ATO data-matching: JobMaker

Data collected will be used to identify compliance issues in relation to JobMaker.

JobMaker Hiring Credit is a payment scheme for businesses that hire additional workers. The eligibility criteria is far from simple – how do you establish “expansion” of workforces?

The Australian Taxation Office expects that data relating to more than 450,000 individuals will be collected from Centrelink.

While the data collected will primarily be used to verify application, registration and lodgement obligations as well as identify compliance issues and initiate compliance activities.

If you are uncertain whether there have been any errors, contact us for a review. Voluntary disclosure of mistakes is always viewed favourably by the Australian Taxation Office.

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JobMaker Hiring Credit rules and reporting

In the next few months, businesses that are seeking to employ additional workers but still need a bit of help can now apply for the JobMaker Hiring Credit Scheme.

The JobMaker Hiring Credit is a payment that your business gets to keep – different to JobKeeper.

The scheme started on 7 October 2020, and employers will be able to claim payments relating to employees hired up until 6 October 2021. The first claim period for JobMaker starts on 1 February 2021 and businesses must first register with the Australian Taxation Office (ATO). To claim the payment in the first JobMaker period, your business must register by 30 April 2021.

Since the aim of JobMaker is to subsidise an increase in the number of employees a business hires – not to reduce the cost of replacing employees – businesses wishing to claim the payment must also demonstrate increases in both in headcount and employee payroll amount.

Employers will need to send information such as their baseline headcount and payroll amounts to the Australian Taxation Office for compliance purposes.

If you expect an increase in number of employees, contact us for more detail on the eligibility criteria.

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‘Penalties will resume’: ATO flips the switch on debt recovery

Taxpayers falling behind on tax debts and lodgement obligations can soon expect contact from the ATO as it confirms the resumption of its compliance activities in the wake of JobKeeper ending.

With the JobKeeper program officially over, the Tax Office has now confirmed that it will resume pursuing and enforcing debt recovery action.

The change in approach comes after the ATO began sending letters to taxpayers in February to warn them of potential sterner action if they failed to make good on their obligations and had refused to get in touch with the Tax Office.

“From the end of March 2021, where appropriate, the imposition of penalties will resume,” an ATO spokesperson told Accountants Daily.

“And on a case-by-case basis, we will start taking debt and lodgement compliance actions.”

The resumption of ATO service comes after it had paused its debt, audit and lodgement work at the height of COVID-19, ultimately contributing to a $1.3 billion shortfall against its compliance revenue target.

With a growing $53 billion debt book to account for, accountants have now correctly predicted that the ATO would turn to stronger enforcement once JobKeeper concluded.

The ATO, however, has assured practitioners and their clients that firm action will not be taken if they reach out for help.

“We understand the bushfires from last year, COVID-19 or the floods more recently may continue to have a significant impact on taxpayers and tax professionals,” said the ATO spokesperson. “The ATO will always provide help and assistance to anyone who engages with us.

“We will generally not take compliance action where we are aware you are trying to do the right thing.”

Tony Greco from the Institute of Public Accountants said it was understandable that the ATO was looking to return to business-as-usual activity to prevent debt issues from snowballing.

“It’s probably appropriate now because I think the zombie firms have been supported by JobKeeper and it’s now a case of dealing with reality,” Mr Greco said.

“What is required is that people get on the front foot, and when they get those debt letters, communicate their circumstances, and then look at the available options that the ATO provides.

“The ATO also needs to understand the circumstances that the client finds themselves in, and we have been reassured that they will find a tailored approach.

“The ATO may not know the financial circumstances of the business, if they are in an industry that has been smashed or if they are business as usual and have the capacity to pay. They might know a little bit about the industry, but they may not know about the particular circumstances of the client, so communicate that with the ATO.”

The Tax Office has also urged accountants to ensure clients continue to lodge even if they are unable to pay, with tailored payment plans still available to them.

