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JobKeeper Guidance – Update 3

JobKeeper Guidance and Payment

Further information has now been released by Treasury to clarify the comparison period is for either;

      1. any monthly period from March 2020 to the end of September 2020 OR
      2. any quarterly period from April to June or July to September, compared to the same monthly or quarterly period in 2019.

Importantly, once this self-assessed test is met for either;

(a) a monthly period OR

(b) any quarterly period,

there is no requirement to re-test in later months or quarters.

Eg, if a business assesses that its turnover will fall by 30% in April 2020 compared to April 2019, the business retains its eligibility until the JobKeeper payments stop for all businesses at the end of September 2020, rrespective of its turnover in the months subsequent to April 2020. It is not required to estimate or determine turnover for subsequent periods.

In addition, where an entity does not qualify in the month eg April 2020, or the April to June quarter, it can re-test in later months or quarters.

The information acknowledges that comparing monthly or quarterly periods from April 2020 and onwards, to April 2019 and onwards, may not always be possible or may lead to unfair outcomes.

The result is, where the ATO is satisfied that there is no such comparison period in 2019 or there is not an appropriate relevant comparison period, the ATO Commissioner may, by legislative instrument, determine an alternative decline in the turnover test.

The two examples that have been given in the information release relate to;

  • businesses that were not in existence for the whole of the comparison period in 2019. (In the explanatory materials, the business is permitted to average its actual turnover, from October 2019 when it came into existence, to March 2020, and then compare that average to its estimated turnover in April 2020).
  • businesses that were impacted by a natural disaster during the 2019 comparison period

On a positive note, the ATO Commissioner will retain flexibility to apply other alternative tests and take into account other unique circumstances (aside from natural disaster and start-up businesses) confronted by a business (should the 2019 comparison period not be reflective of typical turnover).

Treasury, in a separate fact sheet, Supporting Business to Retain Jobs, has stated that these alternative tests may include eligibility being established as soon as a business temporarily ceased trading or where a business significantly curtails its operations.

The JobKeeper payments package began on 30 March 2020, legislation was only passed last week, and the pay periods prescribed relate to fortnightly pay periods and the ATO’s guidance has come during the second fortnightly pay period running from 13 April to 26 April.

Hence, the ATO will assume that the minimum payment of $1,500 (before tax) has been paid for each of the first two fortnights, even if it has been paid late, provided it is paid to the employee by the end of April.

Important: If employers do not continue to pay their employees for each pay period, they will cease to qualify for the JobKeeper payment.

“This means that employees can make two fortnightly payments of at least $1,500 per fortnight before the end of April, or a combined payment of at least $3,000 before the end of April,” the ATO said.

While the ATO has set out guidance on determining the decline in turnover test for businesses, it has yet to reveal the alternative tests for businesses where turnover periods are not appropriately comparable.

This will be passed on ASAP as soon as we receive such information.

Guidance for sole traders and businesses that operate in the form of a company, trust or partnership will also soon be provided by the Tax Office.

It is also important to note, it has been confirmed that the payment will be limited to one entitlement for each director of an entity, even if there are multiple business owners or participants.

How To Enrol and Apply for JobKeeper

There are eight (8) steps that businesses or their advisors have to take to enrol for JobKeeper:

  1. Register your interest and subscribe for JobKeeper payment updates
  2. Check your employees meet the eligibility requirements.
  3. Continue to pay at least $1,500 to each eligible employee per JobKeeper fortnight (the first JobKeeper fortnight is the period from 30 March to 12 April).
  4. Notify eligible employees that you are intending to claim the JobKeeper payment on their behalf and check they aren’t claiming JobKeeper payment through another employer or have nominated through another business. If they are receiving JobSeeker they need to notify Centerlink to cancel.
  5. Send the JobKeeper employee nomination notice to your nominated employees to complete and return to you by the end of April if you plan to claim JobKeeper payment for April.
  6. From 20 April 2020, I can enrol clients or you can enrol yourself with the ATO for the JobKeeper payment. You must do this by the end of April to claim JobKeeper payments for April.
  7. In the online form, provide your bank details and indicate if you are claiming an entitlement based on business participation, for example if you are a sole trader.
  8. Specify the estimated number of employees who will be eligible for the first JobKeeper fortnight (30 March – 12 April) and the second JobKeeper fortnight (13 April – 26 April).

Download Article – Jobkeeper Guidance

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 stephen@smbaccounting.com.au

 P 1300 854 159

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Claiming your Home Office Expenses

You may now be working from home more than ever and you will be incurring costs of working from home, outlined below are various details as to  what you can claim and how to claim those deductible expenses at tax time

In order to be able to claim, all of the following must apply:

      • You must have spent the money.
      • The expense must be directly related to earning your income.
      • You must have a record to prove it.

No deduction can be claimed for items that your employer has provided or where you have been reimbursed for the expense.

If you are not reimbursed by your employer, but instead receive an allowance from them to cover your expenses when you work from home, you:

      • must include this allowance as income in your tax return.
      • can claim a deduction as outlined.

Expenses you can claim

You will be able to claim a deduction for the additional running expenses you incur if you work from home,. These include:

      • electricity expenses associated with heating, cooling and lighting the area from which you are working and running items you are using for work
      • cleaning costs for a dedicated work area
      • phone and internet expenses
      • computer consumables (for example, printer paper and ink) and stationery
      • home office equipment, including computers, printers, phones, furniture and furnishings – you can claim either the:
        • full cost of items up to $300
        • decline in value for items over $300.

