Economic recovery could be slower than anticipated: RBA

The Reserve Bank of Australia has warned the economic recovery from the COVID-19 pandemic remains uncertain, with its latest figures being worse than those predicted three months earlier.

In its monthly monetary policy update, RBA assistant governor Luci Ellis outlined three scenarios which the economy could take depending on how quickly the virus is contained and restrictions lifted.

In all three scenarios — baseline, an upside and a downside — these will now see Australia’s unemployment rise and its GDP fall, but the levels change based on the health outcome.

The three scenarios all assume international borders will remain closed and travel will be restricted until the middle of next year.

The RBA’s new baseline scenario isn’t what one would normally consider optimistic, with unemployment expected to soar to almost 10 per cent by the end of the year, a figure that was unthinkable at the start of the year.

“The situation in Victoria will reduce growth in the September quarter and push out the recovery beyond that,” said RBA assistant governor Luci Ellis. “That said, activity is expected to continue to recover in much of the country over the rest of this year and next. The recovery is expected to be slow and uneven, and GDP will probably take several years to return to the trend path expected prior to the virus outbreak.”

This will also see the June 2021 growth forecast be reduced by 4 per cent from a 7 per cent previously forecast.

Business investment is also expected to be worse than originally forecast, falling 17 per cent this year, with the May forecast suggesting a 13 per cent reduction.

The RBA continues to rely on a vaccine or a medical breakthrough to achieve its upside scenario as it would see the national economy bounce back harder than first predicted.

“An effective vaccine would take a bit longer to be distributed, so it would mainly affect outcomes next year and the year after. But it could also result in a stronger recovery than we have assumed even in the upside scenario presented here. A worse outcome than our downside could be conceivable if the virus cannot be contained and further waves of infection occur around the world for some years yet,” Ms Ellis said.

The RBA’s May statement on monetary policy reads: “If the lifting of restrictions is delayed, the restrictions need to be reimposed or household and business confidence remains low, the outcomes would be even more challenging than those in the baseline scenario.

“For this scenario, we assume that many restrictions remain in place until closer to the end of 2020 and international travel restrictions are in place well into next year.”

The upside scenario also assumes that infection rates fall quickly and stay low. The pace of decline in case numbers is assumed to be a bit faster than in the baseline, so the restrictions are eased a bit faster. This would be similar to the experience of some of the smaller states in recent months.

The RBA has also predicted that the economy could follow Victoria’s stage 4 lockdowns, with its downside prediction noting further restrictions and barriers to an economic recovery.

“Australia itself faces a series of outbreaks and periods of stage 3 or 4 restrictions in some states,” Ms Ellis aid. “The result is further near-term weakness in activity. Confidence is damaged and so the recovery is much slower as well. The extent of the damage would depend on how widespread and long-lasting renewed restrictions need to be to get control over the spread of the virus.”

Cameron Micallef
10 August 2020
accountantsdaily.com.au

High Court rules in favour of employers on personal leave accruals

The High Court of Australia has preserved the long-standing industry practice regarding personal/carer’s leave accruals in a significant ruling that has been welcomed by employers that were potentially set to face a substantial back-pay bill.

The High Court of Australia has granted the appeals by Mondelēz International and the Australian government against the previous decision of the Full Federal Court, clarifying the quantum of personal/carer’s leave entitlements for millions of employees.

The Full Federal Court’s 2019 ruling against Mondelēz found the Fair Work Act’s minimum 10 days of paid personal leave should be given to permanent employees regardless of the number of days worked per week or number of hours per day.

But a summary issued by the High Court of Australia on Thursday revealed that a majority of the High Court rejected the “working day” construction and instead held that what is meant by a “day” or “10 days” must be calculated by reference to an employee’s ordinary hours of work.

“Because patterns of work do not always follow two-week cycles, the entitlement to ‘10 days’ of paid personal/carer’s leave can be calculated as 1/26 of an employee’s ordinary hours of work in a year,” the summary reads.

Commenting on the outcome, Innes Willox, chief executive of national employer association Ai Group, said the High Court’s judgment preserves widespread industry practice.

“If the Federal Court’s interpretation of the expression ‘10 days of paid personal/carer’s leave’ in section 96 of the Fair Work Act had been upheld, there would have been major cost implications for a very large number of businesses,” Mr Willox said.

“In addition, a major barrier would have been imposed on employers agreeing to part-time employment arrangements, including for employees returning from parental leave.”

Mr Willox noted that the case was brought on because of action relating to “12-hour shift workers at the Mondelēz International plant in Claremont, Tasmania”, but the Federal Court’s ultimate ruling had implications for most employers in Australia.

