Later last month, the government announced to extend JobKeeper Payment by six months to 28 March 2021 and the JobSeeker Payment to 31 December 2020. The extension is aiming to build up the confidence for economy recovery and continue to support the business and community. However, the government also make eligibility stricter for the sake to only provide assistance to individuals and businesses who are indeed highly impacted.

Changes of the extended JobKeeper

Two phases payment

From 28 September 2020 to 3 January 2021, Jobkeeper Payment will be:

• $1,200 per fortnight for all eligible employees who, in the four weeks of pay periods before 1 March 2020, were working in the business or Not-For-Profit for 20 hours or more a week on average, and for eligible business participants who were actively engaged in the business for 20 hours or more per week on average in the month of February 2020; and

• $750 per fortnight for other eligible employees and business participants.

From 4 January 2021 to 28 March 2021, JobKeeper Payment will be:

• $1000 per fortnight for all eligible employees who, in the four weeks of pay periods before 1 March 2020, were working in the business or Not-For-Profit for 20 hours or more a week on average, and for eligible business participants who were actively engaged in the business for 20 hours or more per week on average in the month of February 2020; and

• $650 per fortnight for other eligible employees and business participants.

Eligibility of employees stays the same as before, for more information please refer to our article The Second and Third Stimulus Package Plan – Which One Suits You.

Turnover Test for Extended JobKeeper

To be eligible for the extended JobKeeper Payment, business and Not-For-Profit are required to meet the current turnover test and in addition, they need to prove their actual turnover has been continuously significantly dropped down in the testing period. They have to apply and satisfy the requirements again in October 2020 and January 2021.

Business and Not-For-Profit need to demonstrate they have experienced a decline in turnover for June 2020 quarter (April, May, June) and September 2020 quarter (July, August, September) compared to the relevant quarters (usually the same quarter of last year) for the period 28 Sep 2020 to 3 Jan 2021 JobKeeper payment.

Similarly, to be eligible for the JobKeeper under the extension period 4 Jan 2021 to 28 Mar 2021, businesses and Not-For Profit should prove their actual turnover for June, September and December quarters 2020 are dramatically reduced compared to the relevant quarters (usually the same quarter of last year).

Test for decline in turnover remains the same, for more information please refer to article The Second and Third Stimulus Package Plan – Which One Suits You.

Changes of the extended JobSeeker

The temporary Coronavirus Supplement has also been extended from 25 September 2020 to 31 December 2020. However, the payment has been adjusted aligning with the gradually improved economy. The government will simultaneously update the associated policy to guide those people become more active in job seeking. 

Changes to the payment

From 25 September 2020 to 31 December 2020, the Coronavirus Supplement per fortnight will be reduced from $550 to $250. Effectively the JobSeeker payment rate will now be reduced from $1100 to $800 per fortnight.

The income free threshold to people on JobSeeker and Youth Allowance (other) will be increased from $106 for JobSeeker Payment and $143 for Youth Allowance (other) to $300 per fortnight for both and a phase out rate of $0.6 in every dollar of income over $300.

Eligibility

Eligibility for the payment will be changed too from 25 September 2020 to ensure the assistance has been delivered to people who need most as the economy recovers.

• Means Testing – from 25 September 2020, means testing will be put in place in the following ways:
  • Asset testing for all payment for both existing and new recipients
  • the Liquid Assets Waiting Period (LAWP) for all payments will be reinstated

• Partner income testing – from 25 September 2020, the partner income testing cap will be increased to $3086.11 per fortnight or $80238.89 per annum for individuals with no personal income. The taper rate will jump to $0.27 from $0.25, with the higher income cut-out a result of changes to income testing for JobSeeker Payment.

• Expanded Criteria – JobSeeker Payment and Youth Allowance (other) criteria will continuously assist permanent employees who are stood down or lose their employment and sole traders, self-employed, casual workers and contractors who meet other tests until 31 December 2020.

From 4 August 2020, a mutual obligation requirement (temporarily suspend from 24 March 2020 to 8 June 2020) will be reintroduced, whereby jobseekers are required to undertake FOUR job searches a month. The penalty will apply to those who reject a job without a legitimated reason that has been provided through the program.

The reduced JobKeeper Payment may make some JobKeeper recipients entitled to JobSeeker Payment too. Therefore, the total benefits of extended JobKeeper recipients received may not necessarily reduce much. People who are affected may need to pay attention to the government on any further changes to JobKeeper and JobSeeker.

At Pitt Martin, we are here to be with you through this pandemic. Since the JobKeeper Scheme is released, we have announced to provide FREE assessment on the eligibility for the businesses. Please feel free to click the social media button on top to share this article with your friends and the ones around you to help more people in need.

2020 is already halfway and we are all heading into the new financial year. Despite there are quite many changes from the government stimulus package, there are still some key changes that we can take a look at for Financial Year 2021.

Reduced company tax rate from 1 July 2020

Firstly, from 1 July 2020, tax rate for small business under certain structure has been reduced to 26%.

