There is a sense of trepidation as we approach September 2020 with deadlines looming for JobKeeper 1.0, the first round of deferral arrangements for SME lending, and the COVID-19 ‘safe harbour’ insolvency provisions.
- Just over 5 weeks until JobKeeper 1 expires and no sign of JobKeeper 2.0 rules
- ASIC and the end of deferred loan repayment arrangements
- SMSF Auditors and the misuse of SMSF Auditor numbers when lodging returns
- The blowback from a cyber attack on client data - ASIC launches legal proceedings
- Help desk question of the week - Tax treatment of COVID-19 related grants and support
- Funny video of the week - Chris Hemsworth's pep talk
- Coming up
Parliament sits next week and we hope to see progress on JobKeeper 2.0 – although the detail will be by legislative instrument. With only just over 5 weeks until the end of JobKeeper 1.0 this may push out the timeframes to assist clients. If you missed it, the Coronavirus Economic Response Package (Payments and Benefits) Amendment Rules (No.7) 2020 confirms that for JobKeeper fortnights starting on or after 3 August 2020 the key date for assessing employee eligibility is now 1 July 2020 (previously 1 March 2020). Employers will need to work through the eligibility criteria for employees to meet the ‘one in, all in criteria’, ensure employee nomination notices are in place, and ensure that sufficient amounts are paid to these newly eligible employees by 31 August 2020 to be eligible for JobKeeper payments for the 3 -17 August 2020 JobKeeper fortnight. This change predominantly impacts employees who were previously ineligible because they were not employed on 1 March, casuals who were not employed for 12 months leading up to 1 March 2020, and potentially those who failed the residency or age related tests at 1 March (but might now meet those conditions as at 1 July 2020).
We'll keep you up to date on any important legislation before Parliament on our twitter feed.
ASIC has outlined their expectations of retail lenders when loan repayment deferrals end including making reasonable efforts to contact consumers with expiring repayment deferrals – the ABA has published FAQs on bank relief and outlined COVID-19 support phase two. Meanwhile, consumers are being warned that accessing their superannuation early under COVID-19 relief measures may have an impact on credit ratings as it is a definitive trigger of financial distress.
SMSF Auditors are in the spotlight (again) with the misuse of SMSF auditor numbers (SAN). Latest results (from 2018) show 358 SAN’s used on funds that did not receive an audit. Another 31 funds were lodged before the audit was completed. SMSF Auditors will need to check their client lists to confirm that their SAN is used appropriately.
Meanwhile, the ATO has dumped 36 auditors who failed to maintain an appropriate level of SMSF audit experience – that is, they have not issued audit reports over the last 5 years. Six auditors had conditions imposed upon them.
How safe is your client data from cyber-attack? The COVID-19 work from home environment is fertile ground for hackers. ASIC has launched proceedings in the Federal Court against RI Advice Group Pty Ltd who were subject to a “brute force” attack that successfully accessed sensitive client data over a period of 155 hours. ASIC alleges that RI failed to implement (including by its Authorised Reps) "adequate policies, systems and resources which were reasonably appropriate to manage risk in respect of cybersecurity and cyber resilience". See Table 1 of ASIC’s Cyber resilience: Health check for prompts on what to review (Report 429). If you have staff working from home and they are using their personal computers, it is essential that you ensure you have taken precautions to protect client data.
Have a great weekend.
Managing Director, Knowledge Shop
Help desk question of the week
Our top Q&A live from the Knowledge Shop's professional help desk: Tax treatment of COVID-19 related grants and support.
My client runs a business and has received a grant / support payment from the state government as a result of COVID-19. Is this taxable to them?
1. Income tax The ATO has recently released specific guidance in this area that confirms that a government payment to assist a business to continue operating is included in assessable income, regardless of whether the entity receives a lump sum payment or a series of payments. This is consistent with TR 2006/3 which confirms that government payments made to an entity that already carries on a business and to assist in the continuation of the business activities are likely to be taxed on revenue account as either ordinary income or under section 15-10. The position can be a bit different in cases where the payment is made so that the entity can commence a new business or cease carrying on a business.
2. GST On the other hand, GST often won't apply to government assistance payments if the entity doesn't need to provide anything in return for the payment (eg, such as entering into a binding legal obligation to do something or refrain from doing something to receive the payment). GSTR 2012/2 provides detailed guidance in this area. The ATO has indicated in LCR 2020/1 that the cash flow boost, JobKeeper payments and Early Childhood Education & Care Relief Package paid to approved child care providers are not subject to GST because they don't represent consideration for a supply. If an entity receives a state government payment then the treatment would depend on the situation. If the entity merely has to meet some general eligibility requirements but doesn't have to do or provide anything to obtain the payment / grant then there won't generally be any GST liability.
Video of the week
Need a boost? Chris Hemsworth recorded this message just for you...yes, just you....hmmm.... If I could have George Clooney next week and let's see, Jason Momoa the following week that should just about get me through COVID-19.
Instant Asset Write-off and Depreciation Rules - 2020 & 2021 Web
Thursday, 27 August 2020
The practical detail and application of the key changes to the depreciation rules likely to impact on your business clients. We work through the timing rules, identify which assets can qualify for an immediate deduction, when SBE general pools can be written-off, how the accelerated depreciation rules apply, and the differences between being a small business entity or medium business entity.
Tax Consolidation Essentials Webinar
Thursday, 3 September 2020
Demystifies the tax consolidation regime, helping you to identify clients that might benefit from the system as well as assisting those already using the system to navigate their way through the provisions. How to form a tax consolidated group, the pros and cons of tax consolidation, and dealing with tax losses and capital losses.
Small Business CGT Concessions Webinar Series
Thursdays: 10, 17 & 24 September 2020
This 3-part series focuses on the key aspects of the small business CGT concessions in a methodical and practical way. Across the series we cover a wide range of issues including the problem areas that often prevent clients from accessing the concessions and the solutions that might make the difference, maximising the tax effectiveness of the concessions, planning opportunities for clients who are thinking of selling business assets, and preparing clients for a CGT audit.
FASEA Exam Prep Live Online
14, 15 & 16 September 2020
Fast track your exam preparation. Designed to get you exam ready, this intensive web series was developed by industry specialists to bring you up to speed as quickly as possible. It's pragmatic, detailed and backed-up by reference materials to support your study. Or online on-demand!
Unpaid Trust Distributions Webinar
Thursday, 15 October 2020
The different options available when dealing with unpaid trust distributions and how to best manage them. Latest ATO guidance on expiring sub-trusts, options to prevent deemed dividends, and your checklist for releasing unpaid distributions.
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