“Don’t ignore our letters — it’s important to talk to us about the client’s position,” said the ATO spokesperson.

“If you or your clients have overdue obligations or are worried about compliance action, give us a call and we will work with you to find a solution.”

Chartered Accountants Australia and New Zealand tax leader Michael Croker said that while the ATO’s confirmation highlights the importance of getting clients to re-engage with the Tax Office, the reality of current economic conditions might pose issues for practitioners.

“You can urge clients to get their tax affairs up to date, but some clients are in deep financial distress and are unwilling to do so or can’t pay their accountant, so it’s an interesting time for client engagement,” Mr Croker said.

“There are some opportunities here, however, and that’s particularly the loss carry-back tax offset, and a lot of good accountants are trawling through their client list at the moment to identify clients likely to be eligible for that and encouraging them to lodge quickly.

“The offset is a handy leverage to get your corporate clients to engage if they have outstanding tax returns.”

Jotham Lian
01 April 2021
accountantsdaily.com.au

ATO chases $172bn in undeclared contractor income

The ATO has warned businesses to come clean on $172 billion worth of payments to contractors as it cracks down on non-compliance with the taxable payments reporting system.

The ATO traced payments to contractors using data from its taxable payments reporting system (TPRS), following estimates that more than 60,000 Australian businesses had yet to lodge TPARs for the 2019–20 year.

Businesses providing services across the building and construction, cleaning, and courier industries are required to lodge a TPAR annually.

After the scheme was extended last year, businesses providing road freight services, information technology services, and security, investigation or surveillance services now have to lodge TPARs, too.

ATO Assistant Commissioner Peter Holt said the technology has granted the Tax Office a clearer view of payments made to contractors, and since its update in early March, more than 158,000 businesses expected to lodge TPARs for the 2019–20 year have now done so.

“More than 158,000 businesses have now reported all payments made to contractors in the 2019–20 year to us,” Mr Holt said. “This data, combined with our sophisticated data and analytics capability, means our field of vision to detect unreported income is better than ever.”

Armed with the TPRS, which Mr Holt in March expected to capture many taxpayers for the first time ever, the ATO has signalled it will now move to proactively contact contractors to ensure that income declared matches that provided to them by their employers.

“Where we discover a discrepancy, our first step is always to contact the taxpayer or their tax professional to check they have fully reported these payments in their tax return,” Mr Holt said.

Through extended lockdown periods and volatile business conditions, the ATO saw businesses contract out services at an increased rate. In August last year, Mr Holt said the resulting services would see businesses that may never have needed to lodge a TPAR, have to do so by 28 August last year.

The ATO noted that it is also using TPRS data to check that businesses are operating under active Australian business numbers and are registered for GST where appropriate.

Pointing to a $6.7 billion shadow economy fueled by tax evasion in Australia, Mr Holt said it isn’t fair to contractors who do the “right thing” in their industries when their colleagues deliberately under-declare their income.

“Honest courier drivers do the right thing: they pay their rego, pay their road tolls, stick to the speed limit, and pay their taxes,” he said. “It’s not fair that some dishonest drivers get to skip the ‘toll booth’ and get an advantage over their honest competitors.”

John Buckley
01 April 2021
accountantsdaily.com.au

Small businesses: don’t forget your FBT concessions

If you own a small business still recovering from the COVID-19 induced downturn, remember that you can take advantage of FBT concessions to lower the amount of FBT you may need to pay.

Even if your business was not considered a “small business entity” a few years ago, it may be worth a reassessment, because the turnover threshold has recently changed, and will soon increase once more.

Carparking could be exempt if the benefit is not in a commercial carpark.

The second exemption relates to work-related devices. Small businesses can provide their employees with multiple work-related portable electronic devices that have substantially identical functions in the same FBT year, with all devices being exempt from FBT.

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5 strategies for successful ‘work from home’ policies

As Australian businesses implement work from home arrangements as part of their business contingency plans, managers need to consider how to accommodate telecommuting arrangements without sacrificing productivity and team dynamics, says one recruitment firm.