Businesses such as companies, corporate unit trusts and publicly trading trusts with a turnover less than $50 million will be taxed at a rate of 26% in 2020-21. The tax rate 30% will continuously apply to all companies that are not eligible for lower company tax rate. Generally, the ones with a turnover more than $50m. The lower company tax rate will then reduce to 25% from the 2021-22 income year. Progressive changes to the company tax rate can be found below:

	2018-19 and 2019-20	2020-21	2021-22
* Base Rate Entities	27.5%	26%	25%
Other corporate tax entities	30%	30%	30%

*base rate entity is a company has an aggregated turnover less than $50m and 80% or less of their assessable income is passive income

Increased National Minimum Wage Rates

From 1 July 2020, the minimum wage has been increased by 1.75%

The Fair Work Ombudsman has staggered the increase into three stages:

The first group on 1 July 2020

• Frontline healthcare and social assistance workers
• Teachers and childcare workers
• Other essential services

The second group on 1 November 2020

• Construction
• Manufacturing
• A range of other industries

The third group on 1 February 2021

• Accommodation and food services
• Arts and recreation services
• Aviation
• Retail
• Tourism

Please go to Fair Work Ombudsman Website (https://www.fairwork.gov.au/) for more information in regards to the affected industries.

For all other employees who are not covered by an award or employment agreement, they have to be paid at a minimum hourly rate of $19.84 or $753.8 per week. The changes will become effective from 1 July 2020.

Employers should ensure their employee receive at least the national minimum wage to avoid breaching any industrial and superannuation obligations.

Increase the flexibility of Parental Leave Pay for self-employed

Starting from 1 July 2020, adopting the Parental Leave Pay Planning announced by the government will provide parents more flexibility and choice.

The new measure introduces 30 days of flexible paid parental leave for self-employed and small business owners.

Before, parents are only eligible to claim paid parental leave of 18 weeks in one go. Now, the payment will include both:

• A continuous paid parental leave period of up to 12 weeks and,
• 30 flexible paid parental leave days

Parents can still get parental leave pay in a single continuous 18 weeks block. Alternatively, you can choose a shorter block of 12 weeks. You can then take the remaining flexible paid parental leave when it suits you. However, you must take the flexible paid parental leave days all before your child turns 2. For example, you work 5 days a week previously. Now you have your new born child. You can choose to take a continuous 12 weeks paid parental leave first, and work for three days a week and take a paid parental leave for the remaining 2 days.

If employees want to receive a flexible paid parental leave, they have to negotiate with their employers in regards to their paid leave period or back to work as a part-time. If you cannot make an agreement with your employers regarding your working arrangement, you have to take a continuous block of 18 weeks.

You can changes apply to the babies born on or after 1 July 2020 but the application for the flexible arrangement is opened from 1 April 2020.

Other changes from 1 July 2020

• The instant assets write-off of $150,000 threshold for small business has been expanded to 31 December 2020.
• Cents per kilometre for work purpose deduction has been increased from $0.68 to $0.72.
• Capital gain tax exemption for non-resident for main residence will not be available unless you satisfy the life event test. Please refer to our article “CGT exemption on Main Residence is not any more to Foreign Resident” for more information.
• Small businesses with employee less than 19 are required to finalise the payroll information through STP (Single Touch Payroll) system which was enforced from 1 July 2020. Please refer to “For All Business – Single Touch Payroll” for more information.

 In Pitt Martin, we keep our clients with government tax and policy updates so they won’t be disadvantaged by the obsolete legislation. Call us on 02 92213345 or email connect@pittmartingroup.com.au for this tax season.

Disclaimer: This article is not providing a formal advice and may not suit to all scenarios. Please make an appointment with us to discuss.

A new financial year is an important time for all kinds of businesses, from sole traders to big corporate. It is not only to meet your tax obligations with the Australian Taxation Office, but also the perfect time to plan for the next 12 months of your business.

There is certainly lots to do as a small business owner as you focus on year-end accounting and bookkeeping tasks besides some planning for the new financial year. To help you organise your financial records, Pitt Martin has put together a handy EOFY checklist for businesses.

• You need to ensure your BAS lodgements are up-to-date and accurate. This is not only making it easier for you to finalise your financial statements but also avoid penalty from the ATO
• You need to ensure your superannuation guarantee (SG) contributions are accurate and up to date. Please note that your March SG is due 28 April 2020 and if you have previous quarters outstanding, you need to act as soon as possible or contact your accountant and bookkeeper for guidance.
• If you are reporting to the ATO via Single Touch Payroll (STP), you are exempt from lodging a PAYG payment summary (Group Certificate) annual report for the amount you’ve reported through STP and from providing payment summaries to your employees so long as you undertake the finalisation declaration by the appropriate date. Please note that you can finalise your employees’ EOFY payroll information through your STP enabled software as soon as you have reconciled the information. Otherwise, you have up until 31 July to do so. Your employees will be able to access their income statements via myGov under the employment tab. If they do not have a myGov account and cannot create one, or do not have a registered agent, you can direct them to contact ATO on 13 28 61.
• You need to ensure that you keep records for at least 5 years, and they are compliant with the ATO requirements
• If you prepared your bookkeeping during the year, please make sure you have your accountant to review the transactions and GST codes assigned to the Profit and Loss and Balance Sheet items to ensure you are lodging a correct BAS.
• The stocktake of your inventory should be done by 30 June 2020, if your business carries stock. Any adjustment on stock quantities and wastage should be reflected in the 2020 accounts.
• If you maintain an asset register for your business, you need to review with your accountant or bookkeeper and remove any assets that had been disposed of or write off. Speak to your accountant about the instant asset write-off that the government introduced as part of the Australian Government’s economic response to coronavirus.
• You need to ensure the following have been completed and reflected in your Profit and Loss and Balance Sheet,
  • Bank accounts, petty cash, prepayments, credit cards, borrowing cost, loans, Chattel Mortgages, and Division 7A Loans are reconciled
  • Depreciation has been properly accounted up to 30 June 2020 in the Profit and Loss and Balance Sheet
  • Review your Debtors and Creditors balance to ensure the accuracy
  • GST and PAYG withholding accounts are reconciled to the June quarter BAS
  • Wages and Superannuation in the Profit and Loss are reconciled to the Payment Summaries.
  • Superannuation Payable in the Balance Sheet is reconciled to the June quarter superannuation guarantee contributions
  • Review the suspense account and ensure all amounts are allocated to the appropriate account
  • Ensure there have been no personal expenses claimed as business expenses

With many businesses facing unprecedented challenges from COVID-19, there is no better time for small business owners to start afresh and thinking about improving their current business performance.

