Federal Budget 2020-21

On Tuesday night, 6th October 2020, Federal Treasurer Josh Frydenberg handed down his second Federal Budget.  A long way from his “Back in the Black” surplus forecasts for this year, his second budget predicts a total budget deficit for 2020-21 of over $213 billion.  Easily the biggest budget deficit we have seen since World War II, it’s a necessary requirement to alleviate the continuing negative effects of COVID-19 on business confidence and profits.  We think it is safe to say that this is the most important Federal budget of our lifetime.

There are always winners and there are always losers when dissecting budget announcements.  So some of the winners from this budget include:

  • Individual taxpayers with cuts to individual tax rates being backdated to 1 July 2020. 
  • Businesses with the introduction of a temporary immediate deduction for the full cost of eligible depreciating assets.
  • Companies with the announcement of a temporary loss-carry back allowance.
  • Unemployed individuals also win with a JobMaker hiring credit being provided to employers that create new jobs for those people currently out of the workforce.

What wasn’t in the budget?  This budget lacked any incentive for individuals to increase their wealth in superannuation and any real debate around change or movements in the GST. 

We’ve outlined below some of the main and business measures that were announced in the Budget.

As with all budgetary measures, these measures are not final until the relevant legislation has been passed by the Government.  Although the Federal Opposition has already professed support for the main tax changes announced, it is important that you use caution in acting on these measures until they have become law.  It is our understanding that the Federal Government will be introducing an omnibus bill to Parliament today (7 October 2020) that will encompass most of the proposed tax changes.  We will keep you updated on the status of these proposed measures.

JobMaker Hiring Credit

The hiring credit is aimed at increasing the employment of young people currently out of the workforce.  It is available to employers for each new job they create over the next 12 months, for which they hire an eligible young person aged 16 to 35 years old.

Amount of credit

From 7 October 2020, eligible employers will be able to claim:

  • $200 a week for each eligible employee they hire aged 16 to 29 years old; and/or
  • $100 a week for each eligible employee they hire aged 30 to 35 years old.

New jobs created until 6 October 2021 will attract the JobMaker Hiring Credit for up to 12 months from the date the new position is created.

Eligible employers

Employers will be eligible for the JobMaker Hiring Credit if they:

  • have an Australian Business Number (ABN);
  • are up-to-date with tax lodgement obligations;
  • are registered for Pay As You Go (PAYG) withholding;
  • are reporting through Single Touch Payroll (STP);
  • are claiming for an eligible employee;
  • the eligible employee was hired for an additional job created from 7 October 2020 (employer’s total employee headcount and payroll cost must increase);
  • have kept adequate records of the paid hours worked by the employee.

Entities who are claiming the JobKeeper Payment are ineligible for the JobMaker Hiring Credit.

Eligible employees

To be eligible, the new employee must:

  • be aged between 16 – 29 (for $200 credit per week) or 30 – 35 (for $100 credit per week);
  • have worked at least 20 paid hours per week on average for the full weeks they were employed over the reporting period;
  • commenced their employment between 7 October 2020 and 6 October 2021;
  • have received JobSeeker Payment, Youth Allowance or Parenting payment for at least one of the previous three months at the time of hiring;
  • be in their first year of employment with this employer.

Employees will be ineligible where the employer is also receiving a wage subsidy under another Commonwealth program for that employee.

How does it work?

The JobMaker Hiring credit will be claimed in arrears from the ATO.  Registrations will open for eligible employers on 7 December 2020.  (Employers do not need to be registered at the time they hire an employee in order to be eligible.)

Claims for the credits can be lodged from 1 February 2021.  The credit will be paid quarterly in arrears.

JobMaker - Apprentice Wage Subsidy

Businesses of any size can claim the new Apprentices Wage Subsidy for new apprentices or trainees who commence between 5 October 2020 and 30 September 2021.  Eligible businesses will be reimbursed 50% of an apprentice or trainee’s wage up to $7,000 per quarter (capped at 100,000 places). 

Lower taxes

Previously legislated cuts to individual income tax rates have been brought forward and will be backdated to 1 July 2020.  The table above shows the new tax thresholds.

We note that the company tax rate for the 2020/21 financial year has already been reduced to 26% for base rate entities (turnover less than $50 million).

Deduction for depreciation assets

From 6 October 2020 to 30 June 2022 businesses with a turnover up to $5 billion can deduct the full cost of eligible depreciating assets of any value in the year they are first used or installed ready for use.  This applies to new and second-hand assets if the turnover of the business is less than $50 million.  Small businesses with a turnover of less than $10 million can write-off the full balance of their simplified depreciation pool at the end of the year in which this measure applies.

Loss carry-back for companies

Companies that make a loss in the 2019-20, 2020-21 and/or 2021-22 financial year can carry this loss back to reduce taxable profits made on or after 2018-19.  The company can elect to receive a refund of the tax paid when lodging the later year tax return.  This measure will enable companies to take advantage of full expensing of depreciating assets while it is available.

