Small Business Stewardship Group special briefing 15 October 2020

COVID-19

JobKeeper

The ATO provided an update on the JobKeeper program.

JobKeeper 1.1 continues to see new employees registered as a result of the change to reference date. This is a positive outcome for businesses.

JobKeeper 2.0 – We are transitioning to the changed eligibility criteria built around actual turnover decline as well as the introduction of the two-tiered payments system.

We are starting to see clients going online to determine their eligibility for JobKeeper 2.0. The first payments for JobKeeper 2.0 commence after 31 October. Our systems are ready, and we have information online.

New employers enrolling for JobKeeper will need to enrol and submit their decline in turnover to us by 31 October 2020. Existing employers can complete and submit this when they do their monthly business declaration between 1 and 14 November 2020.

We encourage businesses to report via Single Touch Payroll to help us streamline payments.

JobMaker – hiring credit

The ATO is administering the JobMaker hiring credit. This credit is designed to encourage businesses to employ young workers. The credits are $200 per week for eligible employees aged 16 to 29 and $100 per week for eligible employees aged 30 to 35.

The registration process opens in December and payments commence in February 2021, subject to the passing of the final legislation.

Member insights

Members noted that with quarterly payments in arrears starting in February, businesses require clarity and certainty so they can plan ahead. The ATO will publish information as soon as legislation is passed.

Budget update

Modernising Business Registers program

The Federal Budget provided funding to fully implement the Modernising Business Registers program, including the introduction of Director Identification Numbers. We are working closely with our stakeholders to implement the program. Small Business Stewardship Group (SBSG) members will be engaged for feedback when appropriate.

Bringing forward of personal Tax Plan

Tax cuts from the second stage of the Personal Income Tax Plan have been brought forward two years to 1 July 2020, including a continuation of the low and middle income tax offset for 2020–21.

Changes to the withholding schedules have been published and apply to payments made on or after 13 October 2020.

Temporary full expensing and changes to the existing Instant asset write-off

Temporary full expensing is a new measure available for purchases of eligible depreciable assets. From Budget night, small businesses will access this measure to write off the purchase price of new and second-hand assets. This continues until 30 June 2022.

For assets purchased prior to 7:30pm on 6 October (Budget night), Instant asset write-off (IAWO) continues to apply for small businesses, provided the asset is first used or installed ready for use by 30 June 2021. The IAWO threshold is still $150,000 per asset.

The ATO is currently working on communications to simply explain the interaction of these two measures.

Temporary loss carry back to support cash flow

Temporary loss carry back is a new measure that seeks to support small business cashflow. The measure applies for corporate entities with less than $5 billion turnover, who have paid tax on profits in 2018–19 (or later) tax years and subsequently made a loss. Through this measure, companies can carry the loss back to a previous year and have some previous tax paid refunded.

The Budget also contained several other measures relevant to small businesses, including:

• changes to the research and development tax incentive, altering percentage points around offsets and refunds
• changes to fringe benefits tax reducing the compliance burden regarding record keeping
• increasing the threshold for small business concessions from $10 million to $50 million
• the ATO has a lead role in mandating and supporting the adoption of e-invoicing for Government
• supporting small business and responsible lending – changes to insolvency laws and simplifying the liquidation process
• making Victorian Government Business Support Grants non-assessable and non-exempt income for tax purposes.

Member insights

Members raised concerns about Victorian businesses’ capacity to access stimulus measures, with many businesses not having work lined up or the resources to acquire new employees or assets.

Members requested that the ATO provide a service to technically assure tax-specific factsheets being written by industry associations. Members can email material requiring review to the SBSG mailbox, noting reasonable expectations around ATO capacity to handle requests. A longer-term solution will be considered.

A member sought information about the tax treatment of payments received after a company has closed. The ATO has information about ceasing or pausing a business due to COVID (PDF 603KB)This link will download a file.

Agency updates

Department of Industry, Science, Energy and Resources

The BusinessBalance measure provides $7 million to support mental health through expansion of the NewAccess program (Beyond Blue) and the Deakin University program for trusted business advisors.

A package to expand the existing Australian Small Business Advisory Service will help small businesses grow their digital capability.

Australian Small Business and Family Enterprise Ombudsman

The Ombudsman noted, in relation to the measures announced in the Budget:

• the Payment Times Procurement policy is a big step in the right direction for small business
• the new insolvency framework is something many SBSG members had input into and members are invited to contact the Ombudsman’s office if they would like more information
• implementing e-invoicing across all government departments
• research and development tax incentive is good however more clarity is required regarding software
• JobMaker hiring credit – there are some issues around identifying eligible employees for employers. For example, anti-discrimination laws may prohibit advertising positions exclusively to people under 35.

Treasury

The Government announced the extension of the low and middle income tax offset for one year.

Treasury clarified the tax measures which received royal assent on 14 October – see A Tax Plan for the COVID-19 Economic RecoveryExternal Link.

Communication update

As part of our commitment to providing up-to-date guidance on ato.gov.au for business, we are integrating the employee and employer JobKeeper frequently asked questions into our existing web content. Existing links will redirect readers to the updated content.

The Government has launched a website detailing its Economic Recovery Plan.