We have included additional checklist which hopefully can help you improve your business performance and financial health going forward,

• You need to revisit your business plan and adjust accordingly to provide a better and clearer direction for your business amid the pandemic. You need to think about what areas of your business do you want to improve? Your accountant can be an important resource to help you put in place a plan to get where you want your business to be.
• You need to update your cash flow budgets for the next 12 months by comparing it to the actual performance. Cash flow is the lifeblood of your small business and needs to be looked at closely for your business to sustain. Review your pricing structure and if you need to raise your price, now is the best time to do. Again, your accountant will be able to assist in the pricing and cash flow budgets.
• You need to review your business insurances or public liability to ensure you have a sufficient level of coverage
• You need to review your financing arrangements to ensure that you have a better deal
• You need to review your own personal insurances including life insurance and income protection insurance to ensure you have adequate coverage should your circumstances have changed
• You need to review your health and safety policies and procedures to ensure your workplace is COVID Safe by following the guidance from the government for the safety plan.
• If you are still using a spreadsheet or other manual accounting system, you might want to consider switching to cloud-based accounting software. Your accountant will be able to assist you with the transition.

In the face of uncertainty caused by the global pandemic, actions taken now can have an immediate impact on how quickly your business rebounds from the global downturn.

Pitt Martin Accountants and Tax Advisers are Xero qualified and Award-winning accountants and bookkeepers who can assist you and your business to improve your business performance and financial health moving forward.

If you know any small business owners who require an assistance in managing their bookkeeping and accounting, please do not hesitate to pass on our details or get in touch with our team on 02 9221 3345 or email connect@pittmartingroup.com.au

Given the impact of Bushfire and COVID-19, Australia has entered into an economic recession first time in the last 30 years. Last a couple of weeks, we have witnessed the Federal Government announced that they have been working with States and Territories to offer a $25,000 HomeBuilder Grant between 4 June 2020 and 31 December 2020 for eligible owner occupiers and buyers including first home buyers.

Eligibility:

• Natural person (not a company and trust)
• Aged 18 years or older
• An Australian Citizen (does not mention PR or New Zealand Citizen)
• Income cap:
  • For Individuals, your earning should be $125,000 or less based on 2018-19 tax return or later
  • For couples, your combined earnings should be $200,000 or less based on 2018-19 tax return or later
• can be either:
  • A new home worth less than $750,000 or
  • An existing home valued up to $1.5m, and the renovation contract should be between $150,000 and $750,000
• The construction and renovation must be executed within three months of the contract date.

Dwelling types:

House, apartments, house and land package, off-the-plan, can be existing property renovation and new property. The scheme will not apply to owner builders or those who are planning to build a new home or renovate an existing home as an investment property.  

Eligibility for Renovation

Renovation fee is between $150,000 and $750,000. The existing property needs worth less than $1.5 million. The construction should be carried out by licensed contractors at arms-length price within three months after signing of the contract. The HomeBuilder Grants must be used for improving your accessibility, liveability, and safety, but not used for add-ons like tennis courts, swimming pool and detached sheds etc. Also, the terms of the contract should be reasonable and in line with the market requirements to prevent any fraud between builders and property owners from swindling grants.

Am I still eligible if I own a land?

• If you own land with an existing dwelling on it and plan to demolish and rebuild your dwelling, this will be considered as substantial renovation as long as the upgraded work’s value is between $150,000 and $750,000, and the value of your existing dwelling (including land value) before the demolish does not exceed $1.5 million.
• If you acquired a vacant land prior to 4 June 2020, you can build a new dwelling on it as long as the total cost of the dwelling plus the land value before construction is less than $750,000.

Can I apply now?

No. It can only apply after your State or Territory enters into a contact with Federal Government and open the channel for application. You will be notified by each State or Territory government in regard to the updates of application. 

Required documents:

Required documents may vary from different State or Territory for your application. However, at least the following documents are required:

• Proof of identification
• Contract with date and signature of you and your licensed builder
• Copy of your builder’s registration or license (depending on your State or Territory)
• Copy of your 2018-19 tax return to demonstrate your income meets income cap
• Other documents including council approvals, building contracts and evidence of land value etc

More detailed documents require further notification from States or Territory government

If I have received First Home Owner Grant, am I still eligible for this HomeBuilder Grant?

Yes, you are. The Homebuilder Grant does not conflict with the First Home Owner Grant, Stamp Duty Concessions as well as the Commonwealth’s First Home Loan Deposit Scheme and First Home Super Saver Scheme.

Do we have to pay tax on that?

No. This is a tax-free payment to you.

Call us on 0292213345 or email on info@pittmartingroup.com.au for further details.

Disclaimer: This article is not providing a formal advice and may not suit to all scenarios. Please make an appointment with us to discuss.

