Important Information for Employers and Small Businesses

Important Information for Employers and Small Businesses

Hello everyone!

I just got a short update yesterday from watching one of the software companies regarding ‘JobKeeper’ funds for employers. Instead of calling /ringing ATO, use the link below because they’ll most certainly advice you to go to this link anyways.

https://www.ato.gov.au/general/gen/JobKeeper-payment/?=redirected_JobKeeperAs

As of March 30, 2020, affected businesses, who employ staff, may Register their interest in information regarding JobKEEPER by going to the link above.

After the registration has been processed by the Australian Taxation Office (ATO), businesses can login to the ATO portal and will be asked to provide further business info and also their payroll details.

Meanwhile, the funds for companies, who are already reporting by means of STP, will be disseminated through their current bank account with ATO for GST every two weeks.

Businesses who are not yet reporting via STP are expected to go to an ATO Portal and request funds every two weeks.

In the coming days, the main SME software companies including MYOB, Xero and Intuit will be meeting with the Australian Taxation Office too discuss the logistics and updates required to their respective software.

For businesses, it is VITAL to keep their payroll records accurate and updated while the payroll information is continuously submitted through the STP reporting.

JobKEEPER link: https://treasury.gov.au/coronavirus/businesses
Other Links you can check out:

https://actbookkeepinggroup.com.au/important-information-for-employers-and-small-businesses/
https://treasury.gov.au/coronavirus/business-investment
https://treasury.gov.au/coronavirus/households

TAX AND CASHFLOW ASSISTANCE FOR SMALL BUSINESSES

Instant Write Off Increased from $30,000 to $150,000

In light of the economic impacts of COVID-19 and to help small businesses and employers cope, the instant asset write off (IAWO) threshold has been increased from the previous $30,000 up to $150,000. Businesses, whose assets have been bough between March 2020 and 30 June 2020, are eligible to receive this write off. Eligible businesses can immediately collect the complete amount as deduction for the 2020 financial year. But before you apply or claim this assistance, ACT Bookkeeping Group will need to complete your 2020 income tax return first.

Temporary Early Access to Super Fund by Unemployed or Sole Traders

Sole traders whose businesses have been suspended or has more than 20% turnover reduction may apply only through myGov.com.au beginning from mid-April 2020 in order to gain access to up to $10,000 of their superannuation.

Low Interest Payment Plans

The Australian Taxation Office is offering low interest payment plans for businesses that are affected by COVID-19 outbreak and need help in paying their existing and ongoing tax liabilities.

Remitting Interest and Penalties

The ATO also considers remitting interest and penalties on debts gained after January 23, 2020.

Alteration to Monthly GST

For companies that are expecting GST refunds in the succeeding months because of reduced income but has the same expenses, one practical plan is to change their GST Reporting Cycle to monthly. As such, these companies will be able to claim their refunds faster. Act Bookkeeping Group can help eligible businesses in calculating the GST outcome and help them decide if this is the best course of action for them.

Backing Business Investment

In order to aid business investment and economic growth over a short period of time, the Australian government has introduce a time limited, 15-month investment incentive through to June 30, 2021 by hastening depreciation deductions. 50% of the cost of eligible assets on installation can be deducted by entities that are earning less than $500 million annually. Existing depreciation rules applying to the balance of the cost of the asset.

Sole traders and self-employed eligible for Jobseeker payment

The eligibility criteria to access income support payments will be relaxed to enable the self-employed and sole traders whose income has been reduced, to access support.

More:

Time limited fortnightly $550 ‘coronavirus supplement’

For the next 6 months, the Government is introducing a new Coronavirus supplement to be paid at a rate of $550 per fortnight. This supplement will be paid to both existing and new recipients in the eligible payment categories.

The payment will be made to those receiving:

  • Jobseeker payment (and those transitioning to the jobseeker payment)
  • Youth allowance jobseeker
  • Parenting payment
  • Farm household allowance
  • Special benefits recipients

In addition, eligibility to income support payments will be expanded to:

  • Permanent employees who are stood down or lose their job
  • Casual workers
  • Sole traders
  • The self-employed
  • Contract workers who meet the income test

The Government notes that these criteria could include those required to care for someone affected by the Coronavirus.

Asset testing has also been reduced and will be waived for 6 months. Income testing will still apply.

The payment is not available if you have access to any employer entitlements such as annual or sick leave or income protection insurance.

More:

KEY INFORMATION FOR EMPLOYERS

Activity Statement Cash Back Up To $100,000

Tax-free payments up to $100,000 for employers

  • From: 28 April 2020
  • Eligibility: Small and medium business entity employers and not-for-profit entities, with an aggregated annual turnover under $50 million.

The Government has increased the previously announced measures to provide cash flow support to business.

Now, eligible businesses with a turnover of less than $50 million will initially be able to access tax-free cash flow support, with the minimum amount being increased to $10,000 and the maximum amount increased to $50,000 (previously $2,000 to $25,000). However, additional support will be provided in the July – October 2020 period so that eligible entities will receive total minimum support of $20,000 and up to $100,000.

In order for a business to qualify for this support it must have been established prior to 12 March 2020. The rules are more flexible for charities because the Government recognises that new charities might be established in response to the pandemic.

The cash flow support measures will be provided in the form of a credit in the activity statement system. The support will be provided in two phases.

