As if tax time wasn’t busy enough, the COVID-19 pandemic continues to create a challenging environment for tax and superannuation professionals.
At Tax & Super Australia, we are committed to helping our members navigate this difficult and stressful time. Commencing Wednesday 5 August, this includes daily updates, available below, to keep you informed of the latest news and announcements around COVID-19, with guidance on what to do and be aware of as well as useful resources.
7 August 2020
NEW CHANGES TO JOBKEEPER LEGISLATION
Today the Treasurer announced two changes to the JobKeeper scheme. The first makes it easier for organisations to qualify for the JobKeeper payment extension from 28 September 2020, while the second change adjusts the reference date for employee eligibility.
1) Business turnover test
Businesses will need to meet one of the decline in turnover tests for the September 2020 quarter alone (rather than for both the June and September quarters as announced in July) to be eligible for JobKeeper for the period 28 September 2020 to 3 January 2021.
Beyond that, businesses will have to meet the decline in turnover tests for the December 2020 quarter to be eligible for JobKeeper for the period 4 January to 28 March 2021.
2) Eligible employee test
The reference date for assessing which employees are eligible for the JobKeeper Payment is now 1 July 2020 (previously 1 March) with effect from 3 August 2020. The reference period for employees regarding their hours worked to determine their tier of payment will be the two fortnightly pay periods prior to 1 March 2020 or 1 July 2020. The period with the higher number of hours is to be used for employees who were eligible at 1 March 2020.
HELPLINE QUESTION 1
Do the Cash Flow Boost, JobKeeper and the various other Federal and State COVID-19 assistance packages need to be included in the calculation of GST turnover for the decline in turnover tests and monthly reporting?
Only consideration for supplies (as defined in the GST Act) need to be included in the calculation of GST turnover. Government assistance and grants are only considered to be consideration for a supply where the recipient of the grant is required to perform some action, or give up something in order to receive the assistance or grant. This is not the case for the various COVID-19 assistance. Therefore the various assistance packages should not be included in the calculation of GST turnover. Please refer to Law Companion Ruling LCR 2020/1 paragraphs 24-25.
HELPLINE QUESTION 2
What are the decline in turnover test requirements for JobKeeper 2.0?
1) Business Turnover Test
Businesses will need to meet one of the decline in turnover tests for the September 2020 quarter to be eligible for JK for the period 28 September 2020 to 3 January 2021. Further businesses will have to have met the decline in turnover tests for the December 2020 quarter to be eligible for JK for the period 4 January to 28 March 2021.
2) Eligible Employee Test
The reference date for assessing which employees are eligible for the JobKeeper Payment is now 1 July 2020 with effect from 3 August 2020. The reference period for employees regarding their hours worked to determine their tier of payment will be the two fortnightly pay periods prior to 1 March 2020 or 1 July 2020. The period with the higher number of hours is to be used for employees who were eligible at 1 March 2020.
For more frequently asked questions…
The ATO’s COVID-19 frequently asked questions have been archived on the ATO’s legal database and embedded within the relevant topic areas on the ATO website.
Business grants program expanded
The Victorian Government has announced that the one-off support grants that it had earlier established are to be expanded. Grants will be made available to eligible businesses under the Business Support Fund-Expansion program:
- $10,000 for employing businesses in metropolitan Melbourne and Mitchell Shire in recognition of spending longer under restrictions
- $5,000 for employing businesses in regional local government areas (except Mitchell Shire)
Businesses that have already received a Business Support Fund-Expansion grant, or have applied for one, will not need to re-apply. Successful applicants will automatically receive this additional allocation. Also, applications for the program will be extended until 14 September 2020.
Under current law, such grants are assessable under s 6-5 or s 15-10 of ITAA 1997 (ie a bounty or subsidy that is received in relation to carrying on a business). See also TR 2006/3 which provides that a “government payment to industry” to assist a business to continue operating, except where the payment is for agreeing to give up or sell part of the profit yielding structure, is included as assessable income of the recipient under section 6-5 or section 15-10.
