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Varying PAYG instalments because of COVID-19

Varying PAYG instalments because of COVID-19

Varying PAYG installments

If you worked under ABN and your tax returns for the previous years generated tax payable amounts, the ATO would have arranged for a Pay As You Go (PAYG) quarterly installment payment plan for you. This payment plan will be based on a projection of your ABN income for the financial year, referring to your latest tax return.

The purpose of the PAYG installment payment plan is to better prepare ABN taxpayers for their upcoming tax returns. The plan will help lower their total tax payable amount at the end of the financial year or potentially create a tax refund instead if the actual ABN income is less than the ATO projected ABN income.

If you are a PAYG installment payer, we encourage you to review your tax position regularly throughout the year. You can vary your PAYG installments on your activity statement if your situation changed such as if you have been affected by COVID-19.

If your situation changed, you can potentially vary the PAYG installment and lower it down to zero. You can also request for a credit to offset any previous PAYG installment amount processed which occurred after your changed business situation.

The ATO will not apply penalties or charge interests too varied installments that relate to the 2020–21 income year when you have made your best attempt to estimate your end of year tax liability.

Setting up ATO payment plans

If you have a pending tax payable amount, you can set up a payment plan with the ATO through your tax agent to pay it in installments.

The maximum number of installments allowed would be 22 monthly installments. To arrange for an installment, the ATO would require you to pay at least 10% within 7 days of the date of the arrangement.

Individuals with a payment plan in place can suspend, vary or cancel their payment plan. If they are affected by Covid-19, they can arrange with the ATO so that no interest will be charged on their outstanding debt.

The ATO will also consider remitting interest and penalties incurred after 23 January 2020.

If the interest or penalties were incurred before 23 January 2020, you can still request for these amounts to be remitted so that the ATO can:

  • Consider whether your circumstances before 23 January 2020 would make a remission of interest or penalties appropriate
  • Arrange to stop interest being charged while you are affected by Covid-19, and for the duration of a payment plan in you put one in place.

 

If you would like for us to help you vary your PAYG installments or set up your tax payable payment plan with the ATO, please do not hesitate to contact us at info@accountsnextgen.com.au

The sole trader in a win-win state for Jobkeeper test case

The AAT has overturned the decision from the Australian Taxation Office to deny a sole trader access for Jobkeeper after the Administrative Appeals Tribunal traced down that its backdated ABN registration has satisfied the integrity rules set within the norms. In December 2020, the Administrative Appeals Tribunal ruled out te sole trader Jeremy Apted was entitles to the JobKeeper program despite not keeping and holding an active ABN before 12 March 2020. This was under an integrity rule contained in the $90 billion wages subsidiary scheme. According to Accounts NextGen sources Mr. Apted, is a known specialist retail valuer and held an ABN since back in 2012 but later canceled his registration in mid-2018 as he was about to retire.

On the contrary, the retirement did not work for Mr. Apted and he resumed providing valuation services in Sept 2019. However, he failed to reactivate his ABN because he has assumed that he only required one if he was in need of a bed registered for GST. On 31 March 2020, Mr. Apted applied online to have his ABN reinstated along with the registrar and eventually backdating the reactivation on 1 July 2019. This was happening after requesting further information on his business history. It is important to acknowledge that after satisfying all the other eligibility requirements. Mr. Apted applied for the Jobkeeper but which was later denied by the Commissioner of Taxation on the basis that at the same point of time on 12 March 2020, Mr. Apted was left with no active ABN.

Assuming the Registrar did not perform his tasks and duties

If we look back and review the first JobKeeper test case the Administrative Appeals Tribunal’s president Justice David Thomas along with Deputy president Bernard McCabe has found that the Australian Business registrar had been satisfied with the historical information of Mr. Apted and appropriately adjusted the date of registration effect to 1 July 2019 that is effectively making Mr. Apted eligible for the JobKeeper.

As per Justice Thomas, an Mr. McCabe, The Australian Business Number act explicitly authorizes the Registrar to consider a date of the effect that predates the registration application where he is very much satisfied and assumes it is very much appropriate to process the same. However, Accounts NextGen explains that the commissioner is worried about the business that was not genuinely active and might get into the violated rules and anybody can access the benefits under the Rules. These Rules are belatedly applied for an ABN and hence convincing the registrar to make amendments in the Australian Business number and convince the Registrar to change the dates of effect on the dates prior to 12 March 2020.