Other measures

Other measures announced in the budget include:

  • Additional $2 billion for R&D tax incentive;
  • Small business tax concessions available to more businesses with the turnover threshold increasing from $10 million to $50 million;
  • Granny flats exempted from CGT where certain conditions are met;
  • Measures to be introduced to stop new superannuation accounts being created every time you start a new job.  Existing superannuation accounts to be attached to taxpayers and employers will have access to this information to enable payments of employee superannuation.
  • Two $250 economic support payments made in November 2020 and early 2021 to pensioners;
  • Reforms to lending laws to reduce the regulatory burden on consumers and small businesses;
  • $7 million allocated to support the mental health and financial well-being of small businesses impacted by COVID-19.

We will keep you up-to-date with the progress of the implementation of these Budget measures.

If you would like to discuss the tax implications of the budget proposals, please call us on (07) 56656469.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

JobKeeper 2.0

** The current JobKeeper scheme remains in place, as originally advised, until 27 September 2020. **

Legislation was passed on 3 September 2020 to extend the JobKeeper payment to 28 March 2021.  The eligibility and administration details of the JobKeeper extension were released, in part, by the ATO on 4 September 2020.

Rates of pay

 
From 28 September 2020, the rate of JobKeeper Payment will depend on the number of hours an eligible employee works or an eligible business participant is actively engaged in the business.  It will be split into two rates:

Tier 1 rate

This rate is expected to apply to:

  • Eligible employees who worked for 80 hours or more in the four pay periods before either 1 March 2020 or 1 July 2020; and
  • Eligible business participants who were actively engaged in the business for 80 hours or more in February and provide a declaration to that effect

Tier 2 rate

This rate is expected to apply to:

  • Any other eligible employees and eligible business participants.

Extension 1 - 28 September 2020 to 3 January 2021

Eligibility

 
To be eligible to receive payments under the first JobKeeper extension period between 28 September 2020 and 3 January 2021, businesses need to show a decline in their actual turnover of 30% or more for the September 2020 quarter only (compared to the September 2019 quarter).  A business may be eligible for JobKeeper payments during this period even if they haven’t been eligible for earlier JobKeeper payments.
 

The decline in turnover is calculated by reference to the actual GST turnover for the relevant quarter.

Fortnightly payment rate

If your business meets the eligibility criteria for JobKeeper Extension 1, the payment rates are as follows:

  • Tier 1 employees: $1,200 per fortnight (before tax)
  • Tier 2 employees: $750 per fortnight (before tax)

Extension 2 - 4 January 2021 to 28 March 2021

Eligibility

 
To be eligible to receive payments under the second JobKeeper extension period between 4 January 2021 and 28 March 2021, businesses need to show a decline in their actual turnover of 30% or more for the December 2020 quarter only (compared to the December 2019 quarter).  A business may be eligible for JobKeeper payments during this period even if they haven’t been eligible for earlier JobKeeper payments.
 
The decline in turnover is calculated by reference to the actual GST turnover for the relevant quarters.
 

Fortnightly payment rate

If your business meets the eligibility criteria for JobKeeper Extension 2, the payment rates are as follows:

  • Tier 1 employees: $1,000 per fortnight (before tax)
  • Tier 2 employees: $650 per fortnight (before tax)

Employee eligibility

From 3 August 2020, the reference date for assessing which employees are eligible for the JobKeeper payment is now 1 July 2020. This will increase the employee eligibility for the existing scheme and the extended JobKeeper scheme.

The reference period for employees regarding their hours worked (to determine their tier of JobKeeper payment) will be the four weeks of pay periods prior to 1 March 2020 and 1 July 2020.  The period with the higher number of hours is used for employees who were eligible at 1 March 2020.

The Commissioner of Taxation will have discretion to set out alternative tests where an employee or business participant’s hours were not usual during the February and/or June 2020 reference period.

In summary, employees are eligible in the extension period if they satisfy all of the following conditions:

  • are currently employed by an eligible employer;
  • were either:
    • Full time, part-time or fixed-term employee as at 1 July 2020; or
    • A long-term casual employee (employed on a regular or systematic basis for at least 12 months) as at 1 July 2020 and not a permanent employee of any other employer.
  • were aged 18 years or older as at 1 July 2020 (if you were 16 or 17 you can also qualify if you are independent or not undertaking full time study);
  • were an Australian resident (within the meaning of the Social Security Act or the Income Tax Assessment Act) or a holder of a Subclass 444 (Special Category) visa as at 1 March 2020; and
  • did not receive any of the following payments during the JobKeeper fortnight:
    • Parental leave or Dad and partner pay under the Paid Parental Leave Act 2020
    • Workers compensation payment for total incapacity for work.

