TAX UPDATES (COVID-19)

COVID-19 ATO Updates

Below is an outline of the measures on the update

Simplified Process – Work From Home Deductions
  1. The ATO has announced new working-from-home shortcuts, enabling business owners and employees working from home due to the coronavirus crisis a simplified process for claiming deductions.
  2. The new arrangement will allow people to claim a rate of 80 cents per hour for all their running expenses, rather than needing to calculate costs for each specific expense.
  3. The Australian Taxation Office (ATO) clarified that multiple people living in the same house can claim this new rate, while the requirement to have a dedicated work-from-home area has also been removed.
  4. The new method will apply to the period between 1 March 2020 and 30 June 2020, with the ATO due to review the special arrangement for the next financial year as the COVID-19 situation progresses. The Tax Office stressed that claims for working-from-home expenses prior to 1 March 2020 cannot be calculated using the shortcut method, and must use the pre-existing working-from-home approach and requirements.
  5. Due to the pandemic, many taxpayers are working from home for the first time and this simplifies home office deductions. It will be necessary though to keep a record of the hours they have worked from home as evidence of their claim.
  6. 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.
  7. The methods available for claiming:
    • claim a rate of 80 cents per work hour for all additional running expenses.
    • claim a rate of 52 cents per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture, plus calculate the work-related portion of your phone and internet expenses, computer consumables, stationery and the decline in value of a computer, laptop or similar device.
    • claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.

JOBKEEPER ATO SCHEDULE

Jobkeeper Payment ATO Schedule
PAYMENT DATE AMOUNT PER EMPLOYEE
MAY $3,000 – Fortnights starting 30 March and 13 April
JUNE $3,000 – Fortnights starting 27 April and 11 May
JULY $3,000 – Fortnights starting 25 May and 8 June
AUGUST $3,000 – Fortnights starting 22 June and 6 July
SEPTEMBER $4,500 – Fortnights starting 20 July, 3 August and 17 August
OCTOBER $3,000 – Fortnights starting 31 August and 14 September

JOBKEEPER ATO – PAYROLL

Jobkeeper Payment Payroll Configuration
FN (FORTNIGHT NUMBER) DATES ALLOWANCE – START JOBKEEPER ALLOWANCE – END JOBKEEPER
01 30/03/2020 – 12/04/2020 JOBKEEPER-START-FN-01 JOBKEEPER-FINISH-FN-01
02 13/04/2020 – 26/04/2020 JOBKEEPER-START-FN-02 JOBKEEPER-FINISH-FN-02
03 27/04/2020 – 10/05/2020 JOBKEEPER-START-FN-03 JOBKEEPER-FINISH-FN-03
04 11/05/2020 – 24/05/2020 JOBKEEPER-START-FN-04 JOBKEEPER-FINISH-FN-04
05 25/05/2020 – 07/06/2020 JOBKEEPER-START-FN-05 JOBKEEPER-FINISH-FN-05
06 08/06/2020 – 21/06/2020 JOBKEEPER-START-FN-06 JOBKEEPER-FINISH-FN-06
07 22/06/2020 – 05/07/2020 JOBKEEPER-START-FN-07 JOBKEEPER-FINISH-FN-07
08 06/07/2020 – 19/07/2020 JOBKEEPER-START-FN-08 JOBKEEPER-FINISH-FN-08
09 20/07/2020 – 02/08/2020 JOBKEEPER-START-FN-09 JOBKEEPER-FINISH-FN-09
10 03/08/2020 – 16/08/2020 JOBKEEPER-START-FN-10 JOBKEEPER-FINISH-FN-10
11 17/08/2020 – 30/08/2020 JOBKEEPER-START-FN-11 JOBKEEPER-FINISH-FN-11
12 31/08/2020 – 13/09/2020 JOBKEEPER-START-FN-12 JOBKEEPER-FINISH-FN-12
13 14/09/2020 – 27/09/2020 JOBKEEPER-START-FN-13 JOBKEEPER-FINISH-FN-13

COVID-19 Update

COVID-19 Superannuation

Below is an outline of the measures behind this package.

Accessing your super
  1. The ATO will be solely responsible for assessing applications for the early release of superannuation by individuals impacted by the Coronavirus.
  2. The Government has legislated to allow eligible individuals to release tax-free up to $10,000 over 2 financial years from their superannuation on compassionate grounds. Eligible individuals can apply to access up to $10,000 in this financial year to 30 June 2020, and a further $10,000 from July until September 2020.
  3. Applications can be made from mid-April 2020 directly to the ATO through the myGov website. A person will need to certify that they meet the eligibility criteria. The ATO will verify the applicant, assess the application, record the bank account details, and make a decision. The ATO will then direct the nominated super fund to release the requested amount to the bank account that is specified by the applicant. You do not need to contact your super fund at any stage.
  4. Some Criteria for accessing your superannuation is summarized below (Meet any 1):
    • Unemployed
    • Eligible to receive Jobseeker, Youth Allowance or Parenting payment on or after 1 January 2020.
    • Made redundant
    • Working hours were slashed by 20%
    • Sole trader whose business was suspended or turnover fell by 20% or more.
  5. Withdrawals are tax-free.

COVID-19 Business Help

Below is an outline of the measures behind this package.

PAYG cash credits to SME employers and charities
  1. 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.
  2. 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.

COVID-19 Business Help – Job Keeper Scheme

Below is an outline of the measures behind this package.

Job Keeper Payment
  1. To be eligible for the Job Keeper subsidy:
    • Business with turnover of less than $1 Billion where it has fallen by more than 30%
    • Business with turnover of $1 Billion or more where it has fallen by more than 50%
    • Business is not subject to Major Bank Levy
  2. Guidance from Treasury:
    • To establish that a business has faced either a 30 (or 50) per cent fall in their turnover, most businesses would be expected to establish that their turnover has fallen in the relevant month or three months (depending on the natural activity statement reporting period of that business) relative to their turnover a year earlier.
    • Where a business was not in operation a year earlier, or where their turnover a year earlier was not representative of their usual or average turnover, (e.g. because there was a large interim acquisition, they were newly established or their turnover is typically highly variable) the Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been significantly affected by the impacts of the Coronavirus.
    • The Tax Commissioner will also have discretion to set out alternative tests that would establish eligibility in specific circumstances (e.g. eligibility may be established as soon as a business has ceased or significantly curtailed its operations). There will be some tolerance where employers, in good faith, estimate a greater than 30 (or 50) per cent fall in turnover but actually experience a slightly smaller fall.

Trustee Resolutions

  1. As we lead up to the end of the Financial Year, if you have a trust, please ensure that you make trustee resolutions to distribute the 2017/18 Trust income by 30 June 2018. Failure to do so could result in the undistributed income being taxed in the Trustee’s hand at 45%.
  2. The manner of distributions are dictated or governed by your Trust deed. It is important that the trustees are familiar with the terms of their trust deed so that distributions can be made properly. The ATO has ruled that a written record is essential if you wish to effectively stream capital gains or franked dividends.
  3. Most trust deeds contain a default beneficiary clause which makes that particular beneficiary entitled to the Trust’s income if no other resolution is made by the 30 June. Therefore if you wish to distribute to someone other than the default beneficiary, it is important to have a resolution in place by the 30 June. Depending on circumstances, it is easier to allocate distributions by percentages rather than fixed amounts. This will ensure that any tax adjustments that might lead to a different trust income reported at year end can still be distributed out without residual income caused by the adjustments.