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Extension of the JobKeeper Payment

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The Government is extending the JobKeeper Payment by a further six months to March 2021

Support will be targeted to businesses and not-for-profits that continue to be significantly impacted by the Coronavirus. 

The payment rate will be reduced and a lower payment rate will be introduced for those who work fewer hours. Other eligibility rules remain unchanged.

Summary

The JobKeeper Payment, which was originally due to run until 27 September 2020, will now continue to be available to eligible businesses (including the self-employed) and not-for-profits until 28 March 2021.

The payment rate of $1,500 per fortnight for eligible employees and business participants will be reduced to $1,200 per fortnight from 28 September 2020 and to $1,000 per fortnight from 4 January 2021. From 28 September 2020, lower payment rates will apply for employees and business participants that worked fewer than 20 hours per week.

From 28 September 2020, businesses and not-for-profits seeking to claim the JobKeeper Payment will be required to demonstrate that they have suffered an ongoing significant decline in turnover using actual GST turnover (rather than projected GST turnover).

From 28 September 2020, businesses and not-for-profits will be required to reassess their eligibility with reference to their actual GST turnover in the June and September quarters 2020. They will need to demonstrate that they have met the relevant decline in turnover test in both of those quarters to be eligible for the JobKeeper Payment from 28 September 2020 to 3 January 2021.

From 4 January 2021, businesses and not-for-profits will need to further reassess their turnover to be eligible for the JobKeeper Payment. They will need to demonstrate that they have met the relevant decline in turnover test with reference to their actual GST turnover in each of the June, September and December quarters 2020 to remain eligible for the JobKeeper Payment from 4 January 2021 to 28 March 2021.

To be eligible for JobKeeper Payments under the extension, businesses and not-for-profits will still need to demonstrate that they have experienced a decline in turnover of:

  • 50 per cent for those with an aggregated turnover of more than $1 billion;
  • 30 per cent for those with an aggregated turnover of $1 billion or less; or
  • 15 per cent for Australian Charities and Not for profits Commission-registered charities (excluding schools and universities).

If a business or not-for-profit does not meet the additional turnover tests for the extension period, this does not affect their eligibility prior to 28 September 2020.

The JobKeeper Payment will continue to remain open to new recipients, provided they meet the existing eligibility requirements and the additional turnover tests during the extension period.

Other eligibility rules for businesses and not-for-profits and their employees remain unchanged. Further information on those rules is at ato.gov.au/General/JobKeeper-Payment/.

The JobKeeper Payment rate

From 28 September 2020 to 3 January 2021, the JobKeeper Payment rates will be:

  • $1,200 per fortnight for all eligible employees who, in the four weeks of pay periods before 1 March 2020, were working in the business or not-for-profit for 20 hours or more a week on average, and for eligible business participants who were actively engaged in the business for 20 hours or more per week on average in the month of February 2020; and
  • $750 per fortnight for other eligible employees and business participants.

From 4 January 2021 to 28 March 2021, the JobKeeper Payment rates will be:

  • $1,000 per fortnight for all eligible employees who, in the four weeks of pay periods before 1 March 2020, were working in the business or not-for-profit for 20 hours or more a week on average and for business participants who were actively engaged in the business for 20 hours or more per week on average in the month of February 2020; and
  • $650 per fortnight for other eligible employees and business participants.

Businesses and not-for-profits will be required to nominate which payment rate they are claiming for each of their eligible employees (or business participants).

The Commissioner of Taxation will have discretion to set out alternative tests where an employee’s or business participant’s hours were not usual during the February 2020 reference period. For example, this will include where the employee was on leave, volunteering during the bushfires, or not employed for all or part of February 2020.

Guidance will be provided by the ATO where the employee was paid in non-weekly or non-fortnightly pay periods and in other circumstances the general rules do not cover.

The JobKeeper Payment will continue to be made by the ATO to employers in arrears. Employers will continue to be required to make payments to employees equal to, or greater than, the amount of the JobKeeper Payment (before tax), based on the payment rate that applies to each employee. This is called the wage condition.

Additional turnover tests

In order to be eligible for the JobKeeper Payment after 27 September 2020, businesses and not-for-profits will have to meet a further decline in turnover test for each of the two periods of extension, as well as meeting the other existing eligibility requirements for the JobKeeper Payment.

