Category Archives: Advisory

Covid19 NSW Business Relief Summary

Introduction

If your NSW business has been impacted by the Covid-19 “Delta outbreak” and the NSW public health stay-at-home orders (commencing June 2021) there are a range of measures to support you during this lockdown.

The measure available are for:

–  ABN Businesses (or Not for Profits),

–  In NSW,

–  With annualised turnover above at least $30,000 (at 30/6/20), and wages less than $10M,

–  Where the 2020 tax return is complete,

–  And the business has suffered a downturn of at least 30%.

2021 COVID Business Grant

–  One off Grant

–  Available for businesses suffering downturn of

–  30% (receive $7,500)

–  50% ($10,500)

–  70% ($15,000)

–  Comparing the 2-week period 26/6/21 – 17/7/21 against the same period in 2019, 2020 or the 2 weeks prior.

–  Business had income between $75K to $50M for FY2020

–  Applications close 13 September 2021

–  Link: https://www.service.nsw.gov.au/transaction/2021-covid-19-business-grant

2021 COVID Jobsaver

–  For businesses with turnover $75K – $250M p.a at 30/6/2020

–  Fortnightly payments (receive min $1,500 per week, MAX $100K p.w)

–  Equivalent to 40% of weekly payroll

–  Available for business suffering downturn of at least 30%

–  By comparing any 2-week period after 26/6/21 against the same period in 2019, 2020 or the 2 weeks prior.

–  Business must maintain employee ‘head count’

–  Sole traders eligible for $1,000 p.w

–  Applications close 18 October 2021

–  Link: https://www.service.nsw.gov.au/transaction/jobsaver-payment

2021 COVID Micro business Grant

–  For businesses with turnover $30K – $75K p.a at 30/6/2020

–   Receive $1,500 per fortnight

–  Paid fortnightly

–  Available for business suffering downturn of at least 30%

–  Comparing any 2 week period after 26/6/21 against the same period in 2019, 2020 or the 2 weeks prior.

–  Cannot apply for NSW Covid Business or Covid Jobsaver

–  The business must be the owner’s primary income source

–  Link: https://www.service.nsw.gov.au/transaction/2021-covid-19-micro-business-grant

Revenue NSW Payroll Tax Relief

DEFERRAL

–  Ability to defer payments due on 2020-21 Annual reconciliation

–  Interest free

–  Any business paying payroll tax is eligible for deferral

WAIVER

–  Any NSW business with 30% decline in turnover is eligible for a 50% waiver in payroll tax bill

–  Eligible for businesses with wages up to $10M

Revenue NSW Land Tax Relief

–  Land Tax waivers for landowners who can demonstrate they provided Rent relief for tenants in distress;

–  Up to 100% of the Land Tax bill

–  Available until 31 December 2021

Commercial Landlord Hardship Fund

–  Administered by Service NSW

–  Provide grants of up to $3,000 per month to small commercial or retail landowners who suffer hardship due to the changed leasing arrangement with tenants who are financially impacted by COVID-19 in 2021, and have not claimed any land tax relief for rent reductions provided between 1 July 2021 and 31 December 2021

–  Available per eligible property

–  The fund is limited (once the funds are disbursed – the scheme is over)

–  Link : https://www.service.nsw.gov.au/commercial-landlord-hardship-fund-guidelines

Six Member SMSFs allowed from 1 July 2021

It has been a few years since the proposal to increase the number of members in a self-managed super fund (SMSF) from four to six was put forward by then Treasurer Scott Morrison.

On 22 June 2021, the legislation for this proposal received Royal Assent.

SMSFs are permitted to have up to six members from 1 July 2021.

There is a lot to consider when adding members to a SMSF and may not suit everyone.

Key Considerations:

  • More members can pool their balances to purchase larger or higher value assets such as property.
  • It could increase the ability to make contributions which in turn could increase cashflow.
  • Allows families to include more family members. It would allow Mum & Dad to include up to four children under the same SMSF.
  • Increased complications when there are disputes, in particular family law disputes
  • Increased risk of control imbalance if voting is based on weighted balances.
  • All trustees/directors are responsible for decisions made, even if they are not directly involved. Succession planning and future control will need to be carefully considered to help manage the risk of loss of capacity and death
  • Most States and Territorities, include New South Wales only permit up to four individual trustees. Accordingly, the SMSF will need to have a corporate trustee where all members would be directors in order to have up to six SMSF members.
  • Some trust deeds specify the four member limit and would need to be varied before increasing the number of members.

