Wise Accounting Podcast (WAP)

Welcome back the podcast! In this episode we cover off the latest JobKeeper developments, the SGC amnesty and that lodgement extensions ar enot really extensions at all. On Friday the 24th of April the treasurer carved out full time students aged 16 and 17 from the JobKeeper system. This was a moving forward approach and therefore any payment made in advance of this date will still qualify for the JobKeeper reimbursement. The JobKeeper alternative test has been announced. If you cannot satisfy the basic test, which is a reduction or expected reduction in GST turnover, then the alternative turnover test can be applied for: a. Entities that have newly commenced business such that there is no relevant comparison period in 2019 b. Entities that acquired or sold part of their business which affected turnover c. Where there was a restructure of the business that affected turnover d. Where a business experienced rapid growth in turnover such that its projected turnover is not comparable to the 2019 period e. The business was affected by drought or other natural disaster f. A business has an irregular turnover that is not cyclical g. A sole trader or partner in a small partnership who was unable to work due to illness. The superannuation guarantee amnesty is now law, and this is effective from 24 May 2018 to 7 September 2020. The amnesty seeks to encourage employers who have failed to comply with SGC obligations in the past to correct this. The act allows employers a one-time window to make up all outstanding SGC contributions that have been neglected previously. The benefit of this amnesty is that it allows employers to claim the payment as a deduction, when typically, late superannuation payments are not-deductible. If you are going to participate in this, then you need to advise the ATO in writng using the typical methods and forms. I encourage ALL employers, even diligent ones to review their superannuation payable accounts to see if there are any that have been inadvertently missed and correct this during the amnesty period. Furthermore, due to COVID-19 the ATO have advised they may be able to make flexible payment arrangements where applicable to assist in these catch ups; however, payment terms aside, this still needs to be declared to the ATO in writing prior to the date mentioned previously for the amnesty to apply.

The third tranche of the government stimulus package has just been announced, and this is centred around a $130 billion stimulus payment, with indications the Government are not done yet. The Government has now contributed $320 billion to the Coronavirus fight, which accounts for 16.4% of GDP.  This latest stimulus package is built around a $1,500 per fortnight gross payment to employees.

On March 23rd parliament passed legislation that would see the updated COVID-19 Stimulus Package introduced by the Government become law. This carries with it changes to the cashflow assistance as well as the widening of other assistance payments. The changes are vast, and the impacts will hopefully be positive for you, and the economy at large.

The Government's $17.6 billion stimulus package is set to have far reaching impacts on the economy, without, apparently, impacting Australia's national credit rating. How? By breaking it down in to 4 manageable components. Specifically, the stimulus package was basically broken in to the following aspects: 1. Delivering support for business investment 2. Cashflow assistance 3. Stimulus payments to households 4. Assistance for the severely affected areas

I wanted to start with something I am passionate about, and glad to see the ATO cracking down on, and that is essentially widening the net in regards to illegal phoenix activities. For those of you that do not know, Phoenixing is essentially abandoning a company and then recommencing a similar company with similar stakeholders, but essentially your tax liabilities from the former company are neglected, and abandoned. Hence the term Phoenix, it is essentially a company that rises form the ashes of another. The benefit of a company is that the directors are protected by the corporate veil and generally are not personally liable for the liabilities of the company. This has changed in recent years, and the recently enacted Treasury Laws Amendment (combating Illegal Phoenixing) Act 2020 takes this further still. What is new in this is act, which is already in effect, is that there are new phoenix offences, which essentially serve to prohibit creditor-defeating actions. This essentially prohibits any transfer of company assets for less than market value that would delay or hinder a creditors access to company assets in a liquidation. In the past essentially, it was only employees via superannuation obligation,s and the ATO, via director penalty notices that were protected. Any unsecured creditor was hung out to dry, with no affordable and effective recourse. If a company officer is found guilty of these new offences, there are new criminal offences and civil provisions. There is also a denial and restriction of backdating resignations. Typically a form can be submitted to ASIC outside of the 28 day lodgement obligation period, but a fine applies. Now however, these forms will essentially be denied, especially in situations where the company would be abandoned, that being, have no director at all. The director would only be able to resign from the date the form is reported to ASIC. Furthermore, abandonment of a company by a resigning director which would leave the company without any directors, is now prevented. Furthermore, directors may become personally liable for the company's GST liabilities. This is in addition to the existing director penalty regimes in respect of pay-as-you-go and superannuation liabilities. This is 100% a welcomed addition, as ensuring ALL liabilities can be met is part of the internal governance obligations of the company directors and officers. Finally, the ATO now have the authority to retain tax refunds in certain situations, which allows the ATO to ensure that companies satisfy their tax obligations and pay outstanding amounts of tax before being entitled to a tax refund. If you are a director of a company make sure you are compliant. I know it goes without saying, but the corporate veil is certainly thinner now than it was before February 18th. The ATO has commenced an inquiry in to the tax treatment of employee share schemes. Based on my Linkedin feed this has certainly been welcomed by the accounting profession and what the committee will inquire is: 1. How effective the changes in 2015 have been in their goal of bolstering entrepreneurship in Australia and start-up companies. 2. The costs and benefits of these concessional taxation treatments and deferred taxing points for options, to the broader community. 3. Whether the current tax treatment of ESS remains relevant to start-up companies and whether any changes are appropriate to ensure that the taxation treatment remains relevant 4. How companies currently structure their ESS arrangements and how taxation treatment effects these decisions, and 5. The challenges faced by companies in setting up an ESS arrangmenet and how the standard documents introduced by the ATO in 2015 assist this process and whether additional improvements should be made. Obviously very early days in this inquiry, but it is important nonetheless. Employee share schemes provide a great avenue for start up companies to attract talent and definitely something that the ATO are aware of, and this inquiry is evidence of themselves changing, accepting that the market place is a changing and dynamic one. As more information comes to hand we will of course be sharing it. Something with a bit more detail, is that we are now in March, and that will see Auskey retired this month. For most of us tax practitioners we will have fully migrated to the RAN and myGovID, which is a system that initially I was very skeptical of. In fact when I first installed it, I could not access my clients, and when I called the ATO, they literally said to just "try tomorrow". Thankfully we were able to resolve the issue and get it all working, and I must say for the last 8 weeks it has worked pretty well. Certainly not without it's teething issues, which are always frustrating, but safe to say this is now a working software solution. If you have not, make sure you are on this new system, as it will be your only option soon enough and you want to make sure you have everything in place.