ATO support for businesses in difficult times
The ATO has reminded taxpayers that it has a range of support available for small businesses experiencing difficult situations, such as natural disasters, mental health challenges or financial hardship.
Depending on the business taxpayer’s circumstances, the ATO may be able to:
- give the business extra time to pay its tax;
- set up a payment plan tailored to its situation;
- re-issue tax returns, activity statements and notices of assessment;
- help the business reconstruct lost or damaged tax records;
- prioritise any refunds the business is owed; and
- remit penalties or interest charged during the time the business has been affected.
Editor: If your business is in financial difficulty and needs support, please contact our office and we can assist in finding a suitable solution.
Government extends SME Recovery Loan Scheme to 30 June 2022
The Government has recently extended the SME Recovery Loan Scheme by a further six months (to 30 June 2022) to support SMEs adversely economically affected by the Coronavirus Pandemic.
Under the Scheme, eligible businesses can obtain loans through participating bank and non-bank lenders with the backing of a Government loan guarantee.
Around 80,000 loans worth approximately $7.3 billion have been written to date since the Scheme commenced in March 2020.
SMEs who are dealing with the economic impacts of COVID-19 with a turnover of less than $250 million will be able to access loans of up to $5 million over a term of up to 10 years.
Other key features of the Scheme include the following:
- Lenders can offer borrowers a repayment holiday of up to 24 months.
- Loans can be used for a broad range of business purposes, including to support investment.
- Loans may be used to refinance any pre-existing debt of an eligible borrower.
- Loans can be either unsecured or secured (excluding residential property).
Importantly, the Government’s loan guarantee has been reduced to 50% (down from 80%) for loans available from 1 January 2022 until 30 June 2022.
COVID-19 vaccination incentives and rewards
The ATO has reminded employers to consider their tax and super obligations when employees are provided with incentives or rewards for getting their COVID-19 vaccination.
When employees are provided a cash payment, including paid leave for employees to get their COVID-19 vaccination (or additional paid leave to recover from any vaccination side effects), employers should withhold PAYG withholding and make super contributions on the amount.
Furthermore, the payment must be reported to the ATO via Single Touch Payroll (‘STP’) as part of the employee’s salary or wage.
On the other hand, employers must consider the FBT consequences of providing non-cash benefits as an incentive for their employees to get vaccinated.
Such benefits may include:
- Goods or services provided to the employee.
- Vouchers and gift cards.
- Prizes won by an employee in a competition (e.g., a raffle).
Note that certain FBT exemptions and reductions may apply in some circumstances.
For example, if an employer provides or pays for an employee’s transport to get their COVID-19 vaccination, there is generally no FBT payable.
Higher PAYG withholding rates continue to apply to backpackers
As we recently communicated, the High Court has held that the ‘working holiday maker tax’ (also known as the ‘backpackers tax’) did not apply to a taxpayer on a working holiday visa from the United Kingdom who was also an Australian tax resident.
This was due to the application of the Double Tax Agreement between Australia and the United Kingdom.
This tax treatment will only apply where the working holiday maker is both an Australian resident for tax purposes and from Chile, Finland, Japan, Norway, Turkey, the United Kingdom, Germany or Israel.
However, the ATO has recently told employers that the higher PAYG withholding rates continue to apply to working holiday maker employees.
This is regardless of the country they are from (unless the employer receives an PAYG variation notice from the ATO).
Broadly, the working holiday maker withholding rates apply as follows:
- If the employer is registered with the ATO as an employer of working holiday makers, they should withhold tax at the tax rate of 15% from the first dollar the working holiday maker employee earns up to $45,000.Tax rates change for amounts above $45,000.
- If the employer is not registered with the ATO as an employer of working holiday makers, they must withhold tax at 32.5% from every dollar the working holiday maker employee earns up to $120,000.The foreign resident withholding rates must be applied to income over $120,000.
If a working holiday maker employee has had excessive amounts of PAYG withheld from their salary, they can lodge a tax return at the end of the income year to receive a tax refund (where eligible).
Single Touch Payroll exemption extended for WPN holders
The ATO has extended the Single Touch Payroll (‘STP’) reporting exemption available to entities that have a withholding payer number (‘WPN’).
As a result of this extension, certain entities that have a WPN (but not an ABN) will not be required to report under STP for the 2021‑22 and 2022-23 financial years.
This continues the exemption that has been provided to relevant entities since the commencement of the 2018-19 financial year.
Editor: Any entity covered by the exemption may still choose to voluntarily report under STP.
Payment extension relating to JobKeeper objections
The JobKeeper rules have been amended to ensure the ATO can make payments to certain taxpayers after 31 March 2022.
Where a taxpayer has objected to an ATO decision relating to JobKeeper, a payment can be made by the ATO after 31 March 2022 to give effect to the objection decision and decisions of the AAT or a court.
Importantly, this extended payment date will only apply where a valid objection was given to the ATO on or before 30 November 2021.
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
Due Dates – February 2022
- Lodge and pay December 2021 monthly business activity statement for business clients with up to $10 million turnover who report GST monthly and lodge electronically.
- Lodge and pay January 2022 monthly business activity statement.
- Lodge tax return for non-taxable large/medium entities as per the latest year lodged (except individuals). Payment (if required) for companies and super funds is also due on this date. Payment for trusts in this category is due as per their notice of assessment.
- Lodge tax returns for new registrant (taxable and non-taxable) large/medium entities (except individuals). Payment (if required) for companies and super funds is also due on this date. Payment for trusts in this category is due as per their notice of assessment.
- Lodge tax return for non-taxable head company of a consolidated group, including a new registrant, that has a member who has been deemed a large/medium entity in the latest year lodged. Lodge tax return for any member of a consolidated group who exits the consolidated group for any period during the year of income.
- Lodge tax return for large/medium new registrant (non-taxable) head company of a consolidated group.
- Lodge and pay Self-managed superannuation fund annual return (NAT 71226) for new registrant (taxable and non-taxable) SMSF, unless they have been advised of a 31 October 2021 due date at finalisation of a review of the SMSF at registration. Note: There are special arrangements for newly registered SMSFs that do not have to lodge a return – see Super lodgment.
- Lodge and pay quarter 2, 2021–22 activity statement for all lodgment methods.
- Pay quarter 2, 2021–22 instalment notice (form R, S or T). Lodge the notice only if you vary the instalment amount.
- Annual GST return – lodge (and pay if applicable) if the taxpayer does not have a tax return lodgment obligation. If the taxpayer does have a tax return obligation, this return must be lodged by the due date of the tax return.
- Lodge and pay quarter 2, 2021–22 Superannuation guarantee charge statement – quarterly if the employer did not pay enough contributions on time. Employers lodging a Superannuation guarantee charge statement – quarterly can choose to offset contributions they paid late to a fund against their super guarantee charge for the quarter. They still have to pay the remaining super guarantee charge.
Note: The super guarantee charge is not tax deductible.Use our Super guarantee charge statement and calculator tool to work out the super guarantee charge and prepare the Superannuation guarantee charge statement – quarterly.