Category: News

Key Dates for July & August 2020

Key Dates for Business 

July 2020 
01 July – First day of the 2020/2021 financial year 
21 July – Monthly Activity Statements (June 2020) due for lodgement and payment 
28 July – Quarterly Activity Statements (April-June) due for lodgement and payment (if lodging by paper) 
28 July – Superannuation Guarantee Contributions (April-June) due for payment to superannuation funds or Clearing Houses 

August 2020 
11 August – Quartelry Activity Statments (April-June) due for lodgement and payment (if lodging electronically) 
21 August – Monthly Activity Statemnts (July 2020) due for lodgement and payment 
21 August – Final day for eligible monthly GST reporters to elect to report annually 
28 August – 2020/2021 Contractor Taxable Payments Annual Reports – due for lodgement

Where one of these dates falls on a weekend or a public holiday, the due date is extended to the next business day.

The Extension and Modification of JobKeeper

Today, the Prime Minister announced the extension and watering down of the wage subsidy, JobKeeper  

Points to note: 

  • Existing JobKeeper continues up until 27 September 2020 
  • From the next day, a new, modified JobKeeper scheme applies until 28 March 2021 
  • Under the new scheme, employers must reassess their eligibility with reference to actual turnover in the June and September quarters (2020) compared to the same period in 2019. That is: 

 

    • from 28 September 2020, businesses and not-for-profits will be required to reassess their eligibility with reference to their actual GST turnover in the June and September quarters 2020.  They will need to demonstrate that they have met the relevant decline in turnover test in both of those quarters to be eligible for the JobKeeper Payment from 28 September 2020 to 3 January 2021. 
    • from 4 January 2021, businesses and not-for-profits will need to further reassess their turnover to be eligible for the JobKeeper Payment. They will need to demonstrate that they have met the relevant decline in turnover test with reference to their actual GST turnover in each of the June, September and December quarters 2020 to remain eligible for the JobKeeper Payment from 4 January 2021 to 28 March 2021 

 

  • Monthly lodgers will use the aggregate turnover for the three-monthly Activity Statements over these quarters, and compare them to the above periods in 2019 
  • The existing decline in turnover rates must be met (i.e. 30% for businesses with a turnover of $1 billion or less, or 15% for Australian Charities and Not for profits Commission-registered charities (excluding schools and universities) 
  • Reduced payment rates will also apply for all eligible employees and business participants.as follows: 

 

  • From 28 September 2020 to 3 January 2021, the JobKeeper Payment rates will be: 

 

  • $1,200 per fortnight for all eligible employees who, in the four weeks of pay periods before 1 March 2020, were working in the business or not-for-profit for 20 hours or more a week on average, and for eligible business participants who were actively engaged in the business for 20 hours or more per week on average in the month of February 2020; and 

 

  • $750 per fortnight for other eligible employees and business participants. 

 

  • From 4 January 2021 to 28 March 2021, the JobKeeper Payment rates will be: 

 

  • $1,000 per fortnight for all eligible employees who, in the four weeks of pay periods before 1 March 2020, were working in the business or not-for-profit for 20 hours or more a week on average and for business participants who were actively engaged in the business for 20 hours or more per week on average in the month of February 2020; and 

 

  • $650 per fortnight for other eligible employees and business participants. 

30 June Trustee Resolution Minutes!

For those businesses that trade out of a Discretionary (Family) Trust it is an annual mandatory requirement of the ATO that all Discretionary Trusts prepare a Trustee Resolution Minute before 30 June each year. 

The Minute outlines who is going to be allocated the income of the trust. 

Without this Minute, the ATO will allocate all income of the Trust to the Primary Beneficiary as shown in the Trust’s Deed, or if there is no Primary Beneficiary listed on the Trust’s Deed, the Trustee of the Trust will be taxed at the highest marginal tax rate plus Medicare levy. 

As you can see, the tax consequences could be significant, which makes this Trustee Resolution Minute all the more important. 

Ensure your minutes are in order as we count down to 30 June. 

