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COVID-19 Tax Updates

COVID-19 Tax Updates

Over the past few days, there have been  some clarification on issues of timing, eligibility and other practical problems revolving around the Cash Boost for Employers and the JobKeeper program

1. Cash Boost for Employers

It is interesting to note that the cash boost has some important timing implications:

Just to reiterate this is the scheme where the Government provides up to $100,000 to eligible businesses that employ people with a minimum of $20,000. These measures are designed to act as a boost to Employers to keep employing people and paying various business expenses.
 
These payments are triggered by the lodgement of the March 2020 BAS, but there is a quirk to the timing.
This affects clients that have pre-existing debts on their Integrated Client Account;
 
If you lodge before the due date of your March 2020 quarterly or monthly activity statement then the cash flow boost will not be applied to your account until after the due date (and not until 28 April) and :

Any excess credits you are entitled to (GST credits) may still be applied against any outstanding debts with other Australian Government agencies.
 
If you lodge on or after the due date any boost will be actually credited or refunded.
 
So it is important to engineer the timing in a correct manner.

 

2. State Government Stimulus measures

With new announcements appearing almost daily, I thought it timely that we reiterate what State Governments are  offering.
 
VICTORIA
https://www.business.vic.gov.au/disputes-disasters-and-succession-planning/illness-and-business-management-plan/coronavirus-business-support
 
NSW
https://www.nsw.gov.au/news/10000-grants-to-provide-fast-relief-for-nsw-small-businesses-battling-covid-19

 

3. JobKeeper Eligibility

There have been questions asked relating to the JobKeeper eligibility in relation to lodging of tax returns.
 Amongst many criteria the rules require  one of the conditions be met  namely ,that:

  • the taxpayer or the entity  lodge, on or before 12 March 2020, at least one of
  • a 2018–19 income tax return showing that it had an amount included in its assessable income in relation to it carrying on a business, or
  • an activity statement or GST return for any tax period that started after 1 July 2018 and ended  before 12 March 2020 showing that it made a taxable, GST-free or input-taxed sale.

But this then calls into question the eligibility of those who haven’t yet lodged their returns.
There is some comfort in the next line of the ATO guidelines :

We have the discretion to give further time, but only in limited circumstances, including if you:

  • did not have a requirement to lodge your 2018-2019 return until after 12 March 2020
  • have deferred your lodgement under an extension of lodgement date we initiated.

Examples include:

  • You are included in a registered agent’s lodgement program whereby your lodgement due date is after 12 March 2020.

This suggests but doesn’t mean an absolute confirmation that you would be eligible if you haven’t yet lodged your return.  We would exercise caution in lodging  an application until we hear definitively.

We will let our clients know as soon as we know.

 

4.Lodgement Deferrals

The ATO have applied automatic deferrals to the lodgement program for the remainder of the 19/20 year.

Lodgement and payment deferrals

(a) Lodgement and payment deferrals will be automatically applied to the following obligations that are due on 15 May 2020:

  • Company 2018-19 income tax returns are now due by 5 June 2020.
  • SMSF 2018-19 annual returns are now due by 30 June 2020.

(b) 2018-19 income tax returns for individuals, partnerships and trusts can be lodged by the 5 June concessional due date, provided that clients pay any liability by this date.

(c) The lodgement and payment due date for 2019-20 FBT annual returns has been automatically deferred to 25 June 2020.

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