SW’s Danny Armstrong and Nick Michael join an impressive line up of experts to share their insights about how to successfully operate in international markets.

The National Retail Association and BNPL giant Klarna are proud to introduce the NRXpo. Retail is constantly evolving to meet and surpass the changing needs of customers and our local communities. The pandemic accelerated digital and ecommerce trends, and now it’s time for us to put a future-focus on the industry.

​With 11 unique and insightful sessions, networking drinks and exhibition stalls, the NRXpo is an event designed to help retailers boost their business, gain key insights, and come away with valuable takeaways to build their plan for the future.

Event details

The post SW presents at National Retail EXPO appeared first on SW Accountants & Advisors.

With a May election fast approaching, there was a lot of anticipation that this Federal Budget would provide much needed support for households in managing the cost of living. While borders have opened, many business in several key sectors are still feeling the impact of the Covid-19 pandemic and were also looking for some key measures to help get them back on their feet.

On the 29 March 2022, the Treasurer announced the Goverment’s plan for long-term economic growth in Australia, through job creation and focusing on investment in essential services and defence. The SW team has navigated the papers to find key measures for industry and sectors.

Take a look at our Fast Facts below or watch the full recording of the Budget Breakfast.

Did you miss out on our Federal Budget webinar?

Check out Catherine Birch, ANZ Senior Economist and our panel of experts as they shared their insights and key takeaways from the Budget.

Mandarin Overview – Federal Budget 2022/23

Watch our Mandarin team summarise the key announcements from this year’s Budget. SW’s team of Asian business experts deliver their insight into the challenges and practical opportunities.

Featuring our experienced and knowledgeable team: David Chu, Bessie Zhang, Vincent Shi, Toby Graham, Michael Chen and Michael Qin.

What does the Federal Budget mean for you?

Our Fast Facts provide an overview of the budget insights and potential opportunities from our team of experts. Tailored to your industry or business type, SW also reviews if the Federal Budget support measured up to expectations.

Take a look at what the Federal Budget means for you in 2022:

Agribusiness

Tourism, hospitality & gaming

Education

Individuals & SMEs

Energy & Resources

Property & infrastructure

The post Federal Budget Overview 2022/23 appeared first on SW Accountants & Advisors.

Careful consideration, planning and record keeping should be undertaken throughout this financial year in respect of work related home office expenses in order to maximise the deduction at year end.

Examples of WFH deductions you may be able to claim

• Heating, cooling and lighting
• Telephone call and phone rental costs relating to landline and mobile phones
• Internet data costs
• Decline in value of furniture and fittings such as desks, chairs, shelving and cupboards which you use for work-related activity
• Decline in value of office equipment such as computers, laptops, tablets, smart phones and printers which you use for work related activity
• Computer consumables such as printer ink and stationery
• Costs of repairs to home office furniture and fittings
• Home office cleaning expenses.

The rules:

• Expenses incurred must be directly related to work;
• Must have been paid out of own pocket; and
• Cannot have been reimbursed by the employer.

What has changed?

From 1 March 2020 to 30 June 2022, an actual home office is not required in order to claim home office expenses. 

Prior to 1 March 2020, a home office was required to be a designated room or area in the home set aside just for work, not shared by other people and not used for other purposes.

The ATO will now allow home office expenses to be claimed when working from the kitchen table or from a sofa.

Methods to calculate your WFH claim

1. Shortcut method

Using the short cut method, a tax deduction of 80 cents can be claimed for each hour worked from home.

This method covers costs such as:

• Electricity and gas
• Telephone
• Internet
• Decline in value of equipment and furniture.

This method is suitable for those working from home, without a dedicated home office space and making do. 

If there are multiple individuals working from home, each individual can claim 80 cents per hour. This includes both members of a couple living together.

2. Fixed rate method

Using the fixed rate method, a tax deduction of 52 cents can be claimed for each hour worked from home.

This method covers costs such as;

• Electricity and gas
• Decline in value of furniture and fittings
• Repairs to your home office equipment, furniture and furnishings
• Cleaning.

To use this method, you must have a dedicated workspace in your home. 

After claiming using the fixed rate, a claim for telephone, internet and decline in value of technology items, stationery and computer consumables can also be made.

3. Actual cost method for home expenses

Using the actual expenses method, the claim is calculated by calculating the actual expenses incurred to produce income when working from home.

