ATO coronavirus administrative support


A series of administrative measures to assist businesses experiencing financial difficulty as a result of the coronavirus (COVID-19) pandemic has been announced by the ATO. These include deferring the payment date and amounts due on Business Activity Statements (BASs), income tax assessments, FBT assessments and excise by up to four months. Businesses will also be allowed to change payment and reporting cycles for GST and vary PAYG instalment amounts. Any interest or penalties applied to tax liabilities incurred after 23 January 2020 may be remitted. 

The ATO has recently announced that it will implement a series of administrative measures to assist taxpayers experiencing financial difficulty as a result of the COVID-19 pandemic. The measures that will apply are similar to those for taxpayers affected by the recent Australian bushfires. However, one important point of difference is that while the bushfire measures applied automatically to particular geographical areas, assistance for those impacted by COVID-19 will not be automatically implemented. Taxpayers who have been affected will need to contact the ATO to discuss their situation in order to come up with a tailored support plan.

ATO Commissioner Chris Jordan has said, "We know that many businesses and communities are being heavily affected by challenging economic conditions created by the outbreak of COVID-19 … we understand this is a time of significant uncertainty and that we will need to be flexible in how we help businesses."

Businesses on a quarterly reporting cycle for GST will be able to change their reporting and payment to a monthly cycle in order to get quicker access to GST refunds. However, the ATO notes that businesses can only make the change from the start of a quarter, so any changes made now will take effect from 1 April 2020, and once a change is made the business must keep reporting monthly for 12 months before it can elect to revert back to quarterly reporting. Additionally, businesses that are registered for fuel tax credits and change to a monthly GST reporting cycle will also need to claim fuel tax credits monthly.

Another thing to note is that changing a business's GST reporting cycle to monthly doesn't mean you have to change your PAYG withholding reporting cycle – each is managed separately. Businesses that are quarterly PAYG instalment payers can vary their PAYG instalments on activity statements for the March 2020 quarter. To do this, they must lodge a revised activity statement before the instalment due date and before their tax return is lodged. Any business that vary its PAYG instalment rate or amount may also be eligible to claim a refund for any instalments made for the September and December 2019 quarters.

Additionally, the ATO will defer by up to four months the payment date of amounts due through the BAS (including PAYG instalments), income tax assessments, FBT assessments and excise. It will also consider remitting any interest and penalties applied to tax liabilities incurred after 23 January 2020 for businesses affected by COVID-19. Taxpayers who need help with paying existing and ongoing tax liabilities are encouraged to contact the ATO to arrange a low-interest payment plan.

The ATO has also clarified that emergency accommodation, food, transport, medical or other assistance provided by employers to employees affected by COVID-19 may be exempt from FBT, depending on the circumstances. However, employers will still need to meet their ongoing super guarantee obligations for their employees. The ATO says that by law, it cannot vary the contribution due date or waive the super guarantee charge where super guarantee payments are late or unpaid.

Source: www.ato.gov.au/Media-centre/Media-releases/Support-measures-to-assist-those-affected-by-COVID-19/.

Coronavirus stimulus: what's in it for you?

In an effort to combat the economic effects of the global coronavirus pandemic, on 12 March 2020 the Federal Government announced an economic stimulus package worth $17.6 billion, which it said is expected to provide direct support for up to 6.5 million individuals and 3.5 million businesses. The package includes business investment initiatives, cash flow assistance payments to small and medium entities (SMEs), household stimulus payments and support for impacted sectors, regions and communities, as well as tax administration relief.

Business investment initiatives

The instant asset write-off threshold will be increased from $30,000 to $150,000 and expanded to include access for businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020. The new threshold will apply from 12 March 2020 and, the Government says, is expected to support over 99% of businesses.

A time-limited 15-month investment incentive (through to 30 June 2021) will also be provided to support business investment by accelerating depreciation deductions. Businesses with a turnover of less than $500 million will be able to deduct an additional 50% of the asset cost in the year of purchase.

Cash flow assistance payments for SMEs

Eligible SMEs will receive a Boost Cash Flow for Employers payment of up to $25,000 (with a minimum payment of $2,000). The payment will provide cash flow support to businesses with a turnover of less than $50 million that employ staff between 1 January 2020 and 30 June 2020. The payment will be tax-free. This measure will benefit around 690,000 businesses employing around 7.8 million people. Businesses will receive payments of 50% of their Business Activity Statement (BAS) or Instalment Activity Statement (IAS) from 28 April 2020, with refunds to be paid within 14 days.