NSW Payroll Tax Rate Reduction

The NSW Government has announced a reduction in the payroll tax rate to 4.85 per cent for the 2020/21 and 2021/22 financial years.

The threshold has also increased to $1,200,000 for the 2020/21 and subsequent financial years.

These changes apply retrospectively from 1 July 2020.

Tax yearThresholdTax rate
01/07/2020 to 30/06/2021$1,200,0004.85%
01/07/2019 to 30/06/2020$900,0005.45%
01/07/2018 to 30/06/2019$850,0005.45%

About a Payroll Tax

If you’re an employer who pays wages in NSW, you must register for payroll tax if your total Australian wages exceed the relevant monthly threshold.

Days in the monthThreshold
28$92,055
30$98,630
31$101,918

What are ”Wages”?

Wages and other payments to employees engaged on a permanent, temporary or casual basis are subject to payroll tax.

  • Wages
  • Allowances
  • Bonus / Commissions
  • Director Fees
  • Fringe Benefits
  • Superannuation
  • Salary Sacrifice
  • Termination payments
  • Third party payments
  • Salary Sacrifice

If you would like a review of your “Wages” to staff and contractors in light of Payroll Tax please contact us for a quote.

JobMaker Hiring Credit

On 6 October 2020 as part of the 2020–21 Budget, the government announced a new incentive for businesses to employ additional young job seekers called the JobMaker Hiring Credit. The JobMaker Hiring Credit will be administered by the ATO.

The measure is subject to the passing of legislation.

How does it work?

Eligible employers will have access to a JobMaker Hiring Credit for each new job they create over the 12 months from 7 October 2020, for which they hire an eligible employee, for a maximum claim period of 12 months from their employment start date.

Employers will register with the ATO and make claims quarterly, with claims commencing in February 2021.

How much is available?

The JobMaker Hiring Credit will be:

  • $200 per week for each eligible employee aged 16 to 29
  • $100 per week for each eligible employee aged 30 to 35.

An employer cannot claim JobKeeper and JobMaker Hiring Credit at the same time.

Eligibility – Employers
To be eligible, employers must:

  • hold an Australian Business number (ABN)
  • be up-to-date with their tax lodgement obligations
  • be registered for Pay As You Go (PAYG) withholding
  • be reporting through Single touch payroll (STP).

Eligibility – Employees
Eligible employees must have worked an average of at least 20 hours per week over the quarter for the employer to qualify for the payment. Employees that start and/or stop employment during a quarter must meet a similar test based on the length of time in employment.
For the employer to be eligible, new employees must:

  • be aged 16 to 35 years
  • be in receipt of income support payments (such as JobSeeker Payment, Youth Allowance (Other), or Parenting Payment) for at least one of the three months before they were hired.

Further information can be found here: https://www.ato.gov.au/General/New-legislation/The-Australian-Government-s-Economic-Response-to-Coronavirus/

NSW Government Land Tax Assistance
The NSW Government is introducing measures to help commercial and residential landlords manage their rental properties.

At present, the Government have not finalised the specific documents required to apply for the reduction in land tax. However the information supplied would need to show your tenant is in financial distress as a result of COVID-19. These documents may include BAS statements, a letter from an accountant or evidence that the lease was reduced in response to this financial distress, such as copies of old and new tenancy/lease agreements that indicate rent reduction.

We ask that you start to prepare any supporting documents in readiness and we will advise you when the application process is released. Our partners and managers are available should you require assistance.

Basic Elements of the Land Tax Support Package
Includes a reduction of up to 25 per cent of the land tax payable in the 2020 land tax year. It’s available when:

  • your land is used for business or residential purposes
  • you’re leasing property to a residential tenant – or a business tenant with annual revenue of up to $50 million – who can demonstrate financial distress resulting from the COVID-19 outbreak
  • you reduce the rent of the affected tenant by at least as much as the tax reduction
  • the land tax is directly related to the property for which rent has been reduced.

Financial distress is considered to be:

  • for commercial tenants – a 30 per cent drop in revenue
  • for residential tenants – a 25 per cent drop in household income .

