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Prime Minister Scott Morrison announced further changes to JobKeeper on 7 August 2020. The changes are intended to ensure that eligibility for the revised JobKeeper scheme – to commence on 28 September 2020 – will be based on a single quarter tax period, rather than multiple quarters as previously announced. Employees hired as at 1 July 2020 will now also be eligible to receive JobKeeper.

Treasury has updated its JobKeeper factsheets as at 7 August 2020 to incorporate the PM’s announcements.

The JobKeeper rules implemented in March 2020 in response to the COVID-19 pandemic were due to finish on 27 September 2020. The Government then announced on 21 July 2020 that the scheme would be extended for six months (until 28 March 2021), in an amended form.

The key highlights of JobKeeper Version 2 – to start on 28 September – are that:

• the extended scheme will apply at a top rate of $1,200 per employee (down from the current $1,500) per JobKeeper fortnight from 28 September 2020 until 3 January 2021, then drop to $1,000 until 28 March 2021;
• lower rates will apply for part-time and casual employees; and
• businesses will be required to re-test their eligibility for the payment scheme to access the extension.

Changes to turnover test

The latest changes relate to the eligibility test announced in JobKeeper Version 2.

JobKeeper Version 2 originally required that, from 28 September 2020, businesses and not-for-profits seeking to claim JobKeeper payments would have to meet a further decline in turnover test for each of the two periods of extension, as well as meeting the other existing eligibility requirements. That is, at that time businesses would have been required to reassess their eligibility for the JobKeeper extension with reference to their actual turnover in the June and September quarters 2020.

The PM has eased the proposed changes to turnover tests for businesses Australia-wide.

The changes mean that businesses will now only be required to show the requisite actual decline in turnover for the September quarter, rather than for both the June and September quarters. Similarly, businesses will only need to demonstrate a decline in turnover for the December 2020 quarter, rather than each of the June, September and December 2020 quarters.

The ATO has “clarified” its position on loans put on hold during COVID-19. The ATO will consider a debt to be forgiven for tax purposes if:

• the debtor is somehow relieved from the legal obligation to repay it; or
• there is evidence that the creditor won’t insist on repayment or rely on the obligation for repayment.

A debt is not considered to be forgiven if a creditor only postpones an amount payable and the debtor acknowledges the debt – unless there is evidence that the creditor will no longer rely on the obligation for repayment.

The ATO has issued an update on residency and source of income. It deals with issues from the perspectives of an Australian resident and a foreign resident in the context of a change of residency due to COVID-19.

In terms of Australian residents, the update addresses those who are temporarily overseas and those who have had to return to Australia early from certain foreign service. The latter may involve the “91 days of continuous foreign service” test.

Where the update is interesting regards what it says about foreign residents who are stuck in Australia because of the COVID-19 pandemic. The ATO acknowledges that “COVID-19 has created a special set of circumstances that must be taken into account when considering the source of the employment income earned by a foreign resident who usually works overseas but instead performs that same foreign employment in Australia”.

Whether salary or wages earned from continuing foreign employment working remotely while in Australia temporarily is assessable depends on:

• whether it is from an Australian or a foreign source; and
• whether a double tax agreement (DTA) applies.

Where the remote working arrangement is short-term (three months or less), the ATO readily accepts that income from that employment won’t have an Australian source.

For working arrangements longer than three months, the ATO says that individual circumstances need to be examined to determine if a person’s employment is connected to Australia.

 

The ATO has updated its employees guide for work expenses for 2019–2020. The document is designed to assist employees to determine whether incurred expenses are tax deductible and outlines the substantiation requirements.

The following are highlighted as being new for 2019–2020:

• The additional method for calculating running expenses incurred as a result of working from home (the “shortcut method” allowing an 80 cents per hour deduction) was introduced to help employees working from home during the COVID-19 pandemic. This method was initially only available to use from 1 March 2020 to 30 June 2020, but has now been extended to 30 September 2020.
• Taxation Ruling TR 2020/1 Income tax: employees: deductions for work expenses under s 8-1 of ITAA has been released. This ruling provides guidance on when an employee can claim a deduction for a work expense.

The employees guide highlights “common myths” about expenses – for example, the myths that everyone can automatically claim $150 for clothing and laundry, 5,000 km of travel under the cents per kilometre method for car expenses, or $300 for work-related expenses, even if they didn’t spend the money, or that employees can claim gym membership if they need to be fit for work.

The ATO has published a fact sheet to assist employers in determining if they have an FBT liability where cars are garaged at employees’ homes because of COVID-19.

