Thinking Tax is a fortnightly update from the Tax Advisory team to provide a short overview of specific tax issues that may affect you or your business, with a focus on practical issues you may face on a day to day basis.
1. June 2020 JobKeeper receipt assessable to businesses in 2021
The June 2020 JobKeeper receipt will be assessable in the 2021 year for businesses (with a 30 June 2020 year-end) irrespective of whether such businesses are operating on an accruals or cash basis.
- For businesses operating on an accruals basis, a JobKeeper payment will be derived when the employer provides a valid completed business monthly declaration to the Australian Tax Office (ATO). The employer only becomes legally entitled to the JobKeeper payment once the monthly declaration is made.
- For businesses operating on a cash basis, a JobKeeper payment will be derived when the business receives those payments. A business will only receive those payments after a monthly declaration has been made.
This is a welcome opportunity for businesses to defer this income to 2021. Tax losses will reduce such assessable income.
On the other hand, income from the cash-flow boost would be non-assessable non-exempt income (NANE) which means that such income will not reduce tax losses.
2. No more JobKeeper for approved childcare providers from 20 July 2020
From the JobKeeper fortnight commencing 20 July 2020 onwards, childcare service providers can no longer access the JobKeeper payment for childcare workers (whether employees or eligible business participants) principally involved in childcare operations.
Workers involved in the direct provision of childcare services as well as people who work in childhood centre administration, payroll and other ancillary tasks will be impacted by these measures.
3. Taxable payments annual report (TPAR) due 28 August 2020
Businesses that provide building and construction, cleaning, courier, delivery, road-freight, information technology, security, investigation or surveillance services may need to lodge a taxable payments annual report on 28 August 2020 to report all payments they made to contractors.
By using data matching (i.e. comparing the data on the TPAR to the data on the contractor’s tax return), the ATO can identify contractors who have not met their tax obligations (i.e. did not include all their income in their tax return, did not lodge tax returns, did not register for GST or quoted the wrong ABN on their invoices).
To make it easier to complete your TPAR, Crowe can review your current record keeping for contractor payments and may suggest potential changes to ensure you record the correct information necessary to complete your TPAR. We can also lodge your TPAR on your behalf.
4. Reminder: Businesses can only claim salary and wages deductions if PAYG obligations met in 2020
From 1 July 2019 (i.e. from the 2020 income tax year), a business can only claim tax deductions for salary and wages paid if they have met their pay-as-you-go (PAYG) withholding obligations (i.e. withheld amounts from the payments, remitted and reported withheld amounts to the ATO).
Although a deduction would not be allowed if no amount was withheld when it should have been, the business would still be eligible for the deduction if they made a mistake or withheld or reported an incorrect amount.
Please contact your Crowe adviser or our Tax Advisory team if you would like a health check of your PAYG system.
Roelof van der Merwe
Chris Heyes
Trevor Pascall