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March 2020

Covid-19 Update – Small Business

Small businesses will be the hardest hit by the ramifications of Covid-19.  The following is more information to help small business owners better understand some of the business support that's now available.

Late last week there was an article added to this site about the Federal Governments stimulus package.

Then 4 Fact Sheets became available to help understand the stimulus package.  Plus more information can be found here .

  1. Cash flow assistance for business
  2. Stimulus payments to households to support growth
  3. Assistance for severely affected regions
  4. Delivering support for business investment
     

This latest update provides more detail on how the stimulus package operates.  For example, Cash flow payment for employers.  'Eligible businesses will automatically receive payments of 50 per cent of their Business Activity Statements or Installment Activity Statement from 28 April 2020, with refunds to be paid within 14 days.'  Read more detail here.

 

ATO
Treasury
Small Business WA

 

 

 

PM launches $17.6 billion virus stimulus plan

The Prime Minister has announced a stimulus plan to curb the economic impact of the coronavirus and keep “Australians in jobs and businesses in business”. 

           

The package, aimed to provide an immediate stimulus to the economy, will be worth $17.6 billion, with a projected impact of $22.9 billion.

It includes tax relief for small businesses, a $750 one-off cash payment for welfare recipients and wage assistance to keep apprentices in work.

“Each measure is temporary, each measure is targeted, and each measure is proportionate to the challenges we face,” Treasurer Josh Frydenberg told media in Canberra. 

Prime Minister Scott Morrison confirmed that the government plans to spend $11 billion before June 30 this year, with the remainder to be injected into the economy before the end of the next financial year.

“This plan is about keeping Australians in jobs. This plan is about keeping a business in business, particularly small and medium-sized businesses, and this plan is about ensuring the Australian economy bounces back stronger on the other side of this and, with that, the Budget bounces back with it,” Mr Morrison told media. 

Under the plan, the government is lifting the threshold for the instant asset write-off from $30,000 to $150,000, and expanding it to businesses with an annual turnover up to $500 million, up from $50 million. It has also announced a 50 per cent accelerated depreciation deduction above existing deductions, which will be available to June 30, 2021.

Additionally, businesses with turnover up to $50 million will receive a tax-free cashflow boost for employers worth up to $25,000, designed to help pay wages. 

It has also set up a coronavirus regional and community fund aimed to assist those in the most impacted areas such as tourism and export. 

 

 

Maja Garcia Djurdjevic
12 March 2020
mybusiness.com.au

 

 

SG amnesty bill passes Parliament

The long-awaited superannuation guarantee amnesty bill has now passed both houses, with employers set to get six months to disclose historical non-compliance before tougher penalties apply.

         

The Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019 has now been passed and is awaiting royal assent.

The SG amnesty provides for a one-off amnesty to encourage employers to self-correct historical SG non-compliance dating from 1 July 1992 to 31 March 2018.

An employer will not be able to benefit from the amnesty for SG shortfall relating to the quarter starting on 1 April 2018 or subsequent quarters.

It will allow employers to claim tax deductions for payments of SG charge or contributions made during the amnesty period to offset SG charge, as well as remove the administrative component and the Part 7 penalty that may otherwise apply in relation to SG non-compliance.

The amnesty period will start from 24 May 2018 and end six months from the date it receives royal assent.

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.

Around 7,000 employers have since come forward to voluntarily disclose historical unpaid super since the amnesty was first announced on 24 May 2018.

Treasury estimates an additional 7,000 employers will come forward during the six-month amnesty period, returning $230 million of superannuation to employees who may have otherwise completely missed out.

Assistant Minister for Superannuation, Financial Services and Financial Technology Jane Hume said the passing of the legislation should not be viewed as giving a free kick to employers who had been previously non-compliant.

“Employers will not be off the hook. To use the amnesty, they must still pay all that is owing to their employees, including the high rate of interest. However, the amnesty will make it easier for workers to secure the super they are owed by not hitting employers with the penalties usually associated with late payment,” said Ms Hume.

“If employers do not take advantage of the amnesty, they will now face significantly higher penalties when they are caught. In addition, throughout the amnesty period the ATO will still continue its usual audit and enforcement activity against employers for historical obligations they do not own up to voluntarily.

“We encourage employers to check they don’t owe outstanding super — and if they do, to take advantage of this once-only opportunity to set things right before much tougher penalties apply.”