Decline in turnover calculation

For most businesses that are registered for GST, the “turnover” used to calculate the decline in turnover will be your sales reported at G1 on your BAS minus the GST payable reported at 1A on your BAS.

The Commissioner of Taxation may also set out alternative turnover tests where it is not appropriate to compare actual turnover in 2020 to actual turnover in 2019.

What do you need to do now?

If you are already registered for the current JobKeeper program, you will need to undertake the following steps:

  1. Ensure any outstanding activity statements are lodged prior to 30 September 2020.
  2. On 1 October 2020 and 1 January 2021, review the turnover for the September 2020/December 2020 quarter to see if you meet the 30% decline in turnover test (if you do not meet this test, you will not be eligible for the JobKeeper extension).
  3. Review your employees to determine:
    • Whether they are eligible for the JobKeeper payment; and
    • If they are eligible, whether they qualify for Tier 1 or Tier 2 payment.
  4. Notify the ATO what payment rate applies to each of your eligible employees and eligible business participants (this is likely to be via your STP system).
  5. Ensure the minimum fortnightly payments are made to your employees and declared to the ATO via Single Touch Payroll.
If you are not already registered for the current JobKeeper program but become eligible for one (or both) of the Extension periods, you will also need to register your business and eligible employees for JobKeeper.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Current JobKeeper payments – extension to eligible employees

On 7 August 2020, further changes were announced to extend the JobKeeper scheme beyond 28 September 2020.  These changes also expand employee eligibility for the current JobKeeper payments.
 
We note that legislation has not yet been passed to give effect to these changes.  We will keep you updated on the progress of this legislation.

Eligible employees

From 3 August 2020, the date for assessing whether an employee is an eligible employee has changed from 1 March 2020 to 1 July 2020.
 
This means that some staff that were not eligible on 1 March 2020, may now be eligible for JobKeeper with effect from JobKeeper Fortnight 10 (which is the fortnight commencing 3 August 2020 and ending 16 August 2020).
 
This includes:
 
  • Casuals who have achieved 12 months service by 1 July 2020;
  • Staff who have achieved permanent residency by 1 July 2020;
  • Staff who have turned 18 years of age by 1 July 2020 (who were previously ineligible under the minor dependency rules); and
  • Permanent staff employed between 2 March 2020 and 1 July 2020.

What should you do?

We recommend that you undertake the following actions as soon as possible to determine if you have additional staff that may be eligible for JobKeeper:

  1. Review your employment records to identify any employees who are newly eligible for JobKeeper (see points above);
  2. With your employee, complete a JobKeeper Employee Nomination Notice;
  3. Update your payroll system to bring in any new employees from the relevant JobKeeper Fortnight (which can be as early as JobKeeper Fortnight 10 – which is the fortnight commencing 3 August 2020);
  4. Ensure that any participating employees are paid the $1,500 (before tax) minimum by no later than 16 August 2020 (the last day of JobKeeper fortnight 10);
  5. Continue to pay all eligible employees the $1,500 (before tax) each fortnight (including the newly eligible employees);
  6. Make sure that you declare your new eligible employees in your August JobKeeper declaration (to be lodged at the start of September).

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

JobKeeper 2.0 Extension

The current JobKeeper scheme remains in place, as originally advised, until 27 September 2020.

JobKeeper 2.0 was introduced on 21 July 2020 to extend the JobKeeper payment to 28 March 2021 (see https://www.tjnaccountants.com.au/jobkeeper-2-0/)

Further changes were announced on 7 August 2020 to make it easier for organisations to qualify for the JobKeeper payment extension from 28 September 2020.  The changes also expand employee eligibility for JobKeeper.

December 2020 quarter payments - JobKeeper 2.0

Eligibility

 
To be eligible to receive payments under the JobKeeper 2.0 scheme between 28 September 2020 and 3 January 2021, businesses need to show a decline in their actual turnover of 30% or more for the September 2020 quarter only (compared to the September 2019 quarter).

The decline in turnover is calculated by reference to the actual GST turnover for the relevant quarter.

(Under the original JobKeeper 2.0 eligibility criteria, businesses had to have a decline of 30% or more for both the June and September quarters).

Fortnightly payment rate

If your business meets the eligibility criteria for the December 2020 quarter JobKeeper payments, the payment rates are as follows:

  • $1,200 per fortnight for employees that worked (on average) 20 hours per week (or business participants who were actively engaged in the business for 20 hours or more per week);
  • $750 per fortnight for employees that worked (on average) less than 20 hours per week in February 2020 (or business participants who were actively engaged in the business for less than 20 hours per week).

March 2021 quarter payments - JobKeeper 2.0

Eligibility

 
To be eligible to receive payments under the JobKeeper 2.0 scheme between 4 January 2021 and 28 March 2021, businesses need to show:
 
  • a decline in their actual turnover of 30% or more for the September 2020 quarter (compared to September 2019 quarter); AND
  • a decline in their actual turnover of 30% or more for the December 2020 quarter (compared to December 2019 quarter).
The decline in turnover is calculated by reference to the actual GST turnover for the relevant quarters.
 

