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September 2020

September update of latest COVID-19 initiatives.

 

With the ending of a number of the original COVID-19 relief and stimulus initiatives, August and the beginning of September has seen the release of new plans to move into the post-September period. Links to these updates and changes are listed below.

 

       

Please click on the following links to access a wide range of Covid-19 related updates, initiatives, guidelines and resources from both Federal and State Governments.

 

Latest Updates:

 

Previous Updates:

  • Articles and Updates in other Latest News articles including:
    • Stage 3 – Covid-19 $1.1billion Domestic Violence, Medicare and Mental Health.
    • Stage 2 – Covid-19 – $66 billion stimulus package.
    • Stage 1 – Covid-19 Update – Small Business
    • Stage 1 – PM launches $17.6 billion virus stimulus plan

ATO JobKeeper 2.0 guidance surfaces

 

The Tax Office has published preliminary guidance on the extension of JobKeeper as the profession continues to wait on the amended rules to be registered.

 

       

Following the passage of legislation extending JobKeeper for a further six months to 28 March 2021 this week, the ATO has now published guidance on the changes.

The updated guidance comes despite amendments to the JobKeeper Rules, which will set out the new two-tiered payment rates, yet to be issued by the Treasurer.

Amended rules notwithstanding, the ATO has now detailed the payment rates for the two extension periods, the first running from 28 September 2020 to 3 January 2021, and the second running from 4 January 2021 to 28 March 2021.

For the first extension period, employees who worked for 80 hours or more in the four weeks of pay periods before either 1 March 2020 or 1 July 2020 will receive $1,200 per fortnight, while all other employees will receive $750.

For the second period, the rate will drop to $1,000 per fortnight and $650 per fortnight, respectively.

The ATO noted that businesses currently enrolled in JobKeeper will not need to re-enrol for JobKeeper 2.0, nor will they need to provide an employee nomination notice again.

However, businesses will need to satisfy the decline in turnover test for the September quarter, and subsequently the December quarter, with the ATO stating that it will soon provide further information on how to undertake the calculation.

“For many businesses registered for GST, this calculation will match the ‘total sales’ reported at G1 on your BAS minus GST payable (1A), where applicable,” the ATO said.

“You can provide additional turnover information to demonstrate that you satisfy the actual fall in turnover test for the September quarter from the start of October onwards. You must provide it before you complete your November monthly declaration.”

View the updated ATO guidance here.

View the Treasury JobKeeper Fact Sheets here.

 

 

Jotham Lian 
04 September 2020 
accountantsdaily.com.au

 

Expats Return to Australia – Travel Expenses

 

One of the conditions of deductibility of travel expenses, is that the expense is not a private or domestic nature.

 

       
The relevant preliminary views of the Commissioner:-
 
  • the fact that the employee is working remotely does not make the cost of travel to that place deductible – for example, where a person who was working on an overseas secondment, returns to Australia due to COVID-19 and continues working remotely from their Australian home
     
  • expenses incurred in travel undertaken in relocating for work are not deductible – they are a prerequisite to work
     
  • where an employee has relocated for work, but retains a connection to their previous home (e.g. family) costs incurred for travel between their new work location and their previous home for private reasons are not deductible, even if their employer agrees to provide or fund the travel.
     
  • The same results may not occur, if the expat as a non-resident has the travel costs paid by their overseas employer.  The challenge then, is to explain how to have an Australian home to return to, if arguing non-residency.  
 
 
 
AcctWeb

Profession to be relied on for post-JobKeeper turnover certificates

 

Accountants will soon be tasked with providing certificates to businesses being weaned off JobKeeper to enable them to cut employee hours or change their duties under temporary Fair Work changes.

 

         

Under new legislation introduced on Wednesday, businesses that qualified for the first round of JobKeeper, but are unable to qualify for JobKeeper 2.0 because they no longer satisfy the 30 per cent decline in turnover test, will still be able to access temporary Fair Work Act provisions for a further six months if they are experiencing a 10 per cent decline in turnover.

These temporary Fair Work Act provisions include being able to reduce employees’ ordinary hours by 40 per cent of the hours they worked before the pandemic struck, and give them directions in relation to duties and location of work.

In order for such businesses to qualify, they will be required to obtain a 10 per cent decline in turnover certificate from a registered company auditor; a registered tax agent, BAS agent or tax (financial) adviser; or a qualified accountant.

These accountants must be independent and external to the employer, and cannot be a director, employee or associated entity.