The fact sheet states that the ATO will accept that an employer isn’t holding a car for the purposes of providing fringe benefits where the car isn’t being driven at all, or is only being driven for maintenance purposes. Provided that the employer elects to use the operating cost method and maintains odometer records, the employer will not have an FBT liability for a car. Without electing to use the operating cost method or not having odometer records, the statutory formula method applies and an FBT liability will arise as the car garaged at the employee’s home is taken to be available for private use.

Where a home-garaged car is being driven by an employee for business purposes, the ATO says the employer may be able to reduce the taxable value of the car fringe benefit by taking into account the business use, provided the employer has logbook records and odometer records for the period in question. Logbook records will need to be for at least:

• 12 continuous weeks; or
• until the car stops being garaged at home, if this is less than 12 weeks.

The fact sheet also provides information on logbook requirements for car fringe benefits and options for employers to consider where COVID-19 has impacted driving patterns.

On 23 July 2020, Federal Treasurer Josh Frydenberg released the Economic and Fiscal Update July 2020, outlining the key COVID-19 policy response measures announced by the Government since March 2020. The Treasurer said the Government has provided economic support for workers, households and businesses of around $289 billion (14.6% of gross domestic product) in response to the pandemic.

 

The economic update incorporated the extension of JobKeeper payments for six months beyond its legislated finish date of 27 September 2020. The total cost of the extended JobKeeper regime is now estimated to be $85.7 billion over 2019–2020 and 2020–2021.

 

While the update did not include any major new financial support measure announcements, it brought information about a range of other changes, including that:

• the Government will extend the application period to 31 December 2020 for the early release of superannuation (tax-free) by those dealing with adverse economic effects of COVID-19;
• the Supporting Apprentices and Trainees (SAT) wage subsidy will be extended for a further six months to 31 March 2021, and expanded to include medium-sized businesses;
• a full income tax exemption will be provided for Australian Defence Force (ADF) personnel deployed on Operation Orenda as part of the United Nations Multidimensional Integrated Stabilisation Mission in Mali;
• the start date for the 2015–2016 Budget measure to allow the ATO to pay lost and unclaimed superannuation amounts directly to New Zealand KiwiSaver accounts has been revised; and
• the start date of the proposal to prevent super funds from transferring new amounts to eligible rollover funds will be deferred by 12 months.

The Economic and Fiscal Update was never meant to be a “mini budget”, and the Federal Budget will be handed down on 6 October 2020. Mr Frydenberg has previously indicated that the Government is looking at the timing of the legislated personal income tax cuts and may consider bringing them forward as part of the Budget in October.

If you’ve purchased assets for your business, remember that you may be eligible to claim an immediate deduction in your 2019–2020 and 2020–2021 tax returns under the instant asset write-off, which was recently further expanded.

 

From 12 March to 31 December 2020 inclusive, the instant asset write-off threshold for each asset increased to $150,000 (up from $30,000) for business entities with aggregated annual turnover of less than $500 million (up from $50 million).

 

To get it right, remember:

• check if your business is eligible;
• both new and secondhand assets can be claimed, as long as each asset costs less than $150,000;
• assets must be first used or installed ready for use between 12 March and 30 June 2020 (to claim for the 2019–2020 year) or from 1 July to 31 December 2020 (to claim for the 2020–2021 year);
• a car limit applies for passenger vehicles;
• if the asset is for business and private use, only the business portion can be claimed;
• you can claim a deduction for the balance of a small business pool if its value is less than $150,000 at the relevant date (before applying depreciation deductions); and
• different eligibility criteria and thresholds apply to assets first used or installed ready for use before 12 March 2020

The Government has announced that JobKeeper payments will continue for six months beyond the legislated finish date of 27 September 2020, subject to revamped eligibility rules. Treasurer Josh Frydenberg said the Government will introduce two tiers of payment rates as part of “JobKeeper 2.0” to better reflect the pre-COVID-19 incomes of recipients.

 

The extension of JobKeeper from 28 September 2020 until 28 March 2021 will also include a requirement for businesses and not-for-profits to demonstrate an actual decline (not merely predict a decline) in turnover under the existing turnover test. The JobKeeper payment will also be stepped down and paid at two rates. Importantly, the existing arrangements for those receiving JobKeeper payments continue until 27 September 2020.

 

The JobKeeper payment ($1,500 per fortnight until 27 September) is to be reduced and paid at two rates

 

Businesses and not-for-profits will be required to nominate which payment rate they are claiming for each of their eligible employees (or business participants) and will have to meet a further decline in turnover test for each of the two periods of extension.

 

The eligibility rules for employees remain unchanged. Self-employed people will be eligible to receive the JobKeeper payment where they meet the relevant turnover test and are not a permanent employee of another employer.