 

 

Jotham Lian 
24 February 2020
accountantsdaily.com.au

 

 

ATO flags most common SMSF return mistakes

The Australian Taxation Office has revealed the top five most frequent errors made in the submission of SMSF annual returns as well as how advisers can avoid them when lodging this year.

         

A bank account that isn’t unique to the SMSF

The ATO said there must be a bank account in the fund’s name to manage the SMSF operations and to accept contributions, rollovers of super and income from investments.

Further, it said the account must be separate from the trustees’ individual bank accounts and any related employers’ or advisers’ bank accounts.

“This will protect your fund’s assets and ensure super payments can be made to your SMSF,” the ATO said.

Providing an incorrect electronic service address (ESA)

The ATO said an ESA allows an SMSF to receive electronic remittance advice and contributions if it has members receiving super from non-related employers. Therefore, it’s not an email address or the contact details of the SMSF messaging provider.

“An ESA consists of alphanumeric characters with a combination of upper and lower-case characters and is case sensitive,” the Tax Office said.

Not valuing an SMSF’s assets at market value

The Tax Office noted that SMSF assets need to be calculated at market value as at 30 June to prepare the fund’s accounts, statements and SAR.

“If you follow our valuation guidelines, we’ll generally accept the valuation you provide,” the ATO said.

“Accurate asset valuation is important to ensure your SMSF retains its complying fund status. Penalties may apply for inaccurate valuations as these can have an impact on your members’ balances.”

Trying to lodge with zero assets

The ATO said an SMSF is not legally established until the fund has assets set aside for the benefit of members. As a result, the regulator said it won’t accept a SAR from an SMSF that has no assets unless the fund is being wound up.

“If this is your SMSF’s first year and you have no assets set aside for the benefit of members, you can ask us to either cancel your fund’s registration or flag the SMSF’s record as return not necessary (RNN),” it said.

Lodging an SAR without auditor details

An approved auditor examines an SMSF’s financial statements and assesses the fund’s compliance with super law, meaning an audit must be completed before your SAR can be lodged, according to the ATO.

“A SAR lodged without auditor’s details will be suspended and not recognised as a lodgment. This will impact the complying status of the fund until the SAR is lodged with the required information,” the ATO said.

“Appoint an auditor at least 45 days before your SAR is due to ensure the audit is completed in time to meet the lodgment date.”

 

 

Adrian Flores 
26 February 2020
accountantsdaily.com.au

 

 

Expected GDP by country 2010 to 2100

This animated chart is simply amazing but some world events could have a negative impact.  Even so, it's fascinating to see how the world might change into the future.

Simply click on the image and see how global economies are expected to change between 2010 and 2100.  

       

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ATO expands small business review pilot

‘Not interested in dragging disputes out’:  The ATO has stopped short of making its small business independent review service a permanent feature as it expands and extends the pilot program until the end of the year.

         

The ATO’s independent review service trial for small businesses will now be extended to 31 December 2020 and expanded to include disputes involving GST, excise, luxury car tax (LCT), wine equalisation tax (WET) and fuel tax credits (FTC).

Launched by commissioner Chris Jordan on 1 July 2018, the pilot program had initially only considered disputes involving income tax audits and was set to run for only 12 months.

With 138 small businesses having taken up the offer since the pilot began, ATO deputy commissioner Scott Treatt said its early success had prompted the Tax Office to expand the pilot.

“Pleasingly, we’ve only received two objections from businesses that have been through our independent review pilot since it launched on 1 July 2018. This result demonstrates that our pilot program is working as intended for small business in that it’s helping to resolve disputes prior to matters reaching objection,” Mr Treatt told Accountants Daily.

“We proactively invite small businesses to take advantage of the service when we issue an audit finalisation letter. We’ve found that the service is helping us resolve disputes with small businesses earlier.

“Our officers will make every effort to resolve disputes as quickly as possible. We are not interested in dragging disputes out.”

The independent review process had been previously reserved for entities with a turnover greater than $250 million.

The pilot program will see eligible small businesses with an audit in progress be contacted by their audit case officer with the offer of a review before issuing assessments.

According to Mr Treatt, small businesses can expect an independent officer from outside its audit area to review the facts and technical merits of the ATO’s audit position.

The most common issues that small businesses have asked for a review into to date includes omitted cash income, usually due to inadequate record keeping; administrative penalties; deductibility of business expenses; and characterisation of payments to related individuals.