In order to be eligible for the first JobKeeper Payment extension period of 28 September 2020 to 3 January 2021, businesses and not-for-profits will need to demonstrate that their actual GST turnover has significantly fallen in the both the June quarter 2020 (April, May and June) and the September quarter 2020 (July, August, September) relative to comparable periods (generally the corresponding quarters in 2019).

In order to be eligible for the second JobKeeper Payment extension period of 4 January 2021 to 28 March 2021, businesses and not-for-profits will again need to demonstrate that their actual GST turnover has significantly fallen in each of the June, September and December 2020 quarters relative to comparable periods (generally the corresponding quarters in 2019).

The Commissioner of Taxation will have discretion to set out alternative tests that would establish eligibility in specific circumstances where it is not appropriate to compare actual turnover in a quarter in 2020 with actual turnover in a quarter in 2019, in line with the Commissioner’s existing discretion. Information about the existing discretion is at https://www.ato.gov.au/General/JobKeeper-Payment/Employers/.

Businesses and not-for-profits will generally be able to assess eligibility based on details reported in the Business Activity Statement (BAS). Alternative arrangements will be put in place for businesses and not-for-profits that are not required to lodge a BAS (for example, if the entity is a member of a GST group).

As the deadline to lodge a BAS for the September quarter or month is in late October, and the December quarter (or month) BAS deadline is in late January for monthly lodgers or late February for quarterly lodgers, businesses and not-for-profits will need to assess their eligibility for JobKeeper in advance of the BAS deadline in order to meet the wage condition (which requires them to pay their eligible employees in advance of receiving the JobKeeper payment in arrears from the ATO). The Commissioner of Taxation 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.

To be eligible for JobKeeper Payments under the extension, businesses and not-for-profits will need to demonstrate that they have experienced the following decline in turnover (which remains the same as existing rules):

  • 50 per cent for those with an aggregated turnover of more than $1 billion;
  • 30 per cent for those with an aggregated turnover of $1 billion or less; or
  • 15 per cent for Australian Charities and Not-for-profits Commission-registered charities (excluding schools and universities).

Registered religious institutions responsible for religious practitioners will continue to be eligible to receive the JobKeeper Payment provided they meet existing eligibility requirements and the additional turnover tests during the extension period.

Further information for employers is at https://www.ato.gov.au/General/JobKeeper-Payment/Employers/ or call the team at Notch Above Bookkeeping on 1300 015 130.

Back to more COVID-19 Resources
Source: Australian Government (2020). Retrieved from The Treasury https://treasury.gov.au/sites/default/files/2020-07/Fact_sheet-JobKeeper_Payment_extension.pdf
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Coronavirus cash flow assistance for business

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Boosting cash flow for Employers

Up to a $25,000 tax-free payment to small and medium-sized businesses that employ workers, between 1 January 2020 and 30 June 2020. These eligible businesses will receive a payment equal to 50% of their PAYG withheld,delivered as a credit in their BAS from March to June 2020, with a minimum $2,000 payment and up to a cap of $25,000

We will ensure these cash incentives are included in your business BAS returns when lodged with the tax office.

Administrative concessions

Other concessions announced to assist businesses impacted by COVID-19 include:

  • Deferring by up to 4 months the payment of tax amounts due through the BAS (including PAYG instalments), income tax assessments, FBT assessments and excise by affected businesses;
  • Allowing affected businesses on a quarterly reporting cycle to opt into monthly GST reporting to get quicker access to any GST refunds;
  • Allowing affected businesses to vary PAYG instalment amounts to zero for the March 2020 quarter. Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters;
  • Remitting any interest and penalties, incurred by affected businesses on or after 23 January 2020, that have been applied to tax liabilities; and
  • Allowing affected businesses to enter into low-interest payment plans for their existing and ongoing tax liabilities

We will consider all these concessions in the relevant BAS periods when preparing your returns and discuss with you, as needed, how they can assist your individual situation.

Please note these are being introduced to parliament next week and expected to be passed as legislation.

Got any questions? Just contact us for further clarification on the new measures on 1300 015 130.

