Changes to STP reporting
concessions from 1 July 2021 Small employers (19 or fewer employees) are currently exempt from reporting ‘closely held’ payees through Single Touch Payroll ('STP'). Also, a quarterly STP reporting option applies to
micro employers (four or fewer employees). These concessions will end on 30 June 2021.
The STP reporting changes that apply for these employers from 1 July 2021 are outlined below.
Closely held payees (small employers)
From 1 July 2021, small employers must report payments made to closely held payees through STP using any of the options below. Other employees must continue to be reported by each pay day.
A ‘closely held payee’ is an individual who is directly related to the entity from which they receive payments. For example, this could include family members of a family business, directors or shareholders of a company and beneficiaries of a trust.
Payments to such payees can be reported via STP (from 1 July 2021) using any of the following
1. Report actual payments on or before the date of payment.
2. Report actual payments quarterly on or before the due date for the employer’s quarterly activity statements.
3. Report a reasonable estimate quarterly on or before the due date for the employer’s quarterly activity statements. Note that consequences may apply for employers that under-estimate amounts reported for closely held payees.
Small employers with only closely held payees have up until the due date of the payee’s tax return
to make a finalisation declaration. Employers will need to speak with these payees about when their
individual income tax return is due.
From 1 July 2021, the quarterly reporting concession will only be considered for eligible micro employers experiencing ‘exceptional circumstances’.
Common examples of when the ATO would generally consider it to be fair and reasonable to grant a deferral due to exceptional or unforeseen circumstances include natural disasters, other disasters or events, serious illness or death.
Additionally, ‘exceptional circumstances’ for access to the STP quarterly reporting concession from 1 July 2021 may include where a micro employer has:
seasonal or intermittent workers; or
no or unreliable internet connection.
The ATO says it will consider any other unique circumstances on a case-by-case basis. It should be noted that registered agents must apply for this concession and lodge STP reports, quarterly, on behalf of their eligible micro employer clients.
The STP reports are due the same day as the employer’s quarterly activity statements. If an employer prefers to report monthly, the STP reports must be lodged on or before the 21st day of the following month.
Finalisation declarations will need to be submitted by 14 July each year.
Please contact our office if you require more information or assistance with these STP reporting options.
Paper PAYG and GST quarterly instalment notices
The ATO has previously advised that it will no longer issue paper activity statements after electronic lodgment. Instead, electronic activity statements will be available for access online, three to four days after the activity statement is generated.
As part of its digital improvement program, the ATO stopped issuing paper quarterly PAYG and GST instalment notices (forms R, S & T), where taxpayers had a digital preference on ATO systems. The September 2020 notice was the last one issued to these taxpayers.
However, the ATO has received feedback from tax professionals that issues have arisen for some of their clients as a result of this change. For example, some taxpayers who are self-lodgers rely on the receipt of the paper statements as a reminder that their instalments are due.
As an interim solution, the ATO said it will issue paper PAYG and GST quarterly instalment notices starting with the March 2021 quarterly notices.
For taxpayers impacted by this change, the ATO will work with their registered agents to take their circumstances into account. The ATO has a range of practical support options available, including lodgment deferrals and payment plans that agents can access online, on behalf of their clients.
For self-lodgers, the ATO has issued an email notification reminding them that their December 2020 PAYG and GST instalment notices are due
for payment soon (by 2 March 2021). The ATO said it will continue to work with the tax profession to develop a digital solution for the PAYG and GST instalment notices that is workable for registered agents and their clients.
Please contact our office if you require more information about paper PAYG or GST quarterly instalment notices.
Avoiding disqualification from SG amnesty
The superannuation guarantee (‘SG’) amnesty ended on 7 September 2020. Employers who disclosed unpaid SG amounts and qualified for the amnesty are reminded that they must either pay in full any outstanding amounts they owe, or set up a payment plan and meet each ongoing instalment amount so as to avoid being disqualified and losing the benefits of the amnesty.
