So I know we aren’t supposed to be in panic mode but the announcements from the governments stimulus package yesterday sent me into a mild panic attack. I’ve been fairly level headed about the whole situation, even attending a large event in Sydney last week but after the announcement yesterday I couldn’t help but think “if they are announcing this now – what will happen at the Budget in May?” I’m really hoping they’ve saved something good for one of my favourite days of the year.
There were some tax free payments for individuals in the form of $750 for those on social security, veteran, concession and other income support payments.
- The instant asset write off has been increased from $30,000 to $150,000 for businesses with a turnover of less than $500m (where the ‘m’ stands for MILLION!) until June 30, 2020.
- There’s some additional depreciation deductions for the next 15 months for new assets.
- The ATO won’t be giving a standardised administrative relief for the Coronavirus outbreak but they are saying that they will consider assistance for tax obligations on a ‘case by case’ basis.
- Employers of apprentices and trainess who employ 20 full time employees (or less) may be entitled to a subsidy of up to 50% of the wage for 9 months with a maximum of $21k.
- And last but not least, possibly my favourite of all – tax free payments of up to $25,000 for businesses with turnover of less than $50m that pay PAYGW.
Let’s unpack what some of these really mean:
The instant asset write off has steadily been rising over the past 2 years and while the jump from $30k to $150k certainly isn’t small – the businesses that this is being made available to has increased literally overnight. Before Thursday March 12th only businesses with a turnover of $50m or less could utilise the $30k asset write off and after Thursday the 12th it is businesses with $500m and $150k. Depending on the industry you are in, the economic impact of the corona virus is going to vary however from speaking with various clients over the past month or so – I know that many are concerned about the domino effect on the market in general and in this way, cashflow is king. I question how many businesses will be inclined to make large capital purchases that were not already on their budget or projected expenditure plan? It will however be a wonderful tax benefit for those who do take advantage of this opportunity – it’s going to make tax planning very fun for me this year.
The refund of PAYGW (wages tax) for employers is one of the most exciting things that I’ve seen in a long time. Big statement but it’s true. This will actually do what it is intended to do – help employers keep their staff in jobs. The way this is expected to mechanically play out is that the BAS and IAS (if you lodge wages monthly with the ATO) are done in March, April, May and June and the ATO will refund 50% of the PAYGW (wages tax) amount in each of those months within 14 days – to your bank account. You will receive the funds from the ATO until you reach the maxiumum threshold of $25k. If you are an employer who has chosen to cease paying yourself wages to assist with cashflow during these uncertain times, now is the time to re-consider. The 50% payment is tax free however your employees will still gain the benefit of the full PAYGW credit and you will still receive the full tax deduction for their gross wages. All business owners should pick up the phone and speak to their accountant about this government announcement – it is a great opportunity.
This week the governments superannuation amnesty bill was waved through the Senate. It took almost two years but it finally happened and for clients with outstanding superannuation – this is definately good news.
In basic terms, the bill allows an “amnesty” for employers to pay superannuation that hasn’t been paid before and make up for prior non-compliance. When superannuation is paid late, there are generally 3 components:
- The actual super owed
- Nominal interest
- Administrative penalty
The calculation of late paid superannuation under the amnesty will not include an administrative penalty. Additionally (and this is my favourite part) the actual super owed and the nominal interest paid will be tax deductible.
An opportunity exists for current businesses to claim large tax deductions in the current year on these additional superannuation payments. In particular, small businesses that have been operating for a long period of time may have unmet SG obligations for business owners, company directors and working family members.
To qualify for the amnesty:
- you must disclose to the ATO that there is a shortfall in super guarantee for a particular quarter for an employee
- the quarter in which there is a shortfall must have ended at least 28 days before the start of the amnesty period (including quarters ending up to 31 March 2018), and
- the ATO must not have declared an investigation into SG compliance for that particular quarter.
Being in business is a never ending cycle of lists and checkboxes, making sure we stay up to date on the various deadlines that we need to adhere to and those that we self impose. It’s easy to become overwhelmed in the busyness of business.