This may include the following expenses:

• Electricity and gas
• Decline in value of furniture and fittings
• Decline in value of decline in value of telephones, computers, laptops or similar devices
• Phone expenses
• Internet expenses
• Cleaning
• Computer consumables and stationery.

For example, any electricity costs claimed will need to be calculated by looking at the cost per per kilowatt of power and the number of hours used for work related purposes. Similarly, telephone expenses bills will need to be itemised. Calls and data incurred specifically for work related purposes will need to be summarised.

Common mistakes made when calculating WFH claims

• Not apportioning shared bills.  Mistakenly individuals often claim the entire monthly bill even though the cost of that bill is shared with others.  For example, if the monthly internet bill is $100 and it is shared by two individuals, the claim is then $50 per individual and not the full $100
• Not having a good understanding how the depreciation rules work.  Assets purchased such as desks, chairs, filing cabinets, computers and printers have different “working lives” therefore, specific depreciation rates should be applied
• Claiming home office expenses when there is not a dedicated room or office in your home
• Claiming a too high a work-related proportion for a particular type of expense.  For example; the personal use of telephone or internet should not be claimed
• Not keeping appropriate records to substantiate the expense
• Not making a WFH claim when you are entitled to .80 cents per hour. This adds up.

What should you do prior to year end in order to maximise WFH claims

• Keep record of the number of hours worked from home each week over the financial year.  This could be a diary or timesheet; and
• Keep receipts for all eligible expenses so each method can be considered to work out the highest claim.

How can SW help

• Provide further information and discuss which method suits your circumstances best
• Advice around how to ensure the maximum tax benefit is obtained with minimal administration workload
• Review expenses incurred and advise which expenses are eligible and can be claimed
• Provide assistance with determining the useful life of assets and assist with calculating decline in value of work related items
• Assist in calculating work related claims using the three methods and provision of workpapers to support the claim in the event of an audit.

Contributors

Janelle McPhee

The post What can you claim working from home? appeared first on SW Accountants & Advisors.

Covid-19 continues to present significant challenges with labour shortages, supply chain issues and inflationary pressures. Australian businesses want to know how Treasurer Josh Frydenberg will tackle our economic recovery.

Join us for the 2022/23 Federal Budget Webinar where we will bring you expert insights into challenges and potential opportunities, tailored for your industry or business sector.

We will once again welcome back Catherine Birch, ANZ Senior Economist and our panel of experts hosted by Matt Birrell to share their insights and key takeaways from the Budget.

Register via the link below to find out what the budget means for you and your business.

Online registration details

Date

Time

Wednesday, 30 March 2022

9.30am – 11.30am

Expert speakers

Catherine Birch ANZ Senior Economist

Matt Birrell SW Director, Tax

The post Federal Budget Webinar 2022/23 appeared first on SW Accountants & Advisors.

The 2022 Small Business Support Program

The new program is intended to help NSW businesses survive the immediate impact of the COVID Omicron variant wave. Eligible businesses with a turnover of between $75,000 and $50 million that experienced a minimum 40% decline in turnover in January 2022 (and the first fortnight of February 2022) can apply for support through this program.

Employing businesses will be eligible to receive 20% of weekly payroll as a lump sum for the month of February, with a minimum payment of $750 per week and a maximum payment of $5,000 per week. Non-employing businesses will receive $500 per week, paid as a lump sum of $2,000.

The 2022 Small Business Support Program is only for the month of February and businesses will be able to apply through Services NSW from mid-February. Further details on the eligibility rules will be issued shortly.

Eligibility

To be eligible for the program, there must be a decline in turnover due to either public health orders or the impact of the Omicron variant of more than 40% during both:

• The month of January 2022 (compared to January 2021 or 2020), and
• 1 – 14 February 2022, compared to the same fortnight in February in the comparison year which is used to test the January 2022 decline in turnover.

Further, employers must maintain employee headcount from 30 January 2022.

Small business fees and charges rebate

Eligible businesses or not-for-profits only need to apply for the rebate once, but can submit multiple claims until the full value of the rebate is reached. The funds can be used to offset the costs of eligible NSW and Local Government fees and charges due and paid from 1 March 2021. These include, but are not limited to:

• Food authority licences
• Liquor licences
• Tradesperson licences
• Event fees
• Outdoor seating fees
• Council rates
• Road user tolls for business use.