In turn, the interpretation adopted by the High Court ensures that all employees are entitled to take up to two weeks off work each year for personal/carer’s leave regardless of how many ordinary hours an employee works in that two-week period.

“A full-time employee who works 38 ordinary hours per week is entitled to 76 hours of personal/carer’s leave per year, and a part-time employee who works 20 hours per week is entitled to 40 hours of personal/carer’s leave per year,” Mr Willox explained. “The court’s judgment ensures equity among full-time and part-time employees, and among eight-hour and 12-hour shift workers.”

Tracy Angwin, CEO of the Australian Payroll Association, also welcomed the final outcome of a case that had cast a shadow over some 1 million shift workers around the country, noting that the “outcome will come as a major relief to employers and payroll professionals”.

Ms Angwin said: “The original decision would have placed significant additional financial burden on companies, and also created a disparity in entitlements for part-time employees, and a level of complexity that could lead to employers re-considering flexible working arrangements.

“We are pleased to see that the historical understanding of personal leave accruals has been upheld.”

‘Win for employers’

Employsure managing director Ed Mallett referred to the ruling as a win for employers who have already been stretched to breaking point over the past year due to COVID-19.

He advised employers to communicate with their staff on the outcome of the High Court’s decision, to avoid any potential confusion.

“If an employer changed how personal leave operates following the original Federal Court ruling last August, they need to update their payroll system accordingly,” Mr Mallett said.

“Staff need to be assured that they don’t need to do a thing, and that when personal or carer’s leave is taken, the business will comply with the governing legislation.

“If an employer did not change how personal leave operates as a result of last August’s decision, the employer should still reiterate with staff that the way they operate personal or carer’s leave in the business is accurate, and no further action is needed.”

Maja Garaca Djurdjevic
14 August 2020
accountantsdaily.com.au

COVID-19 resources – Jobkeeper, Victoria Stage 4 Update

Several new links have been added to the many already in this article, links that date back to the beginning of the COVID-19 pandemic. If you have any questions, or require further assistance, please send us an email or phone.

Please click on the following links to access a wide range of Covid-19 related guidelines and resources for both Federal and State Government initiatives. Once done, click on the X (top right) to close the article and you'll return to this list. NB: Internet links are often altered by the source which means some of the following might not link properly. Ongoing testing is done to try and ensure this problem is minimised.

Latest Updates:

Jobkeeper Update – Extension to March 2021. Read more ….
Victorian Government Stage 4 Restrictions. Read more ….
Victoria – Health and Human Services – Stage 4 restrictions. Read more ….
Victoria – State Revenue Office – Land Tax. Read more ….
Federal Government COVID-19 Updates. Read more ….
NSW – New round of small business grants. Read more ….
Qld – Round 2 of Small Business COVID-19 Adaption Grant Program opens. Read more ….
Vic – Range of videos explaining topics effected by COVID-19 such as Land tax and Payroll Tax. Read more ….
Tas – An update on all COVID-19 matters in Tasmania. Read more ….
ACT – Updated 30-6-2020. Read more ….
SA – Updates for Land tax deferrals and Job Accelerator Grants. Read more ….
NT – COVID-19 Update. Read more ….

Previous Updates

COVID-19 Safe App. Download now
Myths about COVID-19 are all over social media. Here is the our Government's mythbusting response. Read more ….
$131.4 million Federal funding to help Public Hospital fight effects of COVID-19. Read more ….
$48.1 million for mental health & wellbeing pandemic response plan. Read more ….
State and Territory Government websites. Their latest responses to the coronavirus pandemic.
3 Step Framework for a Covidsafe Australia. Click here.
Easing of coronavirus (Covid-19) restrictions. Read more …
Boosting cash flow for employers. Read more ….

Increase in asset right-off from $30,000 to $150,000. See Backing Business Development – Fact Sheet: Delivering support for business investment

How the ATO reviews Jobkeeper applications. Read more ….

Click here for the latest coronavirus news, updates and advice from government agencies across Australia.