The  tracking of all of these expenses can be challenging so the ATO  will accept a temporary simplified method (or shortcut method) of calculating additional running expenses for the period starting 1 March 2020 until at least 30 June 2020. The ATO has also indicated they  may extend this method, depending on when work patterns start to return to normal (whatever that may be in the future).

Expenses you can’t claim

If you are working from home only due to COVID-19, you:

      • cannot claim occupancy expenses such as mortgage interest, rent and rates
      • cannot claim the cost of coffee, tea, milk and other general household items your employer may otherwise have provided you with at work.

Calculating running expenses

Additional Running Expenses can be claimed in 3 different methods:

      • shortcut method ─ claim a rate of 80 cents per work hour for all additional running expenses
      • fixed rate method ─ claim all of these:
        • a rate of 52 cents per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture,
        • the work-related portion of your actual costs 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.
      • actual cost method ─ claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.

For more information on how to calculate and claim a deduction under the actual cost method or fixed rate method see Employees Working Working From Home

Shortcut method

You can claim a deduction of 80 cents for each hour you work from home due to COVID-19 as long as you are:

      • working from home to fulfil your employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls,
      • incurring additional deductible running expenses as a result of working from home.

You do not have to have a separate or dedicated area of your home set aside for working, such as a private study.

The shortcut method rate covers all deductible running expenses, including:

      • electricity for lighting, cooling or heating and running electronic items used for work (for example your computer), and gas heating expenses
      • the decline in value and repair of capital items, such as home office furniture and furnishings
      • cleaning expenses
      • your phone costs, including the decline in value of the handset
      • your internet costs
      • computer consumables, such as printer ink
      • stationery
      • the decline in value of a computer, laptop or similar device.

You do not have to incur all of these expenses, but you must have incurred additional expenses in some of those categories as a result of working from home due to COVID-19.

If you use the shortcut method to claim a deduction for your additional running expenses, you cannot claim a further deduction for any of the expenses listed above.

You must keep a record of the number of hours you have worked from home as a result of COVID-19. Examples are timesheets, diary notes or rosters.

If you use the shortcut method to claim a deduction and you lodge your 2019-20 tax return through myGov or a tax agent, you must include the note ‘COVID-hourly rate’ in your tax return.

Records you must keep

If you use the shortcut method, you only need to keep a record of the hours you worked at home, for example timesheets or diary notes.

If you use the other methods, you must also keep a record of the number of hours you worked from home along with records of your expenses. For more information on what those records are see Employees Working Working From Home.

 

 

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 P 1300 854 159

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JobKeeper Payments Update 2

JobKeeper

In the third and largest economic stimulus package up to 6 million workers are set to be eligible for the $130 billion wage subsidy, known as the JobKeeper payment.

The flat $1,500 payment, which will be delivered by the ATO, will be paid to businesses, and will include businesses which have been structured through companies, partnerships, trusts and sole traders.

The full $1,500 a fortnight, before tax, to eligible employees will be required to pass on by employers.

Eligibility – businesses with a turnover of < $1 billion will need to self-assess a reduction in revenue of 30 per cent or more, relative to a comparable period a year ago.

Qualified employees will include those employed by the employer as at 1 March 2020, including those who have been stood down and retrenched workers can be re-employed to qualify for the JobKeeper payment.

How to apply and Participation in JobKeeper

  • Eligible businesses, will need to register an intention to apply on the ATO’s website. and additional information will come from the ATO about how and when claims for JobKeeper can be made.
  • A payment period is a rolling 14 day period commencing Monday 30 March 2020 and ending on Sunday 27 September 2020 (6 Months)
  • Information on the number of eligible employees engaged as at 1 March 2020 and those currently employed by the business, including those stood down or rehired, will need to be provided to the ATO, although the Tax Office will look to use Single Touch Payroll data to pre-populate the employee details for the business.
  • The ATO will make payments to the employers monthly in arrears, but the first payment will be sent in the first week of May and will be backdated to 30 March 2020 to allow employers to start paying their workers now.
  • Employers will be required to report the number of eligible employees employed by the business to the ATO on a monthly basis.
  • A normal payroll is run for employees and reported via Singe Touch Payroll (STP). The claims process will then be linked to STP to support the JobKeeper payment to the employer. If you do not use STP (eg Sole Trader, Trust Beneficiary, Director Fee, Dividend in Lieu of Labour etc) A manual claim process will apply.
  • The payment is treated as ordinary income for an employee and is subject to PAYG withholding tax.
  • An employer will be required to advise an employee if they have been nominated as an eligible employee for which an employer will be reimbursed a JobKeeper payment.

 

Contrived schemes and consequences

The legislation also makes clear that anyone who enters into or carries out a scheme for the sole or dominant purpose of obtaining a corona virus economic response payment will face a wide range of administrative and criminal sanctions, including up to 10 years’ imprisonment.

However, the legislation empowers the commissioner to call out any change in the financial position of any entity as part of a scheme designed to improperly pocket JobKeeper cash, and the ATO has extensive payback powers.

The legislation has clawback rules empowering the ATO to recover overpaid amounts and target those who weren’t entitled to payments received, plus interest.

 

Eligibility for employers

Definition of turnover:

For existing business:-

  • works on your BAS – if you are cash or accrual preparer. If you prepare your BAS as cash then you look at your Profit and Loss under a cash basis. If you are accrual then you check your PL as accrual. looking at the same period eg. Jan – March compared 2019 to 2020.

