Monthly Update – September

The peak season is here and this month we bring to you latest updates to Jobkeeper relief, insights on Taxable Payments Annual Report and Shortcut method for WFH. We touch upon PAYG withholding tax obligations for foreign resident employers and changes to FBT – Cars garaged at Employee’s Home. The Land Tax Relief by Victorian Government is also briefly explained.

Changes to Job Keeper

• The new changes come into effect from 28^th September 2020.
• This will be based on single quarter tax period, rather than multiple quarters as previously announced.
• Employees hired as at 1^st July 2020 will now be eligible to receive Job Keeper payment. Previously employees on books as at 1^st March 2020 alone were eligible for this payment.
• Employees can now be nominated by alternative employers if their employment has changed since the scheme began.

Application of ‘one – in – all – in’ rule

• The 1^st July 2020 employment date is designed to include additional employees in Job Keeper.
• This rule ‘one – in – all – in’ compels employers to include new employees employed after 1^st March 2020 but before 1^st July 2020.
• Employers must quickly consider the eligible employees, send nomination forms, and consider if any new employees need ‘topping up’ to meet the Wage condition to avoid getting exposed to penalties under the ‘Fair Work Act’.
• The notice regarding the Job Keeper scheme to new employees should be provided within 7 days of commencement of the Legislative Instrument (commenced on 15^th August 2020).

Taxable Payments Annual Report (TPAR)
The Taxable Payment Reporting System (TPRS) has been extended this year to businesses that pay contractors to provide:

1. Road Freight Services
2. Security, Investigation or Surveillance Services
3. Information Technology Services

Extension to Shortcut Method for Working from Home
The shortcut method to claim running expenses for Working from Home @ 80c/Hour has been extended up to 30^th September 2020.

PAYG Withholding Tax obligations for Foreign Resident Employers
Effective 1^st July 2020, Foreign Resident Employers are to withhold PAYG Tax in respect of:

1. Australian Resident Employees
2. Foreign Resident Employees whose income is Australian sourced

In short, it is to be noted that the PAYG Tax is to be withheld from the Salary/Wages if the Foreign Resident Employer believe that the ‘Double Taxation Agreement’ exception will not apply because the employee is likely to remain in Australia for more than the applicable time period of 183 days.

FBT – Cars garaged at Employee’s Home

• Where employers use the Operating Cost Method, there is no FBT liability where the cars have not been driven or has only been driven for maintenance purpose during the period it has been garaged at employee’s home.
• The new fact sheet also specified how the logbook can be used where the driving patterns are impacted by COVID-19.

Land Tax Relief by Victorian Government

• An increased 50% waiver of the property’s 2020 Land Tax and deferral of payment to 31^st March 2021 for landlords of residential and commercial properties providing eligible tenants with a 50% or more outright rent waiver for at least 3 months.
• Owner/Occupiers of commercial properties can obtain a 25% waiver of the property’s 2020 Land Tax and deferral of payment to 31^st March 2021, if they remain under the ‘Commercial Tenancy Relief Scheme’ as if they were a tenant.

ATO’s view on ‘Loans put on Hold and Debt Forgiveness’ during COVID

A debt will be forgiven for tax purpose, if

• The debtor is somehow relieved from the legal obligation to repay it, or
• There is evidence that the creditor will not insist on repayment or rely on the obligation for repayment.

A debt will not be forgiven for tax purpose, if

• The creditor only postpones an amount payable and the debtor acknowledges the debt unless there is evidence that the creditor will no longer rely on the obligation for repayment.

Debt forgiven by a Private Company

• The Div. 7A provisions are spelt out to treat a forgiven debt to be a deemed dividend.
• A debit is forgiven only when a creditor will not insist on payment or rely on the borrower’s obligation to pay.
• Extending the time to repay the debt due to COVID-19 will not result in the debt being treated as forgiven.