Mr Watson and small-business tax specialist Debra Anderson talked about preparing for tax time 2020, considerations for recipients of the COVID-19 stimulus measures, the ATO’s attitude to tax time in a pandemic and much more.
How is the cash-flow boost reported on the tax return?
How cash-flow boost credits are reported in your return or your financial statements is different depending on your business structure. Talk to a registered tax professional for more information.
In our discussion group, we are having problems with entities who are entitled to the cash boost but are eight weeks out and no progress, when identical ones are paid.
While most eligible employers will receive the cash-flow boost automatically when they lodge their relevant activity statements, we know there are some who are still waiting. This may be because of the information we currently hold, and they have not met all eligibility criteria yet. We have started to contact those we require additional information from to determine eligibility. In most cases, we will be able to obtain this additional information over the phone at the time we contact you or your clients.
If we don’t require additional information from you, any credits your clients are entitled to will be applied to their activity statement account once the case has been reviewed. You can monitor their account through our online services to see if the credits have been applied.
Where clients are found to be ineligible, we will send a letter advising this and the reasons. We encourage you to read our eligibility companion guide which gives an overview of how we determine eligibility and the next steps you can take.
Is the cash-flow boost payment received during 2019–2020 taxable or tax-exempt?
You do not pay tax on the cash-flow boost credits as they are non-assessable non-exempt income, but you may need to report the amount for the purpose of other income tests. This is different depending on your business structure, so talk with your tax agent for more detail.
What if you have ceased trading or started another job?
If you are a business and have ceased trading, there is a fact sheet in the small business tax-time toolkit that will be able to help you. You can find this under the “small business guide” section at https://www.ato.gov.au/SBtaxtimetoolkit.
Is there a direct phone number at ATO to discuss tax treatment of the cash-flow boost and JobKeeper allowance?
There is no direct line; however, if you’re an individual, sole trader, small or medium business and you’re having difficulty meeting your tax and super obligations because of COVID-19, you can contact our Emergency Support Infoline on 1800 806 218 or speak with a trusted tax adviser.
The WFH $0.80/hour deduction is claimed from 1 March, so the period 1 July 2019 any deduction claim is based on the actual costs rule?
Or you can use the 52 cents per hour method. The working-from-home temporary shortcut has been extended to 30 September 2020.
Can small furniture, printers etc. bought for home office be claimed 100 per cent in addition to $0.80 per hour claim?
The 80 cents shortcut method covers all additional deductible running expenses including computer consumables. If you use this method, you can’t claim any other expenses for working from home for that period.
If you have a family member living at home, they do not contribute towards the running costs — can they still claim the 80 cents and if they do pay board?
A family member can only claim the 80 cents per hour if they are working from home (they need to keep a record of the hours they have worked from home) and they incurred additional running expenses as a result of working from home. They can claim this even if they do not personally contribute towards the running costs.
Due to COVID-19, a lot of clients have to work at home now — telehealth — then travel to practice to see patients. Can they claim the car travel between home and the practice?
Trips between home and work are generally considered private travel.
Can I claim for purchases such as microphones, webcams etc. that have become a necessity since COVID-19?
If you are using the 80 cents per hour rate, then you cannot claim these items in addition to the 80 cents. If you use one of the other methods, you will be able to claim for the business usage portion of those items.
If the person is a full-time employee and also is a sole trader on top of being an employee, would the reduction in sole trader income allow the person to access super?
There are a number of grounds under which a person may apply for COVID-19 early access of super. For a person that is a sole trader, there are two matters that must be addressed:
- the amount released is required to assist the person to deal with the adverse economic effects of COVID-19; and
- on or after 1 January 2020, the person’s business was suspended or suffered a reduction in turnover of 20 per cent or more.
In relation to the second matter, the hours worked by an individual in other employment is not something that is used to calculate a reduction in turnover by the individual’s sole trader activities.
I’m tax practitioner and I’m issuing an invoice for a non-resident client re: rental statements/tax return. Should I be charging GST?
If you are registered for GST, the goods and services you sell in Australia are taxable unless they are GST-free or input-taxed. You can find more information at https://www.ato.gov.au/Business/GST/When-to-charge-GST-%28and-when-not-to%29/.
Broadly, a supply of a service is GST-free if the recipient of the service is outside Australia. However, as the service is not for consumption outside Australia, GST applies.
Software for Single Touch Payroll for SMEs is very expensive. It’s also costly to manage superannuation [and] SMEs need support in this area. Is this likely?
There are a number of STP-enabled software available for businesses. For micro-employers who have one to four employees, there are low and no-cost solutions available. Please refer to the list of low or no-cost STP-enabled software at https://softwaredevelopers.ato.gov.au/no-cost-and-low-cost-solutions-single-touch-payroll, or for the full list, refer to https://api.gov.au/productregister/.