For the Start up business that has not been trading for over a year:

  • the ATO is working out how to report.

 

If your business turnover has not declined by 30% or 50% but is expected to at some point?

  • YES – Still go in and register.

I am self-employed Sole Trader, do I qualify?

  • YES – meeting some criteria – your 2019 income tax has been lodged prior to 12th of March 2020, Your BAS have been lodged

If I operate as a partnership, can each partner receive JobKeeper?

  • NO – only one (1)  partner can receive the JobKeeper payment

If I operate my business through a trust, can I receive the JobKeeper payment?

  • YES – but still only one (1) person can receive the JobKeeper

I operate as a company and usually pay myself a director fee. Can I receive JobKeeper payments?

  • YES –  One (1) shareholder or director can claim

As one of these types of businesses, how do I apply for the JobKeeper program?

  • it will be an online application

 

 Employees will be eligible if:

They are currently employed by an eligible employer or who were in that employment on 1 March 2020 and continue to be employed (even if currently stood down)

  • Is full-time, part-time or a casual who is employed on a regular and systematic basis or longer than 12 months as at 1 March 2020
  • Aged 16 years or older at 1 March 2020
  • An Australian citizen, a permanent visa holder or a special category holder ) eg 444 subclass) as at 1 March 2020.
  • Is a resident for Australian Income Tax purposes
  • Not in receipt of a JobKeeper payment from another employer.

I started with my employer after 1 March 2020 am I eligible for JobKeeper?

  • NO – only if you have been stood down

As a casual employee, how does JobKeeper affect me?

  • You need to be with the same employee for over 12 months.

If I am an employee on a fixed-term contract, how does JobKeeper affect me?

  • You are eligible if the contract started before the 1 March 2020

If my employer has put me on paid or unpaid leave can I still receive JobKeeper?

  • YES

If I am receiving Workers Compensation, can I receive Job Keeper payments?

  • YES – if you are doing light duties while still receiving Work Cover and some wages
  • NO – if you are only receiving work cover payments

What if I am on Parental Leave?

  • NO – You are not eligible to receive the JobKeeper

Where I have a salary sacrifice arrangement in place, how does the Job Keeper payment impact such an arrangement?

  • It does not any effect to your arrangement

 

Payments:

I have paid my employees, when does my business get reimbursed the JobKeeper payment?

  • The first week of May 2020

How often will the ATO make payments to my business?

  • Monthly in ARREARS

What is if pay my employees monthly not fortnightly?

  • the ATO will average it to fortnightly amounts, to make sure it has been passed on to the employee

If I have stood employees down after 1 March 2020 what do I do for these employees?

  • register and start paying the min $1500 per fortnight to the employees that are eligible

If my business is still operating and my employees are working do I still get a JobKeeper reimbursement?

  • Yes – please register

If I currently pay an employee less the $1500 per fortnight how am I impacted by the JobKeeper arrangement?

  • You must top up there pay to match the JobKeeper payment

If I currently pay an employee more than $1500 per fortnight how am I impacted by the JobKeeper arrangement?

  • the difference of their pay is out of the business
  • You must top up there pay to match the JobKeeper payment

If I currently pay an employee more than $1500 per fortnight how am I impacted by the JobKeeper arrangement?

  • the difference of their pay is out of the business

If I let my employees go after 1 March 2020, re-hire them and then immediately stand them down, what is the JobKeeper impact?

  • YES – they are eligible for JobKeeper when you bring them back, the employee must de-register from JobSeeker payments.

I don’t have enough funds to pay eligible employees until I receive the reimbursement, what should I do?

  • The JobKeeper must be paid in Arrears, there are many loans that you can apply for

If an employee resigns after I receive a JobKeeper payment, what must I do?

  • When you submit that months report to the ATO you take them off the list, if you employ a new person to replace them that employee is not eligible

How does PAYG withholding and Superannuation apply to a JobKeeper payment that I make to an employee?

  • PAYG is to be deducted from the employee and paid to the ATO via your BAS as per normal pay run.
  • Super is payable if the employee is still working.
  • Super is NOT payable if you are paying the JobKeeper to the employee as a stand-down (not working)
  • Super does not need to be paid on the difference of the employees pay if you are topping them up with the JobKeeper payment, eg. employee normally gets $1000 FT now gets $1500 super is only on the $1000 as per normal. It is up to the employer if you pay super on the extra $500.

If an employee I had to let go or was stood down is receiving a JobSeeker payment, how does JobKeeper impact both me and my employee?

  • Once you have advised the employee that they are on JobKeeper payments, the employee needs to tell Centerlink to cancel the JobSeeker payments. There will be data matching, note, the employee cannot claim both and they will need to pay back any amount they received unlawfully.

 Timing

The JobKeeper program is effective from 30 March 2020 and runs for 6 months until 27 September 2020. They will be made to eligible employers monthly in Arrears, with the first payment being made in the first week of May 2020.

Compliance and other issues

The JobKeeper program will be subject to ATO audit activity and there will be obligations on employers to establish their eligibility as well as that of their employees.

The ATO will cross-check payments with Services Australia data as well as other agencies to identify any multiple payments made.

There is further guidance coming from the ATO to assist businesses to assess eligibility, in particular, the ATO focus will be on ‘manipulation’ of turnover for a business that seeks to qualify. Businesses that are identified as ‘manipulation’ will face penalties.

