Tag: ATO

ATO Publish New Tax Tables

October 2020 Tax Threshold update 

Changes to personal income tax thresholds announced by the Government during the Federal Budget have been incorporated into the withholding schedules and tax tables and will apply to payments made on and from 13 October 2020. 

As the changes to withholding are made part way through the income year, employers and other payers who are unable to immediately implement these changes into their payroll will have until 16 November 2020 to do so. 

Employees and other payees will receive their entitlement to the reduced tax payable for the entire 2020–21 income year when they lodge their income tax return. 

Read more here https://www.ato.gov.au/Rates/Tax-tables/

JobKeeper Payment Rules Released 10/4/20

Late on Friday April 10, explanatory materials were released in relation to the JobKeeper payment that has now been passed into law. The explanatory material clarifies one key aspect of the new legislation:

Establishing a downturn


By way of background, to qualify for the JobKeeper wage subsidy, one of the eligibility criteria is that:

  • for businesses that have an annual aggregated turnover of less than $1 billion, they estimate their GST turnover has fallen or will likely fall by 30% or more or
  • for businesses that have an annual aggregated turnover of $1 billion or more (or is part of a consolidated group for income tax purposes with turnover of $1 billion or more), they estimate their GST turnover has fallen or will likely fall by 50% or more.

Treasury has revealed that the comparison period is for either (a) any monthly period from April 2020 to the end of September 2020 or (b) any quarterly period from April to June or July to September…compared to the same monthly or quarterly period in 2019.

Importantly, once this test is met for either (a) a monthly period or (b) any quarterly period, there is no requirement to re-test in later months or quarters. For example, if a business assesses that its turnover will fall by 30% in April 2020 compared to April 2019…then it retains its eligibility until the JobKeeper payments stop for all businesses at the end of September 2020. This is irrespective of its turnover in the months subsequent to April 2020. It is not required to estimate or determine turnover for subsequent periods.

Where an entity does not qualify in the month of April 2020, for example, or the April to June quarter, it can re-test in later months or quarters, but will only be eligible for the JobKeeper payments from the period of qualification onwards (the payment won’t be backdated to the commencement of scheme).

Alternative tests

The explanatory material acknowledges that comparing monthly or quarterly periods from April 2020 and onwards, to April 2019 and onwards, may not always be possible or made lead to unfair outcomes. To this end, where the ATO is satisfied that there is no such comparison period in 2019, or there is not an appropriate relevant comparison period, the ATO Commissioner may, by legislative instrument, determine an alternative decline in turnover test.

The two alternative test examples cited in the explanatory materials relate to:

  • businesses that were not in existence for the whole of the comparison period in 2019. In the explanatory materials, the business is permitted to average its actual turnover from October 2019 when it came into existence to March 2020, and compare that average it to its estimated turnover in April 2020.
  • businesses that were impacted by a natural disaster during the 2019 comparison period. In the explanatory materials, the business is permitted to go back to 2017 (the most recent year when its turnover was not impacted by drought) and compare its turnover to the same eligible period in 2020.

The Commissioner retains flexibility to apply other alternative tests and take into account other unique circumstances (aside from natural disaster and start-up businesses) confronted by a business, should the 2019 comparison period not be reflective of typical turnover. Treasury, in a separate fact sheet Supporting Business to Retain Jobs, has stated that these alternative tests may include, for example, eligibility being established as soon as a business ceases or where a business significantly curtails its operations.

Businesses and their advisors should contact the ATO where they believe they warrant special consideration in this regard.


JobKeeper Payment – Fresh Guidance on Establishing a Downturn

We’ve received many questions from subscribers around how a “downturn of turnover” will be measured for the purposes of eligibility for the coronavirus-related Job Keeper Payment.

Last night there was fresh guidance from Treasury. 

By way of background, one of the eligibility criteria for Job Keeper is that: 

• for businesses that have an annual turnover of less than $1 billion, they estimate their turnover has fallen or will likely fall by 30% or more; or  
• for businesses that have an annual turnover of $1 billion or more (or is part of a consolidated group for income tax purposes with turnover of $1 billion or more) they estimate their turnover has fallen or will likely fall by 50% or more; and  
• the business is not subject to the Major Bank Levy. 