However, there will be a carve-out for small businesses with fewer than 15 employees to allow such employers to provide a statutory declaration to attest to the 10 per cent decline.

The 10 per cent decline in turnover test periods will align with BAS lodgement dates for each completed quarter.

False or misleading information provided to accountants in order to satisfy the 10 per cent decline in turnover test will face a maximum civil penalty of 60 penalty units for inpiduals or 300 penalty units for a corporate entity.

Chartered Accountants Australia and New Zealand assurance and reporting leader Amir Ghandar said the practical aspects on providing the 10 per cent decline in turnover test certificate have yet to be worked through with government officials, with engagement only just commencing.

“We will seek to work with the government to make sure the requirements are clear and accord with applicable professional standards,” Mr Ghandar said.

“CAs should be aware of the professional practice and insurance implications in undertaking assurance engagements.

“Employees and the organisations that represent them will rightly take a keen interest in the accountants’ work, and the Federal Court can examine whether an employer has indeed satisfied the 10 per cent test.”

 

 

Jotham Lian
27 August 2020
accountantsdaily.com.au

 

Update of Superannuation contribution rules from July 1, 2020

 

The rules around Superannuation contribution change almost every year, so it is important that taxpayers know what these changes mean to them.

 

       

The following outlines what has changed.

An increase in the age required for the work test.

From July 1, 2020, the age required rose from 65 to 67. The main benefit of this change is that it provides, where possible, an additional opportunity to implement voluntary super contribution strategies.

What taxable contributions can be made for the year ending June 30, 2021?

There is a cap of $25,000 per person for those able to make extra contributions to their super during the 2020/21 financial year. Any excess over this concessional contribution (CC) cap is taxed at the inpidual’s marginal tax rate.

CCs are contributions where a tax deduction is claimed and include:

  • Superannuation guarantee contributions (SGCs)
  • Employer voluntary / extra contributions like salary sacrificing
  • Member taxable contributions claimed as a deduction in personal ITR.

The CC cap will, in most cases, exceed employer contributions in 2020/21. If this is the case, then consideration could be given to adding personal taxable contributions to get you up to the $25,000 limit.

The higher your income, the greater the tax savings and keep in mind that there is no upper age limit for being eligible to receive SGCs.

Carry forward provisions

An indivdual can carry forward CCs if their total superannuation balance (TSB) is less than $500,000.

Unused contributions can be carried forward for five years. This option came into effect in 2019/20.

An important consideration prior to June 30, 2021 is to see if you can utilise this carry forward option to bolster your CCs before the date noted.

Work test

If an inpidual is under 67, there is no work test required to be able to make a contribution.

The work test is where, once you turn 67, you must be able to show that you have been gainfully employed for 40 hours or more in any 30-day period in a financial year.

If an inpidual is between the ages of 67 to 74, they must meet the work test in order to make a contribution.

Splitting of contributions

An inpidual can split their CCs that are made on their behalf to a spouse but they need to meet certain requirements.

The main reasons to split contributions are to:

  • Assist with the limit of only being allowed to have $1.6 million to start an account-based pension with
  • Assist with ability to make non-concessional contributions (NCC) given the cap limit also of $1.6 million
  • Assist with the ability to use the carry forward provisions given the member balance cap of $500,000
  • Address age differences between spouses and the ability to access benefits at an earlier date
  • Access Centrelink advantages by minimising a member’s account
  • Allow a member to have sufficient superannuation to be able to pay life insurance.

Spouse rebate for super contributions

A spouse rebate, up to a maximum of $540, can be claimed for superannuation contributions for the year ending June 30, 2021.

If your spouse earns less than $37,000 per year and you contribute $3,000 into superannuation for them, you can claim a tax rebate of $540.

Spouse contributions can be made if you are aged under 75 from July 1, 2020.

What tax-free contributions can be made for 2020/21?

Non-concessional contributions (NCC) are those contributions made into a super fund from after tax income. In this case, an inpidual is not claiming a tax deduction. There is a cap for NCCs of $100,000 for the 2020/21 year.

Members under 65 have an option to contribute up to $300,000 over a three-year period, depending on their total superannuation balance (TSB). The rule works as follows:

TSB NCC and bring forward amount

< $1.4M $300,000 over 3 years

> $1.4 & < $1.5M $200,000 over 2 years

> $1.5 & < $1.6M $100,000 over 1 years

> $1.6M $0 (nil)

To be able to make an NCC, a member must meet the work test, as described above.