Examples:

  1. Employer with employees on different wages

Greg owns a travel business with two employees. The business is still operating at this stage, but Greg expects that turnover will decline by more than 30 per cent in the coming months. The employees are:

  • Brooke, who is a permanent full-time employee on a salary of $2,000 per fortnight before tax and who continues working for the business; and
  • Zac, who is a permanent part-time employee on a salary of $800 per fortnight before tax and who continues working for the business.

Greg is eligible to receive the JobKeeper payment for each employee, which would have the following benefits for the business and its employees:

  1. The business continues to pay Brooke her full-time salary of $2,000 per fortnight before tax, and the business will receive $1,500 per fortnight from the JobKeeper payment to subsidise the cost of Brooke’s salary and will continue paying the superannuation guarantee on Anne’s income;
  2. The business continues to pay Zac his $800 per fortnight before tax salary and an additional $700 per fortnight before tax, totalling $1,500 per fortnight before tax. The business receives $1,500 per fortnight before tax from the JobKeeper payment which will subsidise the cost of Zac’s salary. The business must continue to pay the superannuation guarantee on the $800 per fortnight of wages that Zac is earning. The business has the option of choosing to pay superannuation on the additional $700 (before tax) paid to Nick under the JobKeeper payment.

Greg can register his initial interest in the scheme from 30 March 2020, followed subsequently by an application to the ATO with details about his eligible employees.

In addition, Greg is required to advise his employees that he has nominated them as eligible employees to receive the payment. Greg will provide information to the ATO on a monthly basis and receive the payment monthly in arrears.

2. Self-employed

Sienna is a sole trader running a florist. She does not have employees. Sienna’s business has been in operation for several years. The economic downturn due to the coronavirus has adversely affected Sienna’s business, and she expects that her business turnover will fall by more than 30 per cent compared to a typical month in 2019.

Sienna will be able to apply for the JobKeeper payment and would receive $1,500 per fortnight before tax, paid on a monthly basis.

 

Please feel free to share to any person you may think may benefit 😊

If you need any assistance, please get in contact with us at

 stephen@smbaccounting.com.au

 P 1300 854 159

 

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Commercial Tenancy Relief

On 7th April 2020, the Government announced SME Commercial Leasing Principles During CoVid 19 that is to be implemented between landlords and tenants through the COVID-19 crisis.

Throughout the pandemic and a reasonable recovery period the document appears to be very supportive of the Tenants (which is usually the business)

“Reasonable recovery period” is a term that is very noticeable throughout the document, and this flags the government’s aim to support businesses long term. Further provisions are to ensure that any agreed repayments can be stretched out over 24 months (or further if required) and are not onerous. Note this can even apply if the lease term has ended.

Basically, if your turnover is less than the $50M threshold and in addition the JobKeeper system applies, then the code should be applied to you as a tenant.

At the moment it is unclear how the code is going to be upheld in a legal sense as it is not intended to supersede legislation in each state, but it aims to compliment such legislation

It specifies that the landlords are to agree tailored, bespoke and temporary arrangements for each tenant

The code specifies:

    1. A lease cannot be terminated by the landlord due to non payment of rent during the period. This also includes for a reasonable subsequent recovery period
    2. The offer must be proportionate reductions up to 100% of any amount payable and refers to the pandemic period as well as the subsequent period
    3. At a minimum, the rent reduction should be the equivalent of the % decline in turnover (ie decrease of 50% in turnover, reduction in rent a minimum of 25%)
    4. Deferral

a) The repayment of this deferred amount should be over the great of the lease term remaining or 24 months

b) Any repayments should not start until the earlier of the Government ending the pandemic or the lease finishing

    1. Any discounts/decreases in statutory charges must be passed on (eg rate, land tax, or insurance proceeds)
    2. No fees/charges/interest can be applied
    3. Landlord cannot recover amounts owing from Security Bond
    4. Complete freeze on rental increases

Example: If your rent is $3,000

  • a 80% loss in turnover would result in a guaranteed 80% cash flow relief of $2,400 net rent $600.
  • At a minimum, half is provided as rent free/rent waiver ($1,200) for the proportion of which the qualifying tenant’s revenue has fallen.
  • Up to half ($1,200) could be through a deferral of rent, with this to be recouped over at least 24 months in a manner that is negotiated by the parties

Based on the examples provided, it appears that for whatever total % cashflow relief is agreed, the application of that % is for 50% rent abatement and 50% rental deferral.

The deferred payments are to be recouped over at least a 24 month period that would begin when the COVID-19 pandemic is officially over. This is in line with what we have been expecting and discussing with you all.

To know more about claiming a tax deduction for any of your expenses, or for help filling out the paperwork, please get in contact with us at

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If you need any assistance, please get in contact with us at

 stephen@smbaccounting.com.au

 P 1300 854 159
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Important Job Seeker payment Information

As we are receiving information we are pushing the information to our clients in order that they are up-to-date.

The below we feel is very relevant to anyone who over the past few days has found they have been stood down, business owners who may have just or are anticipating or have of stood staff down and closing for the duration. Finally business owners themselves, who are now in a situation of no income through forced closure.

Following is an update from Services Australia from their Facebook page Services Aust regarding claims for the JobSeeker.this Facebook page is a very relevant to follow in these times

“Important update: If you’ve registered an intent to claim, we will contact you over the coming days to let you know what to do next. Your next steps will depend on your specific circumstances, so please wait for us to contact you. There’s no need to register more than one intent to claim, and no need to call or visit us.

