The Australian Government has announced stimulus packages aimed at helping Australians navigate financial hardships as a result of COVID-19.
For more detailed information about the stimulus measures, please see the Government fact sheets uploaded to our Resource Library.
Below is a summary of the key measures that are most likely to impact you - our strata manager partners, and your clients.
The Commissioner of Taxation issued a media release advising of a series of administrative measures.
These measures will not be automatically implemented, and must be requested and discussed with the ATO in advance.
Options available include:
· deferring BAS liabilities,
· varying PAYG instalments (ie: prepaid income tax) to nil for the March quarter;
· remission of penalties/interest, and
· low interest payment plans.
Coronavirus SME Guarantee Scheme
The Government has said they will guarantee 50% of new loans issued by eligible lenders to small & medium enterprises (which will presumably include strata companies with an ABN / TFN).
Strata companies considering acquiring eligible assets before 30 June 2020 that cost less than $150,000 will likely be entitled to deduct the purchase in full against assessable income.
Other eligible assets acquired over the next 15 months will be entitled to a 50% deduction in the year the asset is installed ready for use, with existing depreciation rules to apply from then on.
IMPORTANT - to take advantage of these measures, a strata company must be deriving assessable income (ie: subject to tax) from the assets being acquired. Some examples may include solar panels and laundry facilities that are purchased from a strata company's funds. We strongly recommend that you obtain client-specific, professional advice before making any decisions on new asset acquisitions if you are at all unsure.
The Government is providing up to $100,000 to eligible small and medium sized businesses that employ staff.
The payments will only be available to active eligible employers established before 12 March 2020.
The amount is to be equal to the amount of tax withheld from salary and wages for the March and June quarters, with a minimum of $20,000.
The assistance will be provided as a credit on the strata companies' activity statements for those periods.
The elephant in the room: 'Boosting Cash Flow for Employers' is the key platform of the stimulus measures to date, and our office has already had several enquiries from clients looking to take advantage of this measure.
We have concerns that this package may prove an incentive for some entities to orchestrate non-genuine employment arrangements with a view to rorting the system. We would like to take this opportunity to highlight that whilst such contrived scenarios may technically qualify for the measures (the details are yet to be made available at the time of publishing this article), there exists a general anti-avoidance rule in the 1936 Tax Act (Part IV-A) that basically prohibits schemes implemented for the primary purpose of avoiding or reducing tax obligations.
With the ATO now able to monitor activities via the compulsory reporting of real-time pay runs (single touch payroll), wages and tax withheld needing to be declared on activity statements, the electronic lodgement of TFN obligations for new employees and 9.5% superannuation needing to go through ATO approved clearing houses (Superstream), the chances of being 'red flagged' for an ATO audit in such scenarios is very high.
Above all else, such rorting is morally wrong when the measures are obviously intended to keep people employed during what is likely to be a very difficult time for many in our society. Ascend Business Accountants will be carefully vetting any requests for new employee arrangements in the coming months and will only be assisting with bona-fide arrangements supported by appropriate paperwork.
That being said, for any of our strata manager partners who have clients that are genuine in their intentions to hire people, please contact our office and we will be more than happy to assist.
The above content is of a general nature and should not be relied upon as professional advice. Ascend encourages readers to seek advice from suitably qualified professionals in relation to their specific circumstances and not to rely solely on the information provided above. Please contact our office for more information.