Fortnightly payment rate

If your business meets the eligibility criteria for the March 2021 quarter JobKeeper payments, the payment rates are as follows:

  • $1,000 per fortnight for employees that worked (on average) 20 hours or more per week (or business participants who were actively engaged in the business for 20 hours or more per week);
  • $650 per fortnight for employees that worked (on average) less than 20 hours per week in February 2020 (or business participants who were actively engaged in the business for less than 20 hours per week).

Employee eligibility

From 3 August 2020, the reference date for assessing which employees are eligible for the JobKeeper payment is now 1 July 2020. This will increase the employee eligibility for the existing scheme and the extended JobKeeper scheme.

The reference period for employees regarding their hours worked (to determine their tier of JobKeeper payment) will be the two fortnightly pay periods prior to 1 March 2020 and 1 July 2020.  The period with the higher number of hours is used for employees who were eligible at 1 March 2020.

The Commissioner of Taxation will have discretion to set out alternative tests where an employee or business participant’s hours were not usual during the February and/or June 2020 reference period.

In summary, employees are eligible in the extension period if they satisfy all of the following conditions:

  • are currently employed by an eligible employer;
  • for the eligible employer they were either:
    • Full time, part-time or fixed-term employee as at 1 July 2020; or
    • A long-term casual employee (employed on a regular or systematic basis for at least 12 months) as at 1 July 2020 and not a permanent employee of any other employer.
  • were aged 18 years or older as at 1 July 2020 (if you were 16 or 17 you can also qualify if you are independent or not undertaking full time study);
  • were an Australian resident (within the meaning of the Social Security Act or the Income Tax Assessment Act) or a holder of a Subclass 444 (Special Category) visa as at 1 March 2020; and
  • did not receive any of the following payments during the JobKeeper fortnight:
    • Parental leave or Dad and partner pay under the Paid Parental Leave Act 2020
    • Workers compensation payment for total incapacity for work.

Alternative turnover tests

The Commissioner of Taxation will also have discretion to set out alternative turnover tests where it is not appropriate to compare actual turnover in 2020 to actual turnover in 2019.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

JobKeeper 2.0

The current JobKeeper scheme remains in place, as originally advised, until 27 September 2020.

JobKeeper 2.0 will commence on 28 September 2020 and will continue until 28 March 2021.  Businesses will need to reassess their eligibility to JobKeeper 2.0.

The JobKeeper Payment will continue to remain open to new recipients, provided they meet the existing eligibility requirements and the additional turnover tests during the extension period.

December 2020 quarter payments - JobKeeper 2.0

Eligibility

 
To be eligible to receive payments under the JobKeeper 2.0 scheme between 28 September 2020 and 3 January 2021, businesses need to show:
  • a decline in their turnover of 30% or more for the June 2020 quarter (compared to June 2019 quarter); AND
  • a decline in their turnover of 30% or more for the September 2020 quarter (compared to September 2019 quarter).

The decline in turnover is calculated by reference to the actual GST turnover for the relevant quarters.

Fortnightly payment rate

If your business meets the eligibility criteria for the December 2020 quarterly payments, the payment rates are as follows:

  • $1,200 per fortnight for employees that worked (on average) 20 hours or more per week in February 2020 (or business participants who were actively engaged in the business for 20 hours or more per week);
  • $750 per fortnight for employees that worked (on average) less than 20 hours per week in February 2020 (or business participants who were actively engaged in the business for less than 20 hours per week).

March 2021 quarter payments - JobKeeper 2.0

Eligibility

 
To be eligible to receive payments under the JobKeeper 2.0 scheme between 4 January 2021 and 28 March 2021, businesses need to show:
  • a decline in their turnover of 30% or more for the June 2020 quarter (compared to June 2019 quarter); AND
  • a decline in their turnover of 30% or more for the September 2020 quarter (compared to September 2019 quarter); AND
  • a decline in their turnover of 30% or more for the December 2020 quarter (compared to December 2019 quarter).
The decline in turnover is calculated by reference to the actual GST turnover for the relevant quarters.
 

Fortnightly payment rate

If your business meets the eligibility criteria for the March 2021 quarterly payments, the payment rates are as follows:

  • $1,000 per fortnight for employees that worked (on average) 20 hours or more per week in February 2020 (or business participants who were actively engaged in the business for 20 hours or more per week);
  • $650 per fortnight for employees that worked (on average) less than 20 hours per week in February 2020 (or business participants who were actively engaged in the business for less than 20 hours per week).

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Instant asset write-off

As part of the Federal Government’s COVID-19 relief package, they increased the instant asset write-off threshold to $150,000 and expanded its application to businesses with a turnover of up to $500 million.