  • If you register your intent to claim by Sunday 29 March, and you complete your full claim by 19 April, we’ll pay your claim from 23 March.
  • If you have lodged a full claim instead of registering an intent to claim, we will pay your claim from 23 March (or earlier if you claimed earlier), if you complete it before 29 March.
  • If you’ve lost income because of corona virus and you haven’t yet tried to access support, please go to our website for more information: www.servicesaustralia.gov.au/covid-19

Our staff are working above and beyond to make sure people can access support as quickly as possible. Thank you for your continued patience.”

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If you need any assistance, please get in contact with us at

 stephen@smbaccounting.com.au

 P 1300 854 159

 

 

 

 

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Five (5) Steps to get you “over the bridge” and survive the Recession

Just understand this is going to be tough, and when it gets tough you either dive, survive or thrive. It is our mission to ensure you thrive once the crisis is past and hopefully grow bigger and stronger on the other side.

You need to be proactive now! Hard decisions aren’t easy to make, that is why they are HARD. If you don’t make the decisions now, there will be others that make them for you, either your landlord, bank, tax office or a supplier) Get on top of those decisions first.

As they say “Be the first to the table!”

Step 1 – Approach your landlord

Yes you have signed your lease to pay an amount of rent per week, per month etc and you are liable for it. But if you are a business that has either been closed down by the Government or your income has fallen drastically, your landlord should understand. If you don’t pay, what can they do? They cant replace you with a like tenant as they can’t open due to closures. You will find that your landlord should/will work with you as they have cashflow problems as well.

Your landlord may have a repayment deferral with the bank, hence they can pass some of that on to you for the term of that deferral. It is in their BEST interest to have a tenant than not have one at all and try to replace you.

Step 2 – Your Bank is in the mood to assist

As with your landlord, it is in the banks BEST interest to provide assistance for both business loans and your private house mortgages. You need to initiate the contact as they generally won’t come to you. Most of the major banks have announced a 6 month deferral on loan repayments and various other cost saving measures eg merchant terminal fees.

Not only are there these announcements by the banks, there are also financial hardship provisions which are available to use. YOU JUST NEED TO CONTACT YOUR BANK before its too late

Step 3 – Government Assistance is coming

By now you would have received a few emails and blogs from our firm regarding  Federal Government stimulus packages 1 and 2, as well as the various state governments and councils are Australia have announced their own packages to assist in these bizarre times.

The largest stimulus announced to date is the 100% PAYGW refund back to your ATO tax account. Most businesses with a turnover of less than $50Mil and you had to be registered for PAYG as at 12th March 2020, and pay wages during either March Qtr or month of March for monthly lodgers, generally will have access toa minimum of $20,000 to a max of $100,000 to be paid over 6 months

These payments are tied to your BAS lodgements so so important to keep them up to date

At this stage however, we have not received any legislation, but from the details and examples issued by treasury the amount will be applied to your ATO account. If there is a credit, this will be refunded within 14 days

There are other measures including government guarantee to banks for small business loans up to $250k unsecured with repayment holidays for 6 months. At this stage unless your business is strong and basically untouched, we would advise any further borrowings should be considered carefully.

In addition to all this the ATO has established the following support;

  • Deferral of ATO Payments (these are for debts after 23rd January 2020)
  • Remitting interest & penalties
  • Low interest payment plan (for debts incurred prior to 23rd January 2020)

Again the ATO won’t come to you automatically so if need be get in touch with them on 1800 806 218 and see what assistance you can get to help with your cash flow. From the experience to date it only takes a few minutes and they are granting payment deferrals for up to 13th July initially

Step 4 – Keep staff informed

Your staff are and will be your biggest asset, both now and once we are through this downturn. Speak to them. Keep them informed. They are just as anxious as you are in these uncertain times. Be open and honest, be compassionate – everyone is feeling the pain.

Try to reduce their hours as opposed to letting them go altogether as the above assistance is in place (maybe a little slow in coming), but they are coming to assist with retaining your staff.

Step 5 – Speak to us

We have spoken to a large number of clients and still have to, but we are working tirelessly to work through and advise on how best to approach in a methodical manner. We will be in contact. We understand the stresses that as business owners or employees or contractors you are going through hence this 5 step process we have put together is for your assistance.

 

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If you need any assistance, please get in contact with us at

 stephen@smbaccounting.com.au

 P 1300 854 159

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Additional Government Stimulus

Wow! This week has been extraordinary since the initial announcement by the Government of the initial stimulus on March 12, added is the extra social distancing measures as well as the associated health actions and the suspension of the AFL competition, having a substantial impact on business in Australia.

 SMB Accounting will be working overtime to ensure that all our clients are supported. Whether it is discussing strategies to smooth cashflows, revising forecasts/budgets, looking at re-evaluating your costs structure.

For all we are concentrating a great deal of time working through the various state and federal stimulus/rescue packages to ensure a maximum support is provided. To this end we have over the weekend preparing a comprehensive Booklet which we have consolidated the known support from federal and state governments, banks, insurance companies and  energy companies which will be available for download from our website in the near future

Firstly here is a quick overview of the announcement yesterday (22nd March 2020)

 Support For Individuals including Sole Traders

The Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Corona virus supplement to be paid at a rate of $550per fortnight.

This then being a total of $1,100 (including the Jobseeker payment)

This supplement will be paid to both existing and new recipients of the eligible payment categories. These changes will apply for the next six months.

For the period of the Corona virus supplement, there will be expanded access to the income support payments listed above there is expanded access to Jobseeker Payment and the criteria will provide payment access for permanent employees who are stood down or lose their employment; sole traders; the self-employed; casual workers; and contract workers who meet the income tests as a result of the economic downturn due to the Corona virus. This could also include a person required to care for someone who is affected by the Corona virus.

