Global governments seek to create a modern coronavirus pandemic economy (COVID-19). The relief includes tax filing and payment extensions, as well as temporary rate cuts, in various countries . and in this COVID 19 tax round-up June 2020, this includes tax round up update, we compile tax news related to the COVID-19 outbreak, so that you can concentrate on your family and business. It is periodically updated with additional details.
Tax relief varies extensively according to country, state, and industry.
The tax rate of company reduction to 26% for base rate entities.
- The $150K instant asset write-off is planned to be deducted to $1000 for small businesses and will be no longer open to the organizations having gross annual turnover of $10 m or more than that, on the other hand, the accelerated depreciation laws are applicable to the companies till June 30, 2021.
- Per kilometer rate for work in Cents- related car expenses enhanced to 72 cents.
- These reforms are expected that allow 66 and 67years old to participate in voluntary superannuation contributions without satisfying work test.
- The age limit of contributing to superannuation to the spouse increased from 69 to 74.
JobKeeper falls 3 million employees below forecast.
The treasury and the ATO released a mutual statement on May 22, 2020, acknowledging the reporting blunder in the estimated number of employees who are likely to get benefit from the JobKeeper program. At the time of releasing, it was expected to cost $130 billion in JobKeeper and 6 million workers. After the mutual release, it was a revised estimate of 3.5 million employees.
According to the statement, the difference in the estimates of the treasury at the time and number of employees now accessing the JobKeeper program reflects the level and influence of health restrictions.
From the ATO
JobKeeper Monthly Reporting
The commissioner has issued a deferment for the need to lodge the monthly declaration to the ATO for JobKeeper purposes. The ATO has elongated the deadline from the 7th day after the end of the month to the 14th day. However, the declaration requires producing the current GST turnover of the month that ended and projected GST turnover of the upcoming month. The ATO indicated that the payments of JobKeeper will be made that depend upon the time of the lodging of declaration. The earlier this step is concluded, earlier the businesses shall get the payments for JobKeeper fortnights for that month.
Super contribution deduction timing
Mostly the employer is able to make claim of deduction for superannuation contributions made on the behalf of their workers, whenever they get the fund under superannuation. These payments guarantee obligations are treated as the instant payments and instructions accepted by small business superannuation clearing house of ATO. These deductions are not liable to be claimed till the contribution is received under fund of superannuation.
The ATO made it confirmed that to assure that the businesses can claim the deductions for the contributions made in the year 2019-2020 income year payments.
STP closely-held employee exemption
The ATO has made a declaration that the STP exemption for the bodies along with closely held employees has been extended from July 1, 2020, to July 1, 2021.
Therefore these bodies need not start reporting payments to the individuals by STP till the income year 2022. However, payments that are made to other employees need to be reported by STP.
Lodgment deferrals and Division 7A
The ATO declared the lodgment deferrals for company tax returns 2019 those were due on May 15, 2020, till June 5, 2020.
The SMSF in 2019 annual returns which were due on May 15, 2020, will be now due on June 30, 2020. This is relevant also in the context of Division 7A. To avoid the consequences of Division 7A for the loans made by the company during the 2018-19 income year. It will be required that the loan be repaid fully or to be kept under complying loan agreement before the actual lodgement date of the company’s 2019 tax return. If the date of lodgement gets extended, then the date for taking these measures will be extended also to prevent the problems associated with Division 7A.
For the loans those were to be made in 2019 income year, are kept under complying agreement before relevant deadline, the borrower will be required to make first yearly repayment by June 30, 2020.
Furthermore, ATO indicated that it shall issue guidance for affected by Coronavirus with least repayments due for year ended June 30, 2020. Many of the borrowers in this situation of COVID-19 could be struggling to make least repayments.
JobKeeper decline in turnover test and GST turnover
The reduction in turnover test for JobKeeper purpose relies on concept of GST turnover. There have been different issues getting out of this because this is a concept that has been poorly understood, due to less practical role in GST compliance activities of taxpayers.
There have been two main issues in context to the JobKeeper :
Supplies included in GST turnover and its method of calculation.
This law gives some specific guidance related to each problem. The GST turnover involves GST- free supplies and GST turnover; however not the supplies linked with Australia. In the same manner, the customers making supplies overseas must be aware of the difference between GST-free exports and other overseas supplies that are not connected with Australia. The main issue from this perception is that the number of payments received by clients will not show consideration regarding the supply that has been made, it means that those are not involved in GST turnover.
This is the common concern for the customers receiving funding from the government and not for profit enterprises.
Discretion by Commissioner for extension of time to hold an ABN or making a required lodgement
The basic condition for the bodies to be eligible for eligible business participants is that the body must have held ABN on 12 March 2020, and it should have some income by business in the income year 2018-19. lodged tax return in 2019 by March 12, 2020. There are numerous businesses that would fail to meet these requirements.
To exemplify, much of the new businesses will not satisfy this condition and small businesses do not require to be registered for GST, as they could not have lodged an income tax return for 2019. It must also be noticed that the businesses cannot enroll to get JobKeeper payment till they are not notified that Commissioner granted the request of further time.
Deductions for expenses related to work
The ATO has already finalized the previous draft ruling dealing with expenses of workers related to work. This ruling came up with a basic framework for the principles claiming work-related expenses deductions. The ruling points to an extended series of other forms of ATO guidance on particular deductions, on this point like links to rulings on travel related to work, clothing expenses, and education.
The ruling also involves assistance on the requirements that apply to work-related expenses that include the instances where exceptions from the general rules are allowed.
Schemes for foreign investment into Australian entities
A taxpayer signal has been marked that outlines concerns of the ATO’s with distinct arrangements that include non-resident bodies investing into Australian entities, with a particular concentration on arrangements that get to characterize the return as capital in nature and potentially avoiding Australian taxes.
There could also be the contingent additional return payable when the Australian bodies dispose of the assets. This is treated as avoiding non-resident withholding or being taken out of the tax system of Australia completely.
The ATO is reviewing these arrangements in an active manner and encouraging the taxpayers with arrangements that exhibit some of the characteristics mentioned to contact the ATO, to seek professional advice, or make a voluntary disclosure.
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