Coronavirus payroll tax relief — claim a refund
Businesses with annual Victorian taxable wages up to $3 million will have their payroll tax for the 2019-20 financial year waived. Eligible businesses can claim an emergency tax relief refund of payroll tax already paid in the 2019-20 financial year (see this SRO page for details).
Commissioner’s pledge to Victorian practitioners
The Commissioner of Taxation Chris Jordan has published a message of support to Victorian tax professionals. He states that the ATO is committed to providing the help you need through this difficult period and that it has a range of practical support options available.
Surgeries on hold in regional Victoria
From midnight on Wednesday, public hospitals in regional Victoria have wound back all non-urgent surgery. Where possible, Category 3 and non-urgent Category 2 surgery which is already booked should still take place, however that will be at the hospital’s discretion. No new non-urgent surgeries will be booked.
Worker support payment and test isolation payment
If you or a client test positive for COVID-19 or are a close contact of a confirmed case, you may be eligible for the $1500 Coronavirus (COVID-19) Worker Support Payment that provides financial support while you are quarantining at home. Also available is a $300 Coronavirus (COVID-19) Test Isolation Payment that provides financial support while taxpayers self-isolate to wait for the results of a coronavirus (COVID-19) test.
6 August 2020
Topic: Client access during lockdown
Question: Can a tax agent in the Stage 4 areas visit clients?
Answer: The industry restrictions guidance mentioned in Tuesday’s Daily Update (here’s the link) rule this out. With accounting services not listed as a permitted activity, tax professionals will not be allowed to apply for the permitted worker scheme to allow employees to travel to work. However the introductory text says: “Sole operators can continue to operate, if they do not have contact with the public, or with people other than those persons living in their primary household”. Tax agents with doubts could check with Victorian police, or call the Department of Health & Human Services on 1300 650 172 or Business Victoria on 13 22 15.
Submission made to Victorian Premier
Regarding the above, members should note that Tax & Super Australia, along with 10 other professional accounting and bookkeeping bodies, has made a request of the Victorian Premier Daniel Andrews to grant tax professionals access to the permitted worker scheme to travel to their own practices or their clients’ business premises to access crucial physical documents. “For some tax practitioners and their clients, these restrictions will result in an inability to access time-critical tax advice, lodge obligations on time (e.g. payment summaries) or make payments on time (eg payment notices such as notices of assessment for clients could go unopened for six weeks, extending beyond the due date of the payment),” we said. “Also, some may miss out on stimulus payments (eg not claiming JobKeeper on time) and suffer significant penalties (eg where they are unable to access the superannuation guarantee amnesty).” Other signatory bodies were CPA Australia, Chartered Accountants Australia and New Zealand, the Corporate Tax Association, the Institute of Public Accountants, Law Council of Australia, the Tax Institute, the Institute of Certified Bookkeepers, National Tax and Accountants’ Association Ltd, Australian Bookkeepers Association and Association of Accounting Technicians. See our Submissions page for more details. We will advise of any response as it comes to hand.
JobKeeper still open
Members are reminded that applications for the JobKeeper subsidy are still open. Some accountants are still confused by this. Some are under the impression that the ability to claim the JobKeeper subsidy was closed at some stage in the year ended 30 June 2020. This is not the case. For example, if a client projects a downturn in turnover of greater than (for most cases) 30% for the months of August or September 2020 or for the quarter ending 30 September 2020, the JobKeeper subsidy can still be claimed.
Due to the rapid imposition of Stage 4 restrictions in parts of Victoria, some businesses that previously may have thought that they would not suffer a 30% or more decline in turnover may now consider that this will occur. Tax & Super Australia is involved with a submission to the ATO with regard to assisting businesses in this situation and we will let you know the outcome of the submission as soon as we can.
Victorian childcare centre top-up from Federal Government
In a measure that stops short of re-introducing free childcare, the Federal Government will make top-up payments to Victorian childcare centres and give parents an extra 30 days of allowable absences to maintain their enrolments. Childcare centres will receive a 5% top-up payment in addition to the transition package outlaid for the sector to replace JobKeeper in June. A larger top-up of between 10% and 25% of the existing transition payment will be given to centres that see attendance levels reduce to less than 30% over the next six weeks, in a bid to ensure revenue remains about 80% to 85% of pre-COVID levels, on average, across the sector. Also see the Premier’s announcement regarding access to childcare.