Homebuilder Grant

On 3 June 2020, the federal government announced the Homebuilder Grant to encourage individuals to build a new home or substantially renovate their existing home. The grant is aimed at encouraging demand in the residential construction sector with industry bodies painting an otherwise grim picture of the second half of this year. 

Homebuilder is a time-limited tax-free grant targeted at owner occupiers who will be provided with a $25,000 grant to build a new home or renovate an existing home. Under the scheme, owner-occupiers (including but not limited to first home buyers) will be provided with the grant if they sign a contract between 4 June and 31 December to carry out construction work (to the value of at least $150,000) which must commence with three months of signature. 

Homebuilder complements existing state and federal schemes including the first home owner grant programs, and the Commonwealth’s First Home Loan Deposit Scheme and First Home Super Saver Scheme. Information on how and when Homebuilder can be accessed will become available through state and territory revenue offices in the coming weeks. 

 

Instant Asset Write-Off – Extension Announced

Businesses will be able to access the boosted $150,000 instant asset write-off scheme for a further six months to the end of the year. 

By way of background, as part of its emergency COVID-19 fiscal package, the government quin­tupled (from $30,000) the value of assets businesses were able to instantly write -off for the ­period of March 12 to June 30, and expanded the eligibility to cover  businesses with turnover of less than $500m (up from $50m ­previously). 

Today the government will announce that the more than 3.5 million eligible businesses will now be given until December 31, 2020 to take advantage of this measure. The asset must be installed ready for use by this date. 

Although it is anticipated that this extension will be supported by Parliament, it is subject to the passage of legislation. 

 

Evidencing Your Decline in Turnover for JobKeeper

To qualify, an employer must demonstrate that its GST turnover has fallen by the following percentage compared to the same comparison period in 2019: 

  • 30% fall in turnover (for an aggregated turnover of $1 billion or less) 
  • 50% fall in turnover (for an aggregated turnover of more than $1 billion), or 
  • 15% fall in turnover (for ACNC-registered charities other than universities and schools). 

You will need to keep evidence and sufficient records to demonstrate how you calculated your projected GST turnover during the 2020 turnover test period, and your basis for estimating that it would fall by the required percentage. 

Your projected GST turnover during the 2020 turnover test period is the sum of the value (GST exclusive sale price) of all the sales you have made, or are likely to make during that period. 

For the purpose of determining sales likely to be made, the ATO will accept a calculation based on a genuine business plan, accounting budget or some other reasonable estimate based on the evidence about the projected facts and circumstances for the remainder of the turnover test period. 

Relevant evidence that would support a prediction of sales likely to be made may include: 

  • a decline in sales during the turnover test period or since 1 March 2020 as a result of government COVID-19 restrictions 
  • customers cancelling or modifying existing contracts for sales on or from 1 March 2020 
  • being required to close or pausing the business due to government COVID-19 restrictions 
  • delays in being able to get access to trading stock sourced from overseas on or from 1 March 2020 
  • evidence of your business’s reliance on tourism 
  • any consequential effect on the price of what you supply, for example, the effect on the market value of new property being sold by a developer 
  • information known to the business, whether or not publicly available 
  • economic forecasts undertaken by a reputable organisation that are relevant to your type of business 
  • the likely timing of government COVID-19 restrictions being lifted for your type of business based on government announcements. 

According to the ATO, when people make a good-faith estimate to comply and a good-faith decision that   they’re eligible, the Commissioner will be very understanding and sympathetic to their position, particularly where they have passed the benefit of the JobKeeper payment to their employees What the legislation, and the ATO are asking of businesses is to make a “good faith effort”. When the ATO considers a good faith effort has been made, even if it’s slightly wrong (i.e. less than the required downturn percentage), the ATO will not seek repayments of JobKeeper or apply penalties. 

 

 

More Coronavirus Relief for Business

Over the weekend (29/03/2020), more relief was announced for business including:  

  1. Deferral of Loan Repayments 

A little over a week ago, the Australian Banking Association announced a six-month deferral of all loan repayments for small businesses hit by the coronavirus pandemic. 

