Coronavirus Stimulus Packages

Coronavirus Stimulus Packages

Coronavirus Stimulus Packages

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Please see below a summary of the major stimulus packages designed to keep businesses in business, and Australians in jobs. 

Individuals

People who are aged 22 or over and under Age Pension qualification age, who are unable to attend work because they have been diagnosed with Coronavirus or who are in isolation may qualify for Sickness Allowance or Youth Allowance (or JobSeeker Payment from 20 March 2020) if they do not have any employee leave entitlements, such as sick leave, and they meet general eligibility requirements in respect of residency and income and asset tests.
Young people under the age of 22 who meet the above calculations will also be able to access Youth Allowance.

Anyone who was entitled to the below on 12th March 2020 will receive a one-off lump sum payment of $750.00 – if your family tax benefit is paid in a lump sum you will receive this at the end of the year when you get your lump sum payment.

  • Age Pension
  • Disability Support Pension
  • Carer Payment
  • Parenting Payment
  • Wife Pension
  • Widow B Pension
  • ABSTUDY (Living Allowance)
  • Austudy
  • Bereavement Allowance
  • Newstart Allowance
  • Youth Allowance
  • Partner Allowance
  • Sickness Allowance
  • Special Benefit
  • Widow Allowance
  • Family Tax Benefit, including Double Orphan Pension
  • Carer Allowance
  • Pensioner Concession Card holders
  • Commonwealth Seniors Health Card holders
  • Veteran Service Pension; Veteran Income Support Supplement; Veteran Compensation payments, including lump sum payments; War Widow(er) Pension; and Veteran Payment
  • Veteran Gold Card holders
  • Farm Household Allowance

Check individuals fact sheet here  

Businesses

$150,000 immediate asset write off increase

  • Businesses with a turnover of less than $500 Million will have access to this concession for assets purchased between 12th March – 30th June, 2020
  • All assets under $150,000 will be immediately written off

Tax Free cash flow assistance boost for employers

  • Businesses with a turnover of less than $50 Million that employ workers will be eligible for a credit between $2,000 – $25,000 on their activity statement account from 28th April, 2020 upon lodgement of the March, April, May and June, 2020 activity statements
  • Businesses will receive a 50% credit of PAYG Withheld up to a maximum benefit of $25,000
  • The payment for monthly PAYG lodgers will be calculated at three times the rate (150%) to provide a similar treatment for quarterly lodgers (examples in fact sheet)
  • Eligible businesses will receive a minimum of $2,000, even if they are not required to withhold tax

Businesses who employ apprentices and/or trainees

  • If a business employs an apprentice/trainee on or before 1st March, 2020 and has fewer than 20 full time employees they will be eligible
  • Eligible employers can apply for a wage subsidy of 50% of the apprentice/trainees wages paid for the period 1st January – 30th September, 2020
  • Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter)
  • Employers can register for the subsidy from early April and final claims for payment must be lodged by 31st December, 2020

Check the Instant Asset Write-Off fact sheet here or the business cash flow assistance fact sheet here

To apply please contact the Australian Apprenticeship Support Network (AASN) provider (employers would have to be in contact with one to employ their apprentice)

Additional Business Assistance for those Impacted by COVID-19

  • Deferring by up to four months the payment date of amounts due through the business activity statement (including PAYG instalments), income tax assessments, fringe benefits tax assessments and excise
  • Allow businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get quicker access to GST refunds they may be entitled to
  • Allowing businesses to vary Pay As You Go (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 on or after 23 January 2020, that have been applied to tax liabilities
  • Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low interest payment plans.

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

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March Practice Update

March Practice Update

Practice Update – March 2020 Edition

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Court Confirms ATO’s Position on Foreign Income Tax Offsets

The ATO has welcomed the decision of the High Court to basically uphold the decision of the Full Federal Court in a case which the ATO won, in relation to foreign income tax offsets (‘FITO’).

An Australian tax resident had sold some US investments and paid US tax on the gains.

The taxpayer was then basically taxed on half of those gains in his assessable Australian income (i.e., the gains were eligible for the CGT discount in Australia).

The taxpayer included the whole of the US tax paid in his FITO to offset against his Australian income tax.

However, when determining the FITO available, the ATO only allowed the proportion of the US tax paid that related to the capital gain included in his Australian assessable income.

The Full Federal Court affirmed the ATO’s position.