When considering asset acquisitions prior to year end, this means that your business may be able to obtain an immediate tax deduction for the purchase of an asset up to the following deduction thresholds:

  • From 1 July 2019 to 11 March 2020: $30,000
  • From 12 March to 30 June 2020: $150,000

Both of these thresholds are available to businesses with a turnover of $50 million or less (with the $150,000 threshold available to businesses with a turnover up to $500 million).

On 6 June 2020, the Government announced that the $150,000 threshold will be extended to 31 December 2020.  However, this extension has not yet been legislated.  

The deduction applies on a per asset basis.  This means you claim an immediate deduction for multiple assets provided each costs less than $150,000.  For example, if your business acquired 3 forklifts for $100,000 each between 12 March 2020 and 30 June 2020, you can claim a deduction for each of these forklists in the 2020 financial year (a total deduction of $300,000).

The assets can be new or second hand.  However, they must be installed and ready for use when you are claiming the deduction (ie. before 30 June 2020 if you would like to claim the deduction in the 2020 financial year).  

Motor vehicles

The deduction available for motor vehicles is capped at the car limit ($57,581 in the 2019/20 financial year).  This is the maximum amount that can be claimed as a deduction for the purchase of a car, regardless of how much it actually cost the business. 

In addition to this, if the vehicle is only used proportionally for business purposes, you can only claim the business proportion of the car limit.  For example, if you only used the car for 75% business use, the total you can claim under the instant asset write-off is 75% of $57,581, which is $43,186.  

Assets acquired for more than the threshold

If your business acquired an asset for more than the instant asset write-off threshold, the asset will be placed into a small business pool.  Under the simplified depreciation rules, the asset will be depreciated at 15% in the first year and then 30% in subsequent years.

New threshold from 1 July 2020 (or potentially 1 January 2021)

Once the $150,000 instant asset write-off finishes (which is currently 30 June 2020, or 31 December 2020 after the relevant legislation is passed), the instant asset write-off threshold will reduce to $1,000 and will only be available to businesses with a turnover of less than $10 million.


DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent.

Concessional Superannuation Contributions

For the 2019/20 financial year, the concessional (deducted) superannuation contribution cap is $25,000.

Concessional contributions include:

  • Employer contributions (including contributions made under a salary sacrifice arrangement); and
  • Personal contributions claimed as a tax deduction.

If you have more than one fund, all of your concessional contributions made to all of your funds are added together and counted towards the concessional contributions cap.

This means, during the 2019/20 financial year (subject to our comments below regarding unused concessional caps), you are generally limited to $25,000 in concessional (deducted) contributions in a financial year.

Unused concessional cap carry forward

From the 2019/20 financial year onwards, if your total superannuation balance is less than $500,000 at the end of the previous financial year, you may be able to contribute more than your $25,000 concessional cap by using up prior year unused cap.  Any unused cap from the 2018/19 financial year onwards can be carried forward for up to 5 years.  After 5 years, if the unused cap is not utilised, it will be lost.

For example, in the 2018/19 financial year, if you only made concessional contributions of $12,000, you have $13,000 unused cap.  If your total superannuation balance is less than $500,000 as at 30 June of the prior year, you can carry forward the $13,000 unused cap to be used at any time between the 2019/20 financial year to the 2023/24 financial year.  For example, in the 2019/20 financial year, you could contribute a total of $38,000 ($25,000 for the 2019/20 cap plus $13,000 for the unused 2018/19 cap).

Making superannuation contributions

Please call us if you are considering making personal contributions superannuation to check whether:  

(a) you can claim a tax deduction for making personal contributions

(b) how much you may be able to claim as a deduction

(c) whether it is tax effective for you to make the personal contribution

(d) what process needs to be followed in order to make the contribution

You also need to consider whether making a contribution fits within your overall financial plan as advised by your financial advisor.


DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent.

Small Business Adaption Grant

Applications are now open for the Queensland State Government’s Small Business Adaption Grant.

The purpose of the grant is to help small businesses in Queensland to adapt and sustain their operations and build resilience.

How much can you apply for?

Each eligible business can apply for a grant between $2,000 and $10,000.

What can the grant be used for?

The grant funds can be used towards the following activities:

  • financial, legal or other professional advice;
  • strategic planning, financial counselling or business coaching;
  • marketing and communications activities, such as content development (eg. web pages, mobile apps, visual and audio media);
  • digital/technological strategy development;
  • digital training or re-training to adapt to new business models;
  • capital costs associated with meeting COVID-19 safe requirements;
  • specialised digital equipment or business specific software to move business operations online;
  • meeting business costs (eg. utilities, rent).