 Eligible small business to receive up to $100,000

The previously announced $25k has been upsized now to maximum of $50k and will provide 100% of the PAYGW from March to June 2020 period. The second $50k is exactly the same, just to be claimed from July to October 2020 period.

They have also said that these payments will only be available to active eligible employers established prior to 12 March 2020.

Your turnover must be less than $50m to be eligible and you simply need to have employees for whom you withhold tax on wage payments.

Apprentices and Trainees

50% of the apprentice or trainee’s wage paid will be subsidised by the government during the 9 months from 1 January 2020 to 30 September 2020, up to $21,000 per eligible apprentice or trainee. It will be capped at $7,000 per quarter.

The business must have had the apprentice or trainee in training with a small business as of 1 March 2020 and is available for business employing less than 20 full-time employees.

You will be required to have an eligibility assessment undertaken by an Australian Apprenticeship Support Network (AASN) provider.

Employers can register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020.

Here are links for additional information:

SME Lending Guarantee

The Scheme will commence by early April 2020 and be available for new loans made by participating lenders until 30 September 2020.

The federal government will provide a guarantee of 50% to SME lenders for new unsecured 3 year loans of up to $250k per borrower to be used for working capital and these loans will not require any repayments for 6 months.

Loans will be subject to lenders’ credit assessment processes with the expectation that lenders will look through the cycle to sensibly take into account the uncertainty of the current economic conditions

Other measures announced

 Temporary relief for financially distressed businesses

  • Increase in the threshold for creditors to issue statutory demands from $2k to $20k for the next 6 months.
  • Increase in the threshold for initiating bankruptcy proceedings from $5k to $20k for the next 6 months.
  • Plus an increase in timeframe whereby you are required to respond to a bankruptcy notice or a statutory demand from 21 days to 6 months.
  • Directors will be temporarily relieved of their duty to prevent insolvent trading with respect to any debts incurred in the ordinary course of the company’s business. Egregious cases of dishonesty and fraud will still be subject to criminal penalties.

 Temporary early access to superannuation

Eligible individuals will be able to apply online through myGov to access up to $10,000 of their superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020.

  • To apply you must satisfy on or more of the following:
    • You are unemployed; or
    • your working hours were reduced by 20 per cent or more; or
    • if you are a sole trader — your business was suspended or there was a reduction in your turnover of 20 per cent or more.
  • No tax will be payable on these amounts
  • You can apply directly to the ATO through the myGov website: my.gov.au

As said above there is much more available and in place and this cannot be an exhaustive list as well as the continued fluid nature of the circumstances unfolding, and we will continue to monitor announcements etc as they happen

 

### Please note we have made every attempt  to confirm this information is correct and complete as of the moment  of publication ####

 

Please send an email stephen@smbaccounting.com.au if you have any questions

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Government Package for Business

 

Below we have provided a briefing of the stimulus package which the government announced last week in response to the difficult times which are affecting all of us

As a business owner or employee of a business, you may/will confront the possibility of yourself or members of your team being isolated from the work environment, supply issues as well as a decrease in the demand for the services/goods over the coming 3-9 months.

Tax incentives for business investment

Increase in Instant asset write-off

From 12 March until 30 June 2020, for new or second-hand assets first used or installed ready for use, the instant asset write-off threshold will be increased from $30,000 to $150,000 for businesses with aggregated annual turnover of less than $500 million (up from the current $50 million threshold).The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets. The threshold will revert to $1,000 for small businesses (turnover less than $10 million) from 1 July 2020, however businesses not entitled to the instant asset write off from 1 July 2020 may be entitled to the 50% investment incentive as below.

Backing business investment incentive

The Government is introducing a time limited 15 month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating depreciation deductions.
Businesses with aggregated annual turnover of less than $500 million per annum will be able to deduct 50 per cent of the cost of an eligible asset upon installation, provided it was acquired after 12 March 2020 and first used or installed by 30 June 2021.

There is no asset value threshold for this 50% investment incentive. Existing depreciation rules applying to the balance of the asset’s cost.

Cash flow assistance for businesses

Increasing cash flow for employers

Up to a $25,000 tax-free payment to small and medium-sized businesses with aggregated annual turnover of less than $50 million that employ workers, between 1 January 2020 and 30 June 2020.
These eligible businesses will receive a payment equal to 50% of their PAYG withheld, delivered as a credit in their BAS from March to June 2020, with a minimum $2,000 payment and up to a cap of $25,000.

Keeping apprentices and trainees employed

Eligible small business employers will be able to apply for a wage subsidy of 50% of the apprentice’s or trainee’s (in training as at 1 March 2020) wage for up to 9 months from 1 January to 30 September 2020, up to $21,000 per apprentice. Employers can register for the subsidy from early April 2020 with final claims for payment due by 31 December 2020.

Non-tax measures

Stimulus payments

Social security, veteran and other income support recipients and eligible concession cardholders including pensioners will receive a one-off $750 payment will be available from 31 March 2020.
There will be one payment per eligible recipient.

Assistance for severely affected regions

The Government has set aside $1 billion to support those regions and communities that have been disproportionately affected by the economic impacts of COVID-19, including those heavily reliant on industries such as tourism, agriculture and education.