The last few months have shown a constant display of obscure challenges related to maintaining business during the COVID-19 pandemic for business owners and leaders everywhere. The latest obscure challenge is possibly the trickiest yet: how to cautiously recommence businesses after the government announced the major easing of coronavirus restrictions.

Businesses will be faced with many logistical details including how to maintain social distance, limit crowd size, and ensure spaces are cleaned thoroughly and regularly. It will take some time to lift the level of confidence in people to start visiting shops, restaurants, and other public venues. In such an uncertain and diverging environment, how can small businesses move forward and back to “business as usual”? There are many opportunities for us as business owners and leaders to unify and build this together amid the uncertainty.

Patience

Patience is not the ability to wait, but the ability to keep a good attitude while waiting. In today’s world, where technology has created the expectation that everything should move more quickly, patience becomes one of the rarest virtues. No one has the patience to wait for anything anymore. However, we need to be careful to not rush everything. We should be careful not to move faster than governments allow.

We should be patient with a timeline that might be slower than we anticipated; patient with a reopening process that might be awkward; patient with the line-up that we have to face when entering the shops; patient with our leaders feeling the pressure of this difficult situation; patient with one another as we are getting used to with the new normal. As hard as it will be to practice patience, we must be determined as it is unquestionable the second wave of Covid-19 cases, or a local outbreak would detrimentally impact businesses.

Humility

Humility is to have a student mindset and always be willing to learn new things. With so many changes in the world amid the pandemic, we need to quick to hear, slow to speak, and slow to anger. When you listen, it may slow down the process of consideration and planning, but it is worth it. We need to be humble to learn to adapt and to accept that things might not be the same as they used to be.

We need humility in how we react to the plans by the government leaders, even if we do not agree with every aspect of it. There is no definitive answer on how to do this well and everyone is just trying to do the best they can to get through this crisis. If we are willing to learn and adapt with all humility, we will be able to survive.

Service

This pandemic is affecting us individually, societally, and organisationally. During this pandemic, we all need to step up and be a leader to do what we can for the greater good. If you are fortunate enough to have cash in your pockets, you can use it to support other businesses. We need to think of ways we can serve our friends, family, neighbours, and community as a whole. We need to encourage “we” before “me” and show gratitude and compassion for others.

If you can make your business about helping others during this crisis, you will always have plenty of work because no one has ever become poor by giving. There is no better time than now to put the needs of others ahead of our own. Remember, success has nothing to do with what you gain in life or accomplish for yourself; it is what you do for others.

There is no need to panic. Tough times never last but tough people do. If we can all continue to show up as servant leaders with patience and humility to serve others, we can get through this uncertainty and crisis stronger than ever.

Don’t let this uncertainty sink your business, reach out for help not because you are weak, but because you want to remain strong.

Pitt Martin Accountants & Tax Advisers are Xero qualified and Award-winning accountants and bookkeepers for small businesses which can be reached on 02 9221 3345 or connect@pittmartingroup.com.au.

It has already been two months since the lockdown was in place. Earlier this month, Prime Minister Scott Morrison finally announced a “Three-Step” procedure to reopen Australia after the COVID-19, which is good news to all of us. Based on the data from Treasurer Josh Frydenberg, Australian has been losing more than $4 billion each week due to the lockdown, of which the largest portion has been attributed to the affected small and medium-sized business (SME). As the lockdown has been gradually lifted, how would SME self-adjust their business and catch up with the changing market in order to bring their business back to normal or even beyond?

1. Get government subsidies and grants

First of all, the biggest issue that SME is facing at the moment is cashflow caused by the declined revenue. As cashflow is considered as the lifeline for any business, the shortage of cashflow may directly lead the business to insolvency. For now, the fastest and most efficient way to deal with the cashflow shortage is to apply for and get the government subsidies and grants. We have mentioned those subsidies and grants in our previous articles The second and third Stimulus Plan – Which one suits you? and How small and medium business benefit from the Stimulus Package? , such as JobKeeper Payment, Cash Flow Boost to employers and Apprentices and Trainees Wage Subsidy etc. These are the most effective approaches you can take currently to maximise your cashflow. For more federal and state stimulus measures, please click on our Internal Manual (https://pittmartin.us7.list-manage.com/track/click?u=7ef7c505bc2b5ac5d9125b1f2&id=8a6e991bbb&e=199892a471)。

Also, the Government Guaranteed Unsecured Finance for up to $250k provided by the bank is another feasible way to supplement the SME’s mid or long term cashflow.

In addition, all the tax liabilities incurred after 12 March, such as income tax, GST, FBT etc, can be deferred to 14 September. Companies that make good use of this relief can help with cashflow shortfalls without violating regulation to delay their tax lodgement.

2. Prepare for return to workplace

If you have already applied for the JobKeeper Payment, you should not worry too much about finding new employees which is the government initiative. Employees can return to work at any time to resume as usual. If you lose your employee for any reason such as you are not eligible for JobKeeper Payment, it is the time for you to consider recruiting or getting in touch with right candidate for the recovery.

After returning to work, business should actively respond to the preventive anti-epidemic measures, such as making employee and customer safety manual or post, keeping 1.5 meters social distance, maintaining 4 square metres of space per person and preparing hand sanitiser etc.

If your business was temporarily closed and you have been working from home since the lockdown, it is the time for you to get in touch with your suppliers and building manager of your workplace to ensure the goods, utilities supplies and office are operating as normal.