Eligibility criteria

To be eligible, the small or micro business must:

  • have been subject to closure or otherwise highly impacted by COVID-19;
  • demonstrate business revenue has had a decline of at least 30% over a one month period;
  • employ staff and have fewer than 20 employees at the time of applying;
  • have a valid ABN (active at 23 March 2020);
  • be registered for GST;
  • have a Queensland headquarters;
  • have an annual turnover over $75,000 for the last financial year;
  • have a payroll of less than $1.3 million; and
  • not be insolvent or have owners/directors that are undischarged bankrupt.

Where to apply?

You can apply now at: https://www.business.qld.gov.au/starting-business/advice-support/grants/adaption?fbclid=IwAR0rbYUVlB1RRN-KwA4yQgADTOUPj1j0gyouBS56S-Tn1SN5Ng3R0EnobuE

Applications will close when the funds have been exhausted.


DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN
Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent.

JobKeeper payment – Enrolment and application

The ATO are continually releasing information about the administration of the JobKeeper Payment.

The information can be found on the ATO website: https://www.ato.gov.au/general/JobKeeper-Payment/

You can read our earlier posts in relation to the JobKeeper Payment here:

JobKeeper Payment – Employers

JobKeeper Payment – Business Participation/Owner operators

Enrolment steps

Below are the steps you need to take if you wish to enrol in the JobKeeper Payment scheme:
 
1. Register your interest and subscribe for JobKeeper Payment updates.
 
2. Check that your entity meets the employer eligibility criteria.
 
3. Check that your employees meet the employee eligibility criteria.
 
4. Continue to pay at least $1,500 to each eligible employee per JobKeeper fortnight (the first JobKeeper fortnight is the period from 30 March to 12 April).
 
5. Notify your eligible employees that you are intending to claim the JobKeeper Payment on their behalf and check they aren’t claiming the JobKeeper payment through another employer or have nominated through another business.
 
6. Send the JobKeeper employee nomination form to your nominated employees to complete and return to you by the end of April if you plan to claim the JobKeeper payment for April.  Keep it on file and provide a copy to your registered tax agent.
 
7. From 20 April 2020, you can enrol with the ATO for the JobKeeper Payment using the Business Portal or via your registered tax agent.  You must do this by 26 April 2020 if you intend to claim JobKeeper Payments for April.
 
8. In the online form, provide your bank details and indicate if you are claiming an entitlement based on business participation (for example, if you are self employed).
 
9. Specify the estimated number of employees who will be eligible for the first Jobkeeper fortnight (30 March – 12 April) and the second JobKeeper fortnight (13 April – 26 April).

Payment application steps

Once you have enrolled for the JobKeeper Payment (per the above steps), there will be ongoing requirements to apply for the actual payment:

1. Apply to claim the JobKeeper payment by logging into the ATO Portal (available from 4 May 2020 onwards).

2. Ensure you have paid each eligible employee a minimum of $1,500 per JobKeeper fortnight before tax.

3. Identify your eligible employees in the application form.

4. Submit confirmation of your eligible employees online and wait for your confirmation email or SMS showing it has been received.

5. Notify your eligible employees that you have nominated them.

6. Receive payment from the ATO.

7. Each month, reconfirm that your eligible employees have not changed.  You do not need to retest your reported fall in turnover but you will need to provide some information as to your current and projected turnover.  This will be done in your monthly JobKeeper Declaration report.

8. If your eligible employees change or leave your employment, you will need ot notify us through your monthly JobKeeper Declaration report.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

JobKeeper payment – Business participation (owner/operators)

The legislation for the JobKeeper Payment received Royal Assent on Thursday, 9 April 2020. The Rules regarding the operation and implementation of the JobKeeper Payment have also been released by Treasury.

A business may be entitled to the JobKeeper payment for the business owner or a nominated owner regardless of whether the business has eligible employees.  An entity is only entitled to payment for one business owner.

We have summarised the application of the JobKeeper payment below for business owners/operators.  Please do not hesitate to contact us if you have any questions about the application of the JobKeeper payment to your business.

Please note, we also have a separate post regarding the application of the JobKeeper Payment for employers – see here.

Eligibility

An entity will be eligible to participate in the JobKeeper Payment scheme where:

 For eligible entities, please see more information about the application and operation of the JobKeeper payment scheme.

Decline in Turnover Test (30% decline)

The entity must show that they have had a decline in their turnover of at least 30% before they can be entitled to the JobKeeper Payment. 

Once the test is satisfied, there is no requirement to retest in later periods. If you do not qualify for the JobKeeper Payment in your first test period, you can test in later months to see if you meet the test.

Test periods

You can calculate the decline in turnover based on a month or a quarter.  The entity can choose the relevant comparison period.

The relevant testing periods are:

Monthly test periods

  • March 2020
  • April 2020
  • May 2020
  • June 2020
  • July 2020
  • August 2020
  • September 2020

Quarterly test periods

  • 1 April 2020 to 30 June 2020
  • 1 July 2020 to 30 September 2020
Calculation
 
The turnover decline is determined by comparing the projected GST turnover for the test period (either a month or quarter) to the actual GST turnover for the same period in 2019.
 