Further reading on the package can be found at Land Tax Support Package.

Small Business and Payroll Tax Support
The NSW government is supporting businesses who are experiencing financial distress as a result of COVID-19 with a new support measures. The table below outlines the various packages available depending on your circumstances. For the Small Business Support Grant evidence may be required to support your eligibility including BAS information and a letter from an accountant. For payroll tax the deferral arrangements are still being completed however we will advise you when the details are released. We ask that you prepare supporting document in preparation and as always or partners and managers are ready to assist.

Small Business Support Grant
The NSW small business COVID-19 support grant of up to $10,000 is available to eligible NSW small business owners.

Available Funding – Grant amount is up to $10,000

Eligible Criteria:

  • Must have between 1-19 employees and an annual turnover of more than $75,000
  • Must have total Australian wages below the NSW Government 2019-20 payroll tax threshold of $900,000
  • Must have an Australian Business Number as at 1 March 2020, are based in NSW and employ staff as at 1 March 2020
  • Are highly impacted by the Public Health (Covid-19 Restrictions on Gathering and Movement) (see list on further reading link below) by the NSW Government Shutdown Restrictions defined as a decline in turnover of 75 per cent compared to the equivalent period (of at least two weeks) in 2019; and
  • Have unavoidable business costs not otherwise the subject of other NSW and Commonwealth Government financial assistance measures. Such as utilities, overheads, legal costs and financial advice, more examples can be found in further reading link below.

Assistance Delivery Method – $10,000 Cash Grant

How funding may be used – Grant must only be spent on unavoidable business expenses for which no other government support is available.

Evidence in support of eligibility

  • Must certify to the administrating agency that business meets the Eligibility criteria
  • Must provide a Business Activity Statement (BAS) to demonstrate that the business has an annual turnover of $75,000
  • Must lodge supporting documents as may be required to demonstrate that they meet the eligibility criteria
  • For small businesses that are not on the list of highly impacted industries, a letter from an accountant confirming the decline in turnover will be required

Additional information can be found on the Service NSW website.

Payroll tax relief for businesses with grouped Australian wages of no more than $10 million
Businesses whose total grouped Australian wages for the 2019/20 financial year are no more than $10 million will have their annual tax liability reduced by 25% when they lodge their annual reconciliation, which is due on 28 July. For businesses who lodge and pay monthly and whose total Australian wages will be no more than $10 million for the current financial year, no payment for the months of March, April or May 2020 will be required. Businesses will also have the option of deferring these payments for an additional three months. When lodging your annual reconciliation, you will still need to provide wage details paid in these months and will receive the benefit of a 25% reduction in the amount of tax you would have had to pay for 2019-20.

NSW Payroll Tax Relief

Available Funding – Annual tax liability reduced by 25%

Eligible Criteria

  • Total grouped Australian wages of no more than $10 million
  • Be paying NSW Payroll Tax

Assistance Delivery Method

  • Businesses who lodge and pay monthly, no payment for the months of March, April or May 2020 will be required
  • Businesses will also have the option of deferring these payments for an additional three months
  • When lodging your annual reconciliation, businesses still need to provide wage details paid in these months and will receive the benefit of a 25% reduction in the amount of tax you would have had to pay for 2019-20

How funding may be used – To reduce 2019/2020 Payroll tax liability

Evidence in support of eligibility – 2019/2020 Payroll Tax Reconciliation

Additional information can be found on the Revenue NSW website.

Payroll tax deferral arrangements for businesses with total grouped Australian wages over $10 million
Businesses whose total grouped Australian wages for the 2019/20 financial year are over $10 million, will have the option of deferring the payment of payroll tax for up to six months. These businesses will not need to make their payment for the March period, normally due on 7 April 2020.

NSW Payroll Tax Deferral

Available Funding – Option of deferring the payment of payroll tax for up to six months

Eligible Criteria

  • Total grouped Australian wages over $10 million
  • Be paying NSW Payroll Tax

Assistance Delivery Method

  • Businesses have the option of deferring the payment of payroll tax for up to six months
  • Businesses will not need to make their payment for the March period, normally due on 7 April 2020.