The ATO will be sending employers reminders to pay disclosed amounts, if they have not previously
engaged with the ATO. Employers will have 21 days to avoid being disqualified from the amnesty.
Registered agents can assist their employer clients who qualified for the SG amnesty avoid
disqualification. In particular, if a client needs to set up a payment plan, agents can do this (online) on their behalf, if the employer:
has an existing debit amount under $100,000 (total balance or overdue amounts);
does not already have a payment plan for that debit amount; and has not defaulted on a payment plan for the relevant account more than twice in the past two years.
The ATO has advised that employers who are disqualified from the amnesty will:
be notified in writing of the quarter they are disqualified for;
be charged an administration component of $20 per employee for each disqualified quarter;
have their circumstances considered when deciding a Part 7 penalty remission (this is an additional penalty of up to 200% of the unpaid SG amount that may be imposed under the SG laws); and
be issued with a notice of amended assessment.
Employers who continue to qualify for the SG amnesty are reminded that they can only claim a tax deduction for amounts paid on or before 7 September 2020 (i.e., the amnesty end date).
Please contact our office if you require more information or would like us to set up a payment plan for SG amnesty amounts on your behalf.
New measures applying from 1 January 2021
The Government has provided an update of a number of new measures which came into effect
from 1 January 2021, including (among others):
The most significant changes to Australia’s insolvency framework in 30 years, which are intended to reduce costs, cut red tape and help more small businesses recover from the pandemic. The reforms introduce a new, simplified debt restructuring process. These measures apply to incorporated businesses
with liabilities of less than $1 million — covering around 76% of businesses subject to insolvencies today, 98% of which have less than 20 employees.
Australians will have more power to choose their own superannuation fund: ‘Your Superannuation, Your Choice’ allows around 800,000 Australians to decide where their retirement savings are invested,
representing around 40% of all employees covered by a current enterprise agreement.
The Government’s HomeBuilder program has been extended to 31 March 2021. The scheme is expected to support the construction or major rebuild of an additional 15,000 homes.
Major reforms to Australia’s foreign investment framework take effect, with new requirements for foreign investors.
Shortcut rate for claiming home office expenses extended
The ATO has extended (again) the ability to utilise the "shortcut rate" for claiming home office running expenses to 30 June 2021 (it previously only applied until 31 December 2020).
The ATO's guideline allows certain taxpayers to claim a fixed rate per hour (80 cents per hour) for
most additional running expenses incurred when working from home by keeping a record of the
number of hours they have worked from home, rather than needing to calculate specific running
The expenses included in the shortcut rate include lighting, heating, cooling and cleaning costs, the
decline in value and repair of home office items (such as furniture and furnishings in the area used
for work, computers and laptops, etc.), and phone and internet expenses. However, the guideline does not cover "occupancy expenses", such as rent, mortgage interest, property insurance and land taxes.
AAT decision on JobKeeper and backdated ABNs
On 21 December 2020, the AAT handed down its decision in a case relating to a taxpayer's eligibility
for JobKeeper payments, in circumstances where the Registrar of the Australian Business Register
decided to reactivate a previously cancelled ABN after 12 March 2020, with a backdated effective
date on or before 12 March 2020.
The AAT held that the taxpayer met the JobKeeper requirement to have an ABN on 12 March 2020.
However, the ATO disagrees with this decision and has lodged an appeal in the Federal Court.
While the appeal outcome is pending, the ATO will postpone finalising decisions regarding an entity’s
eligibility for JobKeeper where the entity has backdated its registration in order to qualify.
The ATO is taking a similar position in regard to eligibility for the Cash Flow Boost.
Note that the AAT's decision has not changed the need to satisfy all other eligibility conditions.
SMSF related party rental income deferrals due to COVID‑19
The ATO has made a determination to ensure that trustees of SMSFs do not inadvertently breach the
"in-house asset rules" where the fund allows a related party to defer the payment of rent under a lease agreement (on arm’s length terms) because of the financial impact of COVID‑19.