3. Have an effective communication with other parties

As a result of market changes caused by the outbreak, the personnel and department in the organisation may also need to be changed. For example, some departments may need more people while others may have to cut. Managers have to have an effective communication with affected employees to make sure personnel change is undertaken in a considerate and proper way.

For most of SME, rent is one of the biggest expenditures in their daily business. The Federal government as well as State government have issued the relevant law and code to ensure landlords to share a portion of the business loss. Therefore, affected business should reach out to their landlord in order to get some rental relief if they have not yet. If you decide to update or enter into a new lease with the landlord, you should take an advantage of the current market to get a better price and terms.

Given everyone is suffering from cashflow shortfall at the moment or in the near future, business should accelerate any necessary debt collection procedures to avoid further capital loss because of the potential future bad debt.

Businesses also have to review the contract with existing suppliers and customers and actively communicate with them to ensure the terms in the contract are updated in a timely manner to reflect the changed market.

4. Change your business plan and look for new opportunities

The current business plan and financial budget may no longer be applicable to the SME. An adjustable and flexible business plan and financial budget are the only guarantee for future recovery and success. Similarly, business who can adjust themselves in the changing market may have more opportunities. For example, lockdown increases the online demand and delivery. In the meantime, online meeting is becoming more acceptable during this period. Therefore, in future, some retail and hospitality business may consider expanding their take-away and IT-related business might intend to engage in online App Development or Video calls.

There is no doubt that there will be a long-term impact brought by this coronavirus pandemic. Business should take their long-term strategies into consideration when they make new business plan to ensure the new plan is more suitable for the changing market and prepare for the worst on the other hand.

Since the outbreak, we can deeply feel that clients, at any other time, never like now need our assistance and advice. At Pitt Martin, we strive to understand your business and put our feet in your shoes so we can be committed to delivering the best service we can to help you out during this tough time. Let us work together and bring your business and life back to normal as soon as possible! Call us on 02 92213345 or email connect@pittmartingroup.com.au.

Disclaimer: This article is not providing a formal advice and may not suit to all scenarios. Please make an appointment with us to discuss.

Tax time is fast approaching and for some of you this might be the last thing on your mind. There might be other things that are more important for you to get through this uncertainty. However, now is the best time to get your tax affair in order and avoid last minute planning that can cost you.

As you have spent more time working from home during the lockdown period, it might be a good idea to put together all the information you need to prepare your returns as it will take some time especially if you have not organised them as you go. You can collect all your receipts or invoices for work related expenses and any credit card statements for invoices that you no longer had and discuss with your tax agent to ensure you are maximising your claims.

If you have been working from home as a result of COVID-19, the Australian Taxation Office has introduced special arrangements which will allow people to claim 80 cents per hour for all their running expenses, rather than needing to calculate costs for specific running expenses. You will need to keep a record of the number of hours you have worked from home. This will apply from March 1 to June 30, after which the ATO will review the arrangement for the next financial year.

If you choose to use the 80 cents per hour for all your running expenses, you can’t make other claims in relation to working from home because items such as mobile phone and internet are included in the 80 cent rate.

You still had the option to use the old claiming method which is known as the 52 cents per work hour method for claiming items such as heating, cooling, lighting, cleaning and the decline in value of office furniture. You need to keep a diary of when your start and finish work each day. This old method also allowed you to calculate the work-related portion of phone and internet expenses, computer consumables, stationery and the decline in value of a computer, laptop or similar device. Nevertheless, you would still require to work out what private use and work use is on ‘a reasonable basis”

You can claim tools or equipment as a deduction in your tax return if you have to use them as part of your job and your employer didn’t reimburse you. You can claim a deduction straight away if the tools or equipment are $300 or less otherwise you will need to depreciate over the life of the item. On the other hand, if you run your own business and acquired all your capital items from 12 March 2020 and the cost of all of them less than $150,000, you can claim a deduction straight away. The capital items included work related IT equipment, cars and tools. Please note that you will still require to apportion the cost if you use them for private use.

As we are approaching the end of financial year, we still have plenty of time to generate some extra common tax deductions if you made the payment by 30 June:

• Donation to a charity registered as a deductible gift recipient over $2 with a receipt are tax deductible
• A personal contribution into your super fund including the contribution made on your behalf by your employer which are less than $25,000 can be claim as a tax deduction providing the payment made by 30 June. You need to advise your super fund by completing the relevant form or speak to your accountant for guidance.
• You need to pay by 30 June your professional membership or subscriptions and union fees to claim the deduction this year

Remember that good record keeping including invoices and receipts will ensure the finalisation of your tax return easier and you can claim for everything you’re eligible to.

If you know anyone in your circle who need any assistance during tax time, please reach out to them because “We can’t help everyone, but everyone can help someone” and “Together We Can Make A Difference”

Pitt Martin Accountants & Tax Advisers is here to assist you and your business in time of crisis by contacting 02 9221 3345 or connect@pittmartingroup.com.au.

Followed by the first Stimulus Package plan announced on 12^th March 2020, the federal government has rolled out the second and third Stimulus Package plan with a total amount of up to 200 billion dollars in last two weeks aiming at helping small and medium business and keeping Australians in jobs. Let’s take a look at what are they for both business and individual and navigate one suits you.

For business

JobKeeper payment

The JobKeeper payment will assist employer to retain their employee and quickly re-start when the crisis is over. Affected employer will be able to claim the fortnightly payment of $1,500 per eligible employee from 30^th March 2020. The first payment will be received on the first week of May, lasting for maximum of six months.

