In this Sky Update, we bring you all the latest tax news along with some other items that may pique your interest.
Important Federal Court decision on casual employment
On the 20th of May, the Federal Court handed down its judgement in the WorkPac Pty Ltd v Rossato case.
This decision deals with when a casual employee will be regarded to be a full-time or part-time employee. In short, a casual employee is an employee who has no firm advance commitment from her or his employer to continuing and indefinite work according to an agreed pattern of work (“firm advance commitment”).
Indications of a lack of firm advance commitment are irregular work patterns, uncertainty, discontinuity, intermittency of work and unpredictability.
In this case, Mr Rossato was found not to be a casual employee as his engagement with the employer exhibited sufficient firm advance commitment. It therefore followed that Mr Rossato was entitled to the entitlements usually accruing to full-time and part-time staff such as annual leave.
Furthermore, the court ruled that the casual loading that had been paid to Mr Rossato could not be used to offset the amount owing in respect to the employee entitlements that are now required to be met.
There has been much comment in the media concerning the implications of this case and it is possible that the Federal Government will intervene to address the situation where casual employees may be seen to be “double dipping” by receiving the casual loading and then subsequently claiming an entitlement to annual leave.
We recommend that any businesses that engage casual employees review their arrangements in light of this decision to ensure that they are correctly classifying staff. If there are any concerns about the status of casual staff, professional advice should be sought.
Fringe Benefits Tax returns
Employers providing non-cash benefits to employees (eg provision of a car for private use, payment of private expenses, etc) may have Fringe Benefits Tax (FBT) obligations in respect to those benefits.
With the FBT year having ended on the 31st of March 2020, employers that have FBT obligations must lodge a FBT return with the ATO by the 25th June.
If your business has provided non-cash benefits to employees during the twelve months to the 31st of March, please get in touch to discuss your FBT obligations.
Joint Treasury & ATO statement on JobKeeper
Treasury and the ATO have issued a joint statement on the JobKeeper scheme. In that statement, it has been revealed that errors made by businesses completing the online enrolment form have resulted in the cost of the scheme having been significantly overestimated.
The revised estimate of the scheme cost is now $70b down from $130b. Whilst it is unfortunate that the financial modelling was not more rigorous, it is good news for Australia’s economic position and ability to further respond to the economic ramifications stemming from the Coronavirus pandemic.
Additionally, we take this opportunity to remind business participating in the JobKeeper scheme that the due date for declaring eligible employees for the month of May is the 14th of June. If you need assistance to make your businesses declaration, please get in touch at firstname.lastname@example.org or 1300 328 855.
With EOFY 2020 now upon us, we recommend that you undertake a tax planning exercise to ascertain your likely tax position and plan accordingly. Eg if there is likely to be a substantial tax liability, you can plan to set aside sufficient funds to cover it.
Additionally, the tax planning exercise will assist in identifying any actions that can and should be taken now in order to improve your tax position. For example, it may be beneficial to make additional tax deductible superannuation contributions or to make use of the extended instant asset write-off of $150,000.
A tax planning exercise will also be beneficial in informing decisions on what dividends to declare, how annual trust distributions resolutions should be prepared and what actions may be required in relation to director/shareholder loans.
Coronavirus restrictions to be eased
Across Australia, the states and territories have been making announcements concerning the gradual easing of their Coronavirus related restrictions. In the coming weeks and months there will be a number of changes affecting what individuals and businesses are allowed to do across a range of different activities and industries including restaurants and cafes, social gatherings, travel, work & study, sport & exercise, etc.
We note that each of the states and territories are taking their own approach to the easing of Coronavirus related restrictions. As such, it is important to access guidance that is specific to the jurisdiction in which you live and/or your business operates. The following are some useful links to guidance on the changes that are occurring:
Additionally, we remind businesses of the obligation to provide a safe environment for staff and customers and direct them to the Safe Work Australia website for the latest guidance on best practice workplace safety.
Businesses that have previously been restricted will need to undertake an assessment of their obligations in order to determine when they will recommence trading. This assessment will need to balance the safety related requirements and obligations along with the economic considerations. For example, whilst many hospitality venues may soon be able to welcome patrons on premises, it may prove to be more economically viable to wait until the restrictions are further eased.
Quote of the month
In times of uncertainty, it is useful to take counsel from those wise men and women who have gone before. It was John F Kennedy who said that “change is the law of life. And those who look only to the past or present are certain to miss the future”.
The nature of these difficult times is such that the events of the day often demand our undivided attention. We must focus on meeting the challenges that are thrown at us each day and this leaves little time or energy to look to the future and plan ahead.
However hard it may be, it is important to be proactive in planning for the future and to seize those future opportunities that will bring us long term prosperity.
Sky Accountants Ballarat
Phone: 1300 328 855
Office Address: 902 Howitt Street, Wendouree, Victoria 3355, Australia
Postal Address: PO Box 2234, Bakery Hill, Victoria 3354
Sky Accountants Sunbury & Gisborne
Phone: 03 97444522
Sunbury Office Address: Suite 13, 33-35 Macedon Street, Sunbury, Victoria 3429, Australia
Gisborne Office Address: 45 Hamilton Street, Gisborne, Victoria 3437, Australia
Postal Address: PO Box 270 Gisborne Victoria 3437