The rebate cannot be used for fines or penalties, fees and charges that have the key purpose of discouraging behaviours or inducing behaviour changes, Commonwealth Government charges, rent on government premises or taxes. However, the rebate can now be used to cover half the cost of Rapid Antigen Tests (RAT).

The rebate will be available until 30 June 2022.

Eligibility

To be eligible for this rebate, small businesses (including non-employing sole traders) and not-for-profit organisations must:

• Have total Australian wages below the NSW Government 2020–21 payroll tax threshold of $1.2 million
• Have an Australian Business Number (ABN) registered in NSW and/or have business premises physically located and operating in NSW.

Note: Only one $3,000 rebate is available for each ABN.

Alfresco Restart Rebate

Small or medium food and beverage businesses wanting to create or expand their outdoor dining area may be eligible for a rebate of up to $5,000 under the NSW Government’s Alfresco Restart Package. The rebate is available to the first 5,000 eligible small or medium food and beverage businesses that register.

There are 2 steps involved in the Alfresco Restart rebate:

1. Register for the rebate

• Businesses must first register to confirm their eligibility
• Registrations will close when 5,000 businesses have successfully registered.

2. Claim the rebate

• Businesses that have successfully registered can claim their rebate from late February 2022 for expenses incurred from 14 October 2021 to 30 April 2022
• Registered businesses will receive an email when the claims process opens
• Claims must be made by 30 April 2022.

Eligibility

To be eligible for the rebate, businesses must:

• Have an active ABN, held before 1 June 2021
• Have operating premises physically located in NSW
• Have an aggregated annual turnover less than $10 million (inclusive) for the year ended 30 June 2021
• Be a small or medium food and beverage business, defined by at least one of the following ANZSIC codes:

• 4511 Cafés and restaurants
• 4520 Pubs, taverns and bars
• 4530 Clubs (hospitality)
• 4400 Accommodation (limited to hotel and motel operation)
• 1212 Beer Manufacturing
• 1213 Spirit Manufacturing
• 1214 Wine and other Alcoholic Beverage Manufacturing

• Have incurred, or will incur, eligible costs and expenses for opening or expanding their outdoor dining areas from 14 October 2021 to 30 April 2022.

When claiming the rebate applicants must also, where applicable:

• Have development approval and approval to use the land from council, Place Management NSW or a private landholder
• Have approval for the liquor licence boundary changes.

Note: Only one application per ABN is allowed. The rebate can be used towards outdoor dining expenses at multiple business locations if eligibility criteria are met.

Commercial Landlord Hardship Grant

Small commercial or retail landlords may be eligible for a grant under the Commercial Landlord Hardship Fund if their main source of income is impacted due to providing rent relief to tenants financially impacted by COVID restrictions.

Grants of up to $3,000 per month (GST inclusive), per property, are available for eligible landlords who have provided rental waivers to affected tenants. Rent waived must comprise at least half of any rental reduction provided. The remaining portion may be a rental deferral. The grant does not apply to rent deferrals.

Grants will be paid as a lump sum amount for the rent waived from 1 August 2021 to 13 March 2022. This is an extension of the period which previously ended 14 November 2021. Applications close on 31 March 2022.

Eligibility

To be eligible for a Commercial Landlord Hardship Grant, applicants must:

• Be the landlord of a property in NSW
• Have an agreement to provide rental relief to tenants from 13 July 2021
• Have not claimed, or will not claim, land tax relief between 1 July 2021 and 31 December 2021
• Have total land holdings valued at $5 million or less as at 31 December 2020, excluding the value of their principal residence
• Have more than 50% of your total income derived from gross rental income for the 2019–20 or 2020–21 financial year

• Where they are a business, attest that providing rent relief to their tenants may cause them financial hardship because they:

• are at imminent risk of closure, or
• are unable to pay for operating expenses, including rent or employee-related expenses for employing business landlords, or
• may be forced to reduce employee headcount if they are an employing business landlord, and
• have not incurred excessive and non-essential business expenses, and
• have experienced a decline in revenue due to the impact of the NSW public health orders, and
• cannot rearrange finances or draw upon non-essential assets to continue operation

• Where the applicant is an individual or holds property on trust, they must attest to financial hardship if they:

• are unable to maintain their current standard of living for themselves or their immediate family, and
• have not incurred excessive and non-essential living expenses.

Performing Arts COVID Support Package

The Package will now be extended from an end date of 14 February 2022 to 30 April 2022.