How funding may be used – To defer 2019/2020 Payroll tax liability

Evidence in support of eligibility – 2019/2020 Payroll Tax Reconciliation

Further information – Payroll Tax Deferral
More information regarding the deferral arrangement will be released in the upcoming days.

Please review the information provided in the Government links provided above. If you have any questions, please contact your Partner or Manager.

JobKeeper Payment: Enrolment Reminder

From 20 April 2020 you need to enrol for JobKeeper by either using the Business Portal and authenticate with myGovID or have enrolment processed by a tax professional through the online tax agent portal.

* If you require our assistance please contact the firm to request the enrolment of your business. *

As per previous email correspondence  you should have completed items numbers 1 to 4 below. If not, please do so as a matter of urgency.

  1. Check if you, as an employer, and their nominated employees meet the eligibility requirements.
  2. Notify eligible employees that you (their employer) intend to participate in the JobKeeper scheme.
  3. Send eligible employees the JobKeeper Employee Nomination Notice to complete and return to you to confirm that they agree to you being nominated as the employer to receive JobKeeper Payments.
  4. Keep the Employee Nomination Notice Form on file for five years.

IMPORTANT NOTE: If you want to undertake the Job Keeper process yourself you need to have access to the business portal via myGovID.

We will be offering our services on a do and charge basis depending on the complexity of your personal situation. More information can be obtained from your partner or manager.

The ATO have released guidance for employers to understand what they need to do to ready themselves for the JobKeeper Payment.

* Please make special note below of the requirement for a business portal with myGovId if you decide to enrol or claim JobKeeper on your own behalf. We ask that you please let us know as soon as possible if you intend to process yourself or require our assistance. The myGovId process can be time consuming and we expect large volumes of business’ trying to access the system on the 20th of April when enrolment opens *

To get ready to claim, employers are advised to:

  1. Check if they, as an employer, and their nominated employees meet the eligibility requirements.
  2. Notify eligible employees that you (their employer) intend to participate in the JobKeeper scheme.
  3. Send eligible employees the JobKeeper Employee Nomination Notice to complete and return to you to confirm that they agree to you being nominated as the employer to receive JobKeeper Payments from.
  4. Keep the Employee Nomination Form on file for five years.
  5. Pay the minimum $1,500 to each eligible employee per JobKeeper fortnight. The first fortnight starts on 30 March and ends on 12 April. Alternatively, employers can make one combined payment of $3,000 for the first two fortnights paid by end of April 2020.
  6. Enrol for JobKeeper from 20 April using the Business Portal and authenticate with myGovID or have enrolment processed by a tax professional through the online tax agent portal.
  7. Subscribe to updates on the ATO website, so the ATO can advise when new information is available.

IMPORTANT NOTE: If you want to undertake the Job Keeper process yourself you need to have access to the business portal via myGovID.

We will be offering our services on a do and charge basis depending on the complexity of your personal situation. More information can be obtained from your partner or manager.

Last week the Coronavirus Economic Response Package (Payments and Benefits) Act 2020 and the Rules were passed by parliament.

This Act and the accompanying rules with explanatory memorandum encapsulates the rules for receiving the JobKeeper payment.

Light reading can be found here: https://www.legislation.gov.au/Details/F2020L00419

The JobKeeper payment requires an application to the ATO. The ATO application is almost ready.

The ATO have provided a link to register your interest in the JobKeeper payment (LINK BELOW), so the ATO can contact you when applications are ready.
The ATO have furthermore updated their website to include the most recent developments.

The Link is here: https://www.ato.gov.au/general/JobKeeper-Payment/

What to do next….

If you would like Economos to handle to JobKeeper matter for you:

  • Please let us know ASAP that you want us to assist you with the matter
  • There will be an administrative fee for any applications and ongoing reporting made on your behalf

If you would like to look after the JobKeeper matter yourself:

Due to the matter above being time critical, you may receive numerous, similar emails from our office.

Underneath some quick discussion points from an initial reading of the legislation and explanatory memorandum:

  1. Businesses need to understand Jobkeeper in fortnights. Each of the following is a “JobKeeper fortnight”:
    i) the fortnight beginning on 30 March 2020; and
    ii) each subsequent fortnight, ending with the fortnight ending on 27 September 2020.