Where the requirements of the determination are met, the deferral of rent will not be treated as a
"loan" or "financial accommodation" to the related party in either or both of the 2019/20 or 2020/21
The determination also applies where an SMSF owns interests in a "non-geared" company or unit trust that allows a tenant to defer the payment of rent under a lease (on arm’s length terms)
because of the financial impact of COVID‑19.
ATO data-matching programs
The ATO has announced it will engage in the following data-matching programs:
it will acquire motor vehicle registry data from state and territory motor vehicle registry authorities for 2019/20 through to 2021/22, with records relating to approximately 1.5 million individuals to be obtained each financial year; and
it will acquire data on Australian sales made through online selling platforms for the 2018/19 through to 2022/23 financial years, collecting 20,000 to 30,000 account records each financial year (with around half of the matched accounts relating to individuals).
These records will be electronically matched with ATO data holdings to identify non-compliance with
registration, lodgment, reporting and payment obligations under taxation laws.
JobMaker Hiring Credit scheme:
Claims open from 1 February 2021 The JobMaker Hiring Credit is being administered by the ATO and provides a wage subsidy payment directly to employers as an incentive to employ additional job seekers aged 16 to 35 years. Registrations for the JobMaker Hiring Credit scheme opened on 7 December 2020, and claims for the first JobMaker period can be made from 1 February 2021, provided employers are registered and meet all eligibility requirements. Employer eligibility requirements include thatapplicants:
are up to date with their tax and GST lodgment obligations for the last 2 years;
have not claimed JobKeeper payments for a fortnight that started during the JobMaker period; and
are reporting through Single Touch Payroll. The ATO will be writing to employers who have registered for the JobMaker Hiring Credit from 15 January 2021, encouraging them to check that they meet all JobMaker Hiring Credit eligibility criteria before they claim, to ensure that registrants can make a claim from 1 February 2021 and there are no delays in them receiving their payments.
Cash payment limit Bill shelved
It appears that the Government has decided not to proceed with its proposal to limit cash payments
in Australia to $10,000. This measure was originally raised as part of the 2018/19 Budget, and the Government subsequently introduced a Bill to the House of Representatives, proposing to make it an offence for entities to make or accept cash payments of $10,000 or more. That Bill passed the House and was then introduced to the Senate on 11 November 2019, but proceeded no further, and the Government
withdrew the Bill from the Senate on 3 December 2020.
Improvements to be made to full expensing measure
The government will expand eligibility for the temporary 'full expensing measure', which temporarily allows certain businesses to deduct the full cost of eligible depreciable assets in the year they are first used or installed.
The government initially announced in the 2020/21 Budget that businesses with a turnover of up to $5 billion would be able to immediately deduct the full cost of eligible depreciable assets as long as they are first used or installed by 30 June 2022.
The government will also allow businesses to opt out of temporary full expensing and the backing business investment incentive on an asset‑by‑asset basis. This change will provide businesses with more flexibility in respect of these measures, removing a potential disincentive for them to take advantage of these incentives
(Editor: For example, where the automatic application of full expensing might cause the entity to make a loss).
JobMaker Hiring Credit passed
The government has passed legislation to establish the JobMaker Hiring Credit, which is part of the government’s economic response to the COVID-19 pandemic.
The JobMaker Hiring Credit is specifically
designed to encourage businesses to take on additional young employees and increase employment.
It does this by providing employers with a fixed amount of $200 per week for an eligible employee
aged 16 to 29 years and $100 per week for an eligible employee aged 30 to 35 years, paid quarterly in arrears by the ATO.
To be eligible, the employee must have been receiving JobSeeker Payment, Youth Allowance
(Other) or Parenting Payment for at least one of the previous three months, assessed on the date of employment. Employees also need to have worked for a minimum of 20 hours per week of paid work to be eligible, averaged over a quarter, and can only be eligible with one employer at a time.
