Weekly Digest – 8 April 2020
The word “uncertain” has been thrown around frequently during the COVID-19 pandemic – and that’s because almost everything around us has been just that. We hope you’re going well and managing to get some time away from your business during these crazy times. In this weeks wrap up we are talking about rental waivers, JobKeeper, $10,000 Grants and WFH Tax Deductions. We also talk about why we sometimes have to say ‘No’ to our clients.
Rental Waivers and Deferrals for Some Commercial Tenants
Prime Minister Scott Morrison announced some new measures for landlords and tenants yesterday (Tuesday 7th April). The new mandatory code will apply to tenancies where the tenant or landlord is eligible for the JobKeeper program, which means those that are in financial distress. This code was described to include “good-faith principles” where landlords must not terminate the lease or draw on a tenant’s security and likewise, tenants must honour their lease.
The PM reinforced the point that landlords and tenants should “sit down and work it out.”
- Landlords will have to reduce leases for businesses affected by Coronavirus.
- The reduction will have to be in proportion to the reduction in the tenant’s business.
- Waivers of rent must account for at least 50% of the reduction businesses
- Deferrals refers to rental payments that need to be paid, but can be put off.
- Deferrals can be spread over the remaining time on a lease for no less than 24 months.
- That means if a tenant had 3 months left on a lease, they would still have at least a year to make any deferred rent payments.
- The PM said landlords that don’t engage with their tenant to work a rent arrangement out would be “forfeiting their rights”.
It’s clear the PM wants landlords and tenants to work together.
JobKeeper Payments Update
Last week the government announced the JobKeeper payment stimulus package. This is to be a wage subsidy aimed at helping employers keep paying their employees. As a result, millions of workers across Australia will receive a fortnightly payment of $1,500 through their employer. The goal is to help businesses start up quickly once this crisis is over.
This legislation is anticipated to pass into law today and we will send you a further update on this just as soon as we know more. We’re particularly interested to know more about the eligibility tests and how they might be applied for our clients.
What we know:
- Employers must apply online, provide information to the ATO on all eligible employees and ensure that those employees receive at least $1,500 per fortnight (before tax).
- There is a maximum period of 6 months, from 30 March 2020.
- Businesses (including not for profits) must prove their business turnover is estimated to fall by 30% or more (more information on this is expected in due course).
- Self-employed individuals will be eligible to receive the JobKeeper payment if they meet the same criteria.
More information can be found here:
Please don’t hesitate to reach out to us to chat about this.
$10,000 Grants for NSW Businesses
On Friday 3rd April the NSW state government announced $10,000 grants as fast relief for NSW businesses that need it most. The new assistance scheme is for businesses struggling to cope with the COVID-19 shutdown, and is based on a similar scheme rolled out during the bushfires.
Premier Gladys Berejiklian said the “grants will provide a big boost, and we will make the application process easy to ensure small businesses can receive some cash-flow as soon as possible to meet pressing needs.” To be eligible for the grant, businesses need to have fewer than 20 employees and meet other requirements detailed here.
Working From Home – New ATO Expense Rules
The Australian Taxation Office has made a major change this year as a result of the ongoing COVID-19 pandemic – and it affects pretty much everyone.
With countless Australians now working from home in a bid to slow the spread of the virus, the ATO is rolling out a new working from home shortcut to make it easier for affected people to claim a tax deduction. This shortcut method will be in place from 1 March to 30 June 2020.
The arrangement will allow people to claim a flate rate of 80 cents per hour for all their running expenses. It will only require that you keep a record of the number of hours worked from home. Multiple people living in the same house can claim this new rate individually, and it is no longer a requirement to have a dedicated work from home area in order to claim.
Claims for working from home expenses prior to 1 March cannot be calculated using this shortcut method, and you must use the pre-existing working from home approach and requirements. This new shortcut arrangement does not stop people from making a working from home claim under the existing arrangements, which involves calculating all or part of your running expenses.
For full details on the new ATO WFH expense shortcut for COVID-19 , please visit the the ATO website here.
The ATO will review the special arrangement for the next financial year as the COVID-19 situation progresses.
Sometimes We Have to Say ‘No’
Our role is to support small businesses, but we cannot compromise our standards along the way.
The Tax Practitioners Board and ATO released a joint statement that they will not look favourably on businesses who seek to become eligible for grants, loans, benefits or other assistance that they would not ordinarily be entitled to.
You will not be eligible for schemes like the Cash Flow Boost if you are found to become entitled to them when you would not ordinarily be. The statement says “any sudden changes to the characterisation of payments may cause us to investigate further.”
So, if you come to us asking to change payroll, increase the amounts you’re paying, backdate a PAYGW registration, we’re going to ask some questions. There’s nothing to worry about if you have a genuine business case for these requests. However, there will be occasions when we can’t ethically and legally undertake what you are requesting. It puts your business at risk, as well as our tax agent licence. So, please don’t be offended if we do say ‘No’, we just ask you to work with us and to understand that we are doing this in your best interests.
Thank you in advance for your understanding in this matter.
Are you using Zoom for conference calls or online meetings? You’ll want to be sure to read this notification from Zoom about security settings, and consider requiring a password from participants. Without a password, anyone with the meeting ID can join. Because of this loophole, many meetings have been “Zoom bombed” by uninvited participants who post inappropriate images or disrupt meetings with annoying sounds.
Time for a Good News Story
This week’s good news story comes out of the US where a college student – Ashley Lawrence – has been sewing face masks for those with hearing impairments who rely on lip-reading. These masks have plastic windows over the wearer’s mouth so they can still communicate.
Ashley is sewing and shipping these masks to dozens of hospitals for free, backed by a GoFundMe campaign. The campaign has since been deactivated as she reached her funding goal in 2 days.
Have you got any good news stories from the week?
All the Best
We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are all in this together!