Small businesses will also receive a total of $1.3 billion to support the jobs of 120,000 apprentices and trainees. Eligible employers can apply for a wage subsidy of 50% of an apprentice's or trainee's wage for up to nine months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that same apprentice.

Household stimulus for pensioners

A one-off $750 stimulus payment will be made to pensioners, social security, veteran and other income support recipients and eligible concession card holders. Payments will be made from 31 March 2020 on a progressive basis, with over 90% of payments expected to be made by mid-April. This payment will be tax-free and not count as income for social security, farm household allowance and veteran payments.

In addition to this initial $750 stimulus payment, the Government announced on 22 March that a further $750 payment will be provided (as part of a secondary stimulus package) to social security and veteran income support recipients and eligible concession card holders (see the following article, "Coronavirus stimulus: round 2"). Payments of the secondary $750 amount will be made automatically from 13 July 2020.

There will be one payment per eligible recipient under the first stimulus package, and one payment under the second. If a person qualifies for either or both payments in multiple ways, they will still only receive each payment once (ie there will be a maximum of two $750 payments per eligible person).

Support for impacted sectors, regions and communities

Support of $1 billion will be provided for sectors, regions and communities that have been disproportionately impacted by the economic impacts of COVID-19, including those heavily reliant on industries such as tourism, agriculture and education. This will include the waiver of fees and charges for tourism businesses that operate in the Great Barrier Reef Marine Park and Commonwealth National Parks. It will also include additional assistance to help businesses identify alternative export markets or supply chains.

Source: https://treasury.gov.au/coronavirus; www.pm.gov.au/media/economic-stimulus-package.

Coronavirus stimulus: round 2

To further support businesses and workers in riding out the COVID-19 pandemic and minimise the impact on the overall economy, on 22 March 2020 the Federal Government announced a second round of stimulus measures in addition to the initial $17.6 billion package announced on 12 March. This second package, worth $66.1 billion, is not only aimed at businesses but also includes support for individuals and households, including casual workers, sole traders, retirees and people who receive income support payments.

Business measures

Cash payments for small to medium employers

Tax-free payments of up to $100,000 (with a minimum payment of $20,000) will be available for eligible small and medium entities (SMEs) and not-for-profits that employ people and have an aggregated annual turnover under $50 million. Employers will receive a payment equal to 100% of the withholding tax liability on their salary and wages, subject to monetary limits. This payment will be available to most employers from 28 April 2020.

Temporary relief for directors of distressed businesses

The threshold at which creditors can issue a statutory demand on a company will be temporarily increased from $2,000 to $20,000, and the time companies have to respond to those statutory demands will be extended from 21 days to six months. Directors will also be provided with temporary relief from any personal liability for trading while insolvent.

SME loan guarantee scheme

A Coronavirus SME Guarantee Scheme will be established to support SMEs in getting access to working capital. Under the scheme, the government will guarantee 50% of new loans issued by eligible lenders. The scheme is able to support $40 billion worth of lending to SMEs.

Personal measures

Increase in income support payments supplement

A new temporary "Coronavirus Supplement" of $550 per fortnight will be implemented for people receiving certain income support payments. Eligible recipients will receive the full amount of $550 on top of their payment each fortnight, effectively doubling the current payment amount. The supplement will be paid for the next six months to existing and new recipients of the various Centrelink payments including the JobSeeker Payment (formerly called Newstart Allowance), Youth Allowance Payment for job seekers, Parenting Payment, Farm Household Allowance and Special Benefit Payments.

Further $750 for pensioners

In addition to the initial $750 stimulus payment previously announced, a further $750 payment will be provided to social security and veteran income support recipients and eligible concession card holders. This does not apply to those receiving the temporary Coronavirus Supplement. Payments of this secondary $750 amount will be made automatically from 13 July 2020.

This secondary $750 stimulus payment is in addition to the initial payment that the Government announced on 12 March (see the previous article, "Coronavirus stimulus: what's in it for you?"). The first payment will be made from 31 March 2020 on a progressive basis, with over 90% of payments expected to be made by mid-April.

There will be one payment per eligible recipient under the first stimulus package, and one payment under the second. If a person qualifies for either or both payments in multiple ways, they will still only receive each payment once (ie there will be a maximum of two $750 payments per eligible person).