Treasury Fact Sheets on Covid-19 relief measures. Originally there were 4, then 12. Now there are 21. Click here to access them all.
Scam Watch Update. Read more about the increasing number of scams that have emerged since the Coronavirus outbreak.
State Government relief programs:
- NSW – Relief for NSW Small Business
- Queensland – Information and assistance for business and industry
- Victoria – Tax relief for eligible businesses
- Victoria – Business support fund
- Western Australia – COVID-19 relief
- Tasmania – COVID-19 Tax update
- ACT – Covid-19
- South Australia – COVID19 Relief Measures
Covid-19 JobKeeper Payments: Frequently asked questions
Stage 3 – $130 billion relief package New Facts Sheets
Breakdown of Federal Government Covid-19 support. Click here.
Australian Government – Economic Response to the Coronavirus
Articles and Updates in other Latest News articles including:
- Stage 3 – Covid-19 $1.1billion Domestic Violence, Medicare and Mental Health.
- Stage 2 – Covid-19 – $66 billion stimulus package.
- Stage 1 – Covid-19 Update – Small Business
- Stage 1 – PM launches $17.6 billion virus stimulus plan
8 essential steps if your business is in distress
- Directors’ duties in uncertain financial times

High alert issued over myGov tax time scam

The Australian Cyber Security Centre has now issued a high alert over myGov-related scams as tax time scams increase.

The high alert comes after the ATO reported increasing instances of myGov-related SMS and email scams.

The scams look like they have come from a myGov or ATO email address, and request that individuals click on a link to verify their details.

If clicked on, the hyperlink connects to a fake website that requests for details and other personal information for “verification purposes”.

The Australian Cyber Security Centre (ACSC) has warned that these emails or text messages mimic official tax time notifications from myGov or the ATO.

“To make them seem more legitimate, cyber criminals use technology that causes these messages to appear in the same conversation thread as genuine messages from the ATO or myGov,” the ACSC said.

“As always, our advice is don’t click any links and don’t provide the information requested.”

Technology Reporter
20 July 2020
accountantsdaily.com.au

Extended director penalty regime to catch out ‘zombie companies’

Directors of companies struggling through COVID-19 conditions could be at particular risk of the recently expanded director penalty notice regime, warns one tax lawyer.

Rigby Cooke Lawyers tax counsel Tamara Cardan has now warned directors of their heightened risk of personal exposure under the recent extension of the director penalty notice (DPN) regime, which kicked in at the height of the coronavirus pandemic.

Since 1 April, the DPN regime has been extended to GST, luxury car tax (LCT) and wine equalisation tax (WET) liabilities.

“The expansion of the regime to GST may catch out many more companies, in particular SMEs, which are right now simply trying to keep afloat and stay in business in these unprecedented times,” Ms Cardan told Accountants Daily.

“Directors are managing significant financial pressures, employee retention issues and a myriad of other urgent matters. In this context, it is logical that compliance with the director penalty regime is not at the forefront of people’s minds.”

With BAS lodgements for the first quarter under the extended DPN regime due soon, and the ATO eyeing a restart of its debt and lodgement intervention activities over the next couple of months, Ms Cardan believes directors need to begin being actively involved in the compliance and reporting activities of their business.

“Directors of ‘zombie companies’ will be at particular risk of exposure under the DPN regime, especially when the government’s support measures cease, and the company is not generating enough income to pay its tax debts. It is anticipated that many ‘zombie companies’ may go into administration, potentially leaving directors exposed under the DPN regime,” Ms Cardan said.

“Where a director has been issued with a DPN, placing the company into administration may actually be a way to satisfy his or her personal liability to the unpaid tax debts.

“However, this option will only be available where BAS lodgements have been made within three months of the relevant due date. If this time frame is not met and a DPN is issued, even if a company goes into administration, the director must still pay the tax debts to satisfy their personal liability.”

Ms Cardan also noted that director resignations would be ineffective in avoiding personal liability, with clients urged to engage with the ATO early to avoid tougher action down the line.

“If a director resigns from their company before a DPN is issued, the ATO may still subsequently issue a DPN to this individual. The key to mitigating personal exposure under the DPN regime is to have good internal reporting systems and timely lodgements,” she said.

“If your client’s business is experiencing financial difficulties and cannot satisfy its tax debts, I would recommend early engagement with the ATO to manage these liabilities. An open and co-operative relationship in most instances would prevent the ATO from taking stronger compliance action.”

Jotham Lian
27 July 2020
accountantsdaily.com.au

SG amnesty deadline – 7 September

Small businesses have been urged to disclose historical superannuation guarantee shortfalls ahead of the fast-approaching SG amnesty deadline.

With just over a month to go before the SG amnesty deadline of 7 September, the Australian Small Business and Family Enterprise Ombudsman has urged businesses to self-correct historical SG non-compliance dating from 1 July 1992 to 31 March 2018.

“Payment plans are available to small businesses unable to pay the lump sum amount owed, so long as they get on the front foot and make contact with the ATO, before the September 7 deadline,” said ASBFEO Kate Carnell.

“However, only payments made before September 7 will be eligible for the tax deduction benefit.

“To qualify for the amnesty, employers have to come forward voluntarily, without direct prompting from the ATO and agree to pay all employee entitlements plus interest.”

