The parliament approved legislation for COVID-19 stimulus and support measures. Most of the stimulus initiatives are being administered by ATO. The compliance deadline remains regardless of the fact that either the payments have delayed or waived. The transitional period of residence exemption modifications which excludes the foreign residents ends on June 30th, 2020. Also, the superannuation guarantee dispensation will be ending on 7 September.
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Coronavirus Economic Response Package Omnibus Bill 2020
The parliament has enacted a number of bills that implement the response of Government to COVID-19 pandemic. The package of bills got assent on 24th March 2020, includes:
- Guarantee of lending to Small and Medium Enterprises Bill 2020.
- Australian Business Growth Fund Bill 2020.
- Aid for severely affected regions Bill 2020.
- Structured Finance Support Bill 2020.
- Appropriation Bill (No. 1) 2019-2020.
- Appropriation Bill (No. 2) 2019-2020.
- Boosting Cash Flow For Employers Bill 2020
The bill includes:
- Increment in the instant asset write-off
- Backing the business investment
- Uplifting the cash flow for employees
- Stimulus payment to households
- Delegation power for Director of Human Biosecurity
- Environment-related Management Charge
- Amendments in Schedule 1AB (assistance in the aviation sector)
- Offering flexibility in Corporations Act
- Child Care
- Reduction in minimum Superannuation Drawdowns amount.
- Added assistance for income support recipients
- Temporarily relief to businesses and individuals who are financially distressed
- Early superannuation release
Improvement in Flexibility of Superannuation for Older Australians
The treasury has draft legislation to enact the changes. These proposed changes will enable the taxpayers to make the voluntary personal superannuation contributions for ages 65 and 66 without any specification to meet the work test. Furthermore, the work test will be applicable from the age of 67 with some changes to pension and retirement. Some modifications in the draft legislation involve enabling the taxpayers of age between 65 and 66 to make use of “bringing-forward”. This rule states for non-concessional contributions and alteration of the cut-off age for spouse contributions from 69 years to 74 years.
These changes will come into effect from July 1st, 2020.
Temporary Modifications to CPE Requirements for Tax Agents
For tax practitioners, the Tax Practitioner Board is relaxing some continuing professional development requirements for a temporary period. As a part of CPE hours, tax agents can include technical and professional reading. This is normal for about 25% cap; this mentioned cap will be eliminated until September, 30th, 2020. The cap of 25% on technical reading is removed temporarily. However, the minimum number of hours which should be completed every ye4ar has not been changed.
COVID-19- Lodgement Deferrals and Some Concessions- By ATO
According to ATO, there is a series of concessions that may be available to the businesses which are affected by Coronavirus.
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- The businesses that change their PAYG installment amount to zero, may claim a refund for installment made from September 2019 to December 2019.
- The Deferral for payment of business activity statements, income tax assessments, fringe benefits, and excise duty for up to six months.
- Businesses on a quarterly reporting schedule able to apply for quicker access to GST refunds for monthly GST reporting where appropriate. Such businesses are required to keep using monthly reporting for a minimum of a year that can be achieved only from the beginning of the new quarter.
- Payment plans for tax debts on less interest.
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These measures are not automatic, taxpayers will have to apply to ATO. Employers must understand that the ATO does not hold the power to extend the deadline for Superannuation Guarantee contributions
Super Guarantee Amnesty- Approved Form
After passing the legislation and introduction of Super Guarantee amnesty, ATO has released the “approved form” for the tax payers to make voluntary disclosures to take the benefit of amnesty. It is significant to notice that employers need to lodge a separate from in relation to every relevant Super Guarantee quarter. The period of 6 months of amnesty will end on September 7th, 2020.
In order to be eligible for amnesty, ATO mentions that employers need to:
- Lodge one approved form of SG amnesty by 11.59pm on September 7th, 2020 for each quarter.
- Verify that the amounts are correct and the form is error free.
- Completions of the declaration to assure that you are applying for amnesty.
ATO will revise the forms and suggest the employers that which quarters are eligible for amnesty. The ATO will then contact these taxpayers to get advice of their eligibility of amnesty
SMSFs with Commercial Property Which Provide Rent Relief
As the businesses are in financial distress, if SMSF will reduce the rent, SMSF will not be liable to any action by ATO. According to ATO:
Some of the landlords are giving reduction or waiver of rent to their tenants due to the financial impacts of Coronavirus, we understand that you could also desire to do so. The compliance approach of financial years 2019 to 2020 and 2020 to 2021, is that authorities will not take any action where SMSF gives a tenant, a temporary rent deduction in this period.
Tax Return Lodgement Needs for Income Year 2020
Every year the Commissioner publishes a statutory instrument this sets out that which taxpayers are expected to file a tax return with ATO. The Commissioner has released the instrument related to income year that ends on June 30th, 2020. This instrument usually ensures that whoever has earned such payments that are subject to PAYG withholding, whoever carries on a company and trusts that have tax losses or capital losses of more than $1000 from the prior year, must lodge a tax return. This instrument also provides a range of provisions for individual taxpayers that can meet those requirements.
Estimates of GST Amounts
Following the recent passage of legislation granting the commissioner the right to estimate GST obligations with a view to recovering unpaid sums, the ATO has also issued assistance on how these regulations should be enforced. The estimates regulations would only be enforced at a high level if there are fair grounds to assume that a taxpayer or related group is involved in phoenix behavior. The estimate of unpaid GST amount will not be made unless:
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- The commissioner has created several attempts to build contact with the taxpayer to make overdue and not paid amount.
- The taxpayer is not able to engage with ATO or refuse to cooperate in making unpaid amounts or overdue amounts.
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Proposed Rate Change Cents per Km
The draft legislative tool has been conducted to propose an enhanced cents per km rate to claim deductions for work-related car expenses under Division 28.
This proposed rate increment will begin from July 1st,2020 from 68 cents to 72 cents each km. This would enhance the maximum claim under this methodology from $3400 to $3600 (for 5000 business km).
Private Use of Motor Vehicles Rather Than Cars
The rates applicable on cents each km basis to calculate the taxable value of fringe benefits existing from private usage of motor vehicles from April 1st 2020 has updated.
| ENGINE CAPACITY | RATE PER KILOMETER |
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| 0-2550cc | 56 cents |
| Over 2500cc | 67 cents |
| Motorcycles | 17 cents |
FBT Amount for Drinks and Food for Lafha
The reasonable amount of food and drink has been set by the authorities to be incurred by employees getting the living away from home benefit from April 1st, 2020.
Three Adults one Child621
| REASONABLE FOOD AND DRINK WITHIN AUSTRALIA | PER WEEK($) |
|---|---|
| One Adult | 276 |
| Two Adults | 414 |
| Three Adults | 552 |
| One Adult one Child | 345 |
| Two Adults one Child | 483 |
| Two Adults Two Children | 552 |
| Two Adults Three Children | 621 |
| Three Adults Two Children | 690 |
| Four Adults | 690 |
FBT Benefits for Remote Area
The ATO has revised its guidelines on excluded remote area housing benefits and the industry’s standard requirement that employers provide their workers with these remote area housing benefits.
Generally, the ATO considers that it is appropriate to include these benefits because it is common for workers with that job category to obtain the same or similar benefits because of the existence of work conditions. However, it is not assured that all or most of the employees will receive the benefits