ATO Latest Measures

The government has continued to rollout further economic measures in response to the Coronavirus, provide further detail on other previously announced measures and moved towards legislating these, some of which are expected to pass in Parliament today.

The ATO continues to update their website regularly to reflect these changes and updates and also to clarify some unanswered questions on each of the measures. To keep up to date with the changes you can access the ATO COVID-19 page on the following link.

https://www.ato.gov.au/General/COVID-19/

Please find attached some information on tax changes for Individuals, including the new arrangements for working from home deductions and how tax is applied to employment payments during this period. I have also attached an information sheet on additional support offered by the ATO for small/medium businesses.

Commercial Tenancies

New rental waivers and deferrals for commercial tenants who have been impacted by Coronavirus have been announced. Qld has yet to legislate this, but the mandatory code released by the government is attached and will be overseen by binding mediation.

The code will apply to any commercial tenancies where the landlord or tenant is eligible for JobKeeper payments and where they have a turnover of $50 million or less.

• Landlords will be required to reduce leases in proportion to the reduction in the tenant’s business. These waivers would have to account for at least 50% of the reduction in business.
• Rental payments that will need to be made, but can be put off (deferrals), must be spread over the remaining time on a lease and for no less than 24 months. For example, if a tenant has three months remaining on a lease, they would still have at least a year to make any deferred rent payment.
• Landlords or commercial properties are legally required to speak with tenants about rental arrangements.
• Landlords may not terminate leases or draw on a tenant’s security.
• Tenants must honour their existing leases.

The Commonwealth Government has also waived rents for all its small and medium enterprises and not-for-profit tenants within its owned and leased property across Australia.

The Prime Minister stated that residential tenancies are a matter to be determined by each State.

Supporting Apprentices and Trainees

As part of its Economic Response to the Coronavirus, the Australian Government is supporting business to manage cash flow challenges and to keep apprentices and trainees employed through a new Supporting Apprentices and Trainees wage subsidy.

• Small business employers, including those using a Group Training Organisation, can now begin registering to receive a 50% subsidy for wages paid to apprentices between January to March this year when the apprentice or trainee has been in-training as at 1 March 2020.
• Employers of any size who re-engage an apprentice or trainee that has been displaced from a small business may also attract a wage subsidy.
• Subsidies will cover wages paid from 1 January 2020 to 30 September 2020. Businesses will be reimbursed up to $7,000 per quarter, up to a maximum of $21,000, per eligible apprentice or trainee. Final claims for payment must be lodged by 31 December 2020.

For further information on how to apply for the subsidy, including information on eligibility, contact an Australian Apprenticeship Support Network provider

Please note the following clarifications and warnings on the ATO website:

JobKeeper payments

In response to queries around the eligibility of new businesses, the ATO has now stated that;

‘To establish that a business has faced either a 30 (or 50) per cent fall in their turnover, most businesses would be expected to establish that their turnover has fallen in the relevant month or three months (depending on the natural activity statement reporting period of that business) relative to their turnover a year earlier. Where a business was not in operation a year earlier, or where their turnover a year earlier was not representative of their usual or average turnover, (e.g. because there was a large interim acquisition, they were newly established or their turnover is typically highly variable) the Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been significantly affected by the impacts of the Coronavirus. The Tax Commissioner will also have discretion to set out alternative tests that would establish eligibility in specific circumstances (e.g. eligibility may be established as soon as a business has ceased or significantly curtailed its operations). There will be some tolerance where employers, in good faith, estimate a greater than 30 (or 50) per cent fall in turnover but actually experience a slightly smaller fall.’

Cash Flow Boost

Just to highlight a few points below with regard to the eligibility of the Cash Flow Boost measures, the ATO website notes the following;

‘We will generally determine whether you are a small or medium business entity based on your most recent income tax assessment for a prior year. However, where you do not have any income tax assessments for prior years, you may still be eligible if we are satisfied, based on other information we hold, that you are in business and would have an aggregated annual turnover under $50 million.’

‘We may also give you further time to provide us notice that business income or supplies were made. This will generally be the case where you have a lodgement deferral in place. If you did not have a lodgement deferral in place, you will not become eligible if you lodge or amend returns for those periods now.’

The ATO has also issued a warning with regard to re-structuring;

‘You will not be eligible for cash flow boosts if you (or a representative) have entered into or carried out a scheme for the purpose of:

• becoming entitled to cash flow boosts when you would otherwise not be entitled, or
• increasing the amount of the cash flow boosts.

This may include restructuring your business or the way you usually pay your workers to fall within the eligibility criteria, as well as increasing wages paid in a particular month to maximise the cash flow boost amount.

Any sudden changes to the characterisation of payments made may cause us to investigate whether the payments are in fact wages. If the payments are wages, we may consider the characterisation of past payments, including whether they should have been subject to PAYGW and whether super guarantee contributions should have been made. You may also have FBT obligations that have not yet been met.’

Download full information documents here:

• Mandatory Code of Conduct – SME Commercial Leasing Principles
• COVID-19 – Working From Home Tax Deductions
• COVID-19 – Tax on Employment Payments
• COVID-19 – Additional ATO Support