JobKeeper questions and answers
Tax & Super Australia recently held a webinar on JobKeeper 2.0. There were many enquiries around this issue and we are pleased to provide answers. Following are a few examples, with more to follow in coming Daily Updates.
What are the general ledger entries for the receipt of the cash flow boost?
Tax & Super Australia has conducted a webinar on this topic. Go here for the details
The monthly JobKeeper declaration needs to be done by the 14th day following the end of each month. What happens if the declaration is done a few days late?
Technically, the business will not qualify for JobKeeper in relation to the month being reported on. The business would need to contact the ATO to see if it will permit the business further time to make the declaration.
If a business is being subsidised with JobKeeper payments due to an individual being an eligible business participant and that individual obtains a permanent job in July 2020, will this affect JobKeeper payments?
The individual would have been required to give a nomination notice to the business (or the Commissioner) stating, among other things, that the individual is not an employee (other than a casual employee) of another entity. However, this condition needs only be satisfied at the time the individual gave that nomination notice. In relation to each JobKeeper fortnight, one requirement is that the individual is actively engaged in the business “at a time in the fortnight”. It will be a question of fact as to whether the individual meets this test if the individual also maintains full-time employment. In our view, the ATO is likely to adopt a position that the individual cannot be actively engaged in a business while they maintain full-time employment. There is not much information on what the ATO considers being “actively engaged” means. Please refer to ATO document QC 62814.
5 August 2020
Pandemic leave payments to start for Victoria
The Federal government has announced, via Services Australia, that it is to introduce a pandemic leave disaster payment of $1,500 a fortnight for workers without sick leave who need to self-isolate. To be jointly funded by state governments declared in a “disaster”, the new $1,500 payment is intended to “supplement and support” Victoria’s existing payment system by covering the fortnight of self-isolation after a positive result. The fastest way to claim is to call Services Australia on 180 22 66. More details are here.
Working permits required from tonight
From 11.59pm Wednesday 5 August 2020, Victorian employers that require their staff to attend a place of work must issue each staff member with a worker permit. See this Business Victoria web page for eligibility and for the permit template.
Stage 4 law states that operational businesses must have a COVID Safe Plan
Under Victoria’s Stage 4 restrictions, there are new requirements for businesses. Certain services and industries will be able to remain operational and will be required by law to have a COVID Safe Plan. Every employer must complete this plan by 11.59pm 7 August 2020. See this web page for guidance, templates and conditions.
Strict new procedures for Victorian flights to NSW
The NSW government has announced that a strict permit system will be in place for all flights arriving in NSW from Victoria, with all passengers undergoing police and health checks on arrival. The new health measures in place for all Victorian flights will help stop the spread of COVID-19 in NSW.
Commercial tenancy relief scheme
Through Business Victoria, the Commercial tenancy relief scheme will provide the following support:
- a six-month moratorium on commercial tenancy evictions from 29 March 2020 for the non-payment of rent for small to medium enterprises with an annual turnover under $50 million that have experienced a minimum 30 per cent reduction in turnover due to coronavirus (COVID-19)
- freeze on rent increases during the moratorium for commercial tenants
- a rental payment waiver or deferral proportionate to commercial tenants’ income reduction due to coronavirus (COVID-19), to be negotiated between tenant and landlord
- a mediation service for commercial tenants and landlords to support fair tenancy negotiations.
Tax relief — landlords, businesses
The Victorian Government has announced a range of tax relief measures – land tax relief, payroll tax relief, liquor licence fee relief and motor vehicle duty relief – in response to coronavirus (COVID-19). The Treasurer has directed the Commissioner of State Revenue to give effect to these measures. In addition to these measures, the State Revenue Office is assisting people impacted by the pandemic by remitting penalties and interest charged on some assessments and providing interest-free instalment plans.
See video on how to apply for land tax relief below.