As we near the end of another financial quarter, there’s a few things that I’m ticking off the list of accomplishments for our clients and within the office:
- Single Touch Payroll implementation
- Taxable Payment Summary Reports
- Payroll Tax Returns
- Workcover Declaration Notices
- the list goes on….
Today I’m sharing my 5 favourite things that help me in my every day work life to give me more time for other things I enjoy doing:
- TIME BLOCKING – In basic terms, this is when you set time aside to do specific tasks without trying to multitask – so basically, you don’t let anything interupt you. I find this works best for me when I time block things like “emails” and “phonecalls” and “meetings.” Basically, I don’t let the flow on from those things distract me from getting through the rest of the group of tasks. I am definately more efficient when I timeblock.
- COMMUNICATION – The IQ team is made up of awesome humans who all have awesome lives that don’t neccessarily allow us or require us all to be in the Burleigh office Monday – Friday, 9-5. Being an e-office (paperless environment), working remotely is seamless, but we needed something that allowed us to keep our office culture and communication at the same level as if we were sitting right next to each other. We have been using Slack for over 3 years and use this as our communication hub and have banned internal emails. This helps us to get things done in the most time efficient manner as well as letting us share photos, do video calls and search prior chats for
- TASK MANAGEMENT – This has been a game changer for me and our IQ team. We use kyber which integrates with Slack and allows us to set ourselves and each other tasks with timeframes, deadlines complete with follow up and the ability to delegate and make notes as required. I love that I can see at a glance what I need to do as well as what any other team member has on their tasks list for today, tomorrow and the future as well as what they have completed.
- LEARNING – I am commited to being a lifelong learner (that’s a term I picked up at my kids school and I am running with it because I really like the alliteration.) I have a host of podcasts that I subscribe to but the ones I am loving right now are Next Generation Innovators Podcast Future Women and The Startup Grind Podcast . I have had a client recommend the Jordan B Peterson Podcast to me but I am yet to check this out.
- PEOPLE – I can’t really make a list of the things that help me do what I do best without listing people! I choose to surround myself with people who are on the same page and who are going in the same direction. We have pretty specific goals and ideas and we make sure we all know what they are and how we are going to get there. I also try really hard to give those people as much of my time as they need so that they can be the very best versions of themselves. I also make sure I both contribute to and seek the counsel of an outstanding support network of business mentors that I can turn to when I need advice – this is invaluable to my general day to day activity and sanity.
Single Touch Payroll (STP) is a change to the way employers report their employees tax and superannuation information to the ATO and is done electronically through your accounting or payroll software. The information is sent directly from the software to the ATO. All employers need to ensure that they are compliant by July 1st.
Employers with 20 or more staff should already be reporting to the ATO as this was implemented from July 1st, 2018.
Employers with less than 20 employees have until July 1st, 2019 to begin reporting but I recommend getting the process started now to ensure that there is not a last minute rush and stressful implementation at the end of the financial year.
The process is relatively simple and once you are setup, it really runs in the background with very little for you to do – most of our existing clients who are already on the STP process report that they mostly forget that it exists. There are some distinct advantages – employers who report using STP for the full financial year will not be required to provide employees with payment summaries. Instead this information will be provided electronically to employees by the ATO through an employment income statement and be available on their mygov account. Where employees do not have a mygov account, their tax agent can access this for them or they can contact the ATO for this information.
Long term the ATO is looking to use the STP information to prefill activity statements and reduce the burdon on the taxpayer for monthly IAS statements that report PAYG withholding amounts. This is the same information that is being reported through the STP data so it makes sense that the ATO would use information that you are giving them to pre-fill the reports.
We have successfully assisted clients with the implementation of Single Touch Payroll. Please consider getting on board prior to July 1st and contact the office on 07 5576 0011 if you would like to make an appointment to get setup.
This morning the JobKeeper extension bill was introduced to parliament – which basically outlines the changes to the JobKeeper scheme that were announced by the Government extending the reimbursement subsidy to March 28th, 2021. I will provide some more detailed information once it is available however, we do know that JobKeeper is likely to come to an end for some current JobKeeper employers at the end of September (final payment in October.)