Despite the disruption caused by COVID-19, the government has remained silent on whether it would extend the SG amnesty deadline.

The accounting profession had previously called for the amnesty period to be extended, arguing that it has now encountered its “worst-case scenario” in coinciding with the coronavirus-induced downturn.

A joint submission from professional bodies has since called on the ATO to extend the SG amnesty deadline by a further six months to 7 March 2021.

Ms Carnell reiterated the amnesty will give small businesses a chance to ensure they are compliant “because all Australian workers deserve to be paid the entitlements they are owed”.

“If you don’t disclose unpaid super under the amnesty and you are found to have been non-compliant, you will face a minimum penalty of 100 per cent of the superannuation owed, have to pay $20 administration fee per employee per quarter and you cannot deduct any payments made,” she said.

Tony Zhang
28 July 2020
accountantsdaily.com.au

‘Hundreds’ to be contacted in ATO early super compliance blitz

Hundreds of Australians who applied for the COVID-19 early release of superannuation are set to be queried on their eligibility as the ATO kicks off a pilot compliance program.

The ATO will now contact “hundreds” of people who appear to have been ineligible for the early release of super but have gone ahead to raid their retirement savings.

The pilot examination will see 130 ATO officers personally contacting people to confirm and prove they have met the eligibility requirements, including by having been made redundant or seeing their working hours reduced by 20 per cent or more.

The initial examination will help the ATO decide if it will need to design a broader compliance program.

“For example, just to make it real, if we write out to 500 people and it turns out that 490 of them were eligible and only 10 were ineligible, we might say, ‘Well, look, the level of ineligibility is so low it’s not worth doing a big compliance program’,” ATO second commissioner Jeremy Hirschhorn told a Senate committee.

“Conversely, we might write out to 500 people and find out that 200 were ineligible, but we’ve worked out a signal to clearly identify those people, and then we’ll do a broader program.”

Mr Hirschhorn said data matching from external sources, including Services Australia, would help it identify those who were ineligible, but admitted that there would be holes in its information.

“We have information from systems in relation to things like how much people have been paid under Single Touch Payroll or whether they are in continued employment and whatnot,” he said.

“That information is informative but not determinative in relation to eligibility.

“For example, one of the tests is based on hours, it’s not based on remuneration. There are various tests on why you can be eligible. We have information which gives us hints that somebody may not be eligible, but it doesn’t tell us that they’re not eligible.”

ATO defends application process

The Treasury now expects $41.9 billion to be removed from the super system following the extension of the scheme to December, with $31.9 billion withdrawn as of 28 July.

Mr Hirschhorn said the scheme was designed on a self-assessment system, and a compliance program could not be enforced at the time of application because the ATO would not have live information of a person’s circumstances.

“It’s based on self-assessment. We work on the assumption that Australians are honest,” Mr Hirschhorn said.

“This is about getting emergency money to people. So, we will never have enough information to reject quickly. We will give people their money on the basis of their say-so.

“We don’t know yet whether, for example, they’ve been terminated, they’ve lost their job. We don’t know at the time they apply. We might have reasonable information a month later, when the next Single Touch Payroll comes in. So, that’s why it’s based on self-assessment.”

Mr Hirschhorn also noted that the ATO has yet to issue any fines or revoke the determination on a person’s eligibility and require the withdrawn super amount to be included as assessable income.

“There are a range of consequences. Again, where we think somebody has made an honest mistake as to their eligibility, and particularly where they voluntarily disclose that to us, we are unlikely to impose significant consequences,” he said.

“The next phase is if we withdraw our declaration, so they will have to pay tax on their superannuation at their marginal tax rate, and that is a reasonably significant consequence for many.

“In the worst cases, we can impose penalties for misleading statements, and that is up to $12,600, which is a very significant penalty when you have withdrawn $10,000 of your own money from super. So, there are a range of consequences, but again, we moderate those consequences depending on the deliberateness of the action.”

Jotham Lian
02 August 2020
accountantsdaily.com.au

90,000 SMEs to benefit from new JobTrainer program

The government has announced a $2.5 billion JobTrainer program, giving 340,000 Australians the opportunity to retrain or upskill into sectors with job opportunities, including an additional $1.5 billion to expand the apprentice and trainee wage subsidy.

Speaking on 2GB Breakfast radio on Thursday morning, the Minister for Employment, Skills, Small and Family Business, Michaelia Cash, explained that the new JobTrainer initiative will offer Aussies access to short courses and full qualifications to prepare for a post-pandemic workplace.

