February 2021 Newsletter

Please click on the following link to view our monthly accounting/tax newsletter for

February – 2021

We would like to highlight the following articles in this month’s newsletter:-

New insolvency rules commence

On the 24 September 2020, the Government announced changes to Australia’s insolvency framework to better serve Australian small businesses, their creditors and their employees. The new model that commences on 1 January 2021, will allow eligible small businesses to restructure their existing debts while remaining in control of their business. For those businesses that are unable to survive, a new simplified liquidation pathway will apply for small businesses to allow faster and lower-cost liquidation.

To be eligible to access this new process a company must:

  • be incorporated under the Corporations Act 2001;
  • have total liabilities which do not exceed $1 million on the day the company enters the process – excludes employee entitlements;
  • resolve that it is insolvent or likely to become insolvent at some future time and that a small business restructuring practitioner should be appointed; and
  • appoint a small business restructuring practitioner to oversee the restructuring process, including working with the business to develop a debt restructuring plan and restructuring proposal statement.

Working from home deductions

The “shortcut” rate for claiming working from home running expenses has been extended (previously 31 December 2020) until at least 30 June 2021. The “shortcut” rate allows eligible taxpayers to claim additional running expenses incurred between 1 March 2020 and 30 June 2021 at the rate of $0.80 per work hour, provided they keep a record of the number of hours worked from home.

Taxpayers eligible to use the shortcut rate are employees and business owners who:

  • work from home to fulfil their employment duties or to run their business during the period from 1 March 2020 to 30 June 2021; and
  • incur additional running expenses that are deductible under s 8-1 or Div 40 of the ITAA 1997.

The expenses covered by the shortcut rate include lighting, heating, cooling and cleaning costs, electricity for electronic items used for work, the decline in value and repair of home office items such as furniture and furnishings in the area used for work, phone and internet expenses, computer consumables, stationery and the decline in value of a computer, laptop or similar device.

Please do not hesitate to contact us if you have any queries in relation to your tax and accounting matters.