Since the Government introduced JobKeeper, many small – medium business owners have relied on this stimulus measure and despite it being a “reimbursement” scheme, it has really assisted with keeping employees in a job and helping with cashflow from month to month. When the extension was announced, “new eligibility criteria” were flagged meaning that to continue to be eligible from September 28th (or to become eligible) the employer needed to meet the 30% decline test in July – September 2020 quarter and then retest in October – December 2020.
The current JobKeeper system does not require retesting for eligibility and many business owners have been in receipt of the JobKeeper payments for the entirety of the scheme (up to 6 months.) Some business owners will have found themselves financially better off under this system as they may have recovered from the initial decline in income and these owners will need to ensure that have not absorbed or become used to the additional JobKeeper funding. Other business owners may find that they are still suffering from COVID related sales decline and as they don’t meet the 30% decline test, the JobKeeper payment will cease. Other business owners may be somewhere in between, there are many stories and I am aware of several clients who are concerned by the new eligibility criteria. With this in mind, we know that the end of JobKeeper could cause a real change to the business cashflow so it’s important to start preparing for how this will effect your business.
Review your current cashflow situation and test it to see what things will look like without JobKeeper
Practically speaking, your software should have a cashflow report showing inflows and outflows on a monthly basis. Review this for the last 3 months and ask yourself the following questions:
- What does my cashflow look like without the JobKeeper supplement?
- Do I expect my income to be more or less than these months I am looking at?
- What will the business cash at the end of each month look like with these things in mind?
While it’s sometimes hard, it’s important to consider a “worst case scenario” approach and then determine some action points if this were to occur. Now is the opportunity to be proactive.
Consider whether you may need to speak to your financial lender to obtain a loan or line of credit to help cover your expenses.
If you have been using the JobKeeper funds to begin a new project or you are waiting on a payment from a customer who is COVID effected, make sure that you think ahead and speak to your lender in advance as applications can take time. Sometimes banks will require updated accountant prepared financial statements or tax returns so it’s important to know in advance what is required to avoid any delays.
If in doubt, seek help
If you are uncertain about your cashflow position then seek help. It is crucial to speak to a trusted advisor like an accountant or a financial planner to get advice in a timely fashion. Often, poor cashflow can create other problems within an otherwise successful business and it’s generally cashflow that keeps us awake at night.
Here at IQ, we are ready and willing to help with a wide range of services for clients who need assistance. We have been:
- preparing cashflow reports for clients and then having 15 minute phonecalls to explain what these mean and creating action points to deal with the issues raised
- having 30 minute monthly meetings to review trading and profit trends and discuss growth and profitability strategies
- doing financial modelling with clients to assist them in determining what the cashflow will do if “we make this choice” vs “making this choice”
- holding “understand your business better” meetings – explaining what the bookkeeping reports mean and teaching clients how to get more data and information out of their own bookkeeping information and then how to use that data
- providing affirmation, being that trusted person to run a new idea past and providing yes/no “does this make sense” feedback
- reviewing processes and offering a set of “fresh eyes” for new opportunities, increased efficiencies and increased revenue
- providing other guidance tailored to specific clients needs.
If you would like to find out more about these services or more, please email firstname.lastname@example.org or phone 07 5576 0011.
The Superannuation Guarantee (SG) Amnesty is one of the best opportunities given to employers in a long time but unfortunately it has come at a very bad time. The SG Amnesty has given employers the opportunity to “fix up” any non payment or short fall payments of superannuation for their employees. However, time is almost up as we move quickly towards the 7th of September deadline.
The ATO is allowing employers to disclose and pay superannuation that is owed to employees without penalty of interest or Part 7 for the periods between July 1992 – March 2018.
I wrote about the SG Amnesty here but to quickly summarise the difference between paying super before September 7th and after September 7th:
- If paid before September 7th under the SG amnesty, there will be no administrative penalty. ($20/employee/quarter)
- If paid before September 7th under the SG amnesty, the super owed will be tax deductible.
- If paid before September 7th under the SG amnesty, the nominal interest paid will be tax deductible.
- If paid before September 7th under the SG amnesty, Part 7 won’t apply which is a penalty of up to 200% of the superannuation guarantee owed.