According to Robert Half Australia director Nicole Gorton, modern workplaces must allow for flexible working arrangements and uphold a high standard of professionalism and productivity regardless of where the team is situated.

“Although implementing telecommuting may prove more challenging for organisations that have not previously supported remote working options, it is a necessary consideration to ensure business are able to uphold productive workflows, clear communication and positive working culture regardless of external forces,” she said.

In order to assist businesses to establish a framework for successful telecommuting, specialised recruiter Robert Half has prepared five work-from-home management tips:

1. Establish regular catch-up meetings

Communication is central to any working relationship, Ms Gorton said.

“Setting aside time for regular communication is a powerful way to work together – it’s also a faster way to address issues than typing emails on the fly. Moreover, biweekly status calls and regular feedback allow telecommuters know that out of sight is not out of mind,” she argued.

“A regular Skype meeting or phone call can help the team to connect, discuss the progress of projects, share new developments and resolve any issues that could potentially arise. The start of group meetings is also a good time to acknowledge birthdays and encourage people to share personal updates, which in turn helps to uphold staff morale.”

2. Set clear expectations

When it comes to quality and deliverables, Ms Gorton continued, there “should be no difference” between the work an employee performs remotely or when that person is present in the company's office.

“Set equal standards for on-site and off-site professionals in areas such as client service, deadlines, office hours, and response times for emails and phone calls,” she said.

3. Choose the right tech tools

In a virtual environment, technology is everyone’s communication lifeline, she said.

“Slack, Google Hangouts and Skype for Business are some of the platforms employees can use to reach out to colleagues and employers throughout the day. File-hosting services like Dropbox, Google Drive or an in-house system also foster virtual collaboration and information sharing in real time,” Ms Gorton said.

4. Keep virtual team members in the loop

As opposed to remote working, Ms Gorton mused, unscheduled meetings and brainstorming sessions as well as impromptu moments of team bonding can often occur in office working arrangements.

“Managers can do much to help telecommuters and other remote workers feel like part of the team by encouraging virtual discussion boards or video meetings to conduct spur-of-the-moment conversations,” she said.

5. Don’t overlook the needs of on-site workers

“Employees who don’t have the option to telecommute — or may simply prefer working at the office — may miss out on some of the same conveniences of their telecommuting colleagues. For those who are working from the office, consider easing the office dress code, allowing flexible scheduling or offering commuter benefits like subsidised parking or transit passes for those workers,” Ms Gorton concluded.

“To make telecommuting work well for the workforce, employers need to make sure that remote team members never feel left out. Likewise, don’t overlook the need for in-office employees to maintain a better balance between their professional and personal lives and to work in a more relaxed environment.”

Jerome Doraisamy
wellnessdaily.com.au

ATO Revs Up As JobKeeper Set To End In March 2021

Although 2020 saw a temporary lull in the ATO and State Revenue Office’s usual activity level due to the COVID-19 pandemic, 2021 is already set to be as busy as ever when it comes to audits and reviews initiated by government revenue authorities.

Accounting professionals are being advised to get their clients ready for an onslaught from the ATO as an end to JobKeeper is in sight. Since the pandemic began in early 2020, the ATO has paused its audit and compliance work in view of the stresses the business community has been suffering due to the economic downturn.

These measures have led to an increase in the total debt book to over $53 billion from $45 billion the previous year. This record-high figure cuts across various categories including insolvency debt, collectable debt, and debt subject to objection or appeal.

It has also resulted in a shortfall of $1.3 billion against a $15 billion compliance revenue target. According to the ATO, this shortfall is due to having been forced to switch gears from pursuing revenue to assisting with stimulus measures to combat the economic impact of the pandemic.

The ATO has been responsible for the administration of two major stimulus measures extended by the Federal government. This included the $1,500 fortnightly JobKeeper wage subsidy and the $20,000-$100,000 tax-free cash flow boosts.

