Welcome to the April 2020 edition of the Spry Roughley Report.
This month has seen a flood of information and updates on the COVID-19 economic support. Finally, the processes to begin accessing the Cashflow Boost and JobKeeper Payments are in place and allowing eligible businesses to access much needed support. Of course, there are teething issues and still many questions for different scenarios but overall, it seems to be working well. We have invested a lot of time in being fully across the issues, including registration and STP setup etc and many clients have really appreciated the practical help we can provide.
Looking ahead, we are conducting 2020 tax planning reviews and while forecasting results to 30 June 2020 now may be with an extra degree of difficulty, nevertheless it needs to be done. It is providing an opportunity to review likely tax payments for March 2020 and to vary PAYG instalments accordingly to preserve cash reserves. Fortunately, there are few changes to tax deductions and concessions apart from the increased immediate asset write-off and accelerated depreciation deductions. The Federal Budget has been deferred until 6 October 2020, this will leave the 2019/20 year to end with some certainty of current rules.
This also leaves some unfinished business. The proposed changes to Division 7A loan rules dealing with private company loans to shareholders and associates (announced in 2016) are due to come into effect from 1 July 2020. However, without legislation, there are calls now for the changes to be deferred for another two years. There are also calls for temporary relief from minimum yearly loan repayments and a temporary reduction in the benchmark interest rate, currently 5.37%, in response to the COVID-19 crisis. The ATO is developing further guidance but with no confirmed date of release or scope. Clients should continue to manage their Division 7A loans within the current rules i.e. minimum annual loan repayments of principal & interest over 7 years for unsecured loans or 25 years for secured loans.
Finally, we are finding that most people are becoming very comfortable with video conferencing platforms for meetings. At some stage our face to face meetings will return as our more regular approach, but in the interim, Spry Roughley has the capability to host virtual meetings and assist our clients to meet on this platform. We are set up to host both Microsoft Teams and Zoom platforms and they are both very reliable. If you would like a meeting just call us.
Read on below for our COVID-19 round-up and the usual collection of tax and other economic updates.
- COVID-19 – Australia's governments and the ATO have made a huge number of announcements in recent weeks about measures to support individuals and businesses during the novel coronavirus pandemic. This issue summarises the main ATO administrative changes, concessions and payments, and ways to find more information.
- Working from home: what can I deduct? – While working from home has its benefits, there may be extra expenses too. You may be able to claim a deduction for the additional running costs you incur.
- Scams targeting natural disaster victims – If you've fallen victim to a tax-related scam, contact the ATO as quickly as possible.
- Independent review of ATO audit position: small business pilot extended and expanded – The ATO has extended and expanded its pilot program offering an independent review service to eligible small businesses disputing income-tax-related audits.
- Super guarantee amnesty for employers – An amnesty is now on for employers in relation to unpaid employee superannuation entitlements from 1 July 1992 to 1 January 2018.
As usual, please do not hesitate to call us on (02) 9891 6100 should you wish to discuss how any of the points raised in the report specifically affect you, or click here to send us an email.
Shaun Madders, Director
Spry Roughley Services Pty Limited
Liability limited by a scheme approved under Professional Standards Legislation
A series of administrative measures to assist businesses experiencing financial difficulty as a result of the 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 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.
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 superannuation guarantee charge where super guarantee payments are late or unpaid.
In an effort to combat the economic effects of the global coronavirus pandemic, the Federal Government has announced a number of stimulus packages. We have covered these in 3 Special Reports - see our website for specifics.
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Have you been directed by your employer to work from home to limit the spread of COVID-19? While working from home has its benefits, there may be extra expenses too, ranging from printing costs to the need for more internet data and perhaps even additional equipment. You may be able to claim a deduction for the additional running costs you incur. The costs you may be able to claim include the work-related portion of any heating, cooling and lighting for the area you're working from, work-related phone and internet costs, and work-related decline in value of a personally owned computer and associated office equipment. To claim these expenses, you must keep specific records ranging from diary entries to receipts.
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Victims of the recent natural disasters beware: there is an SMS scam circulating that purports to give you "a bonus" on your 2020 tax return. The scam urges victims to start the process by filling out a form and provides a link to a what looks like the genuine myGov website. According to the ATO, this is a classic case of scammers impersonating the ATO in an effort to collect personal information including names, birth dates, addresses, emails, phone numbers and online banking login details.
Once this information is obtained, scammers can use it to commit identify theft, including porting your phone, accessing your bank account, obtaining a loan in your name, lodging tax returns, stealing your superannuation and committing other types of fraud, or they could on-sell the information to others who may commit these offences.
If you receive a call from someone saying they are from the ATO but you aren't sure, the best course of action is to hang up and call the ATO back on the appropriate number listed on its website, or to call your tax agent directly on their listed number to seek advice. While the ATO does send SMS messages and emails and calls taxpayers, it's important to remember that the ATO will never:
- send an SMS message or email asking you to click on a hyperlink to log into myGov or other government websites;
- ask for personally identifying information in order for you to receive a refund;
use aggressive or rude behaviour, or threaten you with immediate arrest, jail or deportation;
- project its number onto caller ID; or
- request that you make payments of debt via cardless cash, iTunes or Google Play cards, prepaid Visa cards, cryptocurrency, or direct credit to a personal bank account.
If you've fallen victim to this or other tax-related scams, don't be ashamed, but contact the ATO as quickly as possible. The sooner you notify the ATO, the better the outcome is likely to be.
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The ATO has advised that it has extended and expanded its pilot program which offers an independent review service to eligible small businesses disputing income tax related audits. The pilot will continue until 31 December 2020.
The independent review is conducted by an officer from the ATO's Review and Dispute Resolution business line. This officer will not have been involved in the audit and will bring an independent "fresh set of eyes" to the review. The independent reviewer will consider the documents setting out the taxpayer's position and the ATO audit position. They will schedule a case conference with the taxpayer and the ATO audit officer generally within one month of receiving the taxpayer's review request. The case conference is an opportunity for all parties to assist the independent reviewer with understanding the facts and contentions.
The audit case officer will contact a taxpayer if it is eligible for an independent review. A written offer of independent review will also be included in the audit finalisation letter.
The ATO emphasises that taxpayers will retain their full dispute and objection rights even if they seek an independent review. Taxpayers will also retain these rights if they are not eligible for an independent review or if they choose not to seek an independent review.
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An amnesty is now on for employers in relation to unpaid employee superannuation entitlements from 1 July 1992 to 1 January 2018. There are certain conditions which have to be met for employers to qualify. The amnesty will allow employers to self-correct super guarantee (SG) underpayments without incurring additional penalties that would normally apply.
During the amnesty period, employers can also claim a tax deduction for payments of SG charge or contributions. The amnesty will end on 7 September 2020, at which time the ATO is set to take a tougher stance on SG underpayments.
To qualify, employers must first disclose the super guarantee shortfall to the ATO in the approved form between 24 May 2018 and 7 September 2020. The shortfall must not have been previously disclosed to the Commissioner, however, additional amounts of SG shortfalls disclosed during the amnesty period may be subject to beneficial treatment.
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