Admin process

  1. Businesses need to nominate to participate (with the ATO)
  2. Employees need to respond in writing to employers that they agree to be nominated to participate (this response does not need to be sent to ATO)
  3. Once an employer decides to participate in the JobKeeper scheme and their eligible employees have agreed to be nominated by the employer, the employer must ensure that all of these eligible employees are covered by their participation in the scheme. The employer cannot select which eligible employees will participate in the scheme. This ‘one in, all in’ rule is a key feature of the scheme
  4. qualifying employers that decide to participate in the JobKeeper scheme must, as a condition of entitlement, notify all employees in writing that they have elected to participate in the scheme and that their eligible employees will all be covered by the scheme (if the employee so agrees).
  5. The nomination requirements in subsection 9(3) of the Rules require an employee to provide a notice in the approved form to their employer agreeing to be nominated by the employer for the purposes of the JobKeeper scheme:  The employee:
    • Agrees to be nominated by the employer as an eligible employee under the JobKeeper scheme as the employer with which the employee will participate in the JobKeeper scheme;
    • that they confirm they have not agreed to be nominated by another employer; and
    • that they do not have permanent employment with another employer if they are employed as a casual employee with this employer.

The required wording and forms are available on ATO.gov.au

Turnover Test

  1. Once an entity satisfies the Turnover test in March or April it does not need to retest its turnover in later months.
  2. The Test periods for the turnover test being compared by can be periods of one month or three months (if three months, then those Quarters reporting periods begin 1 April 2020, and 1 July 2020)
  3. An alternative decline in turnover test applies if there is not an appropriate relevant comparison period in 2019. This might be the case for a new business, started for example in January 2020 or a business that made a major business acquisition in 2020.

Components of the $1500

  1. The component amounts that together must equal or exceed $1,500 are
    i) salary and wages
    ii) PAYG WHT
    iii) super contributions
    iv) Salary sacrifice
  2. The requirement that the component amounts be at least $1,500 applies regardless of whether the employee ordinarily receives more or less than that amount.
  3. If an employer’s ordinary arrangement is to pay its employees less frequently than fortnightly, then the payment can be allocated between fortnights in a reasonable manner.
  4. There are timing rules.  Where the employer wishes to participate in the scheme and receive the first or second JobKeeper payment (relating to the JobKeeper fortnights commencing on 30 March 2020 and 13 April 2020 respectively the employer has until the end of the second JobKeeper fortnight, that is, 26 April 2020, to provide the Commissioner with its election to participate;

Eligibility

  1. A business owner is entitled to participate even if they are not an “employee”
    i) Sole trader
    ii) Beneficiary of a trust
    iii) Director or shareholder of company
    iv) Partner in a partnership
    The individual must be actively engaged in the business
  2. Under s.16 of the ACT participation in the JK scheme requires monthly reporting
  3. The Jobkeeper scheme effectively ceases after the last Jobkeeper fortnight – after 27 September 2020.

But importantly please register your interest and please explicitly advise if you wish us to register for you and maintain reporting (fees will apply).

Amidst the growing fears around the spread of COVID-19 (coronavirus), we would like to take this opportunity to reassure our clients that Economos are committed to ensuring that the disruptions are kept to a minimum.

As you know this is an unprecedented and constantly evolving situation. The health and safety of our clients and employees are our number one priority and managing the risk of transmission of coronavirus is critically important.

Tax Obligations

The Australian Taxation Office (ATO) together with the Government’s economic response will be assisting taxpayers who experience financial difficulties due to COVID-19.

For more information on the ATO support: https://www.ato.gov.au/Individuals/Dealing-with-disasters/In-detail/Specific-disasters/COVID-19/

At this stage there have been no announcements with regards to any extensions to lodgement due dates. We will monitor and advise you of any developments.

Contact with our team and visiting our office

Based on the information provided by the Australian Government – Department of Health, we will be exercising social distancing. Accordingly, all face-to-face meetings will be held electronically via telephone or web meeting.

Our team have the technology and devices to be able to continue to support you regardless of work location.

For the latest information about coronavirus in Australia, visit the Australian Government’s Department of Health website https://www.health.gov.au or contact the coronavirus health information line: 1800 020 080.

We encourage our clients and the community to remain calm, if we work together to follow protocols within our community, we can help to reduce the risks associated to coronavirus.

We will get through this together.