Further discussions on the topic

It is assumed that the Registrar does not do his task and duties according to the requirements and then satisfy himself with very matters the treasurer considered. It is further understood by Accounts NextGen that there is no evidence provided at the hearing to suggest the Australian Business number registration process lacks integrity or not. In such circumstances, the authorities are satisfied with it assumed as an approach that operates according to their respective terms.

The take by Administrative Appeals Tribunal 

The Tribunal stated that the taxpayers are in similar circumstances as Mr. Apted, and as a result, he should engage with the established Australian Business Number registration process, with any of its have a pre 12 March 2020 date of the effect that satisfying the integrity rule that exists within the JobKeeper program. Accounts NextGen further noted that the senior tax controversy partner who led the case on behalf of Mr. Apted, appeals and explains that the decision would be welcomed by the small businesses that are locked out because of the 12 March 2020 integrity rule.

This year was seen to be a difficult year to survive and it’s been disappointing to see all the small businesses dissolving and the owners facing the word economic shift which is affecting them adversely. This requires access that requires support for simply not meeting an arbitrary deadline. In the scheme of foreseeing the Jobkeeper and the other measures have cost and affected this country, these are an important fact to understand that the small businesses claims are costing nothing. However, in view of such businesses and people, this is everything they mean.

In a conclusive viewpoint:

According to the Tribunal, their judgment was about the Jobkeeper scheme to provide the support for an active business that is facing pandemic-related challenged to survive. This decision will be an act that will support the small businesses a vital boost to step in this new year with a fresh start. It is hence understood that the Australian Taxation Office is currently considering the decision of the Tribunal along with its implications that include whether to appeal or not. Furthermore, the information is set to base and structure in the forthcoming weeks.

Josh Frydenberg is about to introduce tax cuts

Josh Frydenberg has made it very clear that it is high time to introduce income tax cuts. This decision has been made by seeing the state of the Australian economy in the worst position since the time of World war 3.

The GDP of Australia has fallen by 7 percent for the quarter of June. This has become a matter of major concern for the department of tax return Melbourne. And this has happened due to the lockdown imposed on Australia because of COVID-19.

It is being expected that on October 6, Josh Frydenberg will introduce the budget and the plans about the upcoming versions of JobMaker will be introduced. Providing such information is very crucial as most of the works related to tax are done online by the department for online tax return Melbourne.

When a journalist asked Mr. Frydenberg about whether they are going to cut down the personal tax, he said, “We are on it as this issue has been under our consideration for a long time. Some modifications were made after the last election. Total changes in this field are not apparent as it will take place in three stages. If we somehow manage to put more money in the hands of people, they will spend more of it and eventually more jobs would be created.”

As you know the role of opposition in any working democracy, you can’t know about the whole scenario without listening to both sides. The person concerned with the treasury in the opposition had different viewpoints regarding Mr. Frydenberg. He said that Frydenberg is lacking on vision in all these steps. “Fridenberg started telling about the state of the Australian economy and then suddenly changed the topic to cutting the taxes in particular. It clearly shows that he had no more things to discuss the vision to get this economy in a better state. It’s definitely not the kind of leadership that we want for our economy, especially in this situation. More profound vision is needed in a time when the people of this country find it hard to pay the individual tax return.”

Based on the present situation, tax incentives in the field of infrastructure is very necessary so that business investments would be enhanced.

The situation of the economy will start changing once the effect of the virus reduces and the restrictions are lifted.

But it is very necessary to introduce a roadmap for the businessmen of this country because businessmen will start hiring more and more employees only after making sure that a good route has been decided for the recovery of the economy. Extra people with proper tax training will be needed to make more and more people aware of the financial aids that the government is providing for business owners. This will ultimately lead to enhanced growth of the business.

Conclusion:

In this vast age of the internet, there are various sources and people get confused about where to go for authentic information. But there is no need to worry when you have reached here. Accounts NextGen brings to you the most relevant information to make you aware of the situation around you.

Tax office to punish people engaged in fraudulent activities to save tax

In a recent press release, the taxation office of Australia said that it will punish the people doing super withdrawals to minimize the payable tax.

The taxation office said that there is a certain loophole that enables people to avoid the payment of personal income taxes. And the office is about to punish all such people who give false information to get benefits from this scheme.