The ATO’s key JobKeeper information has been updated to note that payments for childcare providers stop from 20 July 2020.

 

This follows the Government’s changes to transition certain approved providers of childcare services out of the JobKeeper scheme. The Government has instead decided to extend separate support to this sector by reintroducing the Child Care Subsidy and adding a Transition Payment as part of the Early Childhood Education and Care transition arrangements.

 

The changes mean that eligibility for JobKeeper payments ends from 20 July for:

• employees of an approved provider of childcare services where those employees whose ordinary duties are that they are engaged principally in the operation of the childcare centre; and
• eligible business participants where the business entity is an approved provider of a childcare service.

Childcare providers need to ensure that they do not claim JobKeeper for employees and eligible business participants who are no longer eligible. Likewise, childcare providers will not be reimbursed for payments made after JobKeeper Fortnight 8 (6 to 19 July 2020).

The Government has announced that it will extend the temporary Coronavirus Supplement payment from 25 September to 31 December 2020 but the rate will be reduced from $550 to $250 per fortnight.

 

Since 27 April 2020, a Coronavirus Supplement of $550 per fortnight has effectively doubled the social security payments for job seekers, sole traders and students in receipt of the JobSeeker Payment, Sickness Allowance, Youth Allowance for jobseekers, Parenting Payment Partnered, Parenting Payment Single, Partner Allowance, Sickness Allowance and the Farm Household Allowance. Individuals eligible for these payments receive the full amount of the $550 Coronavirus Supplement on top of their payment each fortnight.

 

The Supplement will continue to be $550 per fortnight for payments up to and including the reporting period ending 24 September 2020. From 25 September to 31 December 2020, the Government will continue to pay the Supplement to existing and new income support recipients but at a reduced rate of $250 per fortnight.

 

The Government will also reintroduce a range of means testing, tapering and mutual obligation arrangements to ensure that social security payments are appropriately targeted.

The ATO is on the look-out for fraudulent schemes designed to take advantage of the Government’s COVID-19 stimulus measures. This includes JobKeeper, early release of superannuation, and boosting cash flow for employers.

 

The ATO will be using its wide array of data sources to assess and identify inappropriate behaviour. It has also established a confidential tip-off line for the public to raise concerns of any wrongdoing.

 

“We’ve received intelligence about a number of dodgy schemes, including the withdrawal of money from superannuation and re-contributing it to get a tax deduction. Not only is this not in the spirit of the measure (which is designed to assist those experiencing hardship), severe penalties can be applied to tax avoidance schemes or those found to be breaking the law. If someone recommends something like this that seems too good to be true, well, it probably is”, ATO Deputy Commissioner Will Day said.

 

Mr Day said the ATO will be conducting checks, “so if you've received a benefit as part of the COVID-19 stimulus measures and we discover you are ineligible, you can expect to hear from us. If you think this may apply to you, you should contact us or speak to your tax professional”. Penalties for fraud can include financial penalties and prosecution, and even imprisonment for the most serious cases.

The ATO has published a list of common mistakes and misconceptions taxpayers have around tax time:

•       bank details don’t update themselves: the ATO does not keep track of changes to bank nominations for taxpayers to receive tax refunds;

•       it’s not okay to double dip: it’s important to remember that if you’re claiming under the shortcut method (of working from home expenses), you cannot claim a separate additional deduction for any expenses you incur as a result of working from home;

•       home to work travel is not claimable: generally, most people cannot claim the cost of travelling from home to work unless, they are required by their employer to transport bulky tools or equipment and there is not a safe place to store these at the workplace;

•       you can’t just claim a flat $300 if you had no expenses: you don’t need receipts for claims of expenses up to $300, but you must have actually spent the money and be able to show the ATO;

•       work-related expenses need to be work-related: taxpayers can only claim for expenses that are directly related to earning their income;

•       lodging earlier doesn’t always mean getting your refund earlier: each year the ATO automatically includes information from employers, banks, private health insurers (and this year JobKeeper for employees and JobSeeker amounts) in people’s returns. Taxpayers are advised to include all relevant information if lodging before the ATO automatically updates the information, so as to avoid delays in the return.

The ATO has extended, from 30 June 2020 to at least 30 September 2020, the “shortcut” rate for claiming work-from-home running expenses. This shortcut eligible taxpayers to claim running expenses incurred between 1 March 2020 and 30 September 2020 at the rate of 80 cents per work hour, provided they keep a record of the number of hours worked from home – for example, using a workplace timesheet.

 

People 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 1 March 2020 to 30 September 2020; and
• incur additional running expenses that are deductible under the tax law.