Treasury has indicated that the decline in turnover test is linked to the GST turnover test in particular the projected GST turnover – which will take into account anticipated decline in revenue. The test requires a business to measure its projected GST turnover and compare this to what is termed a relevant comparison period. If this equals or exceeds the following thresholds, the entity satisfied the decline in turnover test: 
• ACNC-registered charities – 15%; 
• entities with turnover less than $1bn – 30%; 
• entities with turnover greater than $1bn – 50%. 
There is scope for the ATO to apply an alternative test to different classes of entities. 
The turnover test period must be a calendar month that ends after 30 March 2020 and before 1 October 2020, or a quarter that starts on 1 April or 1 July 2020. The relevant comparison period must be the period in 2019 that corresponds to this turnover test period. 
Further ATO guidance will be forthcoming 
The turnover numbers must be reported to the ATO before any payments will start, though there is a transitional rule for the first 2 JobKeeper fortnights. 
The key take-away points are while, at this stage, this is Treasury guidance: 

• the test/comparison period vis-à-vis 2019 to 2020– spans from April to the end of September 
• if 2019 is not representative of typical turnover, another comparison period may be considered 
• the ATO is willing to exercise its discretion where there are anomalous cases.

Employees Working From Home

As a consequence of COVID-19, many employees are now working from home.  
To make it easier for people to claim deductions when working from home, the ATO yesterday announced a new shortcut method which will allow taxpayers to claim a rate of 80 cents per hour for all their running expenses, rather than needing to calculate costs for specific running expenses. Therefore, the ATO will only require you to keep a record of the number of hours worked from home as evidence of their claim.  
This concession applies from 1 March 2020. 
The ATO will review this concession for the next financial year as the COVID-19 situation unfolds. 

According to the ATO, the simplified method will encompass all deductible running expenses, including electricity for heating, cooling and lighting; phone and internet expenses; and the decline in value of computers, printers, phones, furniture and furnishings. 

News – Budget Delay & 2nd Stimulus Package looms

The Budget will be delayed from May to October 

Prime Minister Scott Morrison says the Federal Government will delay its budget until October 6, five months later than usual, as it considers the economic damage of the coronavirus. 

State and territory leaders have also agreed to delay their budgets until later this year. 

“The idea that you can actually put together any sort of forecast around the economy at this time is simply not sensible,” Mr Morrison said. 

Mr Morrison said National Cabinet, which includes the Prime Minister, premiers and chief ministers, would also bring in new social distancing rules for indoor gatherings. 

In a wide-ranging press conference, he announced: 

  • Schools will remain open, following health officials’ advice 
  • A second stimulus package will be directed towards small and medium-sized business 
  • Australians should reconsider the need for unnecessary travel 
  • Travel to Indigenous communities will be restricted 
  • Aged-care facilities will receive an extra $444 million 
  • Commercial and residential tenants will receive financial relief 
Second Stimulus Package Looms 

The Prime Minister and Treasurer last week announced a $17.6 billion stimulus package, described at the time as a bid to keep Australia out of a recession. 

Treasurer Josh Frydenberg has since said a recession will be hard to avoid. 

Today Mr Morrison said the Government was in the final stages of finalising a second stimulus package. 

The details of the package are expected to be announced before the Parliament returns on Monday to pass the legislation needed to enact the stimulus measures. 

“We are working on a package that will cushion the blow over the next six months, and will provide the necessary support so people can get on that bridge, to get them to the other side,” Mr Morrison said. 

More to come.  


ATO Coronavirus Support Measures

The ATO earlier this week announced a series of administrative concessions for taxpayers impacted by the coronavirus (COVID-19), as follows: 

  • deferring by up to four months the payment of tax amounts due through the BAS (including PAYG instalments), income tax assessments, FBT assessments and excise 
  • allowing businesses on a quarterly reporting cycle to opt into monthly GST reporting to get quicker access to any GST refunds. Businesses can only make this change from the start of a quarter. Therefore, a change now would only take effect from 1 April 2020. 

The change in cycle to monthly does not mean that a business must change its PAYGW reporting cycle also. Rather, this should be managed by specifying the roles that the business is changing. Once a business has made the choice to report and pay its GST monthly, it must keep reporting monthly for at least 12 months before it can switch back to reporting quarterly. 

  • allowing businesses to vary PAYG instalment amounts to zero for from the March 2020 quarter (the current quarter). Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters. 

If a business is a monthly PAYG instalments payer and has a base assessment instalment income of $500m or less, and they want to vary their instalment rate and claim a refund on previous instalments paid, the ATO says the taxpayer will need to phone the ATO (13 72 26) to discuss the matter. If a taxpayer realises that they have made a mistake working out their PAYG instalment, the ATO says they can correct it by lodging a revised activity statement or varying a subsequent instalment. 

  • remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities and 
  • allowing affected businesses to enter into low-interest payment plans for their existing and ongoing tax liabilities. 

Importantly, these measures will not be implemented automatically by the ATO (unlike the relief measures for the recent bushfires). 

Therefore, anyone impacted is required to contact the ATO Emergency Support Infoline (1800 806 218) when they are ready to request assistance. Once a taxpayer contacts the ATO, the Commissioner says a support plan will be tailored for the taxpayer/business. 

