Welcome to our first tax blog from lock down. I write this while sitting in my new home office for the day, where I will be hanging out for the next four weeks at least and I hope you have all managed to settle into your places of isolation.
While the wage subsidy and the business impacts of the shutdown will be front of mind for many at the moment we thought we might use this blog to cover some other tax issues which may come up over the coming weeks and leave the heavier items to some of our other correspondence.
While the major and immediate focus over the recent week has been on the wage subsidy and more recent some discussion on mortgage payment holidays there have been several other tax law changes.
Also included in the amendment Act passed under urgency were:
- The re-instatement of depreciation in commercial buildings
- An increase in the low-value assets provisions allowing you to expense an asset on acquisition from $500 to $5,000 for the next year and $1,000 after that
- An increase to the threshold at which you need to start paying provisional tax from $2,500 to $5,000
These measures do not provide any immediate relief however are likely to have some impact, particularly the re-instatement of building depreciation, on future years tax obligations.
We have also heard some anecdotal reports in the media around AirBnB transitioning to long term rental. Once again, the traps of GST and AirBnb have the potential to cause unnecessary additional pressure in the current circumstances here. Where the AirBnB is owned in a GST registered entity this change could result in a change of use for the property resulting in a GST liability based on the market value of the property. Where you are considering changing the use of an AirBnB property we would encourage you to discuss this with your advisor first.