People who choose not to use the shortcut rate can instead:

• claim 52 cents per work hour for running costs plus claiming the work-related portion of phone and internet expenses, computer consumables, stationery and the work-related portion of the decline in value of a computer, laptop or similar device; or
• claim the actual work-related portion of all running expenses, which need to be calculated on a reasonable basis.

The Inspector General of Taxation and Taxation Ombudsman (IGTO) has launched a new investigation into effective communication of taxpayers’ rights to review, complain and appeal decisions made and actions taken by the ATO. The investigation will seek to understand and confirm how effectively, clearly and completely the ATO communicates appropriate information to taxpayers and their representatives on these taxpayers’ rights.

 

In examining the taxation complaints service, the IGTO has observed that information on rights of appeal and opportunities to raise complains varies across different types of ATO-issued correspondence. In particular, the IGTO found in a number of investigations that ATO correspondence may not clearly and/or completely advise taxpayers and their representatives of their rights to review, complain and appeal.

 

Initially, the review will focus on ATO communications which concern debt decisions in relation to individuals and small business taxpayers as they have been deemed most “vulnerable”.

 

After the initial stage, the review will also seek to confirm ATO communications around access to the Administrative Appeals Tribunal Small Business Taxation Division.

The Australian Banking Association (ABA) has announced a new phase of support to assist customers to get back to making their loan repayments. With the six-month loan repayment deferral period set to end on 30 September, the ABA said customers with reduced incomes due to COVID-19 will be eligible to apply for an extension of their deferral for up to four months.

 

A deferral extension of up to four months will not be automatic. It will only be provided to those who genuinely need some extra time. Bank customers with reduced incomes and ongoing financial difficulty due to COVID-19 will be contacted as they approach the end of their initial deferral period. Wherever possible, borrowers are expected to return to a repayment schedule through a restructure or variation to their loan.

The Assistant Minister for Superannuation Senator Jane Hume has welcomed the recent amendments to Australia’s superannuation regulations that allow more people to make voluntary superannuation contributions from 1 July 2020.

 

The changes allow people aged 65 and 66 (ie under age 67) to make voluntary super contributions (both concessional and non-concessional) without meeting the work test. The amendments bring these contribution rules into line with those for individuals under 65 years, providing greater flexibility to make contributions as people approach retirement. The age limit for making spouse contributions has also been increased from 69 to 74 from 1 July 2020.

 

These changes to the super contributions rules were previously announced in the 2019–2020 Federal Budget. Another change in that Budget package will allow people aged 65 and 66 to make up to three years of non-concessional contributions (up to $300,000) under the bring-forward rule from 1 July 2020.

The Australian Securities and Investments Commission (ASIC) has reminded companies, directors and officers faced with COVID-19 challenges to reflect on their fundamental duties to act with due care, skill and diligence, and to act in the best interests of the company.

ASIC Commissioner John Price has said the impacts of COVID-19 will require many companies to focus on and, most likely, recalibrate aspects of their corporate strategy, risk-management framework, and funding and capital management, among other things. This will require directors to reflect on which stakeholders’ interests need to be factored into decisions – including employees, investors and creditors. This is still the case even in areas where temporary relief has been provided from specific obligations under the law.

ASIC will maintain its enforcement activities and continue to investigate and take action where the public interest warrants it. Whether action is taken depends on the assessment of all relevant circumstances, including what a director or officer could reasonably have foreseen at the time of taking relevant decisions or incurring debts.

Processing of COVID-19 early release of superannuation applications has now resumed, with the ATO adding extra risk filters for all files that are delivered to super funds. These release requests had been temporarily paused between 8 May and 11 May 2020 so that the ATO could consider enhancements to its systems to help protect individuals’ personal data.

 

Assistant Treasurer Michael Sukkar recently reported that the ATO had identified a small number of third parties who could be susceptible to new techniques that criminals are using to try to steal personal data. The ATO has now worked with these third parties to help them make security enhancements, Mr Sukkar said, and the resulting additional risk filters will be applied on all files before they are delivered to super funds.

The ATO has extended the Single Touch Payroll (STP) exemption for small employers in relation to closely held payees from 1 July 2020 to 1 July 2021 in response to COVID-19. This STP exemption for closely held payees applies automatically and small employers do not need to apply to the ATO to access it. However, employers should keep records to support their decision to apply the concession.

The ATO and Treasury have released a joint statement advising that the previous estimate of the number of employers who would access the JobKeeper program was significantly overstated. Treasury now estimates the number of employees covered under the JobKeeper program to be around 3.5 million (down from a previous estimate of 6.5 million). The estimated cost of JobKeeper has been revised down to around $70 billion (from the original $130 billion estimate).