The ATO have recently announced that they will accept payment plans for employers who wish to participate in the amnesty however only payments made by September 7th will be tax deductible.
For further information, please contact our office without delay.
For weeks we’ve been told the JobKeeper announcement would be on the 23rd and the PM and Treasurer decided to bring the news early and make the announcement yesterday. On the whole, it’s a good news story with the scheme being extended and I will outline the general details below. We must remember though, there is no legislation yet and if we’ve learned anything from the COVID stimulus announcements to date – the devil is in the detail. So while I am absolutely celebrating the important and wonderful assistance this announcement will bring for many of my clients, I am also conscious that we need to wait and see what the details are as none of this takes effect until very late in September.
- Most important, there is no change to the current JobKeeper and it will continue to run “as is” until September 27th.
- The “new” JobKeeper which has been called JobKeeper 2.0 will be run from 28/09 through until March 28th, 2021.
- The turnover tests will need to be re-applied for JobKeeper 2.0. The tests need to be re-applied twice during the 2.0 period. This is where I am expecting some of the nitty gritty detail to come into play and where there are already a wide range of questions being thrown around.
- New JobKeeper applications will be available – so if you become eligible during the period, you can still apply (this is the same as now.
How much will the new JobKeeper be?
From September 28th
- Currently $1,500 per fortnight for all employees and business participants, from September 28th there will be a 2 tiered payment system.
- If you work 20 hours or more then you will receive $1,200/fortnight.
- If you work 20 hours or less then you will receive $750/fortnight.
From January 4th, 2021
- This will reduce from the $1,200 or $750 per fortnight for all employees and business participants, from September 28th but the 2 tiered payment system continues.
- If you work 20 hours or more then you will receive $1,000/fortnight.
- If you work 20 hours or less then you will receive $650/fortnight.
How does the 20 hours test work?
- The 20 hours period is based on the 4 weeks of pay periods before 1 March 2020, so you look back to February 2020. You must have worked more than 20 hours a week.
- The 20 hours test will also apply for sole traders and eligible business participants and the 20 hours will apply to time spent “actively engaged in the business.”
JobKeeper 2.0 is due to CEASE on MARCH 28th, 2021.
I have a lot of questions and am keen to see the actual legislation and some further interpretation on this. The changes are expected to be legislated through ammendments to the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020.
Here is the link to the Government info sheet about the JobKeeper changes. Again, we’ve learned over the COVID-19 period that this document changes regularly (even by the hour at times) so I recommend downloading this document if there is something on there that you specifically want to rely on.
I never profess to be an expert in matters concerning Department of Human Services or Centrelink or Services Australia (so many names for one organisation!) There was an announcement regarding JobSeeker though which is as follows:
- The JobSeeker coronavirus supplement will be $250 a fortnight, currently $550 taking effect from the end of September.
- Those in receipt of JobSeeker will be able to earn $300 before any reduction in payment.
I understand that those receiving the full JobSeeker payment including supplement are receiving $1,100/fortnight and this will drop to $800.
Happy New Financial Year everyone! Now we turn our minds to finalising the payroll for the 2020 financial year and for most small businesses, this will be due at the end of July or if you have more than 19 employees – on July 14th.
Here are the steps that I recommend taking in order to finalise the payroll year and complete the STP finalisation:
- Check your bank feeds. Best practice is that the bank account that you pay payroll from is reconciled.
- If you use an electronic clearing account for payroll – make sure that the balance of this account is NIL.
- Check that your employee details are up to date……I’m talking names, dates of birth and tax file numbers.
- Make sure that all of your payroll items have been allocated to the respective ATO reporting categories correctly. For MYOB users, click here for AccountRight and here for Essentials.
- If you have paid any termination payments for employees during the year, now is the time to go back and review these for correctness.
- Obtain any Reportable Fringe Benefit Amounts from your accountant if you lodged a Fringe Benefits Tax Return in March – June this year.
- Confirm that the last pay run lodged via STP was accepted. Make sure the payroll year is set to 2019/20 as it will default to the current pay year.
- “Print” the payroll summary report for the period 1st July – 30th June and compare this to the YTD verification report. Specifically check that the total income (wages) and total PAYGW Withholding matches on both reports. If yes, proceed to the next step. If no, see below:
- Select all employees and then press the “Set as Final” button.