On the weekend, this relief has now been extended to all businesses that have loans of up to $10 million. That accounts for just on 98% of all Australian businesses that have loans with Australian banks 

  1. Commercial Tenancies 

National Cabinet agreed to a moratorium on evictions over the next six months for commercial and residential tenancies in financial distress who are unable to meet their commitments due to the impact of coronavirus. 

Commercial tenants, landlords and financial institutions are encouraged to sit down together to find a way through to ensure that businesses can survive and be there on the other side. As part of this, National Cabinet agreed to a common set of principles, endorsed by Treasurers, to underpin and govern intervention to aid commercial tenancies as follows: 

  • a short term, temporary moratorium on eviction for non-payment of rent to be applied across commercial tenancies impacted by severe rental distress due to coronavirus;
  • tenants and landlords are encouraged to agree on rent relief or temporary amendments to the lease; 
  • the reduction or waiver of rental payment for a defined period for impacted tenants; 
  • the ability for tenants to terminate leases and/or seek mediation or conciliation on the grounds of financial distress; 
  • commercial property owners should ensure that any benefits received in respect of their properties should also benefit their tenants in proportion to the economic impact caused by coronavirus; 
  • landlords and tenants not significantly affected by coronavirus are expected to honour their lease and rental agreements; and 
  • cost-sharing or deferral of losses between landlords and tenants, with Commonwealth, state and territory governments, local government and financial institutions to consider mechanisms to provide assistance. 

 

COVID-19 Additional Help for Business

As the anticipated economic impact from the Coronavirus worsens, the Government on the weekend beefed up its assistance package that was originally announced last week as follows:

PAYG cash credits to SME employers and charities up to $100k (minimum $20k) 

The Government announced on the weekend that it will boost last week’s cash credit to employers. It will now provide a tax-free credit up to $100,000 for eligible small and medium sized entities (SMEs), and not-for-profits (including charities) that employ people, with a minimum credit of $20,000. These tax-free credits seek to help businesses’ and NFPs’ cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff. 

Under the enhanced scheme from last week’s first stimulus package, employers will receive a credit equal to 100% PAYG withholding from employee salary and wages (up from 50%), with the maximum credit being increased from $25,000 to $50,000. In addition, the minimum credit will be increased from $2,000 to $10,000. 

SMEs with aggregated annual turnover under $50m and that employ workers are eligible. NFPs entities, including charities, with aggregated annual turnover under $50m and that employ workers will now also be eligible. This will support employment at a time where NFPs are facing increasing demand for services. 

The cash flow credit for employers will be available from 28 April 2020. 

For example, if an employer lodging their quarterly March Activity Statement was ordinarily due to withhold $40,000 in PAYG withholding from their employee’s salaries in that quarterly period, then they would just keep this money themselves (being 100% of the withholding that was due) rather than sending it to the ATO and it would be tax-free. The rest of that Activity Statement would be dealt with normally, for instance it may be the case that GST may be owed for that quarter. 

We can see from this example, that the benefit is by way of the withholding that would normally be owed to the ATO, and that withholding amount is tax-free to the employer. Therefore, it is not a cash payment from the ATO as such, but rather retaining the withholding which would otherwise be payable. 

An additional credit is also being made from 28 July 2020. Eligible entities will receive an additional credit equal to the total of all of the Boosting Cash Flow for Employers payments received. The credits are tax-free, there will be no new forms and payments will flow automatically from the ATO. 

Temporary Relief for Financially Distressed Businesses  

The Government is temporarily increasing the threshold to $20,000 (up from $2,000) at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive (21 days to 6 months). Temporary relief will also be provided for directors from any personal liability for trading while insolvent. The Corporations Act 2001 will also be amended to provide temporary and targeted relief for companies to deal with unforeseen events that arise as a result of the Coronavirus. 

 

Coronavirus stimulus package worth $84 billion passed without objection by Parliament

23/03/20 The Federal Parliament has rushed through $84 billion in financial support for workers, students and businesses affected by the coronavirus outbreak, before wrapping up for a five-month-long break. 