The hiring credit is not available to an employer who does not increase their headcount and payroll.
Employers and employees will be prohibited from entering into contrived schemes in order to gain access to or increase the amount payable.
Existing rights and safeguards for employees under the Fair Work Act will continue to apply, including protection from unfair dismissal and the full range of general protections.
ATO Visa Data Matching Program
The ATO will acquire visa data from the Department of Home Affairs for 2020/21 through to 2022/23, relating to approximately 10 million individuals for each financial year. The data will be used to identify non-compliance with obligations under taxation and superannuation laws, including registration, lodgment, reporting and payment responsibilities.
How to avoid getting dodgy advice
The ATO is warning taxpayers who may be thinking about pausing, changing or closing their business, due to the current economic conditions, to be wary of untrustworthy advisers who may recommend inappropriate or illegal behaviour. This could include illegal phoenix activity, where businesses intentionally remove their assets prior to winding up so that they can be used in a copy of the original business.
Red flags include:
people the taxpayer doesn't know cold calling with advice;
unsolicited letters, emails or phone calls after the taxpayer has been through court action with a creditor;
advice to transfer assets to a third party without payment;
refusal to provide advice in writing;
advice suggesting they have a sympathetic liquidator who will protect the taxpayer's personal interests and assets;
advice to withhold certain records from the bankruptcy trustee or liquidator, or provide incorrect information to authorities; and
advice to deal with the liquidator or trustee on the taxpayer's behalf.
The ATO instead recommends anyone thinking of pausing, changing or closing their business to contact a qualified professional, such as an accountant, lawyer, or registered liquidator.
STP data-sharing with Services Australia
Single Touch Payroll ('STP') allows the ATO to share data in real-time with other government agencies, to "help them deliver government services to the Australian community". As part of the ATO's data-matching program, it has a STP data-sharing arrangement with Services Australia to help them administer Australia's welfare system. This means that people who are on an income support payment from Services Australia and need to report their employment income fortnightly to Centrelink will now see their employer details
Proposed FBT exemption — retraining and reskilling
The government has announced it will introduce an exemption from FBT for retraining and reskilling benefits provided by employers to redundant, or soon to be redundant, employees where the benefits may not be related to their current employment.
It is proposed that this exemption will not apply to:
retraining provided under a salary packaging arrangement;
training provided through Commonwealth supported places at universities; or
repayments towards Commonwealth student loans.
If enacted, this proposed measure is intended to
apply from the day it was announced (i.e., 2 October 2020).
Getting the margin scheme right
The margin scheme may allow a property owner to pay less GST when they sell the property — paying GST of 1/11th of their margin on the sale, rather than 1/11th of the total sale price.
If a property owner wants to use the margin scheme when selling property, they must be eligible before the property is offered for sale.
This may be where they're selling new property as part of their business and they're registered for
Importantly, among other criteria, there must be a written agreement before settlement between the
supplier and purchaser to use the margin scheme — this could be part of the contract.
To avoid the common errors suppliers make when selling property using the margin scheme, the ATO is reminding suppliers that they must also:
calculate the margin correctly; and
report the amount of the margin on the sale on their BAS — not the full amount of payment received.
We can help determine your eligibility and also calculate the margin.
Also remember that, when someone purchases property using the margin scheme, they:
can't claim GST credits for the sale; and
don't report it on their activity statement.
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the
information to practical circumstances should seek professional advice to independently verify their interpretation
and the information’s applicability to their particular circumstances.
Tax cuts pass Parliament
Tax cuts pass Parliament The Government announced various tax measures in the 2020 Budget on 6 October 2020, and it was able to secure passage of legislation containing some of the important measures very shortly afterwards, as summarised below.