The ATO’s handling of these stimulus packages has caused some friction with a section of taxpayers. According to the Inspector General of Taxation and Taxation Ombudsman (IGTO), Karen Payne, there were more than 9,000 small businesses that lodged complaints about the ATO's decision to deny them stimulus payments. Part of the problem was attributed to the ATO not updating its public guidance, leaving some small business taxpayers unaware of their eligibility.

Thus far, the ATO has not fully resumed its normal pursuit of debt and compliance-related work. They did begin to re-engage with debt clients across the country, except for Victoria, in late 2020. ATO assistant Commissioner, Sylvia Gallagher, confirmed that this soft restart was to help determine what situation these businesses were in and inform them of available support.

Accounting professionals, like Michelle Maynard of Carbon Group, have confirmed having been contacted by the ATO. Maynard indicated that signs pointed towards likely stronger enforcement once JobKeeper ends in March. She confirmed that they were receiving more communication on defaults and payment arrangements, but were waiting to see what the new norm would be.

Tony Greco of the Institute of Public Accountants has also advised accountants to ready themselves for a resumption of business-as-usual activity from the ATO. He admits having advised the ATO to take a tailored approach. For businesses still receiving stimulus payments, he did not see the need in pushing them on debt. He recommended the ATO liaise with tax agents to determine which businesses were still struggling before making direct contact.

As official reviews, audits, investigations and enquiries of taxpayers lodged returns and their taxation affairs in general start to increase in prevalence again, the best course of action is to ensure that your accounting firm has a comprehensive tax audit protection solution such as Audit Shield in place.

Audit Shield ensures your professional fees will be covered in the event of ATO and other government revenue authorities’ initiated audit activity with respect to lodged client tax returns and financial compliance obligations.

Ask reported in the accouintantsdaily.com.au
Roman Kaczynski
Director – Accountancy Insurance

What’s Happening to Small Business Loans in Australia?

Will 2020 Crisis Continue in 2021? 2020 was hard on small businesses worldwide.

Australia fared better than many countries. However, the damage to SMEs was huge and many of them closed with many more at risk of doing so in 2021. The biggest problem for small businesses that came from the COVID-19 pandemic are cash flow issues. Those could have been mitigated by loans, but those are in short supply as well now. Therefore, it’s very hard to say how the economic recovery of Australia will progress in 2021. There are some promising developments, but the situation is highly complex.

Impact of the COVID-19 Pandemic on Australian Small Business in 2020.

The coronavirus pandemic of 2020 is a global crisis that is almost unprecedented. The impact of this global economic crisis is compared to that of the Great Depression and recession after World War 2. However, the truth is that the world is quite different today and we have yet to see the full impact of this situation.

However, now in 2021 we can see, after all the trials of 2020, that the Australian small business sector didn’t break under the challenge. Small businesses are the most affected group in this crisis because they already experience frequently cash flow issues. In fact, the majority of small businesses run “paycheck-to-paycheck”. Therefore, lock downs and a forced halt on international trade should have devastated the sector.

The only reason why this hasn’t happened is the government’s relief and financial support programs. These programs offered different types of assistance, which allowed many small businesses to get through the lockdown periods.

Moreover, many SMEs were able to adjust to the situation somewhat by modifying their business models. The most common of these changes were the mode of offering products/services, operating hours, staff duties, and range of offered products/services. These changes helped SMEs to keep working even in this difficult time. However, neither the adjustment nort financial support from the government is able to erase the negative impact of the pandemic.

The simple truth of the matter is that small businesses require constant cash flow in order to function. If they are unable to get it from doing business, they need financing to tide them over until profitable trade is restored. However, financing is currently in very short supply due to the same pandemic. Even alternative lenders have mostly stopped loan origination due to the lack of funds or extreme risks.