A bare minimum of MPs and Senators came to Canberra for a single day to vote on legislation for the Government’s two rounds of stimulus measures. 

The bills were passed late Monday night without objection in both the House of Representatives and the Senate after some amendments were made. 

“The measures that have been passed by the Parliament today represent the most significant support for the Australian economy and community since the war,” said Treasurer Josh Frydenberg. 

The legislation supports both the first coronavirus economic stimulus package, worth $17.6 billion, and the $66 billion in direct financial support announced in the second package on the weekend

It also includes a raft of other measures to support the economy more broadly, as well as giving the Government flexibility to respond to changing circumstances without needing further legislation. 

Under pressure from Labor and the Greens, the Coalition amended its own legislation to give the social services minister the power to make changes to the stimulus payments, including rates, means testing, eligibility and residency requirements. 

The Government will immediately use those powers to extend the $550 coronavirus supplement to students receiving Youth Allowance, Austudy and Abstudy payments. 

Other than the income test, “there are really very few other requirements” students will have to meet to get support, said Social Services Minister Anne Ruston. 

The Government estimates up to 236,000 students could benefit from the change. 

https://www.abc.net.au/news/2020-03-23/coronavirus-economic-stimulus-passes-parliament/12080388

Key Points
Changes to the Government’s stimulus package include:

Extending the $550 per fornight coronavirus payment to students
New powers to increase or expand payments as needed, including for pensioners, those on disability support payments and carers, jobseekers and people who fall through the cracks
Making it easier for people who lose their job to get support by relaxing the test on their partner’s income

PRESS CONFERENCE – AUSTRALIAN PARLIAMENT HOUSE, ACT – 22/03/2020

THE HON. JOSH FRYDENBERG MP, TREASURER:  Since the government announced its first stimulus package just over a week ago, the global and the domestic economic environment has deteriorated. We now expect the economic shock to be deeper, wider, and longer. Every arm of government and industry is working to keep Australians in jobs and businesses in business, and to build a bridge to recovery on the other side.

Today, the government is announcing a second package, $66 billion dollars to cushion the blow to households as a result of the coronavirus and to support businesses, and we are enhancing in an unprecedented way Australia’s safety net. This package is consistent with our principles. The initiatives are targeted, are temporary, are proportionate, are scalable, and are using our existing systems. Today, this package, together with the other initiatives that have been announced, sees the government’s support for our Australian economy, announced over the last 10 days, at $189 billion dollars or as the Prime Minister said, around 10 per cent of GDP.

Today’s package has three parts involving 10 separate initiatives. The package will support households, including casuals, sole traders, retirees and those on income support. It will provide assistance for businesses to keep people in a job and it will provide regulatory protection and financial support for businesses to stay in business.

Today, the government is announcing:-

The doubling of the Jobseeker Allowance, formerly known as Newstart, through the introduction of a temporary coronavirus supplement.
The government will also waive the assets test and waiting periods for the Jobseeker Allowance, allowing more Australians to more quickly access the support that they need. The coronavirus supplement will provide an additional $550 a fortnight on top of the existing jobseeker or Newstart payment and will be available to sole traders and casual workers who meet the income test. This means anyone eligible for the maximum jobseeker payment will now receive more than $1,100 a fortnight, effectively doubling the jobseeker allowance.

In the first package on the 12th of March, we announced a $750 payment for Australians on income support. Today, we announce that from July 13, a further $750 payment to those on income support that are not eligible for the coronavirus supplement. This includes those receiving the age pension, the carer’s allowance, family tax benefits and the Commonwealth Seniors Health Card. In total, 5.2 million Australians. We are also reducing the deeming rates by a further quarter of a per cent to reflect the recent Reserve Bank interest rate cut. Over 900,000 thousand social security recipients on income tested support will now benefit.

