In this Sky Update, we bring you all the latest tax news along with some other items that may pique your interest.
On the 21st of July, the Federal Government announced that JobKeeper would be extended for those businesses that have continued to experience financial difficulty as a result of the Coronavirus pandemic.
In order to give effect to the extension, the Federal Government first needed to pass legislation that would then empower the Treasurer to make a legislative instrument setting out the rules governing the extension.
The legislation was passed by Parliament and received royal assent on the 3rd of September. Subsequently, the Treasurer registered a legislative instrument containing the rules on the 15th of September. The following day, the Commissioner of Taxation made three additional legislative instruments to supplement the rules made by the Treasurer.
Amongst the three legislative instruments registered by the Commissioner of Taxation, is a legislative instrument dealing with the timing of supplies for the decline in turnover test. The effect of this legislative instrument is to displace the concept of “GST Turnover” that we have come to know from the initial phase of the JobKeeper Scheme.
Instead, the Commissioner of Taxation’s legislative instrument prescribes that decline in turnover must be tested by comparing the supplies (revenue/sales) that are recorded on the entities Business Activity Statement for the relevant periods. Eg by comparing supplies recorded on the September 2019 quarterly Business Activity Statement to the supplies recorded on the September 2020 quarterly Business Activity Statement.
This means that many businesses will be assessing their decline in turnover on a cash basis (being the most common GST reporting option) as opposed to the previous concept of GST Turnover which was aligned to an accrual basis.
With the final fortnight of the first phase of the JobKeeper having just ended, and the official rules now available, businesses should be taking steps to quantify their eligibility to access the JobKeeper extension and to make the necessary adjustments to their arrangements.
For further information on the JobKeeper extension, please refer to our downloadable guide that can be found here.
Export Market Development Grants (EMDG)
The EMDG scheme is designed to encourage small and medium sized businesses to develop export markets by reimbursing up to 50% of eligible expenses.
To qualify, businesses must have incurred at least $15,000 of eligible expenses in promoting one of the following:
- the export of goods or most services; or
- inbound tourism; or
- the export of intellectual property and know-how; or
- conferences and events held in Australia.
Businesses that are interested in claiming the EMDG for the 2019/20 financial year have until the 30th of November 2020 to submit an application.
We recommend that the first step for interested businesses is to review the EMDG eligibility checklist that can be found on the Australian Trade & Investment Commission website.
If you would like to find out more about the EMDG, or need assistance to find an EMDG consultant, please get in touch.
With Coronavirus case numbers on the decline throughout Australia, most states are continuing their easing of restrictions on businesses.
As part of this, most states have made it mandatory for businesses to have in place a COVID-safe plan to document how they will manage Coronavirus risk and respond should an incident take place.
As the requirements vary from state to state, we have brought together the following links to assist businesses to understand their obligations throughout Australia.
Additionally, we note that Safe Work Australia have a wealth of resources to assist businesses to ensure that they operate safely, minimising risk to staff and customers alike.
Maintaining good practices and having a high level of transparency about how they are responding to Coronavirus risk is a must for all businesses. This is particularly the case in industries where there is a perceived higher risk such as hospitality (cafes/restaurants/pubs/clubs), health (medical/dental/allied health), retail and personal services (hair/beauty).
The risk of contracting Coronavirus is still very real and will play an important part in decision making about which businesses people will have interactions with. Those businesses that are seen to be prioritising the health and safety of their staff and clientele will create an atmosphere where people will have the confidence to have ongoing interactions with the business.
Small Business Insolvency Reforms Announced
The Federal Government has announced a range of changes to be made to Australia’s insolvency framework from the 1st of January 2021 in an attempt reduce complexity, time and cost.
The objectives are to enable small businesses to more quickly restructure for survival. And where survival is not possible, to allow for the business to be wound-up faster with greater returns to creditors and employees.
The reforms include:
- A new formal debt restructuring process for financially distressed but viable firms to restructure their existing debts;
- A simplified liquidation pathway; and
- Measures to ensure the insolvency sector can respond effectively to increased demand resulting from the Coronavirus pandemic fall-out.
Further information on the intended reforms can be found here.
Federal Budget 2020/21
In March, the Federal Government took the decision to defer the handing down of the 2020/21 Federal Budget so that they could focus on the response to the unfolding Coronavirus pandemic.
The Federal Budget is now due to be handed down on Tuesday the 6th of October.
With the Federal Budget now only weeks away, there is much speculation taking place around what may be announced. Many are hopeful that there will be further assistance announced to support business and to underpin job creation.
Further information on the Federal Budget announcements will be available on the official website shortly after the budget is handed down.
And of course, we will be poring over the materials to bring you the details on all of the important announcements.
Quote of the month
Living and working in Victoria, we have participated in the shared experience of multiple set-backs associated with the control of the Coronavirus pandemic in recent times.
These set-backs have at times been unexpected and have left us with the feeling of lack of control of our businesses, jobs and lives. A feeling that has no doubt been felt by innumerable people throughout Australia and the world for much of 2020.
When we feel at the mercy of circumstance, we can counsel ourselves with the wise words of Eleanor Roosevelt, who said “you have to accept whatever comes, and the only important thing is that you meet it with the best you have to give”.
We can’t always predict and control what life will throw at us. However, if we commit to applying ourselves to the best of our abilities, we can have confidence that we will always make the best of any situation that comes our way.
Clearly the current situation is not ideal. But with the right attitude, we can make the best of a bad situation.
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