The funding is to be provided to eligible performances staged between 19 September 2021 to 30 April 2022.

The funding amount per performance will be calculated using a formula of:

• Average ticket price multiplied by the number of tickets available for sale (capped at 10,000) and,
• A specified percentage (up to a maximum of $12.5 million).

Eligibility

To be eligible for funding, the applicant must be one of the following:

• An eligible venue
• A producer of an eligible performance scheduled to perform at one of the eligible venues
• A promoter of an eligible performance scheduled to perform at one of the eligible venues.

Eligible venues have been identified through:

• Sector-wide consultation
• Review of online marketing material of venues, and
• Through assessment of tickets on sale through major ticket selling agencies (list published by Create NSW).

Eligible performances must be evidenced by:

• Marketing collateral (website, social media etc), and
• Have ticket sales managed through one of the eligible ticketing systems (list published by Create NSW).

How SW can assist

Many businesses have found the eligibility criteria difficult to navigate.

Our experts can guide you through the process and help you gather accepted relevant documentation to ensure your business gains the maximum benefits for these support measures.

Contributors

Tony Principe

E tprincipe@sw-au.com

Jae Debrincat

E jdebrincat@sw-au.com

The post NSW extends COVID-19 support for SMEs appeared first on SW Accountants & Advisors.

Updated 10 June 2021 (including announcements in the 2021/22 Federal Budget)

In this alert, our tax experts have detailed the key dates and conditions of eligibility for the instant asset write-off and full expensing of depreciable assets announced in the 2020/21 and 2021/22 Federal Budgets.

The multiple amendments to the rules have seen variations and extensions in eligibility thresholds, asset cost thresholds and installation date requirements. What was designed to be a simple tax cash flow benefit to encourage investment has now become relatively complex.

The Federal Government introduced the Full Expensing of Depreciable Assets (FEDA) measures in the 2020 Budget, which was an extension to the existing Instant Asset Write Off measures (IAWO).

As a guideline:

• IAWO apply to assets purchased prior to the 2020/21 Federal Budget (6 October 2020)
• FEDA measures apply to assets purchased on or after the 2020/21 Federal Budget (6 October 2020)

There may be some overlap in rules between the IAWO and the FEDA, in particular for assets purchased after 6 October 2020. Where this is the case the FEDA measures takes priority.

The tables below, summarises the measures (as they currently stand) for the 2020 income year and onwards. For simplicity we have not included thresholds or eligible requirements prior to the 2020 income year.

Federal Budget 2021/22

In the 2021/22 Federal Budget (on 11 May 2021), the Federal Government announced that they will extend the FEDA until 30 June 2023. It was otherwise due to finish on 30 June 2022. Other than the extended date, all other elements of FEDA will remain unchanged. This will be law when the Bill receives Royal Assent.

Please note

1. The term aggregated turnover includes group companies located within and outside of Australia. Your global consolidated annual report will be a good starting reference point.
2. The IAWO and FEDA provisions do not apply to certain assets including capital works asset (e.g. buildings and structural improvements), certain primary production assets or assets that have been allocated to a low-value pool or software development pool.
3. A passive entity (e.g. entity holding a rental property) may not qualify as carrying on a business. You should discuss this with your adviser.
4. For a LBE, a depreciating asset that starts to be held after the 2020 Budget time is excluded from the FEDA if:
   • the entity entered into a commitment to hold, construct or use the asset before the 2020 Budget time; or
   • the asset is a second hand asset.
5. In the 2021/22 Federal Budget (on 11 May 2021), the Federal Government announced that they will extend the FEDA until 30 June 2023 (i.e. it will cover assets installed and ready for use by 30 June 2023). This will be law when the Bill receives Royal Assent.
6. No immediate expensing under the FEDA. However, LBE can look to utilise the IAWO measures and claim an immediate deduction for the full cost of eligible second-hand assets costing less than $150,000 if they are purchased by 31 December 2020 and installed ready for use by 30 June 2021.
7. For those entities which may not otherwise qualify for FEDA, alternative tests are available to be able to access the FEDA measures (similar to the measures available for LBEs).  To satisfy the new test, companies must have:
   • less than $5bn in total statutory and ordinary income, excluding non-assessable non-exempt income (generally assessable income Australia) in either the 2018-19 or 2019-20 income year; and
   • invested more than $100m (cumulative) in Australia in tangible depreciating assets in the 2016-17 to 2018-19 income years.