- You are done!!
What to do if the reports don’t match
I recommend running a NIL pay run for all employees to see if this updates the balances. If this doesn’t work, you will need to go through each employee and determine which employee is out of balance and then check each payroll category has been allocated to the STP per Step #4.
Ensure that when you complete the June BAS, the total PAYGW on the verification statement and the payroll summary report matches the PAYGW you have declared on the BAS for the entire year.
If you use MYOB Accountright, consider updating to 2020.2.2 as you will not have to complete the STP Finalisation before running the first payroll in the 2021 financial year – this is a gamechanger and totally takes the pressure off. Hooray!
Don’t feel pressured by your staff. Getting the year end process right is better than rushing and getting it done incorrectly. If there is an error, it will likely result in your staff having to amend their income tax returns.
As the end of financial year draws near, employees begin to get excited about lodging their tax returns and getting their refunds which in turn, puts pressure on their employers to provide their payments summaries – or group certificates (depending on your age!) This year, most employers and businesses will be on the Single Touch Payroll (STP) system and this means that employees will not receive any documentation regarding their annual earnings.
FACT: When registered for STP – employers are not required to provide employees with a final end of year payment summary.
FACT: Some employers will have until July 31st to complete the “STP Finalisation” process. This means employees may not have access to their year end information and be unable to lodge their tax returns. The ATO have recommended that employees “hold off” lodging their tax returns until employers have completed the process.
FACT: The STP Finalisation process replaces the old payment summaries. Upon completing the process, employers are:
- letting the ATO know that all pays for the 2020 year have been done
- the status of the employees income statement in myGov changes to “Tax Ready” and this means they can now lodge their tax return
FACT: Every time an employer who is STP registered processes a pay, this information goes to the ATO.
FACT: Employees can access their Employment Income Statements through any of the following ways:
- Access myGov and download from there
- Via a registered tax agent who can assist in lodging the tax return
- By phoning the ATO who will provide this over the phone – 13 28 61
Here is a great fact sheet to provide your employees if they ask for their payment summary/group certificate.
All IQ clients who are employers should have received an email advising the due date for the STP Finalisation. If you have not, please contact the office as a matter of urgency.
It’s been 62 days since we closed the IQ office – we miss each other terribly but in all reality, we are working really well and things are going fine. Some of our clients haven’t even realised we have closed the office given that they ask me “Are you at home or at work?”
The IQ office is in Burleigh Heads, Queensland. I know, that seems like an odd statement but because we are a digital firm, we have clients nationwide and some people have never been to the office – so it’s an important piece of information given the topic at hand. Qld has a “Roadmap to recovery” that was announced last Friday and there is a federal one as well. There is also an overwhelming amount of information here about what needs to be implemented before and when we return to the office. Workcover Qld also has some information.
Day to day, we only take about 25% of our meetings face to face. Otherwise it’s via other methods using various technologies, much like we’ve been doing over the past 62 (still can’t get over that number) days. But I also know that if clients ever decide to make that one face to face visit to the office, its generally at tax planning time – which is now. So our decision, to delay re-opening the office has been a really tough one.
We are all very keen to see each other but the bottom line is that we are accounting and taxation experts and not workplace health and safety experts. This is our busiest time of the year and we need to stay focused on the outcome which is completing the 2019 for the late lodgers and proactive tax planning for all other clients.
Speaking of tax planning, we recently installed a very fancy new whiteboard which I was really looking forward to using in tax planning this year! It is currently hanging sadly on the wall.
And to end – some exciting news. This week we learned that I have been named as a finalist in the Australian Accounting Awards. The awards night is being held in a few weeks via live stream! What a wonderful world we live in.
In a welcomed break from Cashflow Boost, JobKeeper and other stimulus measures – I wanted to share the tools that we’ve been using at the IQ office to help make the work from home situation a little easier.
We made the call early to go to “work at home”and closed the office on March 16th, about a week before most offices did the same. When we closed, we didn’t speak to our IT people and there was no phone re-direction, we just packed up our laptops, took the extra screens and went home. The office looked like it had been robbed! It was eerily easy – apparently we’ve been planning for Corona Virus all along and hadn’t realized it.