Disputes over superannuation, fringe benefits tax, fraud and evasion findings, and interest will not be considered by the independent review service at this stage.

 

 

Jotham Lian 
28 February 2020 
accountantsdaily.com.au

 

 

A resource hub for our clients.

We provide 24/7 access to many extra tools and resources to help you build on what we offer concerning your tax and other financial affairs. *

     

Latest News. 7-9 individual articles every month and all chosen for their relevance. Our website is a great place to stay informed.

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Calculators. A good comprehensive range of calculators to help you better understand and manage your personal and family financial issues. Four of the more popular are: Pay calculator, Budget Calculator, Loan Calculator, and Superannuation Calculator

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Ask us a question at any time. If you have a question on any related topic then don’t hesitate to use a form on our site to ask.

Your information is private and confidential and should be treated that way. Using Secure File transfer means your information is encrypted when sent in either direction over the Internet.

Many sites also have a message window feature that displays messages of interest or that cover topics and deadlines you should be aware of.

 

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Risks when dating documents in 2020

Do you use the short form year when dating documents?

       

The risk is that formatting the date as DD/MM/YY leaves the year able to be altered by the adding of two digits after the ‘20’ to (fraudulently) post or pre-date the document.

It would be wiser, as a standard habit to always write ‘2020’ in full when dating documents.  Doing so means the date cannot be altered or manipulated.

 

 

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Stage 2 – Covid-19 stimulus package.

Detail on what the second stimulus package means to your hip pocket, Centrelink payments and staff retention.

 

The announcements for individuals, retirees, households and employers: 

  • Temporary early release of superannuation for those in need
  • Reducing the minimum drawdown rates for superannuation income streams for the 2019/20 and 2020/21 years
  • Reducing the deeming rates by a further 0.25%
  • An additional $750 lump sum for pensioners and concession card holders
  • Additional income support payments for the unemployed
  • Keeping staff employed

NB: There is another article on our site that covers details of Stage 1 of the Government's Covid-19 stimulus package.

 

Release of super funds:

The Federal Government has decided to allow financially stressed people to access $10,000 tax free of their super fund this financial year and $10,000 next financial year. 

Treasurer Josh Frydenberg made the announcement on Sunday as part of a broader $66 billion stimulus package to mitigate the fallout from the outbreak that has killed more than 13,000 people worldwide and is tipped to plunge the global economy into a recession.

“These extraordinary times demand extraordinary measures,” the treasurer said in a statement. “The government is taking unprecedented action to strengthen the safety net available to Australians that are stood down or lose their jobs and increasing support for small businesses that do it tough over the next six months.”

Eligibility: One of the following requirements must be satisfied for the early release of super: 

  • You are unemployed; or
  • You are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment, special benefit or farm household allowance; or
  • On or after 1 January 2020:
    • You were made redundant; 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.

If eligible, individuals can apply directly to the ATO via MyGov (www.my.gov.au) and will be required to certify that they meet the eligibility criteria. The ATO will then issue a determination and contact the super fund directly to release the money.

It is anticipated that payments will be available from mid-April. Payments will be received tax free and will have no impact on existing income support payments.

 

Reduction of minimum pension drawdown requirements

As we saw in the Global Financial Crisis (GFC), a temporary reduction to the minimum payment rules will apply for superannuation income streams to assist retirees who would otherwise be forced to sell down assets to meet their minimum pension.
 
For the 2019/20 and 2020/21 financial years, the minimum drawdown rates will be:


  ​

Deeming rates.

Further to the recent decrease in deeming rates announced earlier this month, the Government will reduce deeming rates by another 0.25% from 1 May 2020. The new rates are provided in the table below.

Additional $750 lump sum payment 

Two separate lump sum payments will now be available to eligible social security, veteran and other income support recipients and eligible concession card holders as follows:
 
Payment one – available to those eligible income support recipients and concession card holders at any time between 12 March 2020 and 12 April 2020.
 
Payment two – available to eligible payment recipients and concession card holders on 10 July 2020.
 
The two lump sum payments will be received tax free and will not impact existing income support payments.

The payment will be made automatically from July 13 to about 5 million Australians, including those receiving the age pension, a carers allowance or family tax benefit and Commonwealth senior card holders.
 