The alternative tests allows businesses with an aggregated turnover of more than $5bn (due to the income of an overseas parent or associate) to qualify on the basis that they meet the additional investment requirements based on Australian activities.

Things to consider for your business

• If the IAWO measures do not apply for depreciable assets purchased prior to 6 October 2020, can the accelerated depreciation rules apply?
• There may be situations where the IAWO rules provide a better benefit over the FEDA including:
  • where LBE acquires a second-hand asset; or
  • where an entity acquired, or first used or installed ready for use, the asset on or after 12 March 2020 and prior to the Budget time
• What entities (domestically and internationally) may be grouped for the purposes of the ‘aggregated turnover’ test. This may be more complicated for multinational businesses.

• Are passive entities (e.g. property trusts) considered as ‘carrying on a business’?
• Consider reducing PAYG instalments if the entity is considering purchasing significant depreciating assets that may be eligible for a write off under the IAWO or FEDA.
• The FEDA is optional. Therefore, it may be worth considering whether incurring the tax deduction in a lump sum would be more beneficial than over time under the normal depreciation rules. Examples where taxpayers may wish to opt out include:
  • Ability to carry forward losses and satisfy loss testing rules
  • Ability frank dividends or receive other tax credits
  • Taxpayers prefer to align accounting and tax depreciation
  • Taxpayers have the choice to apply the FEDA on an asset-by-asset-basis.
• The ATO has indicated that significant FEDA and IAWO deduction disclosure information will be included in 2021 and later year returns. Record keeping will be required to be tailored to be able to make these disclosures.

Get in touch

Contact one of our experts to learn more about the impacts this may have to your business and how to navigate these changes.

Contributors

Jae Debrincat
View LinkedIn profile

The post Temporary full expensing of depreciating assets appeared first on SW Accountants & Advisors.

With a national plan in place to transition Australia’s National COVID-19 Response to allow visits to regional areas, plus the festive season fast approaching, it is anticipated the wine sector will see a massive increase in sales and visits to their wineries. We’ll be exploring the issues and long-run opportunities for Australian winemakers to make it more than a sugar rush with real life consumer data and insights from a range of experts!

Join us and experts as we explore:

• Consumer wine behaviour trends before, during and after lockdown
• How wineries can attract visitors and convert them into long term customers
• How wineries can create a more stable and sustainable business over the long term
• What grants are available and how to access them.

Your guides online

Tom Mullarkey Partner, SW	Mark O’Callaghan Managing Director, Wine Network Consulting	Sam Morris Director, SW
Robin Shaw Founder & Lead Consultant, Wine Tourism Australia	Michael Whitehead Head of Agribusiness Insights, ANZ

The post Spotlight | Wine Tourism – The Great Reopening appeared first on SW Accountants & Advisors.

At our recent Mandarin Tax and Accounting update, our team of experts discussed the recent key accounting and tax changes, the impact and opportunities that these changes would bring to individuals and businesses.

重点税务与财务事宜更新总汇 | Summary of key tax & accounting matters 

• 联邦预算重点事宜跟进
  Follow up on Budget key tax measures
• 各州疫情补贴汇总/对比
  State COVID support overview/comparison
• 澳大利亚税务局最新税收裁定与观察
  ATO Ruling updates & observations
• 个人与中小型企业近期关注
  ATO‘s focus area on Individual and SMEs
• 近期重大税务案件回顾
  Recap of key cases
• 《减少信息披露制度》与《简化披露准则》的差异对比
  RDR and SDS comparison
• ASIC 最新消息及其他条例变化
  ASIC update and other regulatory changes

专家团队 | Our experts

张洋 Bessie Zhang 合伙人 Partner E bzhang@sw-au.com		叶嘉 James Ye 合伙人 Partner E jye@sw-au.com		栾万博 Leo Luan 合伙人 Partner E lluan@sw-au.com
时炜淞 Vincent Shi 合伙人 Partner E vshi@sw-au.com		林长春 Neville Lin 总监 Associate Director E nlin@sw-au.com		陈泓洋 Michael Chen 经理 Manager E mchen@sw-au.com

联系我们 Contact us

若您有任何疑问或想了解更多详情，欢迎通过 marketing@sw-au.com 联系本所市场团队。
If you have any queries or would like more information, please contact the Marketing team via marketing@sw-au.com.

关注我们的微信公众号，查看更多最新资讯与活动。
Follow our WeChat account to stay updated on insights and our other webinars.