“This decision reminds taxpayers that they can only claim the foreign income tax offset to the extent that the capital gain is assessable in Australia, rather than the full amount assessed in a foreign jurisdiction,” Deputy Commissioner Tim Dyce said.

“We believe that others may have similarly incorrectly claimed the foreign income tax offset.  Now is the time to review any claim and make any necessary voluntary amendments as we intend to commence compliance activity on this issue in the near future.”


Employer’s Requirements And The Deductibility Of WREs

Some employees may wonder whether a work-related expense (or ‘WRE’) becomes deductible merely because their employer specifically requires the employee to incur the expense.

Importantly, the ATO’s recent draft ruling on the deductibility of work-related expenses reiterates that an employer’s requirements do not determine the question of deductibility.

Specifically, a number of examples contained in the draft ruling confirm that a WRE expense may be deductible without an employer requiring the expenditure.  For example, a taxpayer incurring expenditure in relation to a course directly connected to their current employment (without their employer’s specific support) may still be in a position to claim self-education deductions.

Alternatively, expenses may be non-deductible despite an employer’s specific directions, such as a restaurant requiring its waiters to dress in ‘black and whites’, or support such as where an employer encourages a dental practice receptionist to undertake a ‘Certificate in Dental Assisting’ so as to open up a new career opportunity.

SMS Scam Targeting Natural Disaster Victims

The ATO is warning the community about a new SMS scam which promises an 8% bonus on 2020 tax returns to victims of recent natural disasters.

The scam text message says: “Due to natural disasters, Australians are entitled to an 8% bonus on their tax return. Please begin the process by filling out the form below. Link: https://my.gov.verification-digital.com.”

ATO Assistant Commissioner Karen Foat said this is a classic case of fraudsters impersonating the ATO in an effort to collect personal information from people like names, addresses, emails, phone numbers and online banking login details.

This particular scam includes a link to a fake myGov website which looks genuine.

Over the past few years the ATO has seen an increasing number of reports of scammers contacting members of the public pretending to be from the ATO by SMS, email, and phone, and the scammers are becoming more and more sophisticated.

“Last year, over 15,000 people reported to us that they provided scammers with their personal identifying information”, Ms Foat said.

“If you receive an SMS, call, or email and aren’t sure if it’s genuine, it’s OK to not respond.”

The ATO does send SMS and emails, and also makes phone calls to taxpayers, but note that the ATO does not project their phone number onto the recipient’s caller ID — so people can be sure that, if there’s a number on their caller ID, it’s not the ATO calling.

Further STP Developments

Editor: In an indication of the far-reaching changes that Single Touch Payroll (‘STP’) will be bringing, Treasury has recently finished consulting on draft legislation that expands the data that may be collected through STP by the ATO (as announced in the 2019/20 Budget).

The legislation, if enacted, will broaden the amounts that employers can voluntarily report under the STP rules, to include employer withholding of child support deductions from salary or wages and child support garnishee amounts from salary or wages that are paid to the Child Support Registrar.

Amendments will also be made to ensure that if employers choose to report under STP to the Commissioner of Taxation, they do not also have to report the amounts to the Child Support Registrar.

STP and employer clients

The ATO has advised that over 580,000 small employers have made the transition to STP reporting, and they are encouraging tax practitioners to help any clients who have yet to engage with STP reporting make the transition now.

They will also send reminders to small employers who are not yet reporting through STP.

Editor: So if you receive any such correspondence and/or simply want to discuss this with us, please call our office.

Value Car Parking Fringe Benefits

Where businesses provide car parking fringe benefits to their employees, the taxable value of these benefits must be calculated correctly to ensure they are meeting their fringe benefits tax (‘FBT’) obligations, regardless of the method used.

The ATO has advised they may directly contact businesses who have engaged an arm’s length valuer, as required under the ‘market value method’.

According to the ATO, in some instances, valuers have prepared reports using a daily rate that doesn’t reflect the market value, meaning the taxable value of the benefits is significantly discounted or even reduced to nil.

The ATO wants businesses to understand that engaging an arm’s length valuer does not mean they’ve met all the requirements for working out the taxable value of their car parking fringe benefits.

It is actually the business’s responsibility to confirm the basis on which valuations are prepared, and they are expected to examine any valuation they suspect is incorrect or which considerably reduces their liability.

Editor: We can help check if a valuation report required under the market value method meets the ATO’s requirements.

In addition to the valuation report, businesses need a declaration relating to the FBT year that includes the:

  • number of car parking spaces available to be used by employees;
  • number of business days; and
  • daily value of the car parking spaces.
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.