As per the statement of ATO, the people of Australia are withdrawing money from their account using financial hardship measure tax-free and then top up their super account through salary sacrifice at a rate of 15 percent.

With the help of this scheme, $10,000 is free of tax for a person having a salary of $100,000 but if he sacrifices $10,000 into his super account, now only 15% tax is being imposed on this $10,000 of the account holder but the right amount of tax should be 37%.

The taxation office has been noticing the people who are managing their wages in such a way that can make them eligible for this scheme. This scheme called Super was introduced by the Federal Government to help the Australians who have lost their jobs or who are getting low wages.

ATO has said the following about this situation, “In earlier days of COVID-19, we saw some cases where people were doing such things to get benefits of this scheme which they did not deserve. In certain cases, we prevented them from applying and did not release the super money.”

ATO can easily fine all those who claim the early access of superannuation payments by manipulating information. This fine could reach up to $12,600.

Sally Tindall (the director of RateCity research) said it is completely certain that ATO will punish all those engaged in such activities. She also said “This particular initiative was taken to help the ones who needed this money the most. We intended to help those who can’t pay their bills or get meals, and the ATO is completely determined to find those who want to exploit this scheme.”

Karen Foat (Assistant Commissioner) has the same viewpoint about the people who are engaged in this type of fraud activity. When asked about this situation, she said the following:

“There is no need to rejoice after seeing that the graph for work from home like jobs is going up because there are a lot of things for which is graph has gone down. Industries like tours and travels and many such others have suffered very big losses. And what we are seeing day by day is that the activities like it to cheat the system is increasing day by day.

There is always a way to work out the simple mistakes that are unintentional but for those who are doing it on a purpose is very bad.”

The Australian Taxation Office said that all such people who are engaged in such activities will have to repay the tax and there is an additional penalty up to 75% of the money that they have not paid. People who have manipulated their documents to be eligible for this scheme will face criminal persecution.

Bernie Dean (chief executive of Industry Super Australia) said “Those who are manipulating their information for getting this scheme are actually making it harder for the ones who are in desperate need of this scheme.”

ISA has also welcomed this decision by the ATO and they said that all those will be punished who are misusing this scheme.

ATO doesn’t consider the JobKeeper payments as a part of aggregated turnover

JobKeeper payments have been considered as assessable income. But there are certain concerns regarding the status of JobKeeper payments as whether they fall under ordinary income or statutory income.

For those who don’t know about it, under this scheme, the business which has been affected the most due to the outbreak of Corona COVID-19 will get money from the government (in the form of subsidy). This assistance is being given to all such businesses so that the employees of all such businesses will get the wages.

As per s328-120, if the JobKeeper payments would become a part of the aggregated turnover, it would decide whether some entity is eligible for different concessions and other measures, instant asset write-offs, base rate entity tax rate, and the refundable R&D tax offset.

Now ATO has made it very clear that the JobKeeper payments are ordinary income but are not derived in the ordinary course of business. So, they are not included in aggregated turnover.

There were certain confusions about whether the JobKeeper payments fall under the category of ordinary income or not in order to calculate the aggregated turnover as said by Tracey Dunn. When asked about this situation, she said the following, “After including the JobKeeper payments in aggregates turnover, there would be some major consequences. Things like CGT concessions of small businesses, the income tax concessions of small businesses, other R&D involvements can push many businesses to threshold after this decision.”

Here are some changes that have taken place in this scheme:

  1. The JobKeeper scheme has been extended until March 28, 2021.
  2. A detailed test of the turnover of the applicant’s firm will determine his eligibility.

Some of the factors that determine the eligibility for this scheme include:

  1. For the businesses having a turnover of at least $1 billion or more and the latest turnover has been reduced by no less than 50%.
  2. The businesses which have turnover less than $1 billion then their turnover of this period should be reduced by 30% or more.

To get the benefits of this scheme, the businesses should apply to the concerned department of the government along with the documents showing a downfall in the turnover. They also have to show the total number of employees working in their firm. But the name of the employees should be mentioned in the book of that business from March and that employee must be active in the same business at present.

It was known to the RSM and they asked about it to the experts. “The ATO has responded very quickly and they modified this information. So, it is clear that they consider JobKeeper payments as an ordinary one and assessable to the employer. But it can’t be included while calculating the aggregated turnover.”

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