Tax relief for individuals
The Government brought forward 'Stage two' of their Personal Income Tax Plan by two years, so that, from 1 July 2020:
the low income tax offset increased from $445 to $700;
the top threshold of the 19% tax bracket increased from $37,000 to $45,000; and
the top threshold of the 32.5% tax bracket increased from $90,000 to $120,000. In addition, in 2020/21, low and middle-income earners will receive a one-off additional benefit of up to $1,080 from the low and middle income tax offset. Tax relief for business Businesses with a turnover of up to $5 billion are now able to immediately deduct the full cost of eligible depreciable assets as long as they are first used or installed by 30 June 2022.
To complement this, the Government will also temporarily allow companies with a turnover of up to $5 billion to offset tax losses against previous profits on which tax has been paid. Also, businesses with an aggregated annual turnover between $10 million and $50 million will, for the first time, be able to access up to ten small business tax concessions. Under the changes passed by the Parliament, the Government will also enhance previously announced reforms to invest an additional $2 billion through the Research and Development Tax Incentive.
Employers need to apply recent tax cuts as soon as possible
The ATO has now updated the tax withholding schedules to reflect the 2020/21 income year personal tax cuts — the updated schedules are available at ato.gov.au/taxtables. The ATO has said that employers now need to make adjustments in their payroll processes and systems in order for the tax cuts to be reflected in employees’ take-home pay. Employers must make sure they are withholding the correct amount from salary or wages paid to employees for any pay runs processed in their system from no later than 16 November onwards. Employees should be aware that any withholding on the old scales will be taken into
account in their tax return.
Deferrals of interest due to COVID-19
Many lenders have recently allowed borrowers with investment property loans to defer repayments for a period of time. While repayments are being deferred, interest (and fees) will usually be added to the loan
balance (i.e., the deferred interest will be 'capitalised'). However, it is important to recognise in such situations that, while repayments are not being made during the relevant period, borrowers continue to ‘incur’ the interest during that time. Further, interest will continue to be calculated
and will accrue on both the unpaid principal sum of the loan and the unpaid (i.e., capitalised) interest. The interest that accrues on the unpaid or capitalised interest is referred to as ‘compound interest’. Importantly, the ATO has previously acknowledged that, if the underlying, or ordinary, interest is deductible, then the compound interest will also be deductible. Accordingly, interest expenses (including any compound interest) will generally be deductible to the extent the borrowed monies are used for income producing purposes (such as where the borrowed funds are used to purchase a rental property). However, interest on a loan will not be deductible to the extent to which the borrowed
funds are used for private purposes (e.g., to purchase a home, a private boat, or to pay for a holiday). Note that, despite the name, "penalty interest" is not always "in the nature of interest" and, in some cases, may not be deductible (e.g., due to the expense being capital in nature).
Simplified home office expense
deduction claims due to COVID-19 Given that many Australians continue to work from home due to COVID-19, the ATO has updated its Practical Compliance Guideline which allows taxpayers working from home to claim a rate of 80 cents per hour, by keeping a record of the number of hours they have worked
from home, rather than needing to calculate specific running expenses. The application of the Guideline has been extended so that it now applies from 1 March 2020 until 31 December 2020. This determination is intended to be in effect until (and will be repealed from) 22 March 2021, unless the Government determines otherwise. Note that the Government has also released exposure draft legislation to make these reforms (in respect of virtual meetings and electronic document execution) permanent.
COVID-19 and loss utilisation
The ATO understands the way some businesses operate has been impacted as a result of COVID-19. Some of these impacts may have resulted in changes that affect whether they are able to utilise their carried-forward losses in the current or a future income year. For companies to utilise their carried-forward losses in a particular year, they need to satisfy the continuity of ownership test or, if they fail that test, they need to satisfy the business continuity test ('BCT'). Whether a company can utilise carried-forward losses requires a consideration of its facts and circumstances. Generally, a company that has completely closed its business with no intention to resume will fail the BCT. However, a company that has temporarily closed its business may still be able to satisfy the BCT. Importantly, the mere receipt of JobKeeper payments will not cause a company to fail the BCT.