  • The first phase ensures that eligible employers receive a credit equal to 100% of the PAYG amounts withheld from salary and wages paid to employees during the relevant period, up to the maximum amount of $50,000.
  • The second phase ensures that eligible employers receive another series of credits, equal to the credits that were received under the first phase. For example, if a business received $40,000 of credits in the first phase it will receive a further $40,000 of credits in the second phase. These additional credits will be spread over two or four activity statement periods, depending on whether the employer lodges on a quarterly or monthly basis.

If a business pays salary and wages to employees but is not required to withhold any tax then a minimum payment of $10,000 will be made in the first phase and a further payment of $10,000 will be made in the second phase.

The credits are automatically calculated by the ATO and employers will need to lodge an activity statement to trigger the entitlement. If the credit puts the business in a refund position the excess amount will be refunded by the ATO within 14 days.

Businesses that lodge activity statements on a quarterly basis will be eligible to receive credits in the first phase for the quarters ending March 2020 and June 2020. Credits in the second phase will be available for the quarters ending June 2020 and September 2020. The minimum $10,000 payment will be applied to the first lodgement.

Business that lodge on a monthly basis will be eligible for the credits in the first phase for the March 2020, April 2020, May 2020 and June 2020 lodgements. Credits in the second phase will be available for the June 2020, July 2020, August 2020 and September lodgments. The minimum $10,000 payment will be applied to the first lodgement.

Eligibility for the measure will be based on prior year turnover. We will have to wait for the legislation for the finer details.

Not-for-profit employers, including charities, with an aggregated turnover under $50 million will also be able to access the cash flow support.

Support for Apprentices and Trainees

Companies that are employing fewer than 20 full-time staffs who have apprentices and/or trainees before March 1, 2020 are eligible for this assistance. An Australian Apprenticeship Support Network provider can help assess the eligibility of businesses. Eligible companies are entitled to receive $21,000.

Businesses Still Need to Contribute to Superannuation

The Australian Taxation Office has not waived the contribution dates and/or amounts for superannuation, as such, business owners are still required to meet super guarantee obligations for their staffs. Nevertheless, employers with overdue obligations from July 1992 to March 2018 are still allowed to make payments without receiving additional penalties due to the Superannuation amnesty. So, if you have an overdue super for your employee, we suggest you contact us immediately. ACT Bookkeeping Group can help you get Superannuation amnesty as part of your complete cash flow plan.

Solvency safety net

A safety net has been put in place to protect businesses in temporary financial distress as a result of the pandemic by lessening the threat of actions that could unnecessarily push them into insolvency and force the winding up of the business. These include:

  • A temporary 6 month increase to the threshold at which creditors can issue a statutory demand on a company from $2,000 to $20,000.
  • The time a company has to respond to statutory demands will increase from 21 days to 6 months.
  • For 6 months, directors will be provided with temporary relief from personal liability for trading while insolvent.
  • See also bankruptcy safety net below

It will be more important than ever for business to stay on top of their debtors.

Debts incurred will still be payable by the business. Only those debts incurred in the ordinary course of the business will be subject to the safety net measures.

Sickness and Closures

What happens if an employee or their family member has contracted COVID-19 or a business is subjected to a government mandated shutdown period?

Employees who have been afflicted by COVID-19 are not allowed to go to work for a period of time because of the workplace health and safety protocols that employers and employees have. Both full time and part time employees are entitled to a paid sick leave. If the employee does not have any more sick leave credit, they can take ‘Leave Without Pay’. Nevertheless, during this period, an employer is prohibited from dismissing an employee that has contracted the coronavirus or because of an employee’s absence. Contact ACT Bookkeeping Group can help you just in case you have specific concerns regarding your situation.

When is an employee allowed to work from home?

Normally, an employer and employee can create and agree on a work from home arrangement. Employees will be required to record their hours of work, which will continue when they are working from their home. We encourage you and your employees to agree on how you should go about this arrangement.

What about Independent contractors and casual employees?

Casual employees are not entitled to Paid Leave under the National Employment Standards. Usually, they have a No Work, No Pay policy. Independent contractors are also not entitled to Paid Leave under the Fair Work Act.

When can employees be stood down without pay?

An employee can only be stood down without pay under the condition that he or she cannot be practically employed due to the stoppage of work for any reason for which the employer cannot reasonably be held accountable. This is under the Fair Work Act. Even if the employer is allowed to stand down an employee, it is still vital for an employer to think about this option cautiously. An employer is allowed to stand down an employee under these conditions:

First, if the government ordered or directed your business to close, which would mean that there is no task or work that your employees need to do, even from the another location.

Second, if a large part of a company’s workforce is under self-quarantine, thus resulting in the inability to undertake vital tasks by the rest of the employees or workforce.

Lastly, if the work is halted because there is no supply where in the employer cannot be held accountable.

 

Disclaimer:

ACT Bookkeeping Group Pty Ltd. has taken all reasonable care in the preparation of this brochure.

ACT Bookkeeping Group Pty Ltd. makes no warranties, representations, express or implied as to the accuracy,
currency, reliability or completeness of the information contained. Users of this information should satisfy themselves that they have correctly interpreted and applied the information to their particular circumstances. Except as prohibited under any applicable legislation, ACT Bookkeeping Group Pty Ltd. does not accept any liability for loss or damage (including economic) whatsoever or howsoever incurred by any person whether direct, indirect, incidental, special or consequential, arising from the use of or reliance upon this brochure.

 

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