5 minute tax updates 25-29 May

JobKeeper guidelines updated with added scenarios
Cash flow boost and your monthly lodgers
COVID-19 benefit rorting warning for enabling practitioners
APRA’s early release from super data
AAT holds that couple did not run a business as a partnership
Retirement income covenant to be deferred
Not-for-profits and JobKeeper
Taxpayer alert on schemes connected with foreign investment
Continuous disclosure provisions relaxed for COVID-19

JobKeeper fortnight dates checklist
COVID-19: It’s officially a “disaster”

JobKeeper guidelines updated with added scenarios
The ATO has issued an updated version of practical compliance guideline PCG 2020/4 “Schemes in relation to the JobKeeper payment”, which gives additional examples of how it will apply its compliance resources to certain schemes that result in an entity obtaining access to or increased amounts of JobKeeper. These include deferral or reduction of price paid to suppliers so that suppliers obtain a payment, and deferral, reduction or waiver of revenue paid to company so that a company can secure JobKeeper.

Cash flow boost and your monthly lodgers
If any clients lodge BAS monthly, and they received a cash flow boost in their March monthly activity statement, they may be due to receive a further payment when they lodge their April BAS. However some may need reminding that if they received the minimum boost credit of $10,000, they won’t receive more credits for the April to June periods until their PAYG withholding exceeds $10,000. And if they were not automatically credited for the March BAS, they may still be eligible if more information is provided to the ATO (which of course you can help them with).

COVID-19 benefit rorting warning for enabling practitioners
There have surfaced many disappointing instances of businesses restructuring or changing employment arrangements to obtain benefits under the COVID-19 stimulus measures, among other questionable practices. The TPB has issued a reminder for clients that practitioners can hand to clients to help ensure they are acting within the intended framework when using the assistance of a tax agent. Of course the other side to the same coin is where practitioners enable questionable behaviour, with the TPB reminding agents that untoward practices can lead to administrative sanctions, such as suspension or termination of registration. Behaviour of concern relating to the COVID-19 stimulus measures can be reported to the TPB’s tip-off mailbox or by calling the TPB’s COVID-19 hotline on 1300 362 829.

APRA’s early release from super data
The statistics show that up to 17 May, 1.59 million applications had been made under the early release from superannuation scheme, with 1.41 million paid at an average of $7,510 each. The time taken to make payments averaged 3.3 business days, with 94% paid within five business days. For the actual week to 17 May, $1.7 billion was released, paid to 220,000 members. The early release statistics are available here.

AAT holds that couple did not run a business as a partnership
A husband and wife have had their appeal against a default assessment dismissed by the AAT. The decision in Holman and Commissioner of Taxation (Taxation) [2020] AATA 1375 concluded in part that “if the business was being conducted as a partnership one would expect that the BAS, ABN, ITR, and business name registration would be in the partners’ joint names. Here, only Mrs Holman is registered on these business records.” The AAT noted that assisting a spouse in running a business was commonplace and did not in itself constitute a “partnership” for taxation purposes.

Retirement income covenant to be deferred
The government has announced that it plans to defer the introduction of the Retirement Income Covenant, previously scheduled to commence on 1 July 2020. The deferral is necessary to allow continued consultation and legislative drafting to occur in the face of the COVID-19 crisis. The purpose of it is to establish an additional obligation for trustees to formulate a retirement income strategy for their members on top of current requirements for trustees to formulate, review and give effect to investment, risk management and insurance strategies.

Not-for-profits and JobKeeper
The ATO says that not-for-profit entities (NFPs) may be entitled to the JobKeeper payment to help them pay their employees. It has provided information that will help NFPs understand how the rules apply to them, but says this should be read in conjunction with the other general advice the ATO has issued on JobKeeper for employers.

Taxpayer alert on schemes connected with foreign investment
The ATO has issued a taxpayer alert (TA 2020/2) in relation to mischaracterised arrangements and schemes connected with direct foreign investment into Australian businesses. It is concerned that these arrangements are deliberately structured to avoid Australian tax that is payable on the return to the foreign investor, or to obtain a tax deduction for the Australian entity.

Continuous disclosure provisions relaxed for COVID-19
The government will temporarily amend the Corporations Act so that companies and officers will only be liable under the continuous disclosure provisions if there has been “knowledge, recklessness or negligence” with respect to updates on price sensitive information to the market. These changes will be made under the instrument-making power that has been inserted into the act as part of the response to COVID-19.

JobKeeper fortnight dates checklist
The ATO has published a handy list of the key fortnight dates related to the JobKeeper scheme. Your employer clients should note that 31 May is the final date they can enrol for JobKeeper if they intend to claim for wages paid for fortnights in April and May. They are also expected to complete a business monthly declaration for each month between the 1st and 14th of the following month (for example, to be reimbursed for JobKeeper payments in May they need to complete such a declaration by 14 June).

COVID-19: It’s officially a “disaster”
We all knew it, but now the ATO has advised that COVID-19 is a disaster. This declaration allows Australian Disaster Relief Funds that are established for the relief of people affected by the COVID-19 pandemic to receive tax-deductible donations. Donations will be tax-deductible when made within two years from 18 March 2020. In order to receive tax-deductible donations, Australian Disaster Relief Funds will need to:

  • apply to the ATO for DGR endorsement as a Disaster Relief Fund for the purpose of COVID-19
  • be registered as a charity with the Australian Charities and Not-for-profits Commission (ACNC).

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