- SLACK – I wrote another post here which covers my top 5 things that help me stay productive and slack made this list under communication. We would be lost without slack. We use this as our “messenger for 2020.” We’ve been using this for almost 5 years now and when we began microsoft teams didn’t exist. I’ve sat in on my fair share of teams meetings lately and my kids have been using teams with school for online learning and there are a lot of things I really like about it but nothing beats the integration options that Slack has so IQ are firmly on team Slack.
- GO TO MEETING – This is our preferred meeting platform and while I’ve sat in on teams, zoom, skype and google hangouts – at IQ we choose GTM because of the whiteboard ability (making tax planning a breeze), higher number of attendee options but mostly because of the safety. GTM uses robust encryption mechanisms so anything discussed in these meetings stays confidential and the data isn’t stored – even if we opt to record the sessions (like in bookkeeping training.) For us, the security of safety is paramount and while it may make joining slightly more difficult on the initial attempt – it’s worth it.
- SPARKLY – This is a bot which we’ve integrated to slack and it connects the IQ team, 2 people per day on a randomized schedule. The aim is to have a quick 5 minute catch up as if we were in the “office kitchen” and chat about whatever’s going on in our lives and aims to keep us connected.
- 3CX– We use a phone system called 3cx which allows us to answer and divert calls as if we were in the office. So many clients have asked me about this as we have found this to be exceptionally reliable. It sits on our computers and some of our work phones (not all staff have these.) It also has a video function so we actually get to see each other when we make internal staff calls – this has really helped keep the team connected.
- PRACTICE PROTECT – We use a special security system designed especially for accountants where our team only know one password and not any other passwords to log into any client files or other programs. This has given us great comfort during this time where there’s been a lot of talk about cyber crime and IT issues.
- ROCKETBOOK – These are actual books which you use special pens to write with and then you can upload it to email, google drive etc and then…….wipe clean and use it again. I love this product, it’s sustainable and really suits our staff who prefer the handwritten notes but keeps them in line with our paperless office workflows.
- IQ CLIENT PORTAL – I saved the best until last. When we went to work at home, I knew that without the portal – we would have been in struggle town. We are so grateful to our clients who utlise the IQ portal and who in turn have been able to assist us in keep our business running seamlessly. We have been able to continue to prepare and lodge tax returns and BAS, receive documentation and provide anything requested through the portal.
Staying connected to each other and to our clients has been really important during this time, particularly with the office being closed. We appreciate all of our IQ clients and are grateful for everyone for being on this technology journey with us.
All the days are really blending into one right now and I am very aware that we are right in our usual tax planning time and our awesome IQ clients have heard NOTHING from us about tax planning. Well, that will change this week – keep an eye on your IQ portals, we will be giving you all the tax planning details and begin taking appointments. The delay has been obvious…….we’ve been super busy helping everyone with COVID related work but also, I needed to make sure we didn’t start tax planning too early this year and not include JobKeeper which is a taxable payment and will make a BIG difference to the year end tax payable.
I assisted countless clients with JobKeeper last week and was surprised and concerned about some of the myths and facts that are being shared. I want to clear some of these up as well as let you all know about a new change that the Treasurer announced late Friday.
- MYTH – I will receive JobKeeper first and then I will pay myself and/or my staff. This is incorrect – JobKeeper is a reimbursement system and if you are an employer who pays wages, you must first pay yourself wages. To be eligible to be paid for the first tranche (30/3 – 26/04) you must pay wages prior to the end of April, meet all of the eligibility tests as an employer and employee and enroll.
- FACT – I can back-pay my staff as long as I do this prior to the end of April. Yes, so time is ticking. Usual eligibility and enrollment criteria apply but there is a concession allowing the back-pay for the first two JobKeeper fortnights only.
- MYTH – All of my staff under 18 can receive JobKeeper as long as they meet the long term casual test or are permanent part-time or full time employees. Late on Friday, there was a change to the JobKeeper rules (I know – welcome to my life.) The rules will be changed prospectively so that full time students aged 16 and 17 years old, that are not financially independent are not eligible for the JobKeeper payment. You will need to retest every employee under 18 years of age. If you have already paid them $1,500, this will be reimbursed but future payments will not be reimbursed.