The increase from age 65 to 67 also impacts on the ceasing work contribution rule as of July 1, 2020 by given more time to make a NCC.

NCCs can be made on a once-off basis in the financial year after you have ceased employment if your TSB is less than $300,000 as of June 30 in the previous financial year. You also need to be under 75.

Downsizing contributions and how this applies to those over 65 years of age.

From July 1, 2018, anyone 65 years or older can make a downsizer contribution of up to $300,000 from the proceeds of selling their residential home.

The contribution is not an NCC and does not count towards the contribution caps, so it goes into superannuation as a tax-free contribution.

If a member has more than $1.6 million in superannuation, they are still allowed to make a downsizer contribution.

If the downsizer contribution is made and is placed into retirement phase, it will count towards a member’s transfer balance cap, which is $1.6 million.

If you are thinking of downsizing then speaking to a financial planner will help clarify eligibility requirements.

Get more from your super

If you have any questions on the above then simply ask us.

 

 

PlannerWeb

 

 

 

Expats & COVID-19 Impacts on tax residency

 

The COVID-19 pandemic has resulted in many Australian expatriates living and working overseas returning to Australia.

 

       

In addition, Australian citizens and permanent residents have been restricted or banned from leaving Australia.

Will those expatriates who have returned temporarily due to the COVID-19 crisis be able to resume working overseas?

Some of these will have ceased to be residents for Australian taxation purposes either when they first left Australia or at some later stage in their life overseas.  However, will their (temporary?) return to Australia change that status and result in them being treated as residents for Australian tax purposes?  Australian Taxation Office guidance continues to evolve.  

Although COVID-19 has create unusual circumstances beyond any taxpayer’s control, the taxpayer must still determine their tax residency status, according to the established law, which has not changed. It remains an analysis of many factors. 

Intentions and evidence regarding foreign employer leave arrangements and expectation of returning to work overseas, add an extra layer on the already complex question.  Any communications with overseas employers and landlords, etc, may be crucial when a decision on tax residency become necessary. But, staying beyond the “lockdown” period may indicate a change of intention.

What can be more complex is taking temporary work in Australia, whilst a foreign tax resident.  Is that evidence of a change in intention?

With so many unknowns, if you intend to return overseas, gathering/generating evidence now may tip the balance in your favour.

 

 

AcctWeb

Economic recovery could be slower than anticipated: RBA

 

The Reserve Bank of Australia has warned the economic recovery from the COVID-19 pandemic remains uncertain, with its latest figures being worse than those predicted three months earlier.

 

       

In its monthly monetary policy update, RBA assistant governor Luci Ellis outlined three scenarios which the economy could take depending on how quickly the virus is contained and restrictions lifted.

In all three scenarios — baseline, an upside and a downside — these will now see Australia’s unemployment rise and its GDP fall, but the levels change based on the health outcome.

The three scenarios all assume international borders will remain closed and travel will be restricted until the middle of next year.

The RBA’s new baseline scenario isn’t what one would normally consider optimistic, with unemployment expected to soar to almost 10 per cent by the end of the year, a figure that was unthinkable at the start of the year.

“The situation in Victoria will reduce growth in the September quarter and push out the recovery beyond that,” said RBA assistant governor Luci Ellis. “That said, activity is expected to continue to recover in much of the country over the rest of this year and next. The recovery is expected to be slow and uneven, and GDP will probably take several years to return to the trend path expected prior to the virus outbreak.”

This will also see the June 2021 growth forecast be reduced by 4 per cent from a 7 per cent previously forecast. 

Business investment is also expected to be worse than originally forecast, falling 17 per cent this year, with the May forecast suggesting a 13 per cent reduction. 

The RBA continues to rely on a vaccine or a medical breakthrough to achieve its upside scenario as it would see the national economy bounce back harder than first predicted. 

“An effective vaccine would take a bit longer to be distributed, so it would mainly affect outcomes next year and the year after. But it could also result in a stronger recovery than we have assumed even in the upside scenario presented here. A worse outcome than our downside could be conceivable if the virus cannot be contained and further waves of infection occur around the world for some years yet,” Ms Ellis said.

The RBA’s May statement on monetary policy reads: “If the lifting of restrictions is delayed, the restrictions need to be reimposed or household and business confidence remains low, the outcomes would be even more challenging than those in the baseline scenario.

