The ATO has announced a number of initiatives to assist businesses as part of the Australian Government’s economic response to the pandemic.
The recent outbreak of novel coronavirus (COVID-19) has introduced many new challenges to our communities and businesses. Below is further practical advice to help emerging, private and mid-market businesses navigate some of the difficulties they may currently be facing.
COVID19 – Australian Taxation Office support
The Australian Taxation Office has released a range of measures to help support individuals and businesses affected by the COVID-19 economic impacts. The ATO has also addressed a number of technical issues that have been raised.
ATO support for individuals affected by COVID-19
The ATO recognises that more people will be working from home during this time which may mean additional running expenses (such as phone, internet, heating, cooling and lighting incurred as a result of COVID-19). Individuals may be able to claim a deduction for these additional expenses.
ATO support for businesses that have been affected by COVID-19
Individuals and businesses affected by COVID-19 will be allowed to defer some payments and vary instalments that are due, such as income tax, business activity statement (including PAYG instalments), fringe benefit tax and exercise payments by up to 4 months.
Access to GST refunds
- Businesses on a quarterly reporting cycle may elect to change their GST reporting to monthly cycles starting 1 April 2020 to get quicker access to GST refunds. Note: once this choice is made, the taxpayer must keep reporting monthly for 12 months before the business can elect to revert to quarterly reporting. This change does not affect the PAYG withholding reporting cycle.
- Businesses that reimbursed their customers due to cancelled supplies and events as a result of COVID-19, and who have already paid the GST to the ATO, are able to make a decreasing adjustment to reduce the amount of GST payable in their next business activity statement.
Varying PAYG instalments
- Businesses that pay PAYG instalments on quarterly basis can vary their PAYG instalments on their business activity statement for the March 2020 quarter. They should lodge a revised business activity statement before the instalment is due and before the income tax return for the year is lodged. Businesses can vary their PAYG instalment rate or amount and can claim a refund for any instalments made for the September 2019 and December 2019 quarters.
Fringe Benefit Tax Exemptions
- Certain additional non-wage benefits provided by businesses to assist their employees or their associates in an emergency situation (e.g. emergency accommodation, food, transport, face masks, sanitisers and health care) may be subject to FBT exemptions. The ATO will also accept that the exemption may also apply to employees posted overseas returning to Australia.
- Portable electronic devices that are used primarily for employee’s work to enable employees to work from home or from another location, are also likely to be exempt from FBT.
- The taxpayer is not liable to pay FBT on non-refundable costs for cancelled events on the basis that no fringe benefit has been provided. However, if the business chooses to reimburse employees that were liable to pay for their attendance at the event which was cancelled, the business may have to pay FBT as this may trigger a provision of an expense payment fringe benefit.
International business issues
- As the spread of COVID-19 has resulted in a high degree of uncertainty around international travel, some foreign-incorporated companies (that are not Australian tax residents) faced a need to temporarily suspend their normal pattern of board meetings. This may have an impact on their corporate residency status for Australian tax purposes. The ATO confirmed that they will not apply compliance resources to determine if the central management and control is in Australia for the affected businesses.
- The ATO confirmed that unplanned short-term presence of employees of foreign-incorporated companies in Australia as a consequence of COVID-19 will not result in the company having an Australian permanent establishment, if the company did not have a permanent establishment in Australia prior to the impacts of COVID-19 and there are no other changes in the company’s circumstances.
Other ATO support
- The ATO may provide businesses affected by COVID-19 a low interest payment plan to assist with paying their existing and ongoing tax liabilities.
- The ATO will consider remitting interest and penalties applied to tax liabilities incurred after 23 January 2020.
- The ATO will set up a temporary shopfront in Cairns to assist small businesses and will consider additional ways to increase their presence in other regions.
Information accurate at the date and time published.
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