- FACT – I can use either CASH or ACCRUALS to calculate the decline in turnover test. In another change, the ATO has now updated the information to show that despite the GST registration – either cash or accruals reports can be used but consistency is key, make sure you are comparing accruals with accruals and cash with cash.
- MYTH – If I use the JobKeeper alternative test – this is the only test I need to meet. The alternative test sets out the available alternative options for the “decline in turnover ” calculation however all other eligibility criteria still apply.
- FACT – I need to make sure I meet all of the eligibility criteria as an employer, employee and/or eligible business participant and understand how to enroll and claim as well as what administrative documentation should be held. This is complex legislation and while it is a wonderful and welcomed wages subsidy, there is an incredible amount of administrative pressure on business owners to ensure this is rolled out correctly. Please do not get this wrong.
- MYTH – Once I’ve enrolled, I don’t need to do anything else. No – if you have employees you need to notify them they have been nominated as an eligible employee within 7 days of notifying the ATO of their individual details (I expect this will happen at claim time.) Also, don’t forget to claim! This is how you are reimbursed for the JobKeeper payments you are making for your employees or if you do not pay wages – this is how you will receive the JobKeeper payments.
- FACT – I can enroll by the end of May and still receive the full payment. Yes, this is true. Originally the ATO information said April 26th, then April 30th and now it is the end of May however the process is check eligibility, enroll and then claim (as well as a heap of other processes along the way.) Claim’s open on May 5th so there is no benefit in waiting until the end of May to enroll.
If you are uncertain about these issues above or any of the JobKeeper information – here’s how you can find out more information:
- ATO JobKeeper Information
- Treasury JobKeeper Information
- IQ Phonecall assistance – can be booked in 15 minute blocks. There are no “quick questions” with JobKeeper. $55
- IQ E-meeting – discuss eligibility and/or ad hoc questions. $110
- IQ Accountants JobKeeper supplement. This is a step by step guide for the JobKeeper process – separate process for those with employees and separate process for those who do not pay wages. The document will be updated as changes are made and the updated document provided at no further cost – $195
What a week this week was! Some of the information that I am going to share with you now was provided to me as late as Thursday and in the accountants world (yes, picture thousands of accountants hidden behind screens geeking out about JobKeeper) there is SO MUCH DEBATE about some of these things and there is still alot of information that we are waiting on from the ATO including further clarification.
But that aside, JobKeeper opens for enrolment on Monday. Yes, Monday April 20th. For employers and the self employed who pay themselves wages, the process is pretty clear but for the self employed (including sole traders) who do not pay themselves wages – there’s going to an online form on the ATO website for this process. The process which begins on Monday.
If I am honest, JobKeeper is pretty complicated but it’s going to be pretty awesome for some clients. I encourage every single business owner to get across the JobKeeper information and check if you believe this is available to you and if you do – find out all of the details. The devil is in the details in this process because if you get this one wrong, the penalties are super harsh.
So far, everyone should have registered and then from Monday, everyone can ENROL. The process for applying for employers with employees and self employed is different. If you are self employed but pay yourself as an employee then it is more simplistic to put yourself in the employee category for the purposes of JobKeeper. However, it will be worth reviewing the self employed category if you also have another family member or business partner who is actively involved in the running of the business as you may be eligible to make a claim for them under the self employed category.
Before you enrol – please be aware that it is not mandatory to participate. This is an “opt in” situation.
- Please review your eligibility for JobKeeper. If eligible then –
- Notify your employees you intend to participate
- Provide your employees with a JobKeeper Employee Nomination Notice They will need to complete this and return it to you and this should be kept on their employee file
- You will then need to review your payroll, make decisions about backpaying your employees for JobKeeper (concession only available until the end of April) and/or begin paying $1,500 to each eligible employee per JobKeeper fortnight.
- Enrol for JobKeeper from April 20, 2020
- Applications for claim don’t open until May 4th however there is lots to be done prior so please don’t ignore JobKeeper until then or you will find yourself not eligible.
