Business Tax Alert September 2020
Many small business owners and sole traders will be breathing a sigh of relief following the extension of the JobKeeper scheme until March next year. At the same time, however, the ATO is stepping up its compliance activities.
Here’s a roundup of some of the key developments in the world of business tax.
JobKeeper extended to March 2021
The government has announced its JobKeeper scheme, which was originally due to wind up on 27 September 2020, will now continue until 28 March 2021.
The $1,500 per fortnight payment to eligible businesses, not-for-profits and the self-employed will, however, drop to $1,200 per fortnight from 28 September 2020 and to $1,000 per fortnight from 4 January 2021.
From 28 September 2020, if your business claims JobKeeper, you will also be required to demonstrate it has suffered a decline in turnover using your actual GST turnover rather than the prior method, which was based on projected GST turnover.
ATO data matching support payments
The tax man is also starting to put JobKeeper support payments under the microscope using information from a new data matching arrangement with Services Australia (formerly Centrelink).
Information about JobKeeper payments reported to Services Australia for social security payment purposes will also be provided to the ATO. This will help the ATO identify people who are receiving both JobKeeper and social support payments.
JobKeeper still open to businesses
Although most businesses suffered an immediate decline in turnover when the COVID-19 crisis started, some businesses are finding things are tougher now the new financial year has commenced. The renewed lockdown in Victoria has also dealt a new blow to many businesses, so it’s worth remembering it’s still possible to apply for the JobKeeper subsidy.
If your small business has experienced a drop in turnover of more than 30 per cent and you meet the eligibility requirements, you are still able to apply for financial support through JobKeeper.
Expenses shortcut extended
For employees who have been using the shortcut method to calculate their working from home expenses, the good news is the end date for this scheme has been extended from 30 June to 30 September 2020.
The ATO announced the new three-month extension and said a further extension may be considered.
Employees and businessowners who work from home between 1 March 2020 and 30 September 2020 on income producing activities can use the shortcut method to claim 80 cents per work hour for their home office running expenses. This all inclusive rate means you don’t need to calculate and record your actual running costs.
The shortcut is not a free pass, however, as the ATO recently noted this was one of the top three issues it was seeing in returns lodged for 2019-20. To avoid problems in this area, ensure you don’t double up on your shortcut claim by adding, for example, a depreciation claim for laptops and desktops.
Warning on TPAR requirement
The ATO is warning some small businesses may find they need to lodge a taxable payments annual report (TPAR) this financial year if they have started using contracted service providers due to the pandemic.
TPARs keep the ATO informed about payments made to contractors, with the requirement initially rolled out for the building, cleaning and courier industries.
The tax man is now cautioning restaurants, cafes, grocery stores, pharmacies and retailers who have started paying contractors to deliver goods to customers that they may be required to report.
If total payments received for delivery or courier services are ten per cent or more of your business’s total annual business income, you may need to lodge a TPAR for 2020-21.
No tax on ‘robodebt’ refunds
And some good news for taxpayers who receive a refund amount from Services Australia for a debt raised using averaged ATO income information – also known as a robodebt. You don’t need to include the money in your income tax return.
The ATO is advising no action needs to be taken regarding these refunds and tax returns for prior years should not be amended.
If you need any further clarification or need business tax advice for any of your businesses, please contact Scott Partners on (03) 8686 9000.