Shortage of Business Financing and Other Consequences of the Global Economic Recession

The consequences of this crisis are not yet fully realized. But already it’s clear that the number of SME closures will keep climbing. There is no avoiding it because the crisis triggered several debilitating changes in consumer behaviour.

Increased payment times.
Whereas the average payment time after it’s due in October 2019 was 13.4 days, in 2020 this number turned into 30.1 days. In some industries, like the transportation, it’s reaching over 90 days.
Reduced purchases.
The overall rate of purchases in every industry has decreased and it’s not clear when it will get back to the pre-pandemic level. Experts state that this economic recession will last for a long time. Therefore, this situation isn’t going to improve soon.
Unemployment.
Recent reports state that the unemployment rate in Australia hasn’t dipped too low and many people regained their jobs after the lock downs were lifted. However, this situation is still precarious and with the rising number of SME closures the unemployment rate will continue to climb. This will further reduce the consumers’ purchasing ability.
Reduction in business financing.
One of the biggest problems triggered by the crisis is a severe reduction in financing opportunities. Small businesses always have a harder time getting loans from banks. However, now it’s almost completely impossible for SMEs to get traditional financing. Unfortunately, alternative lenders are no help because the majority of them are also deeply affected by the crisis. Therefore, they stopped loan origination almost completely. The result is that small businesses have no solution that could help them with cash flow issues. This is why a great many SMEs will have to close in the near future.

Government Grants and Financing Programs for Small Business Support

Small business grants and a variety of debt relief and financing support programs are essential for the survival of Australian SMEs in the current crisis. The government of Australia, along with the governments of each individual territory are doing their best to provide financial relief where it is most needed. This is helping the small business situation a great deal. The results of these programs have improved further when online lenders joined them.

This was a turning point for the industry as a whole because alternative lenders were close to out of business due to the COVID-19 pandemic and restrictions it brought. They remained active, especially in big cities. Therefore, one could still find small business loans in Sydney and Melbourne with relative ease.

However, the situation changed rapidly as fintech lenders started to run out of money. Without the capital, they were literally unable to offer loans. This is where government funding programs became a solution. These lenders are oriented to work with small businesses and sole traders as a matter of priority. Therefore, they were able to deliver government-backed financing to these recipients more effectively than large banks. Leading online lenders in Australia, including Capify, Prospa, and GetCapital all offer financing under the SME Loan Guarantee Scheme.

That said, small business owners and sole traders need to remember that government assistance is greatly varied. Therefore, you should research all options of financial assistance available within your region. You might be eligible for several types of aid that will help strengthen your business in 2021.

These grants and assistance programs can make a big difference for the Australian economy. That’s why improving their accessibility is essential. Dispersing this financing through alternative business lenders is one of the most promising strategies.

COVID-19 Pandemic Repercussions for Online Lenders in 2020

The COVID-19 pandemic was hard not only on enterprises but also financing providers. Alternative lenders, in particular, suffered a great hit from the pandemic. Some of them, like 255 Finance, are not able to recover from this crisis. However, there are some companies that fared admirably and were able to maintain loan origination through lock downs.

It’s important to note that the coronavirus crisis of 2020 was the first true global challenge that the online lending industry faced. These businesses have been around for a while but they made the real breakthrough after the recession of 2008. At that time, banks and other traditional lenders were very reluctant to offer loans to small businesses and entrepreneurs. Therefore, online lenders filled out the niche.

Due to the specifics of their business, these financing providers have a greater number of high-risk borrowers. And that’s exactly why the entire industry is now facing a reckoning. With so many borrowers defaulting on their loans and not enough cash, loan origination from online lenders has been cut entirely.

Small Business Recovery Forecasts for 2021

For now, there are not many optimistic forecasts for Australian small businesses. The situation isn’t desperate yet as technology helps many SMEs adjust to the new reality. However, the recovery after this pandemic crisis will take a lot of time and not everyone will make it through.

In fact, it might be a more expedient route for many current business owners to close up their companies and create something new. It’s also a good idea to establish new partnerships that will have a better chance of success.

