021. This date is extended to 30 June 2022 pending royal assent.
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For businesses with an aggregated turnover of less than $50 million, temporary full expensing also applies to the business portion of eligible second-hand depreciating assets.
Businesses can also immediately deduct the business portion of the cost of improvements to eligible depreciating assets (and to assets acquired before 7.30pm AEDT on 6 October 2020 that would otherwise be eligible assets) if those costs are incurred between 7.30pm AEDT on 6 October 2020 and 30 June 2022.
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If an asset qualifies for an immediate deduction under temporary full expensing in an income year, you can choose not to apply temporary full expensing and to claim a deduction using other depreciation rules.
However, you must notify the ATO in an approved form (such as using the new items on the company tax return) that you have chosen not to apply temporary full expensing to the asset. Your choice cannot be changed and you must notify the ATO by the day you lodge the tax return for the income year to which the choice relates.
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If you are a small business that chooses to use the simplified depreciation rules, you cannot opt out of temporary full expensing.
Base rate entity company tax rate
From the 2017–18 to 2019–20 income years, companies that are base rate entities must apply the lower 27.5% company tax rate. The rate reduced to 26% in the 2020–21 income year and then to 25% for the 2021–22 income year and future years.
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A base rate entity for an income year is a company if:
the company’s aggregated turnover for that income year is less than the aggregated turnover threshold for that income year, and
it has 80% or less of their assessable income in that income year that is base rate entity passive income – this replaces the requirement to be carrying on a business from the 2017–18 income year onwards.
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The aggregated turnover threshold for the 2017–18 income year is $25 million. For the 2018–19 income year or each subsequent income year, it is $50 million.
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The aggregated turnover from any prior income year is irrelevant when working out if a company is a base rate entity for any particular income year.
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Base rate entity passive income is:
corporate distributions and franking credits on these distributions
royalties and rent
interest income (some exceptions apply)
gains on qualifying securities
a net capital gain
an amount included in the assessable income of a partner in a partnership or a beneficiary of a trust, to the extent it is traceable (either directly or indirectly) to an amount that is otherwise base rate entity passive income.
Changes to payment summaries
You may not receive a payment summary from your employer this year.
Most employers now report their employees’ income, tax and super information directly to the ATO each payday. You can access your payment summary information – now called an income statement – at any time by going to ATO online services through your myGov account.
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If you can't access your information through your myGov account, please get in touch with us for a copy of your income statement.
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If we are acting as your registered tax agent to prepare your tax return, you don’t need to do anything. The ATO provides us with your income statement information as well as other information third parties report to the ATO, such as banks and government agencies.
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Wait for your employer to mark your income statement as ‘tax ready’ before you prepare and lodge your tax return. Your employer should mark your income statement as ‘tax ready’ by 14 July.
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If you have more than one employer, you may receive several income statements or both a payment summary and an income statement. You will need to check that income from all your payment summaries is included in your tax return.