Our economic response will allow those Australians who are in financial stress as a result of the Corona virus to access more of their own money in superannuation. From April, those affected will gain access to their superannuation capped at $10,000 this financial year, and a further $10,000 next financial year. These withdrawals will be tax free. I repeat, these withdrawals will be tax free and available to those who are eligible for the coronavirus supplement, as well as sole traders who have seen their hours worked or income fall by 20 per cent or more as a result of the coronavirus. So if you’re a sole trader or you’re a casual and you’ve seen your income or your hours worked fall by 20 per cent or more as a result of the coronavirus, you will be able to get early access to your superannuation. Applications will be made online through a simple declaration to the tax office. This initiative builds on existing provisions that allow early access to super in the event of hardship or on compassionate grounds, and it is estimated to put up to $27 billion dollars of superannuation back into the pockets of hardworking Australians. This comprises less than 1 per cent of the 3 trillion dollars in superannuation today. APRA, the prudential regulator, has advised the government that they do not expect this initiative to have a significant impact on the industry overall.

The government is also giving retirees more flexibility over their superannuation. Currently, retirees are required to draw down a minimum of 4 percent a year from their superannuation, a number that increases with their age. The government is halving this requirement to 2 per cent for this year and for next year, to give retirees more discretion over the management of their assets.

The second part of our package sees a massive scaling up of support for small and medium sized businesses across the country. We are increasing cash payments to SME’s to boost their cash flow and to keep their workers employed. All employing businesses will receive at least $20,000. All employing small businesses will receive at least $20,000 and some of the larger SME’s will receive up to one hundred thousand dollars. And we are extending this measure to around 30,000 not for profit organisations, which have an annual turnover of less than $50 million dollars. This will be a lifeline for hundreds of thousands of employers like the local hairdresser, the local cafe, the local mechanic whose income has been significantly reduced over this difficult period. This is the single largest measure in this second package, and together with the first initiative in the first package for small businesses is worth $31.9 billion dollars in total. This payment will be automatically paid through the tax system largely over the next six months with the first payment after 28 of April. No new forms will be required from Australian small and medium sized businesses.

Over the course of the last week, $105 billion dollars is being injected into the financial system by the government and the Reserve Bank of Australia, the purpose of which was to lower the cost and increase the availability of credit, particularly to smaller, medium sized businesses. Today, the government is going one step further and is guaranteeing in a 50/50 partnership with the banks and other lenders, more lending to Australia’s small and medium sized businesses. This $40 billion scheme, which will start in early April, will provide loans of up to $250,000 for up to 3 years for a business with a turnover of less than $50 million dollars. No repayments will be required for the first six months. These will be unsecured loans and they will help build a bridge for small and medium sized businesses to the other side of the coronavirus, and I urge small businesses to go and talk to their bank about these new opportunities that are available. These funds will provide hope and confidence to a vitally important sector and together with the red tape reduction for SME lending announced on Friday, more credit will be coming their way.

The third part of our package will provide a regulatory shield for what are otherwise profitable and viable businesses that find themselves under severe financial pressure as a result of the coronavirus. Now is the time for more flexibility in insolvency and bankruptcy laws to keep these businesses alive and to trade through this period. The government is proposing to increase the threshold at which a creditor can take action to initiate insolvency or bankruptcy from as low as $2,000 today to $20,000 and giving companies and individuals 6 months instead of 21 days to respond. We will also provide relief from directors, from personal liability, where the company is trading while insolvent. This relief will be provided over the next 6 months and will be vital to helping companies get through this period. As a result of the health related restrictions being put in place to reduce the impact of the coronavirus, it will not be possible for many companies to comply with their obligations under the Corporations Act, for example, holding general meetings in person. A temporary 6 month power will be provided to me as the Treasurer to deal with these situations as they arise

These extraordinary times require extraordinary measures and we face a global challenge like we have never faced before. But by working together, we will get to the other side and we will bounce back stronger. Today’s announcement will provide hope and support for millions of Australians at a time when they need it most. We know that there is more to do and we will continue to do what it takes.

https://www.pm.gov.au/media/press-conference-australian-parliament-house-act-22march