How do I enrol?
On Monday – self employed will hopefully have a form on the ATO website that they can use to enrol. For all employers will employees, you need to either do this yourself on the business portal or use a tax agent (that’s us!) If you do not have the business portal but wish to do this yourself then check here for information. Anyone who hasn’t yet moved from the auskey to MygovID should also follow these instructions. Warning: I have heard that this is becoming difficult to setup at the moment and recommend that you try this at low peak times.
Why is this so complicated?
I genuinely believe that there will be clients who are eligible for JobKeeper and will miss out because the information has not been able to be clearly laid out all at once due to the timing of the release. There are varying rules and processes between Employers who pay wages and Self Employed and some people will fall into both categories and may have to do both processes.
The ATO is working extremely hard in the rollout and implementation of this system but the constant update of information is really hard to keep track of. This is going to mean that at some stage people are going to think they know whats going on and then miss important updates that could effect their eligibility. A great example of this is me! I logged off around 7pm last night and at 8:30pm got notification there had been an update to an area of “uncertainty” by the ATO that was going to change the eligibility for some of my clients (in a wonderful way!)
As JobKeeper is a reimbursement system, there is a risk of paying employees prior to the ATO reimbursing you and the risk is on the Employer – not on the employee. If you choose to pay the employee and then find out later, you were not eligible for JobKeeper – this is a huge financial outlay. Given that we know that staff who are currently paid less than $1,500 per fortnight must receive the full amount for the employer to be eligible – there is also some uncertainty regarding the treatment of the top up wages for Workcover and payroll tax thresholds. This could end up being quite costly for the employer. Leave and superannuation issues also need to be considered.
Finally, the penalties for getting this wrong are what I would call – on the harsh side.
The IQ team has prepared a JobKeeper supplement that we will be making available to all clients. The JobKeeper supplement sets out in a step by step process for both employers with employees AND the Self Employed (including sole traders) how to navigate the process and obtain the payments. For anyone who has already purchased the Business Action Plan, this has been provided to you as a complimentary addition. The cost of the JobKeeper supplement is $195. We are also doing our COVID rate e-meetings and phonecalls. I really encourage clients (especially those who are self employed) to review the JobKeeper information carefully as there will be many clients who will be able to access these funds (up to $19.500/eligible employee or business person) – we are here to help you.
The Australian Taxation Office is offering some relief options to assist those impacted by the Coronavirus. One of these is that quarterly payers of PAYG Instalment Tax can vary their March quarter down (to NIL) and/or claim a refund of the instalments paid for September and December 2019 quarters.
This is PAYGI – this is not the same as the PAYGW (or wages tax) that is paid for employees.
The relief will not be automatically applied and you will need to take your own action or the IQ team can assist you.
To assist you in making a decision, here’s the important information that you need to know:
- The PAYG instalments are prepaid tax for your 2020 tax return. If you vary the March quarter down or to NIL and/or claim a refund of the September and December 2019 quarters, this will reduce the amount of tax you have paid during the year and when your tax return is lodged at the end of the year, there is a very high change you will have a tax debt to pay.
- The ATO are not offering you a “gift of funds.” This is simply a deferral of tax – giving you your money back now so you can pay it back to them at a later date.
- There are a variety of options to choose from:
- You can choose to vary the March quarter down OR to NIL and leave September and December 2019 quarters as paid.
- You can choose to vary the March quarter down OR to NIL and also refund September AND December 2019 quarters.
- You can choose to vary the March quarter down OR to NIL and only refund one of the September or December 2019 quarters.
How to take advantage of this opportunity:
This is time sensitive – please act now.
- The ATO provide you with a guide here which you can follow to vary your PAYG instalment yourself. The ATO have confirmed that they will not seek to penalise anyone who has a tax debt at the end of the year due to varying, so don’t be disheartened by the “interest and penalties” or;
- The IQ team can assist. We are offering a discounted COVID rate to assist clients in this process – please complete this form if you would like our office to take care of this matter for you. All information including costs are outlined on the form.
Finally, the ATO released some further information about JobKeeper late today. Unfortunately this did not contain detail for self employed but for employers the information is here.