Related reading

https://notchabove.com.au/economic-stimulus-package/

3 Things You Need To Be Aware Of With Simpler BAS

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As a business owner, I hope you’ve paid attention to a new initiative by the ATO called Simpler BAS. If you haven’t heard of it, then maybe it’s time to hire a bookkeeper or switch to another.

What is Simpler BAS?

It is a new way of reporting your BAS, simplifying your BAS with fewer mandatory figures to report. It is part of the government’s efforts to reduce red tape for businesses, which is one of SME’s biggest gripes over the years.

With the Simpler BAS, you are only required to report:

• G1 Total Sales
• 1A GST on sales
• 1B GST on purchases

This means you don’t have to report figures such as export sales, GST-free sales, capital purchases and non-capital purchases in your BAS.

The Simpler BAS applies to all small businesses with a GST turnover of less than $10 million. It came into effect on 1st of July 2017. However, this doesn’t change how often or when you lodge your BAS.

It also doesn’t change your bookkeeping routines, the process to produce your BAS, your record keeping and tax return. And I think this is the key point that many small business owners miss.

Simpler, not easier BAS

Although you have fewer calculations, everything else remains pretty much the same. There is an equal amount of due diligence and hours that go into producing your BAS.

A lot of the bookkeepers I talk to have complained that business owners seem to think that this makes their job, or our job easier. SMEs who are already time poor get excited by the word, “simpler”.

Fundamentally, nothing has changed. The GST laws haven’t changed. If you don’t understand how to apply GST in your business and the exemptions, you will still need a bookkeeper or BAS agent to explain it thoroughly to you.

If you are not using a proper accounting software to record all your transactions and plan your finances, you still need a bookkeeper to set it up and train you. If you’ve never produced a BAS yourself, you still need a bookkeeper to help you out.

These are the common misconceptions I’ve heard around Simpler BAS.

1. It saves a lot of time.

I think it does save some time, but not substantially. Like I’ve said, the process, care and due diligence that goes into producing your BAS remains the same. You are just reporting differently.

Furthermore, you still need to keep all your documents and organise your records. You must keep evidence for all your purchases and transactions, whether GST applied or exempted. There is no escaping that. And you still need to file your tax return as before.

2. Simpler means I can do it myself.

When it comes to something as serious as taxation, please seek professional advice. As a business owner, your time and expertise is best left for running and growing your business.

If you are a new, growing or complex business, then hiring experts such as bookkeepers and accountants will take a load of your shoulders. Believe me, you want to err on the side of caution when it comes to your taxes.

Previously, I had a new client approach us after receiving a dreaded letter from the ATO that they will be audited. Apparently, the sales reported in their BAS did not match with the GST On Sales figure that the ATO was projecting.

Upon investigation, I found that they did indeed pay the correct amount of GST. This issue could have been avoided had they done a few simple checks on their BAS before submitting. Although the crisis was resolved quickly, it certainly gave my client a few grey hairs.

3. I can produce Simpler BAS with my accounting software.

Contrary to popular beliefs, not all accounting software are up to date with this new change. You need to check with your provider to see if your latest version supports Simpler BAS. Xero is already on board with Simpler BAS so you don’t have to worry about a thing if you are using Xero. In fact, your bookkeeper may have discussed it with you beforehand.

One of our corporate values is reliability. You can rely on us to provide high quality work in a timely manner, even when it’s just a simple BAS report. We want to let you do what you love best – growing and running the business without worrying whether you will get in trouble with the ATO.

I know it’s Halloween this month, so let us take the spookiness and scariness out of your BAS, and make your way to a wonderful Christmas this year.

Feel free to share this article if you feel others will benefit or if you wish to discuss further book a next actions discussion with me by clicking here.

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Specialising in Xero bookkeeping, Notch Above is a Brisbane bookkeeper and BAS Agent located in Alderley that offers Xero setup, as well as training and ongoing support.  Notch Above can take care of all the bookkeeping tasks you would rather not do, like bank reconciliations, supplier payments, payroll services, debtor control and BAS returns.  

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Demystifying the BAS Myths

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I get a 2-week extension to lodge my BAS return through my business portal, why should I use a BAS Agent?

Because with a BAS Agency you get FOUR WEEKS. That’s an additional two weeks that you could be making your money work for you, like reducing the interest charge on your overdraft.