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SG Amnesty Bill Passes Parliament

SG Amnesty Bill Passes Parliament

SG Amnesty Bill Passes Parliament

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The Recovering Unpaid Superannuation Bill has now passed through parliament and is waiting on royal assent.

The SG (Superannuation Guarantee) is a 6-month amnesty aimed at providing employers a once off pardon and to encourage them to self-correct any SG non-compliance between 1st July 1992 and 31 March 2018.

Employers with any non compliance between 2018 to now are not eligible for the amnesty period.

The amnesty will allow employers to claim tax deductions for payments of SG or other contributions made during the amnesty period to offset SG charge and remove a penalty that may otherwise apply in relation to SG non-compliance.

The amnesty period started on 24 May 2018 and ends six months from the date it receives royal assent (yet to be announced).

The new legislation will also impose minimum penalties on employers who fail to come forward during the amnesty period by limiting the commissioner’s ability to remit penalties below 100 per cent of the amount of SG charge payable.

So far approximately 7,000 employers have come forward voluntarily since the amnesty was first announced on 24 May 2018 and the Treasury estimates an additional 7,000 employers will come forward during the final 6-month amnesty period, returning a figure of around 230 million to employees who may otherwise have missed out.

This is the perfect opportunity for employers to pay out what is owing to employees while not facing additional late penalties and fees.

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Coronavirus – Time For Panic Or Opportunity?

Coronavirus – Time For Panic Or Opportunity?

Coronavirus – Time For Panic Or Opportunity?

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The headlines over the last few weeks and in particular, over the last few days have looked something like the following:

  • Global Markets Fall for Fifth Consecutive Day
  • Stocks Fall Again as Coronavirus Spreads
  • Coronavirus has Major Impact on the Stock Market
  • Coronavirus Market Sell Off
  • Another Bad Day in the Markets as the Coronavirus Spreads

As you can imagine, this has had many investors selling their shares in a panic and running for the woods.

Never in human history has information been so freely available to us due to social media and the internet. For the most part, this is fantastic. However, with so many opinions and news headlines around, we can sometimes get caught up and begin to believe everything we read.

Now, I am not saying that the Coronavirus is not something we should be worried about at all. Many people have died from this illness and it has been a tragedy for those affected.

What I am saying is that this is not the first time (and likely not the last time) that we will see a major global epidemic impact investment markets.

The below table shows some past epidemics and the change in the US market following the outbreak.

Epidemic Epidemic End 6-Month % Change of S&P 12-Month % Change of S&P
SARS April 2003 14.59% 20.76%
Avian flu June 2006 11.66% 18.36%
Swine flu April 2009 18.72% 35.96%
Ebola March 2014 5.34% 10.44%
Measles/Rubeola June 2019 9.82% N/A
Source: Dow Jones Market Data

As can be seen from the above, following recent outbreaks, the US market has managed to rebound not only quickly, but also quite substantially.

Therefore, it is important not to forget some key fundamentals when it comes to investing.

Firstly remember, we invest for the long term and therefore short-term fluctuations and market events should not worry us.

Secondly, why did you start investing in the first place? Has the outbreak of Coronavirus changed your investment goals? If not, then why panic and sell because of a new media headline? If your investment goals remain the same, then so should your investment plan.

I am not saying to buy now because the market has dropped, the market may continue dropping over the next few days and weeks. We do not know where the bottom of the market is and neither does anyone else.

What I am saying is that it is important to stick to your plan and continue investing rather than selling in a panic because the markets have dropped and media headlines are in a frenzy. 

To summarise, ultimately the market’s reaction to the Coronavirus will come down to the severity of the virus and just because markets have managed to rebound following outbreaks in the past doesn’t mean that will be the case this time. It is however important to keep a clear head when it comes to selling your shares and to not let media headlines and social media panic cloud your judgement.

One final thought, remember what Warren Buffett, arguably the greatest investor of all time, once said:

“Be greedy when others are fearful, and fearful when others are greedy”

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Award Changes – Annualised Wage Agreements

Award Changes – Annualised Wage Agreements

Award Changes – Annualised Wage Agreements

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Modern Awards have now been updated to include the below changes around Annualised Salaries/Wage Agreements. These changes are effective from 1st March, 2020.

An annualised wage agreement may also be defined as where a flat fixed pay rate is applied for all time worked.