“For this scenario, we assume that many restrictions remain in place until closer to the end of 2020 and international travel restrictions are in place well into next year.”

The upside scenario also assumes that infection rates fall quickly and stay low. The pace of decline in case numbers is assumed to be a bit faster than in the baseline, so the restrictions are eased a bit faster. This would be similar to the experience of some of the smaller states in recent months.

The RBA has also predicted that the economy could follow Victoria’s stage 4 lockdowns, with its downside prediction noting further restrictions and barriers to an economic recovery.

“Australia itself faces a series of outbreaks and periods of stage 3 or 4 restrictions in some states,” Ms Ellis aid. “The result is further near-term weakness in activity. Confidence is damaged and so the recovery is much slower as well. The extent of the damage would depend on how widespread and long-lasting renewed restrictions need to be to get control over the spread of the virus.”

 

 

Cameron Micallef 
10 August 2020
accountantsdaily.com.au

 

High Court rules in favour of employers on personal leave accruals

The High Court of Australia has preserved the long-standing industry practice regarding personal/carer’s leave accruals in a significant ruling that has been welcomed by employers that were potentially set to face a substantial back-pay bill.

 

       

The High Court of Australia has granted the appeals by Mondelēz International and the Australian government against the previous decision of the Full Federal Court, clarifying the quantum of personal/carer’s leave entitlements for millions of employees.

The Full Federal Court’s 2019 ruling against Mondelēz found the Fair Work Act’s minimum 10 days of paid personal leave should be given to permanent employees regardless of the number of days worked per week or number of hours per day. 

But a summary issued by the High Court of Australia on Thursday revealed that a majority of the High Court rejected the “working day” construction and instead held that what is meant by a “day” or “10 days” must be calculated by reference to an employee’s ordinary hours of work.

“Because patterns of work do not always follow two-week cycles, the entitlement to ‘10 days’ of paid personal/carer’s leave can be calculated as 1/26 of an employee’s ordinary hours of work in a year,” the summary reads.

Commenting on the outcome, Innes Willox, chief executive of national employer association Ai Group, said the High Court’s judgment preserves widespread industry practice.

“If the Federal Court’s interpretation of the expression ‘10 days of paid personal/carer’s leave’ in section 96 of the Fair Work Act had been upheld, there would have been major cost implications for a very large number of businesses,” Mr Willox said.

“In addition, a major barrier would have been imposed on employers agreeing to part-time employment arrangements, including for employees returning from parental leave.”

Mr Willox noted that the case was brought on because of action relating to “12-hour shift workers at the Mondelēz International plant in Claremont, Tasmania”, but the Federal Court’s ultimate ruling had implications for most employers in Australia.

In turn, the interpretation adopted by the High Court ensures that all employees are entitled to take up to two weeks off work each year for personal/carer’s leave regardless of how many ordinary hours an employee works in that two-week period.

“A full-time employee who works 38 ordinary hours per week is entitled to 76 hours of personal/carer’s leave per year, and a part-time employee who works 20 hours per week is entitled to 40 hours of personal/carer’s leave per year,” Mr Willox explained. “The court’s judgment ensures equity among full-time and part-time employees, and among eight-hour and 12-hour shift workers.”

Tracy Angwin, CEO of the Australian Payroll Association, also welcomed the final outcome of a case that had cast a shadow over some 1 million shift workers around the country, noting that the “outcome will come as a major relief to employers and payroll professionals”.  

Ms Angwin said: “The original decision would have placed significant additional financial burden on companies, and also created a disparity in entitlements for part-time employees, and a level of complexity that could lead to employers re-considering flexible working arrangements.

“We are pleased to see that the historical understanding of personal leave accruals has been upheld.”

‘Win for employers’

Employsure managing director Ed Mallett referred to the ruling as a win for employers who have already been stretched to breaking point over the past year due to COVID-19.

He advised employers to communicate with their staff on the outcome of the High Court’s decision, to avoid any potential confusion.
 
“If an employer changed how personal leave operates following the original Federal Court ruling last August, they need to update their payroll system accordingly,” Mr Mallett said.

“Staff need to be assured that they don’t need to do a thing, and that when personal or carer’s leave is taken, the business will comply with the governing legislation.
 
“If an employer did not change how personal leave operates as a result of last August’s decision, the employer should still reiterate with staff that the way they operate personal or carer’s leave in the business is accurate, and no further action is needed.”

 

 

Maja Garaca Djurdjevic 
14 August 2020 
accountantsdaily.com.au