 

What is the difference between cash and accruals for BAS?

For an accruals BAS you need to have received the invoice for expenses to be able to claim it. But you don’t have to have paid the invoice to include it in your BAS.

And this works in reverse also, sales made during that period are included whether the customer has paid you or not.

Cash method is when income and expenses are only included when the money is paid and received. If your business turnover is over $2 million you need to be on the accruals basis for BAS.

 

My BAS return always seems to be really high – how can I reduce this?

Money due on your BAS return is not your money. Most BAS returns have three types of tax GAST, PAYGW and PAYGI.

GST due is the difference between GST collected on sales and GST paid on purchases. This is purely a calculation so there is no way this can be reduced. In fact, often more is better, as this usually means you’ve made more profit. (subject to GST free income and expenses and wages paid)

PAYGW is the tax you have withheld from employee wages. Again this figure is a direct result of wages you have paid. The only way to reduce this is to pay less wages.

PAYGI is a calculated prepayment of income tax based on the last lodged income tax return. If your income is likely to be less in the current financial year this number can be reduced, however you do open yourself up to interest and penalties if this is underestimated. If you believe this to be the case we can discuss and revise along with advice from your tax agent.

For further clarification on any of these points please call our office today on 1300 015 130. Feel free to share if your feel others would benefit.

 

Specialising in Xero bookkeeping, Notch Above is a Brisbane bookkeeper and BAS Agent located in Alderley that offers Xero setup, as well as training and ongoing support. Notch Above can take care of all the bookkeeping tasks you would rather not do, like bank reconciliations, supplier payments, payroll services, debtor control and BAS returns.

Like us now on Facebook.

Follow us now on Twitter.

Connect with me on LinkedIn.

Visit our Website.

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How to apply for an ABN

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An unique number for every business

An Australian Business Number is an 11-digit number unique to each business. It’s a legal requirement for anyone who wants to start an enterprise in Australia or who wants to register for GST (Goods and Services Tax). Even if your business isn’t going to register for GST, you still need an ABN.

Apply for an ABN through the Australian Business Register (ABR) – it’s free to apply. Your business will use its unique number to identify itself when dealing with the government, other businesses and the public.

 

Apply for an ABN if you intend to run a business

You’ll be asked to provide lots of information when you apply for an ABN. The information you provide will determine if you receive one or not.

To be issued with one, your business must be one of the following types (also called entities):

  • individual/sole trader
  • partnership
  • company
  • trust

Every business entity (whether a sole trader, partnership, company or trust) that applies for an ABN only needs the one number. However, you can choose to run more than one enterprise with a single ABN – for example, a furniture shop, a curtain outlet, and a fabric supplier could all use the same number if they’re part of the same business entity. But if any of the operations are run by a different business entity, they’d require a separate ABN.

So it’s important to choose the right structure for your business. You should always seek professional advice from your accountant or lawyer before making any decisions about registering for an ABN or choosing your business structure. Read more about choosing your business structure on the ATO website.

 

The advantages of having an Australian Business Number

One of the main advantages is that you’ll save time and money. That’s because other businesses are legally required to withhold tax from payments to you if your business doesn’t quote an ABN on invoices. And in this case, they must withhold it at a rate of 46.5 percent. So even though your business can claim back any excess tax paid in the tax return at the end of the year, it’s not ideal for your cashflow.

Having an Australian Business Number also means your business can:

  • claim GST credits (when registered for GST)
  • claim fuel tax or energy grants credits (if you qualify)
  • stay compliant and be able to lodge activity statements (BAS/IAS) with the ATO
  • confirm your business identity to others when ordering and invoicing
  • avoid pay-as-you-go (PAYG) tax on payments you receive (see below)
  • obtain an Australian domain name (for your .au website)
  • deal with other businesses more seamlessly.

Registering an ABN is a separate process to registering a business name.

Specialising in Xero bookkeeping, Notch Above is a Brisbane bookkeeper and BAS Agent located in Alderley that offers Xero setup, as well as training and ongoing support.  Notch Above can take care of all the bookkeeping tasks you would rather not do, like bank reconciliations, supplier payments, payroll services, debtor control and BAS returns.

Thanks for Xero for providing this article