GST Stewardship Group special briefing 17 July 2020

COVID-19

Instant asset write-off and Backing business investment

The Instant asset write-off (IAWO) was first expanded from 12 March 2020 to 30 June 2020 and increased the maximum claimable amount from $30,000 to $150,000 and the eligible business turnover from $50 million to $500 million. The increased turnover has now made 10,000 extra businesses potentially eligible to claim a deduction. The expansion of the IAWO was recently extended to 31 December 2020.

Delays in global supply chains have meant some taxpayers were uncertain if they could purchase assets and have them in place and ready to use by 30 June 2020.

On 9 June 2020, the Government extended the period of this measure to 31 December 2020. The IAWO does not change limits in other provisions. For example, the luxury car tax limit still applies for motor vehicles.

Boosting cash flow for employers

There is still a very small number of businesses that are waiting for outcomes of eligibility reviews. All of these are ones who were not automatically eligible because they failed the ‘activity test’ (no notice of supplies provided) or those with a backdated pay as you go (PAYG) withholding registration which indicates a change in circumstances that might impact eligibility.

Some have provided further evidence that we are considering in order to ensure integrity in the system. Information we ask for can include sufficient evidence that payments subject to withholding were actually made, or that business activities were carried on in the relevant periods.

We have seen situations where taxpayers have reported withholding amounts but not actually made payments during the relevant period. For example, some had intended to pay but did not, and others had made payments, but in a different period.

Credits are being applied to June lodgments. Businesses who received Cash flow boost in tranche one will receive Cash flow boost amounts in tranche two.

JobKeeper payment scheme

The ATO is tracking well on getting payments out while keeping an eye on integrity, with 97% of claims paid within four days. The ATO is engaging the remaining 3% on issues including business income, employees claimed for, their PAYG role, and where employees are claimed by more than one employer.

Post-payment compliance activities include ensuring employers have actually passed the payment onto their employees.

The ATO will release its approach to JobKeeper overpayments in coming weeks.

Members’ questions

Are there any patterns or key issues evident in the post-payment reviews?

The ATO will produce some early JobKeeper insights in coming weeks. It is too early to see trends at the moment.

Early release of superannuation

Early release of super applications continue to be submitted and processed.

Members’ questions

Have instances of drawing down and recontributing been identified and what measures are in place to prevent it?

There are instances where an individual has withdrawn money under the early release program and recontributed back to their super fund.

In some instances, this has occurred with the intent of claiming a personal superannuation deduction. We recognise that everyone’s circumstances are unique and can change and as such, some people have found that they no longer require the money and have recontributed some or all of it back to their fund.

The ATO has data to enable us to compare the withdrawal, contribution and the deduction.

The ATO will support and engage taxpayers on the correct claiming of deductions for superannuation contributions.

COVID-19 ATO debt engagement

The ATO’s primary focus for debt and lodgment is the administrative relief measures announced in late March 2020, which included:

• Payment deferrals
• Payment plans
• Lodgment deferrals.

All but the most complex or concerning debt and lodgment work has been paused and staff temporarily reallocated to support inbound calls for clients seeking the administrative relief measures and also the Government Stimulus.

In the past four months, we have assisted over one million clients who have reached out to seek help with regards to their lodgments and payments with most of these clients contacting us.

Although lodgment levels are in line with last year’s figures, as anticipated, payment of debt is down.

The ATO is piloting a way to re-engage taxpayers using a phased approach. A small pilot has been running, which has involved SMS, letters and outbound calls. Melbourne postcodes are being excluded for the time being.

The ATO is starting to see some interactions generated from this engagement. Many taxpayers are calling the ATO and requesting to enter into a payment arrangement or paying the debt in full. A very small number of these phone calls have not been welcome, but the vast majority of clients have welcomed our efforts with more than half paying or making arrangements to pay.

The pilot will be used to inform how the ATO best supports taxpayers affected by COVID-19, particularly keeping them engaged, as well as how to grow the debt engagement strategy in the future.

Members’ questions

Are there any patterns in the types of taxes not being paid?

The growth in activity statement debt has always been larger than the growth in income tax debt. This has not changed because of COVID-19. There is an interplay in relation to debt increasing and net tax collections decreasing.

Other business

The ATO does not have any information to share about any proposed changes to the Stimulus measures that might come from the Government’s Economic and Fiscal update on 23 July 2020.

The ATO does not intend to change any of its performance standards. It will focus on moving resources to the most critical work required to meet those standards while delivering on Stimulus measures. As Stimulus work decreases (such as requests for technical advice on Stimulus), ATO resources will return to business as usual. Note, objections work is not considered optional and the ATO will need to continue to service those.

Shorter, ad-hoc COVID-19 updates may occur prior to the next main meeting on 1 September 2020 if required.