The post 全中文税务与财务更新讲座 | Mandarin Tax and Accounting update appeared first on SW Accountants & Advisors.

The relief comes following amendments to the Retail and Other Commercial Leases (COVID-19) Amendment Regulation 2021 (NSW) (‘the Regulation’) earlier this month.

The amendments were passed on 13 August 2021 and provide greater protections to impacted lessees by reinstating National Cabinet’s Commercial Leasing Code of Conduct. The Regulation seeks to ensure that the economic impact of COVID-19 is shared by both property owners and tenants.

Combined with the land tax concessions and the newly established Commercial Landlord Hardship Fund available to property owners, the Regulation seeks to limit the economic damage of COVID-19 and maximise the number of businesses able to resume normal operation when public health orders are lifted.

What do the Regulations provide for?

Under the Regulation, property owners must negotiate rent relief agreements with eligible impacted lessees in accordance with the leasing principles in the National Code of Conduct.

Under those principles, property owners are required to offer tenants rent relief proportionate to the tenant’s decline in turnover. Waivers should make up at least 50 per cent of any rent relief provided (unless the impacted lessee agrees otherwise). Rental deferrals make up the balance.

Eligibility

In order to be eligible an ‘impacted lessee’ must:

• first qualify for the 2021 COVID-19 Microbusiness Grant, the 2021 COVID-19 Business Grant or the 2021 JobSaver Payment
• have a turnover of less than $50 million for the 2020/2021 financial year.  If the lessee is a member of a group, the turnover of the group is the relevant turnover. If the lessee is a franchisee, the turnover of the business conducted at the premises of the franchisee is the relevant turnover.  In all other cases, the turnover of the business conducted by the lessee is the relevant turnover. Turnover includes any turnover of the business and would therefore include amounts earnt from internet sales (notwithstanding the business may ordinarily operate from a shopfront), and
• have entered into their lease before 26 June 2021.

Decline in Turnover Test

The Regulation does not prescribe a specific period that parties should use to calculate decline in turnover. As such, parties are free to determine an appropriate period that works for them.

Impacted lessees should provide evidence of their decline in turnover to their property owner to help them calculate the appropriate rent reduction. Evidence could include a Business Activity Statement (BAS) or an Accountant’s Letter.

If an impacted lessee’s circumstances change, they can make a subsequent request to negotiate future rent adjustments.

For the purposes of calculating an appropriate rent reduction, payments from Government COVID-19 grants should be included as part of an impacted lessee’s turnover.

Process for agreeing rent relief

The period during which the rules apply is 13 July 2021 to 13 January 2022. Impacted lessees in financial distress and their property owners should start the process of negotiating rent relief agreements as soon as possible. Support measures will be reviewed regularly as required due to the changing environment brought about by the pandemic.

For the six-month period (July 2021 – January 2022), commercial and retail property owners cannot take certain actions against an impacted lessee (e.g. evict an impacted lessee, increase rent level) unless they have first renegotiated rent and attempted mediation.

If a lessee is asked to negotiate rent reduction, they must respond within 14 days of receiving the request, or another period if agreed by both parties.

Commercial property owners and impacted lessees must negotiate rent relief agreements by taking into consideration the following principles in National Cabinet’s Code of Conduct on commercial tenancies (unless otherwise agreed by both parties):

1. Landlords must not terminate leases for non-payment of rent
2. Impacted lessees must remain committed to the terms of their lease, subject to any amendments negotiated, and material failure to do so will forfeit additional COVID-19 protections provided to impacted lessees
3. As noted above, landlords must offer impacted lessees proportionate reductions in rent (in the form of deferrals and waivers) of up to 100 per cent of the amount ordinarily payable, in proportion to the decline in the impacted lessee’s trade.
4. Rent waivers, as opposed to deferrals, must constitute at least 50 per cent of the rent reduction provided by landlords (in negotiating this, regard must be had to the landlord’s financial ability to provide such a waiver)
5. Any rent deferral must be amortised over the balance of the lease term and for a period no less than 24 months, whichever is greater, unless otherwise agreed by the parties
6. Landlords must pass any reduction in statutory charges (e.g. land tax, council rates) to the impacted lessee
7. Landlords should seek to share any benefit received due to deferral of loan payments by a bank or otherwise with the impacted lessee in a proportionate manner
8. Landlords should, where appropriate, seek to waive recovery of any other expense (or outgoing payable) by an impacted lessee under the lease terms during the period the impacted lessee is unable to trade
9. Repayment of other (non-rent) expenses should not commence until the earlier of the COVID-19 pandemic ending (as defined by the Australian Government), or the existing lease expiring
10. Landlords must not charge fees or interest on rent or fees that are waived or deferred
11. Landlords must not draw on a impacted lessee’s security for the non-payment of rent (be this a cash bond, bank guarantee or personal security) unless agreed by the impacted lessee and landlord
12. Impacted lessees should be allowed to extend their lease for an equivalent period of any rent waiver/deferral period.
13. Landlords must freeze rent increases (except for retail leases based on turnover)
14. Landlords may not apply any prohibition or levy any penalties on impacted lessees that reduce operating hours or cease to trade during the COVID-19 pandemic.