Employees on JobKeeper can satisfy the ‘work test’
The Australian Prudential Regulation Authority ('APRA') has confirmed that, where an employer is receiving the JobKeeper wage subsidy for an individual, superannuation funds should consider the individual to be ‘gainfully employed’ for the purpose of the ‘work test', even if that individual has been fully stood down and is not actually performing work. As such, superannuation funds can assume that all members in receipt of the JobKeeper subsidy satisfy the ‘work test’ when determining whether they can make voluntary superannuation contributions.
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
We summarise the below key changes announced in the Federal Budget that was delivered on 6 October 2020. This is for informational purposes and does not take the place of advice suited to your circumstances. Should you require any further information or explanation please contact your accountant at SH Tait & Co.
Changes to personal income tax rates
The Government has legislated to bring forward changes to the personal income tax rates that were due to apply from 1 July 2022, so that these changes now apply from 1 July 2020 (i.e., from the 2021 income year). These changes include:
Employers are to reduce the tax withheld from 13 October 2020.
Changes to the Low Income Tax Offset ('LITO')
The Government announced that it will also bring forward the changes that were proposed to the LITO from 1 July 2022, so that they will now apply from 1 July 2020 (i.e., from the 2021 income year), as follows:
Note that, the Government also announced that the current Low and Middle Income Tax Offset (‘LAMITO’) would continue to apply for the 2021 income year (which is available in addition to the LITO for eligible taxpayers). For example, the maximum LAMITO of $1,080 will be available to taxpayers with taxable incomes of between $48,000 and $90,000 in the 2021 income year.
Expanding access to Small Business Tax Concessions
The Government has announced that it will expand the concessions available to Medium Sized Entities to provide access to up to ten Small Business Concessions.
For this purpose, a Medium Sized Entity is an entity with an aggregated annual turnover of at least $10 million and (less than) $50 million.
The expanded concessions will apply in three phases, as follows:
The Government will introduce a JobMaker Hiring Credit to incentivise businesses to take on additional young job seekers.
From 7 October 2020, eligible employers will be able to claim $200 a week for each additional eligible employee they hire aged 16 to 29 years old and $100 a week for each additional eligible employee aged 30 to 35 years old. New jobs created until 6 October 2021 will attract the credit for up to 12 months from the date the new position is created.
The JobMaker Hiring Credit will be claimed quarterly in arrears by the employer from the ATO from 1 February 2021. Employers will need to report quarterly that they meet the eligibility criteria.
The amount of the credit is capped at $10,400 for each additional new position created. Furthermore, the total credit claimed by an employer cannot exceed the amount of the increase in payroll for the reporting period in question (see employer eligibility requirements below).
Who is an eligible employee?
Employees may be employed on a permanent, casual or fixed term basis. To be an ‘eligible employee’, the employee must:
Who is an eligible employer?
An employer is able to access the JobMaker Hiring Credit if the employer:
Uncapped immediate write-off for depreciable assets
The Government has announced it will introduce the following changes to the Capital Allowance provisions:
CORPORATE TAX PAYERS INCLUDING PTY LTD COMPANIES:
Temporary loss carry back for eligible companies
The Government has announced that it will introduce measures to allow companies with a turnover of less than $5 billion to carry back losses from the 2020, 2021 or 2022 income years to offset previously taxed profits made in or after the 2019 income year.
This will allow such companies to generate a refundable tax offset in the year in which the loss is made. The tax refund is limited by requiring that the amount carried back is not more than the
earlier taxed profits and that the carry back does not generate a franking account deficit.
The tax refund will be available on election by eligible companies when they lodge their tax returns for the 2021 and 2022 income years. Note that, companies that do not elect to carry back losses under this measure can still carry losses forward as normal.