 

The overstatement has been attributed to errors made when employers applied for JobKeeper. For example, when estimating their eligibility over 500 businesses with only a single eligible employee actually reported the dollar amount that they expected to receive per fortnightly JobKeeper payment (1,500) instead of the number of their eligible employees.

 

Importantly, this error has no consequences for JobKeeper payments already made, as payments under the scheme depend on the subsequent declaration that businesses make in relation to each and every eligible employee. This declaration does not involve estimates and requires an employer to provide the Tax File Number (TFN) for each eligible employee.

Coronavirus COVID 19 – Rent Relief: What it Means for Tenants and Landlords of Commercial Leases

 

The COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licenses) Regulations 2020 (Vic) was published on 1 May 2020 (the Regulations). The Regulations are made under the COVID-19 Omnibus (Emergency Measures Act 2020 (Vic) which follows the National Cabinet Mandatory Code of Conduct. The Regulations carry retrospective effect and are taken to have come into operation on 29^th March 2020.

 

The purpose of the Regulations is to implement temporary measures that apply to tenants and landlords under certain eligible leases in order to mitigate the effect of the COVID-19 Pandemic.

 

Read More about the Regulations and eligibility criteria here:

 

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COVID-19 - Boosting Cashflow for Businesses

 

We have created this Fact Sheet is to enable you to make a quick assessment of your eligibility for the Government's Boosting Cash Flow for business. It is not a comprehensive guide as the rules are quite complex. If, after you have examined the information in this Fact Sheet and believe that you may be eligible, please contact us immediately so we may assist you further.

 

The cash flow boost will be available only to ‘active eligible employers established prior to 12 March 2020’. To be eligible for the cash flow boost, an entity must meet all of the seven conditions set out below.

 

Please click the link below to download the fact sheet and let us know if you have any question.

 

Click to download

 

COVID-19 Assist - Early Access to Superannuation

 

The Government will allow eligible individuals affected by the Coronavirus to have up to $10,000 released from their superannuation or retirement savings account on compassionate grounds before 1 July 2020. A further amount of $10,000 may be withdrawn for the period 1 July 2020 to 30 September 2020.

 

We have created this Fact Sheet to enable you to make a quick assessment of your eligibility to temporarily access their Superannuation. It is not a comprehensive guide as the rules are quite complex. If, after you have examined the information in this Fact Sheet and believe that you may be eligible, please contact us immediately so we may assist you further.

 

Click the link below to download the fact sheet and please let us know if you have any question.

 

Click to download

 

JobKeeper Payment Scheme Explained

 

We have created a fact sheet and self-assessment tool for individuals and businesses wish to participate in the Australian Government JobKeeper Payment Scheme.

 

The purpose of this Fact Sheet is to enable you to make a quick assessment of your eligibility for the Government's JobKeeper Payment Scheme. It is not a comprehensive guide as the rules are quite complex. If, after you have examined the information in this fact sheet and believe that you may be eligible, please contact us immediately so we may assist you further

 

You can download the fact sheet via the link below. Please let us know if you have any questions.

 

Click to download

 

ARITA Info Sheets for Directors, Accountants and Businesses

 

On 23 March 2020, the Government passed laws to assist businesses with the impact of the current economic conditions, including temporary relief for directors from personal liability for trading while insolvent.

 

Given the current impact of the COVID-19 pandemic, there is a strong likelihood that businesses’ liquidity will be adversely impacted. Ensuring that the challenges to liquidity do not move into a shortage of working capital which is unable to be overcome, is key to maintaining solvency during this period.

 

It’s really important to realise that a lot of people are in the same boat at the moment, and generally through no fault of their own. So, don’t see this as a personal failure. But do get proper, qualified advice as quickly as you can.

 

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COVID 19 – Holding DOCA - the solution to the liquidity trap and building financial bridges 

 

We think that there are good reasons for holding DOCAs as being a part of the solution to the present liquidity trap. If you are experiencing cash flow difficulties or if you think that your business is on the brink of insolvency but is otherwise a good and profitable business and worth saving, we may be able to assist in “building that bridge” with the use of a holding DOCA until our social and working lives return to normal.

 

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Temporary relief for financially distressed businesses

 

COVID-19 Updates

 

Ray Barrett

Director

 

Started in the tail -end of last year, COVID-19 has infected more than 80,000 people in China and more than 220,000 globally. As this particularly distressing time, the team at Barrett Walker wants to check in with you to make sure you are alright. We want to let you know we are here to support you and we are all in this together. In the meantime we recommend that you remain informed of the latest development of COVID-19, practice social distancing, and check in with your friends and family when you can.

 

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