Requirements for both parties

Commercial property owners and impacted lessees should work together to negotiate a rent relief agreement. Where parties are unable to do this, they must attend mediation through the Small Business Commission.

Interim arrangements for urgent matters involving a threatened or actual eviction, can be sought through the NSW Civil and Administrative Tribunal or the courts.
For standard matters, the Small Business Commission aims to offer a date within five weeks of application.

For urgent matters, mediation can be arranged within days. The mediator cannot impose any outcome but, if a mediation is successful, parties can enter a binding deed.
Where mediation is unsuccessful, parties can pursue action through the NSW Civil and Administrative Tribunal or the NSW civil courts.

As a result of the Regulation a landlord may not:

• try to regain possession of premises with respect to a relevant lease,
• try to terminate such a lease, or
• exercise or enforce any other right of the landlord with respect to such a lease

unless the Small Business Commissioner has first certified that mediation has failed to resolve the dispute, whilst also enunciating the reasons for the mediation being unsuccessful.

It is important that impacted parties obtain advice from their legal advisers with respect to the matters noted above to ensure their obligations and rights are appropriately dealt with as provided by the Regulation.

Landlord’s assistance/relief

Where landlords have provided rent relief to ‘impacted lessees’, they are entitled to land tax relief of an equivalent amount of their land tax liability for 2021, with the relief limited to the actual land tax liability. The relief will be a rebate for those landlords who have already paid land tax and a waiver for those landlords that have not paid their land tax. Please refer to our previous update on land tax relief for further information.

The New South Wales government is also in the process of establishing a new $40 million Hardship Fund. This Fund will provide a monthly grant of up to $3,000 for qualifying landlords who provide a rent waiver of at least the same value of the Hardship Fund grant, as well as any land tax relief that the landlord is granted.

How SW can assist

Whether you are a commercial landlord or business tenant, our experts are highly experienced in assisting with calculations of decline in turnover, eligibility assessment, the application and negotiation process.

Reach out to one of our tax and property experts below for a conversation about your circumstances.

Get in touch

Tony Principe

E tprincipe@sw-au.com

Helen Wicker

E hwicker@sw-au.com

Blake Rodgers

E brodgers@sw-au.com

The post NSW rent relief for COVID-19 impacted lessees appeared first on SW Accountants & Advisors.

The scheme seeks to provide rent relief to commercial tenants affected by COVID-19 and operates in a similar manner to the Regulations released in March 2020, which expired on 28 March 2021. However, there are key differences including more specific details as to how to calculate the tenant’s decline in turnover and a mandatory reassessment process which will adjust the relief percentage from 31 October 2021.

Outlined below are the key eligibility requirements, the turnover reduction calculation methodology and the processes to be followed.

Eligibility

Decline in Turnover Test

Turnover means Current GST Turnover as defined in the GST Act, with some modifications in Regulation 11.

Decline of at least 15% for ACNC registered charities (with some exclusions); or 30% for all other entities.

Turnover test, periods to compare:

• If a tenant commenced trading before 1 April 2019,
• Any consecutive 3-month period between 1 April 2021 and 30 September 2021; compared to either:

1. the equivalent period in 2019; or
2. the tenant’s chosen applicable alternative comparison periods (see table on page 4 for alternative options).