The application of these new measures to our corporate business clients will be considered during tax planning work performed in April / May 2021.
OTHER BUDGET ANNOUNCEMENTS:
Supporting apprentices and trainees
The Australian Government is extending and expanding the Supporting Apprentices and Trainees wage subsidy, to include medium-sized business who had an apprentice in place on 1 July 2020. Eligible employers can apply for a wage subsidy of 50% of an eligible apprentice or trainee’s wages paid until 31 March 2021.
· Your small business may be eligible if:
· you employ fewer than 20 people; or
· you are a small business with fewer than 20 people, using a Group Training Organisation; and
· the apprentice or trainee was undertaking an Australian Apprenticeship with you on 1 July 2020 for claims after this date. Claims prior to 1 July 2020, will continue to be based on the 1 March 2020 eligibility date.
· Your medium-sized business may be eligible if:
· you employ fewer than 200 people; or
· you are a medium business with fewer than 200 people, using a Group Training Organisation; and
· the apprentice or trainee was undertaking an Australian Apprenticeship with you on 1 July 2020.
Any employer (including all small, medium or large businesses and Group Training Organisations) who re-engages an apprentice or trainee displaced from an eligible small or medium business may also be eligible for the subsidy. Further information is available at https://www.australianapprenticeships.gov.au/search-aasn
Small business COVID-19 Adaption Grant Program
The objective of this program is to support small businesses subject to closure or highly impacted by the coronavirus (COVID-19) shutdown restrictions announced by the Queensland Government, to adapt and sustain their operations, and build resilience. The first round of funding for this program is 100% subscribed, however round two is currently open specifically to regional businesses, noting that subscription is nearing capacity. To be a 'regional business', your principal place of business must be in a local government area within Queensland that is not identified as a South East Queensland (SEQ) location.
To be eligible, your business must:
In recognition of the significant impacts of COVID-19 on small businesses, the funding can be used towards meeting a variety of ongoing costs, including the following:
Modern Manufacturing Initiative
This Modern Manufacturing Strategy (the Strategy) is led by industry, for industry, to help our manufacturers to scale-up, become more competitive and build more resilient supply chains. The Australian Government will be a strategic investor in this, in order to drive productivity and create jobs for Australians, both now and for generations to come. Key initiatives will deliver immediate and long-term economic benefits.
The program is targeted at growth opportunities in the following areas:
Insolvency reforms to support small business
The Government will implement certain insolvency reforms, effective from 1 January 2021 (subject to the passing of legislation) to support small business, including the following:
Special COVID-19 Superannuation Condition of Release Extended
Regulations that extend the time frame of the special condition of release to access
$10,000 from superannuation for individuals experiencing financial difficulties due to COVID-19
have been formally registered.
The ability to withdraw up to $10,000 from superannuation (if certain conditions are
met) was initially set to expire on 24 September 2020.
The newly registered Regulations to the SIS Act will now enable an eligible individual to withdraw
up to $10,000 from superannuation (which is not assessable to the individual) until 31 December
To be eligible, a citizen or permanent resident of Australia (and New Zealand) must require
the COVID-19 early release of super to assist them to deal with the adverse economic effects of
In addition, one of the following circumstances must apply:
θ The individual is unemployed;
θ The individual is eligible to receive one of the following;
– JobSeeker payment;
– Youth Allowance for job seekers (unless they are undertaking full-time study or are a new
– Parenting payment (which includes the single and partnered payments);
– Special Benefit; or
– Farm Household Allowance;
θ On or after 1 January 2020 either;
– they were made redundant;
– their working hours were reduced by 20% or more (including to zero); or
– they were a sole trader and their business was suspended or there was a reduction in turnover
of 20% or more (partners in a partnership are not eligible unless the partner satisfies any other
Tax treatment of JobKeeper Payments
Broadly, JobKeeper Payments received by an employer are assessable income to the employer.
