April 2020 Newsletter
April 2020 Newsletter
Do you or your business need help?
Do you or your business need help?
If you or your business need help with your financial arrangements during this difficult time, we can help you to work out which of the many Coronavirus (COVID-19) related payments, concessions and arrangements apply to you, and how you can best make use of them. Contact us today.
ATO Coronavirus administrative support
A series of administrative measures to assist businesses experiencing financial difficulty as a result of the COVID-19 pandemic has been announced by the ATO. These include deferring the payment date and amounts due on Business Activity Statements (BASs), income tax assessments, FBT assessments and excise by up to four months. Businesses will also be allowed to change payment and reporting cycles for GST and vary PAYG instalment amounts. Any interest or penalties applied to tax liabilities incurred after 23 January 2020 may be remitted.
The measures that will apply are similar to those for taxpayers affected by the recent Australian bushfires. However, one important point of difference is that while the bushfire measures applied automatically to particular geographical areas, assistance for those impacted by COVID-19 will not be automatically implemented. Taxpayers who have been affected will need to contact the ATO to discuss their situation in order to come up with a tailored support plan.
The ATO has also clarified that emergency accommodation, food, transport, medical or other assistance provided by employers to employees affected by COVID-19 may be exempt from FBT, depending on the circumstances. However, employers will still need to meet their ongoing super guarantee obligations for their employees. The ATO says that by law, it cannot vary the contribution due date or waive the superannuation guarantee charge where super guarantee payments are late or unpaid.
Coronavirus stimulus: what's in it for you?
In an effort to combat the economic effects of the global Coronavirus pandemic, on 12 March 2020 the Federal Government announced an economic stimulus package worth $17.6 billion, which it said is expected to provide direct support for up to 6.5 million individuals and 3.5 million businesses. The package includes business investment initiatives, cash flow assistance payments to small and medium entities (SMEs), household stimulus payments and support for impacted sectors, regions and communities, as well as tax administration relief.
The instant asset write-off threshold will be increased from $30,000 to $150,000 and expanded to include access for businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.
A time-limited 15-month investment incentive (through to 30 June 2021) will also be provided to support business investment by accelerating depreciation deductions.
Eligible small and medium entities will receive a Boost Cash Flow for Employers payment of up to $25,000. The tax-free payment will provide cash flow support to businesses with a turnover of less than $50 million that employ staff between 1 January 2020 and 30 June 2020. Businesses will receive payments of 50% of their Business Activity Statement (BAS) or Instalment Activity Statement (IAS) from 28 April 2020, with refunds to be paid within 14 days.
Eligible small businesses employers can apply for a wage subsidy of 50% of an apprentice’s or trainee’s wage for up to nine months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that same apprentice.
Household stimulus for pensioners
A one-off $750 stimulus payment will be made to pensioners, social security, veteran and other income support recipients and eligible
concession card holders. Payments will be made from 31 March 2020 on a progressive basis, with over 90% of payments expected to be made by
mid-April. This payment will be tax-free and not count as income for social security, farm household allowance and veteran payments.
TIP: In addition to this initial $750 stimulus payment, the Government announced on 22 March that a further $750 payment will be provided (as part of a secondary stimulus package) to social security and veteran income support recipients and eligible concession card holders. Payments of the secondary $750 amount will be made automatically from 13 July 2020.
There will be one payment per eligible recipient under the first stimulus package, and one payment under the second. If a person qualifies for either or both payments in multiple ways, they will still only receive each payment once (ie there will be a maximum of two $750 payments per eligible person).
Coronavirus stimulus round 2
To further support businesses and workers in riding out the COVID-19 pandemic and minimise the impact on the overall economy, on 22 March 2020 the Federal Government announced a second round of stimulus measures in addition to the initial announced on 12 March. This second package includes support for individuals and households, including casual workers, sole traders, retirees and people who receive income support payments.
Cash payments for small to medium employers
Tax-free payments of up to $100,000 (with a minimum payment of $20,000) will be available for eligible small and medium entities (SMEs) and not-for-profits that employ people and have an aggregated annual turnover under $50 million. Employers will receive a payment equal to 100% of the withholding tax liability on their salary and wages, subject to monetary limits. This payment will be available to most employers from 28 April 2020.
SME loan guarantee scheme
A Coronavirus SME Guarantee Scheme will be established to support SMEs in getting access to working capital. Under the scheme, the government will guarantee 50% of new loans issued by eligible lenders. The scheme is able to support $40 billion worth of lending to SMEs.
Increase in income support payments supplement
A new temporary “Coronavirus Supplement” of $550 per fortnight will be implemented for people receiving certain income support payments. Eligible recipients will receive the full amount of $550 on top of their payment each fortnight, effectively doubling the current payment amount. The supplement will be paid for the next six months to existing and new recipients of the various Centrelink payments including the JobSeeker Payment (formerly called Newstart Allowance), Youth Allowance Payment for job seekers, Parenting Payment, Farm Household Allowance and Special Benefit Payments.