• If a tenant commenced trading after 1 April 2019, but before 1 April 2021:

1. any consecutive 3-month period between 1 April 2021 and 30 September 2021; compared to
2. the tenant’s chosen applicable alternative comparison periods (see table on page 4 for alternative options)

• If tenant commenced trading on or after 1 April 2021,

1. the period that is agreed to by negotiation between landlord and tenant; compared to
2. the tenant’s chosen applicable alternative comparison periods (see table on page 4 for alternative options)

Process for agreeing rent relief

1. Tenant assesses eligibility.
2. Tenant requests relief. A request must be in writing and include a statement from the tenant that:
   • the tenant is an eligible tenant
   • the tenant satisfies the decline in turnover test including:
   1. Turnover for the test period
   2. Turnover for the comparison period
   3. Whether an alternative comparison period used
   4. Details of the calculation of decline in turnover
   5. The decline in turnover percentage
   6. The reduction in rent that would satisfy the minimum requirements of the regulations, consistent with the proportion of decline in turnover percentage provided
   7. Any other circumstances that the tenant would like to include.
   • Within 14 days of making the request, the tenant must provide evidence of the turnover figures used including at least one of the following:
   1. Accounting record extracts
   2. Business Activity Statements
   3. Bank statements
   4. A statement prepared by a practising accountant.
      The evidence must be accompanied by a statutory declaration from the tenant.
      If a tenant fails to provide evidence within the required 14 days then the request automatically lapses.  Up to 3 requests for relief can be made, i.e. 2 more if the first lapses. If they let 3 requests lapse then the tenant cannot apply again.
3. Landlord makes offer within 14 days, unless otherwise agreed, of receiving everything required from the tenant including the request noted in 2. above, supporting evidence and the statutory declaration:
   • the offer must be for rent reduction which at a minimum is proportionate to the decline in turnover
   • at least 50% of the reduction must be a waiver and the balance can be a deferral.
4. Tenant and landlord to negotiate.
5. If no agreement is reached within 15 days of the landlord’s offer of rent relief, the tenant is deemed to have accepted the landlord’s offer unless the tenant has referred the matter to the Small Business Commissioner or the landlord’s offer does not comply with the requirements noted in 3) above.
6. Agreed position to be documented by lease variation or other agreed approach.

Rent relief period

The period commences on either:

• 28 July 2021
  • For complete and successful requests made on or before 30 September 2021
• The date of the request
  For complete and successful requests made after 30 September 2021

The period ends 15 January 2022.

Mandatory Reassessment – before 31 October

For agreements reached on or before 30 September 2021, the tenant must provide the following by 31 October 2021 for re-assessment:

• Turnover for the quarter ended 30 September 2021.
• Turnover for the comparison period being:

1. If the tenant began trading before 1 July 2019, the quarter ended 30 September 2019; or
2. If the tenant began trading between 1 July 2019 and 31 March 2021, the quarter ended 30 June 2021; or
3. An alternative test period (should be same as used for first request), including details of the comparison method.

• The percentage change in the above two periods
• Another statutory declaration.

The net percentage change is then used for the purposes of calculating rent relief from 31 October 2021.

If the tenant fails to provide the necessary information by 31 October, the rent relief agreement no longer applies to the extent that it relates to any waiver of rent from the assessment date.  That means only the deferred portion of any rent relief will continue after 31 October.

Subsequent relief

Tenants can apply for further relief if their financial circumstances materially change, following the process described above under “Process for agreeing rent relief” subheading.

Any new rent relief agreement will apply in substitution of the original agreement.

Extension of term

The landlord must offer an extension on the same terms as were in place on 28 July equivalent to the period for which rent is deferred. E.g. if 3 months rent is deferred, 3 months must be added to the term of the lease.

Deferred rent

The landlord cannot request payment until after 15 January 2022.

Deferred amount is to be paid over the greater of the remaining term of the lease, including any extension, and 24 months.

Previous deferrals

Any leases subject to rent deferrals under the previous (2020) rent relief scheme, must have the repayment of those deferrals paused and resumed after 15 January 2022.

Dispute resolution

Either party can refer a dispute to the Small Business Commissioner for mediation.

Further powers are provided to the Small Business Commissioner to make a binding order in certain circumstances.

Application can be made to VCAT for review of a binding order in certain circumstances.

Alternative comparison periods

How SW can assist

Our teams can assist commercial landlords and tenants to calculate the decline in turnover, assessing eligibility, the application and negotiation process.

Reach out to one of our experts below for a conversation about your circumstances.

Stephen O’Flynn

E soflynn@sw-au.com

Abi Chellapen

E achellapen@sw-au.com

Blake Rodgers

E brodgers@sw-au.com

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