Likewise, the payments an employer subsequently makes to an employee that
are funded (in whole or in part by the JobKeeper Payment) are generally allowable
deductions to the employer.
The ATO has recently issued some guidance for employers in receipt of JobKeeper Payments.
For sole traders, they will need to include the payments as business income in their
individual tax return.
For partnerships or trusts, JobKeeper payments should be reported as business income in
the relevant partnership or trust tax return.
For a company, report JobKeeper payments as income in the company tax return.
For a taxpayer that has repaid (or is in the process of repaying) any of their JobKeeper payments
to the ATO, these amounts do not need to be included in their tax return.
Note a business would be refunding JobKeeper payments to the ATO if it had been discovered that
the business had incorrectly claimed JobKeeper payments, and had either voluntarily disclosed
this to the ATO, or the ATO made this determination as a result of audit activity.
The normal rules for deductibility apply in respect of the amounts a taxpayer pays to
their employees, even where those amounts are subsidised by the JobKeeper payment.
That is, if the underlying salary is deductible, then it is still deductible to the employer where
it has been subsidised by a JobKeeper payment.
For employees who have received JobKeeper payments, these will be included as salary and
wages (or an allowance) in their income statement (or payment summary) as provided by
If you have any queries about the JobKeeper Payment scheme, please contact our office.
Deduction for work-related vehicle expenses disallowed
In a decision of the Administrative Appeals Tribunal, a taxpayer, Mr Bell, was a
denied a deduction for $21,565.73 of work-related vehicle expenses for the 2016 income year.
Mr Bell, was a construction worker who predominantly worked on a construction
site in an eastern suburb of Melbourne and lived approximately 100 kilometres
away from that worksite.
Mr Bell owned a ute that had a load carrying capacity of more than one tonne – so it fell
outside the definition of a 'car' for the purposes of the ITAA 1997.
Mr Bell claimed a total deduction for $24,865.73 for motor vehicle expenses and received an
allowance under his Enterprise Bargaining Agreement.
This allowance did not vary with the amount of travel undertaken and totalled $15,221
for the year.
Mr Bell contended that he was required to use his vehicle to transport heavy/bulky goods
(tools) between his home and his workplace and to collect supplies and equipment from
hardware stores while travelling between his workplace and his home.
Ordinarily, travel from home-to-work (and back again) is considered non-deductible. However,
if an employee is required to carry heavy/bulky
equipment for which there are no secure storage facilities at work, the travel
between home and work with the heavy/bulky equipment can be considered deductible.
Unfortunately for Mr Bell, evidence before the Tribunal indicated that there were safe and
secure storage facilities for his tools (the bulky/heavy equipment) at the worksite.
Accordingly, Mr Bell was unable to rely upon the ‘bulky goods’ exception to recharacterise home-
to-work travel as being a deductible work expense.
Instead, it retained its ordinary private and non- deductible status.
Mr Bell was unsuccessful in advancing the argument that he was entitled to a deduction
in relation to the motor vehicle expenses because he was in receipt of an allowance.
However, Mr Bell was able to convince the ATO that he had undertaken at least some work-related
travel using his vehicle. The ATO allowed Mr Bell a deduction under the 'cents per
kilometre method' up to the maximum dollar amount for 5,000 kilometres for the 2016
income year of
Editor: This decision provides a timely reminder that simply carrying bulky equipment
between home and work will not make these trips deductible, where there is a secure
place for the equipment to be stored at the employee’s worksite. The decision also
highlights the fallacy of assuming that being in receipt of an allowance somehow entitles the
taxpayer to an offsetting deduction.
The taxpayer was technically 'lucky' that he was allowed the 'cents per kilometre
method' deduction for work-related travel, given that his motor vehicle fell outside the
definition of a 'car'.
This is because the cents per kilometre method only applies to 'cars', so it could be said that the
ATO was generous to the taxpayer in these circumstances.
Please contact our office if you have any queries as to the deductibility of work-related travel.
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.