ATO relief measures

On 12 March 2020, the Australian Taxation Office (ATO) announced a series of administrative concessions to assist businesses impacted by COVID-19, which include:
• up to 4 months the payment deferral of tax amounts due through the BAS (including PAYG instalments), income tax assessments, FBT assessments and excise by affected businesses;
• allowing affected businesses on a quarterly reporting cycle to opt into monthly GST reporting to get quicker access to any GST refunds;
• allowing affected businesses to vary PAYG instalment amounts to zero for the March 2020 quarter. Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters;
• remitting any interest and penalties, incurred by affected businesses on or after 23 January 2020, that have been applied to tax liabilities; and
• allowing affected businesses to enter into low-interest payment plans for their existing and ongoing tax liabilities.
The ATO assistance is not automatic, taxpayers must first contact the ATO to request assistance, and if eligible, the ATO will ‘tailor the assistance package for the relevant taxpayer.

To know more about the application of these measures, please get in contact with us at support@smbaccounting.com.au or

P 1300 854 159.

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Tradespersons’ Tax Deductions

Everyone has the right to claim tax deductions in Australia. A tradesperson can definitely claim deductions so you can maximise your tax refund. If you’ve just heard about this good news, lucky you! We know it’s tiring to comply with all those tax requirements but saving money should be your top priority. So, here are a couple of tax tips to help you maximise your tax deductions as a tradesperson.

1) Tools and equipment qualify as tax deductions.

How much have you spent on your tools and equipment? You’ve probably spent a lot of money for that. Don’t worry, using them for your business or for your job is good. What’s even greater is that you can use them as tax deductions depending on how you run your business or job. There are different ways to claim your tools and equipment.

  1. The first method is if you are running your business – If you have the receipts, you can claim tax deductions by using the cost of your tools and equipment you bought for less than $30,000. The tools should be bought after April 2, 2019. Previously, the cost limit is $25,000 between January 29, 2019, and April 2, 2019, and $20,000 before January 29, 2019.
  2. The second method is if you are a self-employed tradesperson – This means that you can directly deduct the cost from your taxable income. Since you bought all your tools and equipment, this is the best thing you can do to save money as long as you have the substantiation.
  3. Third, if you are an employed tradesperson – You can only claim tools costing $300 as tax deductions in the year they were purchased and for the full amount. If the tools are more than $300, you have to write it off over the tools useful life ie claim depreciation.

Note that tools and equipment qualify under this section. Your computers, phones, printers, and tablets can be used as tax deductions as long as they are being utilised for your business or job.

Equipment that you use for a proportion of personal purpose, the proportion of personal use is required to be deducted.

2) Vehicles as tax deductions

Yes, your vehicles can be used to maximise your tax deductions too! Just imagine spending a good amount of money for your ute or van. The cost may be prohibitive for some tradespersons but since you can claim it, no need to worry. If you use the vehicles for your business or job, here are the ways you can claim them.

  1. For tradespersons who are running a business – the same rule for tools and equipment applies. If your van/ute/car costs < $30,000, you can claim it 100% write off (less any personal use). However, if it’s more than the threshold, you have to write it off over its useful life.
  2. For those who work for someone else eg an employee – you can claim the depreciation of your vehicle as tax deductions. But, keep in mind that you need a logbook of your usage, whether personal or private so the ATO can distinguish how much you can deduct. Your logbook is used for all your Vehicle deductions eg work-related expenses attached to the vehicle such as fuel, maintenance, repair, and so on.

If you are on business travel, you can also claim your 68c/km allowance every time you travel up to a maximum of 5000km. Remember that the distance between your home and work can’t be deducted unless your employer requested for you to carry heavy tools that you can’t leave at work.

NB: Yes you receive an immediate write-off for a vehicle/equipment purchased under $30,000, but when you trade-in the vehicle the amount of the trade-in is taxable income as it is recouped depreciation.

3) Work-related clothing as tax refunds

Work-related clothing also qualifies as tax deduction. If you are wearing a uniform or protective clothing, which is very common for tradespersons, keep the receipts so you can deduct the costs.

Aside from the cost of them, you can also claim your laundry, dry-cleaning expenses and repairs.

 

Sounds interesting?

However, the ATO still evaluates the type of clothing being claimed. Some common types used by tradespersons as tax deductions:

  • Clothing that is made to survive work with dangerous conditions where normal clothing can’t be used.
  • Clothing that is designed to give protection like heavy-duty top and trousers. These types of clothing are unique from ordinary cotton drill trousers and shirts. Ordinary clothing cannot be used as uniforms.
  • Clothing that has a density of weave so to protect the worker from UV when the job is required to be done outside workplaces.
  • Protective clothing and footwear that give protection from injuries or illness.

Under this section, you can also claim fire-resistant clothes, gloves, hardhats, safety coloured vests, steel-capped boots, overalls, heavy-duty shirts and trousers, non-slip safety shoes, and required uniform with your company’s logo.

4) Laundry and dry cleaning of your uniforms and protective clothing.

Good news! You can now claim your laundry and dry-cleaning expenses for uniforms and protective clothing that qualify as tax deductions. If the total amount of your expenses reached $150 or less and your total work-related expenditures are $300 or less, no need for receipts. You can claim them right away.

If you are doing the laundry yourself, you need to keep this in mind: $1 per load claim if you are washing, drying, and ironing and $0.50 if there are other items other than uniforms and protective clothing.

5) Unusable items as tax claims

In addition to the above items, you can also claim any unusable, damaged, or obsolete items that are left on the site where you did your job as a business or as a tradesperson. You can write off the cost before the end of the year so you can maximise your tax deductions. Under this claim, you can deduct the cost of items that the customers did not pay for. Write off should be done by June 30.