Eligibility for employer (including Not-For Profit):

• Business turnover less than $1 billion PLUS turnover has been reduced by more than 30% (of at least one month compared to the same period of last year)
• Business turnover more than $1 billion PLUS turnover has been reduced by more than 50% (of at least one month compared to the same period of last year)
• The business is not subject to the Major Bank Levy

Eligible employee can be full-time, part-time and casuals (a casual employed on a regular basis for more than 12 months as at 1^st March 2020). They must be an Australian citizen, Permanent Visa Holder, or a Special Category (Subclass 444) Visa Holder who is a Australian tax resident on 1 March 2020.

Self-employed individuals (Sole Trader) who meet the above turnover test are also eligible for JobKeeper Payments.

Register you interest and keep update with ATO.

Cash flow paid to eligible employers

As we mentioned in our previous article “How small and medium business benefit from the Stimulus Package”, eligible employers have the entitlement to claim equal to 50% of the PAYG Withholding amount with a minimum of $2000 and maximum of $25,000 even the withholding amount is nil. At this second package plan, the figures are lifted up to 100% cashback on PAYG Withholding, with an increased minimum payment of $20,000 and maximum payment of $100,000.

The cash payment will be provided in two phases. The ATO will automatically credit the first phase amount (from $10,000 to $50,000) to the tax payer’s ATO account after the BAS or IAS lodgement from 28^th April 2020. Different cycle tax payer will be paid upon the lodgement as below:

• Quarterly lodgers – March 2020 quarter (due on 28^th April 2020), and June 2020 quarter (due on 28^th July 2020)
• Monthly lodgers – March 2020 (due on 21^st April 2020), April 2020 (due on 21^st May 2020), May 2020 (due on 21^st June 2020) and June 2020 (due on 21^st July 2020)

The second phase amount will be equal to the first phase amount. Different cycle tax payer will be paid upon the lodgement as below:

• Quarterly lodgers (each credit will be equal to 50% of the phase one payment), one after each BAS or IAS lodgement for June 2020 quarter and September 2020 quarter
• Monthly lodgers (each credit equal to quarter of the phase one credit) one after each BAS or IAS lodgement for June, July, August and September 2020

Government Guaranteed Unsecured Loan

The $40 billion guarantee for small business loan under the Coronavirus SME Guarantee Scheme is in place to support small and medium business in obtaining the additional working capital. The government will grant a guarantee of 50% to eligible small and medium business lenders which will reinforce lenders’ willingness and ability to provide credit.

Meanwhile, a deferred repayment of up to 6 months has been announced by the Australian Banks aiming at supporting small and medium business who has existing loans. Reserve Bank of Australia (RBA) has also announced a $90 billion Term Funding Facility for the banking system to lower the funding costs for banks and subsequently to encourage lending to businesses.

Temporary relief for financially distressed businesses:

• The threshold at which creditors can issue a statutory demand on a company has been increased from $2,000 to $20,000
• The threshold at which creditors can initiate bankruptcy notice has been increased from $5,000 to $20,000
• The time companies have to respond to a statutory demand and bankruptcy notice they receive will be extended from 21 days to up to 6 months

Directors will also be temporarily exempted from any personal liability arising from the trading during insolvency. The Corporate Act 2001 will also be amended to provide companies with temporary and targeted relief against unforeseen events caused by COVID-19.

For individual

JobSeeker Payment

The government introduced a temporary income support payment for the next six months, offering a fortnightly payment of $550, which is the double of the current allowance, to eligible job seekers who lost their jobs during the pandemic. This supplement will be an additional payment paid on top of their existing allowance to both existing and new eligible recipients (including those currently receiving JobSeeker Payment, Youth Allowance, Parenting Payment, Farm Household Allowance and Special Benefit)

One-Off $750 Economic Support Payment

On top of the one-off $750 economic payment released by the government on 12^th March 2020, the government will be providing second $750 income support payment to social security, veteran and other income support recipients and eligible concession card holders (except for those receiving the Coronavirus supplement).

The first $750 payment will be available from 31^st March 2020 to individual who becomes eligible from 12 March 2020 to 13 April 2020.

The second $750 payment will be made automatically to eligible payment recipient and concession card holders from 13 July 2020

Early Access to Superannuation

Eligible individual affected by the COVID-19 have earlier access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21 to help them relieve the financial hardship. The first period for them to access their superannuation is between 20 April 2020 and 1 July 2020. The second period is between 1 July 2020 and 24 September 2020.

To apply for early released superannuation, you must satisfy any one or more of the following requirements:

• You are unemployed
• You have the entitlement to receive a JobSeeker payment, Youth Allowance for jobseekers, Parenting Payment, Farm Household Allowance and Special Benefit
• On or after 1 January 2020,
  • You were made redundant
  • Your working hours were reduced by 20% or more
  • If you are a self-employed individual (Sole Trader), your business is forced to suspend or your turnover has fallen by 20% or more

Early released superannuation is not subject to income tax, and the money you are claiming will not affect Centrelink or Veteran’s Affairs payments.

Reduce the minimum superannuation pension drawdown rates

The minimum superannuation drawdown rates for account-based pension and similar products will be reduced by 50% for 2019/20 and 2020/21. The pensioners who hold these products will be benefit from this measure because they do not have to sell their products to meet the minimum withdrawal requirement under the current financial market downturn.

Minimum pension drawdown rates halved for 2019/20 and 2020/21：

Given all the measures rolled out by the government in respondence to the outbreak of COVID-19 are temporary and applications are required with supporting fact and explanation, both business and individual should examine their own situation and check for the subsidies they are entitled in order to turn around their business and life during the outbreak. If you need any assistance for the consultation or application, please do not hesitate to reach us on 02 92213345 or connect@pittmartingroup.com.au.