“That will be up to the states and territories as to how they would like to deliver them. But certainly, it’s vocational education and training, short courses, full qualifications. It’s all about upskilling, reskilling, retraining into areas that we know are in demand and have a job,” Ms Cash said.

Under the program, the National Skills Commission will work directly with the states and territories to ensure that we are targeting the areas of demand in their particular state or territory.

But according to Ms Cash, priority areas will be mining and resources; construction; ICT; health, aged and disability care.

“They’re the obvious ones where we know there is that growth,” Ms Cash said.

As for the additional cash being focused towards apprentice wage incentives, the minister explained that around 90,000 small and medium businesses will be covered.

“All those businesses out there, 200 employees or less, you now qualify,” she said.

“We’re extending it to those with 21 or more, and less than 200. We’re also extending the wage subsidy by a further six months to March 2021.

“So, for all of those small businesses out there who have already qualified, you will now get an extra six months of support. We want to see apprentices and trainees kept on the job, and that’s what this $1.5 billion will do.”

Maja Garaca Djurdjevic
16 July 2020
accountantsdaily.com.au

Important Single Touch Payroll Update

Single Touch Payroll (STP) and Annual PAYG Payment Summaries – a reminder to both employers and employees.

Payment summaries – if you are using the STP system you will be exempt from issuing payment summaries to your employees if you have made a ‘’finalisation declaration’’.

STP summaries replace the previous PAYG summaries.

The payment summaries will be made available to your employees online through myGov.

The finalisation declaration requires the employer to declare that all of the information relative to the financial year for each employee has been provided through your STP reporting. Finalisation declaration lodgement requirements are:

Employers with 20 or more employees will have until 14^th July 2020.
Employers with 19 or less employees will have until 31^st July 2020.

Payment summaries – if you are not using STP, the payment summaries have to be prepared and sent to all employees by 14^th July 2020.

PAYG Withholding Tax – if you are not using STP the annual summary is due to be lodged with the ATO by 14^th August. 2020.

Payroll Tax (if you are liable – if you have any questions please contact us) – you have to prepare a reconciliation of total payroll for the year showing the total amount of payroll tax payable and then reconcile this with the remittances that you have forwarded throughout the year.

Workcover – a Workcover Declaration is due by 31^st August certifying wages paid for the year ending 30^th June 2020.

ATO

JobKeeper Phase 2 – The Next Step

The Government has decided to extend a lower JobKeeper for a further six months (13 fortnights) from 28 September this year, with eligibility based on actual rather than projected turnover declines.

The key features are

Only those businesses whose actual GST turnovers in each of the June AND September 2020 quarters have declined by 30% or more (or 50% or more – businesses with a GST turnover of $1 billion or more) compared with the same periods in 2019 will be entitled to JobKeeper in the December 2020 quarter.
Only those businesses whose actual GST turnovers in each of the June, September AND December 2020 quarters have declined by 30% or more (or 50% or more – businesses with a turnover of $1 billion or more) compared with the same periods in 2019 will be entitled to JobKeeper in the March 2021 quarter.
The JobKeeper payments will be lower and there will now be two tiers:
- For employees who, in the four weeks of pay periods before 1 March 2020, were working in the business for 20 hours or more a week on average – for the December quarter, $1,200 a fortnight; and for the March 2021 quarter, $1,000 a fortnight
- For other eligible employees (both permanent part time and casual) – $750 a fortnight for the December 2020 quarter and $650 a fortnight for the March 2021 quarter
Business participants who are not employees remain eligible on the same basis as employees.
Employers must pay employees first before they can receive JobKeeper.

The new turnover tests will be harder to fulfill than those applying to JobKeeper 1.0.

Each quarter is tested for actual GST turnover, – averaging is out and the single month test is out.

One difficulty all employers who remain eligible will face is timing the calculation of their turnover for the September and December 2020 quarters with the payment of staff. With BAS deadlines of 28 October and 28 January respectively, the ATO “will have discretion to extend the time an entity has to pay employees in order to meet the wage condition, so that entities have time to first confirm their eligibility for the JobKeeper Payment”. But delaying BAS lodgement can also delay receipt from ATO.

As far as employees are concerned, the eligibility rules are unchanged. In that regard, the employee must have been on the books as at 1 March 2020 as well as being a current employee for the relevant JobKeeper fortnight. The rules which exclude persons who were not long-term casuals as at 1 March also remain, as do the rules excluding most temporary workers who are neither citizens nor permanent residents.

The long term casual test has two relevant dates – 1 March being the date on which the employee has to meet the basic criteria (including the long term casual test) and the JobKeeper fortnight the subject of the claim and for which the employer must have paid the employee.

Federal Government