If the shortfall (expressed as a percentage of the 2019 income) is 30% or more, the Decline in Turnover Test is satisfied.
 
Example calculation:
April 2020 projected GST turnover: $400,000
April 2019 actual GST turnover: $700,000
Shortfall: $700,000 – $400,000 = $300,000
Shortfall as a percentage of 2019 actual turnover: $300,000 / $700,000 x 100% = 42.86%
 
GST turnover
 
The turnovers being compared are “projected GST turnover” and “current GST turnover”.  These terms are defined in the GST legislation.  However, you do not need to be registered for GST in order to apply this test.  You simply need to apply the definition in the GST legislation in order to calculate your turnover for the relevant period.
 
Projected turnover includes all of the supplies that you have made or are likely to make.  The likelihood of a supply being made must be based on a reasonable expectation and considered in the context of the facts and circumstances of a particular business.  So, in assessing your projected turnover, you will need to consider all the sales you have made and sales you are likely to make for the rest of the test period (ie. the chosen month or quarter).
 
Your current GST turnover is the actual GST turnover for the chosen period in 2019 (ie. the comparison month or quarter from 2019).  For most GST registered entities, this is likely to be the G1 label from your BAS if you report your GST for the same period. 
 
For example, if you report GST monthly and choose March 2020 as your test period, you will need to compare your turnover from March 2020 to G1 from your March 2019 BAS to see if the decline is greater than 30%. 
 
Example – Satisfying the Decline in Turnover Test
 
Burke Industries assesses its eligibility for JobKeeper payments on 11 May 2020 based on projected GST turnover for May 2020 of $10 million from its business activities.  The corresponding period is the month of May 2019 for which it had a current GST turnover of $20 million.  The May 2020 turnover falls short of the May 2019 turnover by $10 million, which is 50% of the May 2019 turnover.  This exceeds the specified percentage of 30%.  Burke Industries satisfies the Decline in Turnover Test.
 
Example – Failing to meet the Decline in Turnover Test


Nguyen Industries assesses its eligibility for JobKeeper payments on 3 July 2020 based on a projected GST turnover for the quarter beginning on 1 July 2020 of $80 million from its business activities.  The corresponding period is the quarter beginning 1 July 2019 for which it had a current GST turnover of $100 million.  The July 2020 quarter turnover falls short of the July 2019 quarter turnover by $20 million which is 20% of the July 2019 quarter turnover.  This does not exceed the specified percentage of 30%.  Nguyen Industries does not satisfy the Decline in Turnover Test.

Alternative Decline in Turnover Test

The Alternative Decline in Turnover Test applies if there is not an appropriate relevant comparison period in 2019.

This may be the case of a new business, started for example in January 2020, or a business that made a business acquisition in 2020.  In both examples, the basic test may not accurately reflect the downturn in activity that the business has suffered.

Where the Tax Commissioner is satisfied that there is no such comparison period in 2019, or it is not an appropriate relevant comparison period, the Commissioner may determine an alternative decline test.

Example – Satisfying the alternative decline in turnover test – comparison period not appropriate

Camille’s Farms carries on a farming business and retail flower sales in Australia.  It was subject to a severe drought from 2018 until September 2019 that reduced the amount of flowers it could grow.  It returned to normal crop output in January 2020.  Its retail flower sales became significantly affected in March 2020.

It assesses its eligibility for JobKeeper payments on 3 July 2020 based on a projected GST turnover from its farming activities for the quarter beginning 1 July of $2,000,000.  The corresponding period is the quarter beginning 1 July 2019 – a period in which Camille’s Farms was severely affected by drought.  Because of the effects of the drought, Camille’s Farms had a much lower than usual turnover for the quarter beginning 1 July 2019 of $2,500,000.  The July 2020 quarter turnover falls short of the July 2019 quarter turnover by $500,000, which is 25% of the July 2019 quarter turnover.  This does not exceed the specified percentage of 30%, so the decline in turnover is not satisfied.

However, because of the effects of the drought on farming businesses, the Commissioner is satisfied that there is not an appropriate relevant comparison period for an entity that carried on a farming business.  Instead, for these entities, the Commissioner determines an alternative test for which the relevant comparison period is the corresponding quarter in 2017.  In the quarter beginning 1 July 2017, Camille’s Farms had a current GST turnover of $4,000,000.  This represents a shortfall of 50% when compared to the projected GST turnover for the quarter beginning 1 July 2020.  This exceeds the specified percentage of 30%, so the alternative decline in turnover test is satisfied.