There are some critical thought changes here, reflecting the volume of common law cases and the impacts of those decisions on award interpretation.

What is included in the changes?

  • The employer must advise the employee in writing of the salary and keep a record:
    1. Of the salary payable
    2. The award provisions satisfied by the salary (what is actually included for example specific allowances or loadings, by default anything not listed would be an additional payment)
    3. The method of calculation and
    4. The maximum number of overtime hours it is in satisfaction for (the outer limit).
  • If the employee works in excess of the maximum number of overtime hours, the employer is obligated to make a separate make-up payment.
  • Review the salary arrangement every 12 months and amend any shortfalls in 14 days.
  • Keep appropriate records of employee working times including unpaid meal breaks. Such a record should be acknowledged by the employee, either physically or electronically.

What do I need to do now?

  • Make sure you & your employee keep a record of all time worked and that this record is acknowledged by the employee. This could be as simple as a book showing start & finish times then signed by an employee.
  • Review any existing contracts and make appropriate adjustments as soon as practical.

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New Calculation Of Personal/Sick Leave

New Calculation Of Personal/Sick Leave

New Calculation Of Personal/Sick Leave

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The Mondelez Decision

On 21 August 2019, the Full Federal Court of Australia handed down a decision dealing with how paid sick and carer’s leave accumulates and is taken under the National Employment Standards (NES).
The decision said that:

  • full-time and part-time employees each get 10 days of paid sick and carer’s leave for every year of employment
  • paid sick and carer’s leave accumulates in days, not hours.
    This entitlement applies from the employees start date of employment.

The company & government have appealed this decision. However, until this is heard the above isthe law.

What does this affect?

Whilst an award, agreement, contract can set out different entitlements to leave, they can’t be less
than the minimum entitlement in the National Employment Standards (NES).
The NES minimum entitlement is based on the decision above and allows for 10 paid days leave per
employee per year of service.
How is it calculated?

  1. Find out how many Calendar days in the employees year of service
  2. Find out how many Calendar days (or part days) count as service. Unpaid leave does not count as service.
  3. Calculate the amount of leave accumulated
    Multiply the number of days from step 2 x 10 then divide by the number of days in step 1.

What happens if an employee takes a part day of leave?

A part day of leave is calculated as a fraction of the ‘ordinary hours’ of work the employee would
have worked that day.

What if an employee works different hours on different days?

If any employee works different hours on different days this doesn’t affect how their leave is
accrued. This is because leave is accrued in days, based on service with the employer. A day is an employee’s ordinary hours of work in a 24 hour period.

Working different hours on different days, does affect what the employee gets paid when they take
leave.

i.e. employee works 2 weeks on a 4 on 4 off basis of 12 hrs. Then for the following 2 weeks they
work 5 days at 8hrs per day.
If sick, in weeks 3 (working 8 hrs per day) they get paid 8 hrs.
This is really applicable to shift workers who will now get paid according to the hrs on the shift of the day they would have worked, not the standard base rate hrs of 7.6 per day. Employee’s aren’t paid for any overtime hours they are rostered to work.

Is an employee entitled to back pay if an employer only paid them for 7.6 hours of leave on the days they would’ve worked 12 ordinary hours?

Yes.
If the employee would have normally worked 12 ordinary hours on a day they took paid sick and carer’s leave, they should be paid for those 12 hours at their base pay rate.
If they were previously only paid for 7.6 hours but should have been paid for 12, the employee is entitled to back pay for the difference.
They may also be entitled to extra superannuation contributions and interest.

What happens to accumulated paid sick and carer’s leave if an employee changes from part-time to full-time employment with their employer?

Nothing changes.
Full-time and part-time employees each get 10 days of paid sick and carer’s leave for each year of
service.
A part-time employee would have accumulated 10 days of leave for each year of service while part time.
If they become full-time, they accumulate leave at the same rate.

Does the decision impact our advice on annual leave or other types of leave?

No.
The decision doesn’t impact annual leave or other forms of leave under the NES. It only applies to
paid sick and carer’s leave.

What should employers do now?

Employers should review their leave or payroll systems and records to make sure they’re calculating
leave in days, not hours.
As part of this, employers should consider issues such as:

  • In addition to employees’ NES entitlements to paid sick and carer’s leave, do their employees have a greater entitlement under their registered agreement, award or employment contract?
  • Are they required to make any back payments and/or additional superannuation
    contributions and/or interest payments in relation to the leave?

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