Disclaimer: This article is not providing a formal advice and may not suit to all scenarios. Please make an appointment with us to discuss.

As the coronavirus outbreak grows, more people are forced to work from home. While working from home can come with its benefits like getting to sleep in longer, avoid the daily commute and work from bed in your pyjamas, it can also hurt your hip pocket if you’re having to fork out for expenses your employer would normally cover, like increase utility bills, phone and home internet bills.

The good news is that most of these expenses can be claimed back at tax time. In order to make it easier for people to claim deductions for working from home, the Australian Taxation Office is introducing special arrangements which will allow people to claim 80 cents per hour for all their running expenses, rather than needing to calculate costs for specific running expenses.

Assistant Commissioner Karen Foat said that if you choose to use this shortcut method, all you need to do is keep a record of the hours you worked from home as evidence of your claim. “We needed something to help people through this time to make it easier to work out how much they can claim”, Ms Foat said.

The change will apply from March 1 to June 30, after which the ATO will review the arrangement for the next financial year. If the Federal Government announces a prolonged lockdown extending into the next financial year the ATO is likely to extend the new claiming method.

The new arrangement does not forbid people from making a working-from-home claim under existing arrangements, where you calculate all or part of your running expenses. Neither does it prohibit multiple people living in the same house to claim this new rate. Furthermore, the requirement to have a dedicated work from home area has also been removed. However, the claims for working-from-home expenses prior to March 1, 2020 cannot be calculated using the shortcut method and must use the pre-existing working from home approach and requirements,” Ms Foat added.

People still had the option to use the old claiming method which is known as the 52 cents per work hour method for claiming items such as heating, cooling, lighting, cleaning and the decline in value of office furniture. This old method also allowed taxpayers to calculate the work-related portion of phone and internet expenses, computer consumables, stationery and the decline in value of a computer, laptop or similar device. Nevertheless, taxpayers would still need to work out what private use and work use is on ‘a reasonable basis”

ATO are expecting a lot of people to be working from home as the outbreak continues to grow; therefore believed that the new method would cut down on the need for reviews and audits, because it was simpler and reduce the chances of people making mistakes while claiming the deductions this year.

The ATO is also reminding people that the three golden rules for deductions still apply,

1. The taxpayers must have spent the money themselves and not have been reimbursed by the employers
2. The claim must be directly related to earning income, and
3. The record must be kept to substantiate the claim

Please note that children’s education expenses, as well as tea, coffee and toilet paper which used to be supplied by employers in the office could not be claimed and neither do rent and mortgage (unless it is an investment property)

The ATO gives this example of how the arrangement might work:

Sophie is an employee who works as a copywriter and an editor. Sophie starts working from home on 10 March as a result of COVID-19 and had since using a lot of online video conferencing for her meeting.

Sophie has just bought a new computer, monitor, desk, chair and stationery. She also wants to claim some additional gas, electricity, phone and internet costs due to working from home.

Under the shortcut method, Sophie can now claim all her expenses under a rate of 80 cents per hour. All she needs is her timesheets to show a record of the number of hours worked from home.

Sophie can also decide to claim using existing working from home calculations which is known as the 52 cents per work hour method. Under that method, Sophie can claim the desk, chair, gas and electricity under the 52 cents per hour, but would need to work out the decline in value of the computer, monitor, and calculate the work-related portion of the computer, monitor, stationery, phone and internet.

Pitt Martin Accountants & Tax Advisers are Xero qualified and award-winning accountants and bookkeepers for small businesses which can be reached on 02 9221 3345 or connect@pittmartingroup.com.au.

With the announcement from Federal Governments Economic Response to the COVIC-19 Coronavirus, the cash flow grant for employers measure is designed to support employing small and medium sized businesses and to improve business confidence. The measures also supports the activities of not-for-profits (including charities) at a time where they are facing increased demand for services.

On 12 March 2020, the Government announced the cash flow grant for employers measure and initially provided up to $25,000 with a minimum payment of $2,000 for eligible businesses. Small and medium sized business entities that employ workers with aggregated annual turnover less than $50 million are eligible.

The Government has then improved this measure as part of the second economic stimulus package. Not-for-profit entities (NFPs), including charities that employ workers, with aggregated annual turnover less than $50 million will now also be eligible. This will support employment activities at a time where NFPs are facing increasing demand for services.

Under the improved scheme, employers will receive a payment equal to 100 per cent of their salary and wages withheld (increase from 50 per cent), with the maximum payment being increased from $25,000 to $50,000. Furthermore, the minimum payment is being increased from $2,000 to $10,000.

An additional payment is also being introduced in the July to October 2020 period. Eligible entities will receive an additional payment equal to the total of all of the cash flow grant for employers payments they have received. This means that eligible entities will receive at least $20,000 up to a total of $100,000 under both payments. The cash flow grant for employers is tax-free payment with no new forms required and automatically calculated by the ATO

This additional payment continues to support businesses over a longer period to help them maintain staff, improve confidence, continue operating and at the same time stimulating the economy. It’s crucial for the government to help small businesses because they are the backbone of the economy.

Who is eligible and what is the timing?

SME business entities and NFPs that employ workers, with aggregated annual turnover less than $50 million will be eligible with the eligibility generally be based on prior year turnover.