New GST Law for Directors!

Last week the Government passed legislation which may make company directors personally liable for any unpaid/overdue GST of their business. 

21 Day GST Director Penalty Notices may be issued by the ATO to a director if their company fails to pay GST but lodges the relevant activity statements within three months of the due dates. To avoid personally liability, within the 21 day period of the notice being issued, directors can: 

  • Pay the GST from the company 
  • Place the company into liquidation or voluntary administration. 

Alternatively, the ATO can issue Lockdown GST Director Penalty Notices if a company fails to pay GST and also fails to lodge activity statements within three months of being due. In this case, personal liability cannot be avoided through bankruptcy, liquidation or voluntary administration. 

The take-home message is to keep your GST lodgements and payments up-to-date, moving forward. 

The new law applies to quarters commencing 1 April 2020, and is not retrospective. 

Single Touch Payroll – Not too Late

for Businesses with Less than 20 Employees….

The ATO advises that it’s not too late to join the other 550,000 employers who are reporting through Single Touch Payroll (STP), but time is running out. 

If you aren’t reporting through STP, you can start by: 

  • finding a software solution that’s right for you. 
  • asking for a concession. This could be reporting quarterly at the same time as your activity statement. Eligibility will depend on your circumstances. 
  • asking for more time if you’re not ready. 

The ATO understands that it takes time to transition to STP, but there are a range of options to assist your transition. 

Remember, registered bookkeepers and tax agents can help you with your transition. 

You have until 30 June before penalties are applied. 

ATO Bushfire Relief

If you or your business has been impacted by the recent bushfires, the ATO don’t want you to be concerned about your tax affairs.

The ATO will help you sort out your tax affairs later.

For identified impacted postcodes, the ATO will automatically grant deferrals for lodgements and payments due.

You, or your accountant, don’t need to apply for these deferrals.

The postcodes are broken down by State: 

Superannuation Amnesty is back on the table!

The Government’s superannuation amnesty for employers is now back on the table! 

The Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019 was introduced into the House of Representatives on 18 September 2019. It seeks to legislate the super guarantee amnesty that the Government failed to pass into law before the Federal Election. The legislation provides for a one-off amnesty to encourage employers to self-correct historical SG non-compliance. 

Specifically, an employer that qualifies for the amnesty in relation to their SG shortfall for a quarter: 

  • Will have the administrative penalty waived ($20 per employee, per quarter) 
  • Will have Part 7 penalties waived (this can be an additional penalty of up to 200% of the shortfall owed) 
  • Will be able to deduct the late shortfall contribution (under current law, late payments cannot be deducted). 

The beneficial treatment provided by the amnesty is available for a quarter that ends at least 28 days before the start of the amnesty period. This means that the beneficial treatment provided by the amnesty is available in relation to the quarter starting on 1 July 1992 (which is the day that Superannuation Guarantee commenced) and all subsequent quarters until and including the quarter starting on 1 January 2018. An employer will not be able to benefit from the amnesty for SG shortfalls relating to the quarter starting on 1 April 2018 or subsequent quarters. 

To qualify for the amnesty, a disclosure must be made by an employer during the amnesty period. The amnesty period is the period that started on 24 May 2018 and ends 6 months after the day the legislation is passed (therefore, at least until March next year if the legislation passes next month). 

On releasing the legislation, the Assistant Treasurer said.   

Since the one-off amnesty was announced, over 7,000 employers have come forward to voluntarily disclose historical unpaid super. The ATO estimates an additional 7,000 employers will come forward due to the extension of the amnesty. This means around $160 million of superannuation will be paid to employees who would otherwise have missed out. 

The amnesty reinforces recent changes to the superannuation system to improve the visibility employees have over their superannuation. We have given the ATO greater powers to ensure employers meet their obligations, and to help ensure employees receive their superannuation entitlements. The Government’s legislated package of integrity measures – part of the Treasury Laws Amendment (2018 Measures No. 4) Act 2019 – includes up to 12 months jail for employers who continue to do the wrong thing by their workers, and gives the ATO near real-time visibility of how much SG employees are owed and the contributions they actually receive. 

This is a practical measure that is all about reuniting hardworking Australians with their super. My message to employers who owe super is: come forward now. Do not delay. This is a one-off opportunity to set things right, and going forward the ATO has the tools to spot unpaid super. 

Irrespective of whether the amnesty passes into law, all employers should strongly consider getting their superannuation affairs in order. There is now real time, and more granular reporting of superannuation liabilities and payments – down to the employee level. The ATO will now know in close to real time if an employer is not paying superannuation in respect of any employee. Therefore, it will be in a position to immediately follow up late payers.