Example – satisfying the alternative decline in turnover test – new business

Seb Tech is a start-up technology company that began carrying on a business on 1 October 2019 selling its product to a range of businesses including cafes and restaurants.  Despite strong initial sales, its sales declined substantially from March 2020.  It assesses its eligibility for JobKeeper payments on 15 April 2020 based on a projected GST turnover for April 2020 of $15,000 from its technology business.  However, because Seb Tech did not begin to carry on a business until 1 October 2019, there is no corresponding period in 2019 that applies.

As there is no corresponding comparison period in 2019, the Commissioner determines an alternative test under which the relevant comparison period is teh average of the actual GST turnover in all of the months in which the business was being carried on prior to the turnover test period.

In October 2019 to March 2020, Seb Tech had an average monthly GST turnover of $30,000.  This represents a shortfall of 50% when compared to its projected GST turnover for April 2020 of $15,000.  This exceeds the specified percentage of 30%, so the alternative decline in turnover is satisfied.

Contrived arrangements

If an entity deliberately enters into contrived arrangements with the sole or dominant purpose of reducing their turnover in order to gain access to JobKeeper payments, they will not be entitled to the payment or increased payment and general interest charge will apply to the overpayment.

Administrative and criminal penalties are also likely to apply to the parties involved in such schemes.

Integrity rules

The JobKeeper Payment for business participants/owners is intended to support active businesses only.  As such, business participants/owners will only be entitled to claim the JobKeeper payment where they satisfy the following conditions:

  • The entity had an ABN on 12 March 2020; and
  • Either:
    • Income tax returns:
      • The entity had an amount included in its assessable income in the 2018-19 income year in relation to carrying on a business; and
      • The Tax Commissioner had notice of this income on or before 12 March 2020; or
    • Business activity statements:
      • The entity made a taxable supply in a tax period that started on or after 1 July 2018 and ended before 12 March 2020; and
      • The Commissioner had notice on or before 12 March 2020 that the entity had made the taxable supply.

Essentially, the business entity needs to have either lodged its 2019 tax return prior to 12 March 2020 or have at least one BAS lodged for the period between 1 July 2018 and 28 February 2020.  The income tax return and/or BAS need to declare business income.  Entities that are behind in their lodgement may find they are not entitled to claim the JobKeeper Payment for their business owner.

Eligible business participant

An individual is an eligible business participant if:

  • the individual is not employed by the entity at any time in the fortnight; and
  • the individual is actively engaged in the business carried on by the entity; and
  • on 1 March 2020 the individual was aged 16 years or over; and
  • on 1 March 2020, the individual was an Australian resident or a tax resident and was the holder of a Subclass 444 (Special Category) visa; and
  • notice was provided by the individual that they will be the nominated eligible business participant for the entity; and
  • the individual has not given notice to any other entity (or the Commissioner) for participation in the JobKeeper Payment scheme; and
  • no other individual has been reported as the eligible business participant for the entity; and
  • the individual is one of the following:
If the entity is a …
The individual must be …
Sole Trader
The Entity
Partnership
A partner in the partnership
Trust
An adult beneficiary of the trust
Company
A shareholder in or a director of the company

ATO notification - election to participate

An entity needs to notify the ATO in approved form of their election to participate in the scheme before the end of the fortnight (for the entity to be entitled to a payment for that fortnight). 

For entities that wish to participate in the first or second JobKeeper payment (that is, the fortnights commencing 30 March 2020 and 13 April 2020), the entity has until the end of the second JobKeeper fortnight (ie. 26 April 2020) to provide the Commissioner with its election to participate.

(At the time of writing this 2:00pm, Sunday 12 April 2020, the approved form had not yet been released.  We will update this page once the approved form has been released.)

Fortnight Starting
Last Date for ATO Notification
30 March 2020
26 April 2020
13 April 2020
26 April 2020
27 April 2020
10 May 2020
11 May 2020
24 May 2020
25 May 2020
7 June 2020
8 June 2020
21 June 2020
22 June 2020
5 July 2020
6 July 2020
19 July 2020
20 July 2020
2 August 2020
3 August 2020
16 August 2020
17 August 2020
30 August 2020
31 August 2020
13 September 2020
14 September 2020
27 September 2020

Application and operation

Receipt of payment from ATO

Where the Tax Commissioner is satisfied that an entity is entitled to a JobKeeper payment, the Commissioner must pay $1,500 to the entity for its business participant.  The Commissioner must generally make the payment no later than 14 days after the end of the calendar month in which the fortnight ends.

** It is important for entities to check that its bank account details with the ATO are correct.

We also understand that the payment will not be used to offset any existing ATO liabilities of the entity.

Monthly reporting

Entities participating in the JobKeeper scheme will be required to report monthly to the ATO.  The entity will be required to report:

  • its current GST turnover for the reporting month; and
  • its projected GST turnover for the following month.

This information does not affect an entity’s eligibility including in respect of the decline in turnover (which only needs to be satisfied once).  It is intended to ensure that there is good information on which to assess the economic impact of the Coronavirus on a monthly basis across Australia.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.