How will COVID-19 affect your end of financial year tax return?

This tax return may be your most important, but also the most complicated one you have done in a while. For organisations there are some key tax planning and compliance issues that need to be considered and be attended to by June 30. Here are some of the new rules and tax laws that you will need to consider when doing your 2019-2020 tax return and when completing your tax planning for financial year 2020-2021.

1. Jobkeeper

For those that are claiming the JobKeeper payments you need to remember that this income is taxable to the business, but it can be claimed as an expense when paying to employees. Therefore, there will be no net tax impact for a company.

It is taxable income for your employees, so you need to ensure that tax has been withheld from these payments on behalf of your employees if necessary.

2. Superannuation Amnesty

If you are behind on your super guarantee payments for your employees, then you are in luck. There is a once off amnesty to correct this and get up to date. However, you will need to disclose, lodge and pay the super guarantee amounts for your employees by the 7th September 2020.

3. Instant Asset Write Off

From March 12th, 2020 the Government increased the amount that you can claim an instant write off for an asset purchase to $150,000. This enables businesses to make a large purchase and write this off against their profits for this current tax year. This is for any business with a turnover less than $500 million.

Instant asset write-off can be used for:

• multiple assets as long as the cost of each individual asset is less than the relevant threshold
• new and second-hand assets.

It cannot be used for assets that are excluded from the simplified depreciation rules.

Ensure to review to instant asset write-off eligibility criteria and thresholds as they have changed. You also need to check your business's eligibility. The eligibility also depends on when the asset was purchased, first used or installed ready for use.

The instant write-off tax incentive was to cease on 30 June 2020, however the government have proposed to extend this incentive by a further 6 months.

4. Corporate Tax Rate

The base rate entities corporate tax rate remains at 27.5%, otherwise the company rate is 30.0%.

This includes corporate limited partnerships, strata title bodies corporate, trustees of corporate unit trusts and public trading trusts.

5. Payroll Tax

Upcoming changes to the Payroll Tax Threshold 2021:

To check online Payroll Rates and Thresholds by each state click here >

New South Wales (NSW)
NSW Payroll tax customers whose total grouped Australian wages for the 2019-2020 financial year are $10 million or less, will have their annual tax liability reduced by 25 per cent when they lodge their annual reconciliation. Payroll tax customers have the option of deferring their payroll tax payments until October 2020.

Victoria (VIC)
Victorian Payroll tax customers whom have annual taxable wages up to $3 million will have their payroll tax for the 2019-2020 financial year waived.

Queensland (QLD)
There have been a number of payroll tax relief measures in the QLD to alleviate the impacts of coronavirus (COVID-19). These include:

• refunds of payroll tax for 2 months – applications closed on 31 May 2020;
• a payroll tax holiday for 3 months – closed on 31 May 2020; and
• deferral of paying payroll tax for the 2020 calendar year – You can apply to defer paying your payroll tax for the 2020 calendar year. If you had already applied for an earlier deferral date, you do not need not reapply – it will be extended to 31 December 2020.
  

South Australia (SA)
The South Australian Government recently announced that businesses and business groups with Australian (annualised grouped) wages up to $4 million will receive a six month payroll tax waiver. Businesses and business groups with wages over $4 million can apply to defer their payroll tax.

Western Australia (WA)
In the WA, Payroll tax will be waived from March to June 2020 for employers, or groups of employers, whose Australian taxable wages are less than $7.5 million at 30 June 2020.

Northern Territory (NT)
The Northern Territory Government has announced that payroll tax waivers are available for the March to August 2020 return periods for employers with:

• confirmed listing on the DTBI Business Hardship Register
• total Australian taxable wages for 2019-2020 of under $7.5 million.

Tasmania (TAS)
As part of the Tasmanian government's COVID-19 stimulus package the following payroll tax relief measures are available to eligible businesses:

• Payroll tax waiver – businesses with Australian grouped wages up to $5 million
  Eligible Tasmanian employers who can demonstrate that their operations have been affected by COVID-19 will not be required to pay any payroll tax for the entire financial year of 2019-2020.
• Payroll tax waiver – hospitality, tourism and seafood industries
  Eligible Tasmanian hospitality, tourism and seafood industry employers will not be required to pay any payroll tax for the entire financial year of 2019-2020.

7. Work from Home Deductions

Those people that needed to work from home can claim running expenses. You can use a fixed rate method which has been increased to 80 cents per hour. You do need to keep a 4 week work diary as proof of the time that was spent at home.

Ensure you have a diary of hours worked and if necessary print timesheets or other information that can verify your hours worked from home as substantiation.

8. ATO Payment Plan - Low interest

For those businesses that have been affected by COVID-19 your Accountant can contact the ATO on your behalf to request a low interest payment plan to help you pay existing and ongoing tax liabilities.

9. Land Tax Rebates

If you are a commercial or residential landlord who has reduced your tenants’ rent due to COVID-19, you may be eligible for the Government’s land tax relief. 

If eligible, the relief available may reduce up to 25% of your land tax liability in NSW, VIC, QLD, SA and WA, subject to specific measures and information required to submitted to state revenue departments for assessment of eligibility. In Tasmania, land tax will be waived for commercial property business owners for the 2020-2021 financial year.

• NSW – for more details click here >
• VIC – for more details click here >
• QLD – for more details click here >
• SA – for more details click here >
• WA – for more details click here >
• TAS – for more details click here >

No Land Tax applies to Northern Territory.

For those businesses that have been affected by COVID-19 your Accountant can help you with collecting supporting documents and submitting application on your behalf.

10. Expert advice

If you are concerned about COVID-19 impacts on your business and what you need to do at tax time this year we are happy to have a chat. Contact us today if you need help with any of your obligations for this financial year.

Have you noticed our #EOFYTaxTips... here's one that relates to #Taxation

“Boosting Cash Flow credits aren’t assessable income for tax purposes but JobKeeper payments are – take care when planning for 30 June.”