Further $750 for pensioners
In addition to the initial $750 stimulus payment previously announced, a further $750 payment will be provided to social security and veteran income support recipients and eligible concession card holders. This does not apply to those receiving the temporary Coronavirus Supplement.
Superannuation early release
Individuals in financial distress as a result of the pandemic will be allowed to access a tax-free payment of up to $10,000 from their superannuation in 2019–2020 and a further $10,000 in 2020–2021. Eligible individuals will need to apply online to the ATO through myGov before 1 July 2020 to receive the payment for the 2019–2020 income year.
TIP: Amounts withdrawn from super in this way will not affect any Centrelink payments.
Coronavirus concessions: state governments
Some states, including New South Wales, Queensland, Western Australia and Tasmania, have followed in the Federal Government’s footsteps to provide their own stimulus and concessions for mostly small to medium businesses and in some cases to individuals and families. Most of the measures are payroll-tax-related, aimed at giving small to medium businesses a cash flow boost during this difficult time, while other measures including fee waivers, grants, relief payments and concessional loans.
ATO's FAQ help to clarify Coronavirus impacts
The ATO’s COVID-19 frequently asked questions (FAQ) is a resource tool for people and businesses in the community who need clarifications in relation to impacts from the COVID-19 pandemic. The FAQ is broken into common questions for individuals, employers, businesses (including internationals) and self managed superannuation funds (SMSFs).
Common questions centre around issues relating to the nationwide shutdown – late or deferring payment obligations; deductibles from working from home; residence status due to travel restrictions; GST and FBT impacts from cancellations; and SMSF losses and strategies.
TIP: The ATO will update this FAQ regularly and welcomes suggestions and more questions. See www.ato.gov.au/Individuals/Dealing-with-disasters/In-detail/Specific-disasters/COVID-19/.
Working from home: what can I deduct?
Have you been directed by your employer to work from home to limit the spread of COVID-19? While working from home has its benefits, there may be extra expenses too, ranging from printing costs to the need for more internet data and perhaps even additional equipment. You may be able to claim a deduction for the additional running costs you incur. The costs you may be able to claim include the work-related portion of any heating, cooling and lighting for the area you’re working from, work-related phone and internet costs, and work-related decline in value of a personally owned computer and associated office equipment. To claim these expenses, you must keep specific records ranging from diary entries to receipts.
Logbooks may be deemed irrelevant now. Given the ATO requires that a new logbook is required when there is a change in pattern of use, everyone working from home and not being allowed face-to-face meetings, means everyone probably has to keep new logbooks during this period. This has ramifications for FBT purposes as well if using the operating cost method.
Today the Australian Government announced a $130B package to assist Australian Businesses with paying their staff. There is still a
lot of information to come on this announcement but the key points are listed below:
- Business are legally required to keep employees on their books to be entitled to the allowance
- Business applying for the allowance will have to prove that they have suffered a reduction in sales of at least 30% and 50% for those with a turnover greater than $1 Billion
- The Business is not subject to a Major Bank Levy
- Not-for-profits (charities) and self-employed individuals (sole traders) that meet the turnover tests are eligible
- Please note the JobKeeper subsidy is taxable income for the employer
- The allowance will be available for full-time workers, part-time workers, sole traders and long-term casual workers who have been with their employer for 12 months of more
- Long-term casual works are there that have been employed on a regular basis for longer than 12 months
- Employees must be at least 16 years of ages
- Workers will need to have been employed before 1 March 2020 to be eligible
- Are an Australian citizen, the holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder
- New Zealanders living in Australia on 444 visas will be eligible for the payment through their employers
- Are not in receipt of a JobKeeper Payment from another employer
We have a full page dediccated to this topic, click here to read more.
Scams targeting natural disaster victims
Victims of the recent natural disasters beware: there is an SMS scam circulating that purports to give you “a bonus” on your 2020 tax return. The scam urges victims to start the process by filling out a form and provides a link to a what looks like the genuine myGov website. According to the ATO, this is a classic case of scammers impersonating the ATO in an effort to collect personal information including names, birth dates, addresses, emails, phone numbers and online banking login details.
Once this information is obtained, scammers can use it to commit identify theft, including porting your phone, accessing your bank account, obtaining a loan in your name, lodging tax returns, stealing your superannuation and committing other types of fraud, or they could on-sell the information to others who may commit these offences.
If you receive a call from someone saying they are from the ATO but you aren’t sure, the best course of action is to hang up and call the ATO back on the appropriate number listed on its website, or to call your tax agent directly on their listed number to seek advice. While the ATO does send SMS messages and emails and calls taxpayers, it’s important to remember that the ATO will never:
- send an SMS message or email asking you to click on a hyperlink to log into myGov or other government websites;
- ask for personally identifying information in order for you to receive a refund;
- use aggressive or rude behaviour, or threaten you with immediate arrest, jail or deportation;
- project its number onto caller ID; or
- request that you make payments of debt via cardless cash, iTunes or Google Play cards, prepaid Visa cards, cryptocurrency, or direct credit to a personal bank account.