For payment one, the qualifying payments and concession cards are as follows:

To be eligible for payment two, the same list applies EXCEPT if you are entitled to the Coronavirus Supplement (explained below).

 
Additional income support for the unemployed and faster access

The Government will introduce the Coronavirus Supplement, a $550 per fortnight payment available for the next six months to eligible payment recipients. Additionally, access to income support will be expanded and the claims process accelerated to ensure timely payments for those in need.
 
Eligibility: The payment categories eligible to receive the Coronavirus Supplement are:

  • Jobseeker Payment (including all the payments that are currently moving to Jobseeker Payment)
  • Youth Allowance Jobseeker
  • Parenting Payment
  • Farm Household Allowance
  • Special Benefit recipients

While the Coronavirus Supplement is available (temporary measure for approximately six months), the Government will expand access to income support (such as Jobseeker Payment) to:

  • Permanent employees who are stood down/lose their job
  • Sole traders/self employed
  • Casual workers
  • Contract workers

The standard allowance income test must be met however the assets test that normally applies to allowances (ie $1 over the asset test threshold results in no payment) will be waived for the Coronavirus Supplement period.
 
Some waiting periods will also be reduced or waived. The standard one week Ordinary Waiting Period, the Liquid Assets Waiting Period (LAWP) and the Seasonal Work Preclusion Period will all be waived.
 
How to apply: The Government is encouraging all applications to be made online or over the phone if internet access is not available. Measures have been adopted to accelerate the claims process such as removing the requirement for Employment Separation Certificates and the need to make appointments with an employment service.
 
The commencement date for the Coronavirus Supplement and the expanded access to income support is 27 April 2020.

 

Casuals and sole traders

If you've found yourself affected by the economic downturn, you'll be able to access a “coronavirus supplement” of $550 a fortnight for the next six months.

That's on top of other benefits — so if you're already receiving payments through Jobseeker (formerly known as Newstart), you can claim both.

Sole traders and casual workers who are currently making less than $1,075 a fortnight will be eligible to receive the full supplement.

In practice, that means if you're a single parent (receiving a maximum fortnightly payment of $612 through Jobseeker), for example, and you meet the criteria, you'll take home about $1,162 a fortnight.

“This means anyone eligible for the maximum Jobseeker payment will now receive more than $1,100 a fortnight, effectively doubling the Jobseeker allowance,” Treasurer Josh Frydenberg said.

Sole traders or casual workers who have had their income or hours reduced by 20 per cent or more as a result of coronavirus will also be able to access to up to $10,000 of their superannuation tax-free.

 

Employers who want to keep staff

Not-for-profits and small businesses with a turnover under $50 million will receive a tax-free cash payment of up to $100,000 to help them retain staff and continue operating.

The Government expects 690,000 businesses employing 7.8 million people and 30,000 not-for-profits will be eligible for measures in the stimulus package.

It doesn't mean extra pocket money if you're an employee, but by linking the payments to staff wage tax withholdings, businesses will be given an incentive to hold on to more of their workers.

“We know that small businesses are enormously resilient but this is really hurting them,” Mr Morrison said.

“Whether it is a coffee shop or mechanic or hairdresser… by providing at a minimum $20,000 and up to $100,000 for small businesses who employ people, [it] gives them a chance to get to the other side.”

Expect more to come…

An important thing to keep in mind is that this is the second suite of measures announced by the Government in just a matter of weeks.  Details about the first stimulus package can be read here.

 

For more information

For more information on these measures and other announcements made by the Australian Government visit treasury.gov.au/coronavirus or speak with your Financial Planner or Accountant.   

 

 

Source:  Several sources and the ATO.

Australian Taxation Office (ATO) debts may affect your credit rating

Businesses with tax debts need to be aware that the ATO will now be able to disclose the details of their tax debts to credit ratings agencies, which could potentially affect the ability of the business to obtain finance or refinance existing debt.

       

Generally, only businesses with an ABN and debts over $100,000 and that are not “effectively engaged” with the ATO will be affected. The ATO is planning a phased implementation which will consist of undertaking education efforts before it targets companies, followed by partnerships, trusts and sole traders.

The aim of the laws, according to the government, is to encourage more informed decision-making within the business community by making large overdue tax debts more visible, and to reduce the unfair advantage obtained by businesses that do not pay their tax on time.

As always, communication is the best action so working out a payment plan with ATO will mean you are “engaged” and should not be listed.

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