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  • Small Business Stewardship Group special briefing 1 May 2020


    Boosting cash flow for employers

    Credits are now being applied to eligible employers as they lodge their activity statements. We are seeing a trend of lodgments being made earlier than usual.

    Credits are displayed on the taxpayer account, which can be viewed via Online services for agents and our Business portal. Credits display as a separate line item in a client’s integrated account.

    The ATO is hearing feedback that some businesses who thought they were eligible cannot see the cash flow boost on their account. In these cases, we are asking clients to contact the ATO as they may need to provide additional information before the boost is credited.

    There has been some confusion about taxpayers not receiving the full $10,000. This is generally because the credit may have been offset against debits on the same activity statement.

    Some clients appear to be confusing this measure with other state-based support mechanisms. This may be because some of the states’ grants also amount to $10,000.

    Members reported that although some businesses do not meet various turnover tests, they are still struggling. The ATO advised the setting of turnover tests are matters for government policy.

    Intermediaries have raised an issue where they have contacted ATO call centres and been told that a case needs to be escalated and may take ‘20 days for accounting treatment’ – with no negotiation on the 20-day time frame. ‘Accounting treatment’ usually occurs where the information on ATO systems is incomplete and further information is required to determine eligibility.

    The ATO website was updated on Friday 1 May 2020 with information on providing evidence of eligibility and special eligibility rules for new to business, sole traders, businesses that are not registered for GST and businesses that use another entity for payroll. These updates are a result of feedback we are receiving from various channels.

    JobKeeper payments

    During his speechExternal Link at the National Press Club on 5 May, the Treasurer announced more than 725,000 businesses employing more than 4.7 million Australians have formally registered for JobKeeper and will start receiving payments this week.

    There are new rules relating to special purpose entities, charities, religious practitioners, full time students and universities. Further information can be found in the Treasurer’s announcementExternal Link on 24 April 2020.

    While the date for making payments to employees has been extended to 8 May 2020, employees must always be paid before the employer can receive the subsidy.

    Monday 4 May is a critically important date – this is the date from when employers must confirm their eligible employers and make a declaration that will trigger the commencement of JobKeeper payments.

    Payments will be made as quickly as possible subject to appropriate integrity checks. There may be limited suppressions based on risk assessments to reduce the potential for abuse of the system. Payments will start flowing later in the week beginning 4 May 2020.

    There is a concern that some grants made by the States and Territories will form income for ATO purposes. The ATO is aware of these situations and will review its advice material scenarios so the appropriate tax treatment of these grants is made clear.

    The ATO is working with other agencies to share intelligence about the intersection of COVID-19 support schemes as appropriate. We are also working with law enforcement agencies to protect the integrity of the government’s responses.

    The ATO advised that where new start-ups have yet to lodge a BAS and have yet to report turnover, they are not eligible for JobKeeper.

    Regulations are yet to be formalised for the treatment of superannuation guarantee under JobKeeper. Treasury fact sheet (PDF 277KB)This link will download a file contains the most up-to-date information regarding the government’s policy intent. Superannuation guarantee payments are not due until 28 July.

    Law administration practice statement

    Members were invited to provide feedback on the draft law administration practice statement relating to the Commissioner's discretion to allow further time for an entity to register for an ABN or provide notice to the Commissioner of assessable income or supplies to receive benefits under the JobKeeper payments scheme and boosting cash flow for employers measure.

    Law administration practice statement PS LA 2020/1 Commissioner's discretion to allow further time for an entity to register for an ABN or provide notice to the Commissioner of assessable income or supplies is now published.

    Treasury update

    Treasury attended the Senate Select Committee examining the implementation of COVID-19 measures. Treasury noted the projected stimulus package size was worth up to $320 billion (roughly 10% of GDP). To date, the ATO had processed $10 billion in payments.

    Members insights

    The ATO may want to review its end of year material for taxpayers through a COVID-19 impact lens including topics such as trading stock valuation and depreciating assets.

    As ATO systems change rapidly, some external accounting software providers are keeping up, some are not. While this is understandable in such a fluid environment, it is causing some concerns amongst some small businesses and tax professionals.

    Communication update

    The ATO continues to refine its answers to top call centre questions published on the website.

    The ATO has recently released a number of JobKeeper podcasts.

    Episode 1 – Overview of the JobKeeper Payment program

    Episode 2 – JobKeeper Payment for sole traders and other entities

    Episode 3 – JobKeeper Payment for Employers, NFPs and charities

      Last modified: 11 Jun 2020QC 62843