Tax Practitioner Stewardship Group briefing messages 8 April 2020

COVID-19 impacts and response for the tax profession

JobKeeper stimulus measure

Deputy Commissioner James O’Halloran provided an update on the JobKeeper stimulus measure. The measure received Royal Ascent on 8 April 2020.

While the details of implementation are still to be finalised, the ATO recognises the significance of this policy and the impact on the community. The priority is to process and commence issuing payments to eligible employers from early May.

The ATO notes that while the focus will be to issue payments as quickly as possible, governance and integrity remains a high priority. This measure is intended as an employee wage subsidy for eligible employers.

ATO website content will be updated with further information shortly, and clients are encouraged to register to receive updates as information becomes available.

It is important to note that this registration is for further information and not a registration to receive the payments.

A significant amount of guidance materials is being developed for the tax practitioner community and will be shared with members when available.

March activity statements

An issue regarding March activity statements arose after the Quarter 1 deployment and impacted around 4% of activity statements generated in late March. The problem caused the accounts associated with these activity statements to be end-dated which changed the status of any outstanding activity statement to ‘discontinued’. In Online services for agents any discontinued activity statements are hidden from view.

The error was not immediately identified and so we were unable to proactively alert agents and clients.

Tax agents with affected clients who noticed there were no activity statements for March awaiting action called the ATO seeking clarification. These agents were advised there had been a problem that would not be fixed until early May. This was the initial advice provided to contact centre officers based on the probable timeframe of a fix, given the current prioritisation of the stimulus work.

In the Business Portal, discontinued activity statements remained visible to the user and any attempt to action a discontinued activity statement resulted in an error. Therefore there were two presentations of the one issue.

The issue was resolved on 3 April and statements were available online from 5 April.

ATO integrity program of work focusing on stimulus measures

Assistant Commissioner Adam Kendrick spoke about integrity work in the future and what this could potentially look like. Adam advised the ATO will be issuing information shortly on what will be attracting the ATO’s attention.

Tax consequences of cash flow boost payment

All cash flow boosts are tax free (non-assessable non-exempt income) and are not required to be paid back when a business’s cash flow improves. However, if a business has been paid more cash flow boosts than they are entitled to, they will be required to repay the excess.

The boost is not subject to GST as they are not making or agreeing to make a supply for the payment. Businesses will still be entitled to a deduction for pay as you go (PAYG) withholding paid. There is no effect on tax paid by employees in respect of their salary and wages.

Cash boost payments are not included in the calculation of turn-over as they are a payment and not a taxable supply.

Commissioner Chris Jordan is currently working to establish methods to prove eligibility for those who have legitimate claims to the cash flow boost payment.

Please continue to monitor the ATO website as content is being updated on a regular basis. Future updates will provide more detail around consolidated entities, eligibility and aggregate turn over.

Refer to ATO COVID-19 cash boost page for additional detail.

Tax profession concerns

A range of concerns were raised at the discussion; some were previously raised in last week’s meeting. New issues discussed included:

• members requested the ATO ensures that information provided across various Government agency websites align
• the profession would like the ATO to provide scenarios on what is and is not allowable for cash flow boost and JobKeeper as agents have advised they would find these a useful resource when responding to client queries to provide them with examples.

Tips and links

• We are regularly updating our COVID-19 landing page to include the latest information. We encourage you and your clients to refer this page in the first instance.
• Resources are also available on the TreasuryExternal Link and australia.gov.auExternal Link websites.
• Second Commissioner Jeremy Hirschhorn has shared a message on LinkedIn regarding Superannuation recontributing schemes relating to COVID-19. Please assist us by sharing this messageExternal Link with your clients and colleagues.
• Due to COVID-19 the ATO has announced special arrangements for this year to make it easier for people to claim deductions for working from home. For more information see the new working from home page.