 

 

To know more about claiming a tax deduction for any of your expenses, or for help filling out the paperwork, please get in contact with us at support@smbaccounting.com.au or P 1300 854 159.

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Maximising your Tax Deductions | Minimising your Tax Payable

Maximising tax deductions is every business’s/taxpayers’ goal. This is one way you can save from paying higher taxes than you need. But, let’s face it, this is one of the toughest things to do when you are running your own enterprise especially If you don’t know how the Australian Taxation Office (ATO) works.  So, is there any way you can avoid paying high taxes? Yes, there is! The greatest secret to counteracting this negative effect on your finances is to always keep your records. Your tax deductions will increase if you have more transactions with substantiation.

The Australian Taxation Office (ATO) has thousands of personnel who do tax collections. One way you can prove that you don’t have to pay all the tax they impose is to give them documents that support your claims, thus increasing your refund. If you can’t give them enough evidence, the ATO will keep their hands in your pockets. Note that claiming tax deduction without evidence is a big move and the ATO gets serious about it.

Don’t let ATO take away the money you’re supposed to count as yours. Don’t lose $$$’s like other Australians out there who don’t claim their tax deductions. You can do better than that!

Develop a habit of record-keeping

So to Maximise your tax deductions, the first step is to develop a habit of great record-keeping. It’s easy, just simply update your records with your receipts from your old to new transactions. Do not miss out on a single receipt! You need them all to claim your deductions so you won’t have to pay higher tax than necessary.

Take note, apart from proving your tax deductions, record keeping will save you a lot at tax time! If you have claims that make it questionable by ATO, you can simply hand them your complete receipts and show them that you are 100% ready no matter what happened.

Did you know that you can also use your receipts as references to your other business needs? Let’s say you are trying to estimate your income and expenses. Without these receipts, you won’t make a good outline of them. They serve as your support in case you need financial advice in the future. Record keeping is not just about saving tax time. It also helps you manage the other sides of your enterprise.

 

The next question is, what type of transaction receipts do you need to keep?

Type of transactions you need for tax refund

When keeping your records, you need to make sure that you are keeping the records of both your income and expenses. In this section, you will be given a list of the items that you may never had thought would qualify as tax deductions. Many Australians are failing to keep records of them for the mere reason that they don’t know that they could actually be used as deductions.

Let’s start off with your income. You must keep the records of your salary, any investment that you have, the dividends you receive from your investments, your managed funds, your allowances, and your rental income from your rental properties.

Some of the good records you can keep are your statement of income or earnings from your employer, funds manager, and real estate agent. Don’t forget to contact them for this document!

Next, you need to break down all your expenses into different categories. These are lists of items that can qualify as tax deductions:

 

  • Work-related travel – parking fees, tolls, personal car costs, public transportation fees, airplane tickets, general travel expenses, taxi fares, accommodation, meals.
  • General expenses – tax agent fees, charity donations, income protection costs, mobile phone usage
  • General work-related expenses – gifts, union fees, professional fees, license fees
  • Education expense – course fees, textbook fees, accommodation, meals, and professional fees for libraries and work related to magazines
  • Equipment purchased or leased for work – computer supplies, calculators, electronic organizers, computers, laptops, iPad, phones, mobile accessories, software, briefcases, carry-on bags, safety equipment, tools for the trade, technical instruments.
  • Home office expense – desks, chairs, office furniture, home utility fees, postage, stationery
  • Clothing – protective clothing, laundry of uniforms and protective clothing, uniforms
  • Costs of newly bought assets, expenses on rental properties and other investments, transactions of assets sold, and expenses related to attendant care, disability aids, or aged care.

 

Keeping of tax receipts

ATO recommends that you keep your receipts for 5 years under the following circumstances:

  • You recently claimed tax deductions for depreciation – you need to keep the receipt for 5 years from the date of your last claim.
  • You acquired or sold an asset – you need to keep your support for 5 years until after capital gains tax (CGT) is no longer required. You will need this document to calculate your capital gain or loss.
  • You are disputing about certain transactions with the ATO – you need to keep the documentation for 5 years after the dispute has been completed.

The era of digital technology, most records can be kept electronically and therefore will be usually kept indefinitely

At least 2 years of safe record-keeping is needed for taxpayers who have simple tax transactions generally Salary Wage employees

How to develop a habit of record-keeping

1) Always get a receipt

Whenever you are buying something or doing a transaction that has taxes, you need to ensure that you get an equivalent receipt of the expense. Even without categorising the expense, you can assess later on if the expense can qualify as a tax deduction or not. Keep in mind that without a receipt, you can’t file for tax deduction.

 

2) Keep a copy of your receipts

Some receipts will fade and you will lose some in the process of record-keeping. What you need to do is to keep a picture or scanned copy of the receipts after getting them. A soft copy will help you preserve the information in that document.

 

3) Organise your receipts

If you can organise your receipts in a chronological manner (date order or expenses category eg petrol receipts), just do it. You can either arrange it from oldest to newest or from newest to oldest depending on your preference.

 

4) List down your deductions

List down all your expenses and sum them up. You will have to categorise them this time based on the list of deductibles above. Do this regularly so you won’t face big job at year end tax time.

 

To know more about claiming a tax deduction for any of your expenses, or for help filling out the paperwork, please get in contact with us at support@smbaccounting.com.au or P 1300 854 159.

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