• The payment will be an automatic credit in the activity statement system from 28 April 2020 upon employers lodging eligible upcoming activity statements.
• Eligible employers that withhold tax on their employees’ salary and wages will receive a payment equal to 100 per cent of the amount withheld, up to a maximum payment of $50,000.
• Eligible employers that pay salary and wages will receive a minimum payment of $10,000, even if they are not required to withhold tax.
• The payments will only be available to active eligible employers established prior to 12 March 2020 except charities which are registered with the Australian Charities and Not-for-profits Commission will be eligible regardless of when they were registered, subject to meeting other eligibility requirements.

The cash flow grant for employers payment will be applied to a limited number of activity statement lodgements. The ATO will send the payment as a credit to the entity upon lodgement of their activity statements. The ATO will send the refund within 14 days if the entity is entitled to a refund.

Type of lodger	Eligible period	Lodgement due date
Quarterly	Quarter 3 (January, February and March 2020) Quarter 4 (April, May and June 2020)	28 April 2020 28 July 2020
Monthly	March 2020 April 2020 May 2020 June 2020	21 April 2020 21 May 2020 22 June 2020 21 July 2020

If you lodged quarterly, you will be eligible to receive the payment for the quarters ending March and June 2020.

If you lodged monthly, you will be eligible to receive the payment for the March, April, May and June 2020 lodgements. To provide a similar treatment to quarterly lodgers, the payment for monthly lodgers will be calculated at three times the rate (which is 300 per cent) in the March 2020 activity statement with the minimum payment will be applied to the entities’ first lodgement.

Additional payment eligibility and timing

Your entity must remain active in order to qualify for the additional payment from the Government.

If you lodged activity statements monthly, the additional payments will be delivered as an automatic credit in the activity statement system. This will be equal to a quarter of their total initial cash flow grant for employers payment following the lodgement of their June, July, August and September 2020 activity statements up to a total of $50,000.

If you lodged activity statements quarterly, the additional payments will be sent as an automatic credit in the activity statement system. This will be equal to half of their total initial cash flow grant for employers payment following the lodgement of their June and September 2020 activity statements up to a total of $50,000.

The additional payment will be applied to a limited number of activity statement lodgements. The ATO will send the payment as a credit to the entity upon lodgement of their activity statements. The ATO will send the refund within 14 days if the entity is entitled to a refund.

Type of lodger	Eligible period	Lodgement due date
Quarterly	Quarter 4 (April, May and June 2020) Quarter 1 (July, August and September 2020)	28 July 2020 28 October 2020
Monthly	June 2020 July 2020 August 2020 September 2020	21 July 2020 21 August 2020 22 September 2020 21 October 2020

If you lodged quarterly, you will be eligible to receive the additional payment for the quarters ending June 2020 and September 2020. Each additional payment will be equal to half of their total initial cash flow grant for employers payment with up to a total of $50,000.

If you lodged monthly, you will be eligible to receive the additional payment for the June, July, August and September 2020 lodgements. Each additional payment will be equal to a quarter of their total initial cash flow grant for Employers payment with up to a total of $50,000.

Examples of Tax-Free Payment to Employers

Example 1 – John’s Removalist Business

John owns and runs a removalist business in Western Australia and employs 10 workers on average full-time weekly earnings, who each earn $90,750 per year. John reports withholding of $15,600 for his employees on each of his monthly Business Activity Statements (BAS).

Under the Government’s measure, John will be eligible to obtain the payment on lodgement of his BAS. John’s business receives:

• A credit of $46,800 for the March period
• A credit of $3,200 for the April period, before he reaches the $50,000 cap.
• No payment for the May period, as he has now reached the $50,000 cap.
• An additional payment of $12,500 for the June, July, August and September period, respectively

Under the Government’s enhanced cash flow grant for employers measure, John’s business will receive $100,000.

Example 2 – Tony’s Barber Shop

Tony owns a barber shop on the Surfers Paradise. He employs 10 employees, with average salary of $45,000 per year. Tony reports withholding of $8,601 for his employees in each of his monthly BAS. Under the measure, Tony will be eligible to receive the payments on lodgement of his relevant BAS.

Tony’s business will receive:

• A credit of $25,803 for the March period
• A credit of $8,601 for the April and May period, respectively
• A credit of $6,995 for the June period, before he reaches the $50,000 cap. Tony will also receive an additional payment of $12,500 for the June, July, August and September period, respectively

Under the Government’s enhanced cash flow grant for employers measure, Tony’s business will receive $100,000.

Example 3 – Todd’s Courier Run

Todd owns and runs a small paper delivery business in South Australia and employs two casual employees who each earn $10,000 per year. In his quarterly BAS, Todd reports $0 withholding tax for his employees as they are under the tax-free threshold.

Under the Government’s measure, Todd will be eligible to receive the payment on lodgement of his BAS.

Todd’s business will receive:

• A credit of $10,000 for the March quarter, as he pays salary and wages but is not required to withhold tax.
• An additional payment of $5,000 for the June and September quarter, respectively

If Todd begins withholding tax for the June quarter, he would need to withhold more than $10,000 before he receives any additional payment.

Under the Government’s enhanced cash flow grant for employers measure, Todd’s business will receive $20,000.

If you know anyone in your circle who need any assistance during these times, please reach out to them because “We can’t help everyone, but everyone can help someone”and “Together We Can Make A Difference”

Pitt Martin Accountants & Tax Advisers is here to assist you and your business in time of crisis by contacting 02 9221 3345 or connect@pittmartingroup.com.au.