The economic forecast might be grim, but the 2020 crisis has also become an opportunity. It forced the technological revolution that has been brewing for a while. It’s true that in 2021 many more businesses will fail. However, it’s also true that they will leave space for others to take.

The change in consumer demand may prompt the need to evolve your business. However, it’s already clear that business owners oriented toward innovation and those who use cutting edge data analytics will have the best chance of success.

Bottom Line: Global Economic Recession Will Keep Claiming More Victims

The recession happening now has only started and it’s clear that it will last for a while yet. This means that many small businesses will struggle in 2021 and possibly beyond. A situation made worse by the fact those who can lend to small business are themselves finding recovery slower than hoped.

As reported in accountantsdaily.com.U
Galyna Bulatseskul
01 March 2021

ATO tipped to pounce once JobKeeper ends

With JobKeeper ending in four weeks, small businesses have been urged to “act early” on exploring their insolvency options before the ATO moves on recouping debts.

“While the ATO has been very quiet for almost 12 months, that won’t last,” said Bradd Morelli, national managing partner at Jirsch Sutherland, a national insolvency firm. “And that’s when we expect to see the insolvency wave building.”

With the ATO’s debt book growing to $53 billion over the last year, Mr Morelli expects the Tax Office to start pursuing outstanding debts once businesses receive their last JobKeeper payments in April.

“It’s crucial for business owners and directors to be proactive and to act early if they’re in financial distress,” he said. “There’s a huge difference between early intervention, a controlled process, a reactive process, and a forced winding up.”

The federal government’s JobKeeper stimulus is set to expire on March 28, three days before the temporary restructuring relief — related to absolving eligible directors of personal liability for insolvent trading — ends on 31 March.

Businesses should, Mr Morelli said, heed the opportunity to act early and be aware of their options, after doing a simple self-assessment and determining whether, once JobKeeper ends, they will have the ability to pay staff wages, tax, rent and super.

“Put simply, will your business be able to keep its head above water post-stimulus? If the answer is no,” Mr Morelli said, “then it’s crucial to speak to a trusted adviser like an accountant or business turnaround/insolvency specialist.

“JobKeeper has been a godsend for many businesses, and while many no longer need the support, there are still countless others that have been relying on it.

“Its conclusion may be a trigger for financial distress, as many businesses have exhausted their cash resources and won’t be able to stand on their own two feet and pay staff wages.”

As the economy bounces back, Treasurer Josh Frydenberg on Wednesday referred to the Treasury’s review of the scheme from last June, which found the subsidy would disincentivise work, keeping otherwise untenable businesses afloat.

“While JobKeeper has been a remarkable program, it is no longer fit for purpose post-March,” Mr Frydenberg said.

The federal government is, however, considering options for further support for businesses and industries crippled by the pandemic.

If it were to materialise, it would be announced in the “coming weeks”, Mr Frydenberg said, and would need to be temporary, “accompanied by an exit strategy”.

John Buckley
01 March 2021
accountantsdaily.com.au

Contributing to Superannuation

Superannuation remains the best available form of an individual retirement savings plan, in spite of continuing government changes.

Superannuation retains its favored position mainly due to tax concessions allowed by the government as an encouragement to fund your own retirement.

Unfortunately, compulsory super has lulled many people into a false sense of security. They feel that their compulsory super will adequately cover their retirement needs. The trouble is that compulsory super has not arrived soon enough to fully help most people. For those who are say aged 30 or over, additional retirement savings will, in many cases, be required.

The self-employed who are not taking a wage have to fully provide their own super.

If you are intending to make a super contribution, some of the many questions arise:

• Am I contributing an adequate amount to fund my retirement?

• Are salary sacrifice contributions to super a good idea for me?

• Should I have my own self-administered super fund?

Answering this sort of question is very important, no matter your age. The sooner you start the better but, in almost every case, asking for some professional assistance does help.

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