Superannuation early release allowed

Individuals in financial distress as a result of the pandemic will be allowed to access a tax-free payment of up to $10,000 from their superannuation in 2019–2020 and a further $10,000 in 2020–2021. Eligible individuals will need to apply online to the ATO through myGov before 1 July 2020 to receive the payment for the 2019–2020 income year.

Amounts withdrawn from super in this way will not affect any Centrelink payments the person may be receiving.

Pension drawdown rate and social security deeming rates reduced

The annual superannuation minimum drawdown requirements for account-based pensions and similar products will be reduced by 50% for 2019–2020 and 2020–2021. In addition to the deeming rates changes made in the first stimulus package, the Government will further reduce rates by another 0.25%. From 1 May 2020, the lower deeming rate will be 0.25% and the upper deeming rate will be 2.25%.

Source: https://treasury.gov.au/coronavirus.

Coronavirus concessions: state governments

Some states have followed in the Federal Government's footsteps to provide their own stimulus and concessions for mostly small to medium businesses and in some cases to individuals and families. Most of the measures are payroll-tax-related, aimed at giving small to medium businesses a cash flow boost during this difficult time, while other measures including fee waivers, grants, relief payments and concessional loans.

New South Wales

Businesses with payrolls of up to $10 million will have their payroll tax waived for three months (essentially the rest of the 2019–2020 financial year), which means they will save a quarter of their annual payroll tax bill. In addition, the NSW Government will seek to bring forward the next round of payroll tax cuts by raising the threshold limit to $1 million starting from the 2020–2021 financial year. For small businesses including bars, cafes, restaurants and tradies, the government will waive a range of fees and charges.

Queensland

In order to help workers in businesses affected by COVID-19, the Queensland government will create a new $500 million concessional loan facility. It will comprise loans of up to $250,000 with an initial interest-free period for businesses to retain stuff. In addition, it is also extending the six-month payroll tax deferral, which was originally only aimed at small businesses, to all affected businesses across the state. The Office of State Revenue will be working with affected businesses to create repayment plans for the deferred tax liabilities.

Western Australia

The WA Government is intending to freeze household fees and charges until at least 1 July 2021. This includes the entire "household basket", including electricity, water, motor vehicle charges, emergency services levy and public transport fares. (The household fees and charges were originally set to increase by a rate of 2% in line with estimated inflation rate for the 2020-2021 financial year.) Additionally, the energy assistance payment will be increased from $300 to $600 for eligible concession cardholders, including pensioners.

Small to medium businesses with payrolls between $1 million and $4 million will receive a one-off grant of $17,500 to assist them with managing the impacts of COVID-19. The payroll tax threshold increase to $1 million will also be brought forward by six months to 1 July 2020. In addition, affected employers that pay $7.5 million or less in Australian taxable wages can apply to defer payment of their 2019–2020 payroll tax until 21 July 2020.

Tasmania

Small businesses in the hospitality, tourism, seafood and exports sectors with a turnover of less than $5 million will have access to loans for the purpose of purchasing equipment or restructuring business operations. The loans will be interest-free for a period of up to three years.

Payroll tax will be waived for this financial year for hospitality, tourism and seafood industry businesses. Other affected small to medium businesses with an annual payroll of up to $5 million in Australian wages can also apply to have their payroll tax payment waived for the period 31 March to June 2020.

In addition to waiving payroll tax, the Tasmanian Government will introduce a youth employment payroll tax rebate scheme for young people from 1 April 2020 and provide a one-off $5,000 grant to businesses that hire an apprentice or a trainee.

For individuals and families, one-off emergency relief payments of $250 and $1,000, respectively, will be available for those required to self-isolate by public health. There will also be various other grants and measures to help the tourism sector, communities, front-line workers and metal health organisations.

ATO's FAQ helps to clarify coronavirus impacts

The ATO's COVID-19 frequently asked questions (FAQ) is a resource tool for people and businesses in the community who need clarifications in relation to impacts from the COVID-19 pandemic. The FAQ is broken into common questions for individuals, employers, businesses (including internationals) and self managed superannuation funds (SMSFs).

Common questions centre around issues relating to the nationwide shutdown – late or deferring payment obligations; deductibles from working from home; residence status due to travel restrictions; GST and FBT impacts from cancellations; and SMSF losses and strategies.

The ATO advises that this FAQ will be updated regularly and welcomes suggestions and more questions from the community.

Source: www.ato.gov.au/Individuals/Dealing-with-disasters/In-detail/Specific-disasters/COVID-19/.