JobKeeper scheme
The JobKeeper scheme ended on 28 March 2021. Your business does not have to do anything, but it will need to complete the March monthly business declaration by 14 April 2021. The final payment will be processed in April.
Your business must keep all relevant records for five years in case the ATO decides to look at its JobKeeper claims in detail.
Don’t forget that JobKeeper payments are assessable and should be included in your business’ tax return as income.
If your business has employees and their wages were effectively subsidised by JobKeeper payments, the full wages are still deductible.
If your business decides voluntarily to repay any JobKeeper payments it did not actually need, it will only get a tax deduction if the repayment is appropriate to achieve, or directed at achieving, the objectives of the business. According to the ATO, examples would include where a payment is made to:
prevent reduction in business; or
publicise and promote a business in the short-term.
Of course, as pointed out by the ATO, if your business deducts from the repayment the amount of tax paid on the payment, the tax outcome will be neutral.
If your business wishes to make a voluntary repayment, it should contact the ATO first as voluntary repayments cannot be made through usual ATO payment channels and require a special Payment Reference Number (PRN).
JobMaker hiring credit scheme
Don’t overlook the JobMaker Hiring Credit scheme (JobMaker). Under JobMaker, the Government may pay your business up to $200 per week if it hires a new employee aged 16 to 29 and up to $100 a week if it hires a new employee aged 30 to 35. The new employee must commence employment between 7 October 2020 and 6 October 2021.
Your business must register with the ATO by 30 April 2021 if it wants to make a claim for the first JobMaker period (1 February to 30 April 2021).
To qualify, the employee headcount and payroll must genuinely increase. Your business cannot claim JobMaker if it merely replaces an employee aged over 35 with one aged between 16 and 35.
JobMaker cannot be claimed for certain new employees, including:
relatives, partners if your business is operated through a partnership;
directors and shareholders if your business is operated through a company; and
certain contractors and subcontractors your business engaged at any time between 6 April 2020 and 6 October 2020.
Stimulus vouchers: How to report this in your tax
Most States and Territories are providing assistance to help boost local economies affected by COVID-19. Many governments are doing this by issuing vouchers to eligible customers to pay towards purchases from eligible businesses for dining out, entertainment or accommodation.
If your business accepts stimulus vouchers from customers, you may be wondering how to deal with this for tax purposes.
When your business accepts a voucher, it needs to:
treat the amount the voucher covers and the customer's payment as income;
report GST on the total of payments received.
SME loan guarantee scheme
The Government has announced an extension of the SME Recovery Loan Scheme, as well as various changes to the Scheme. Phase 1 operated until 30 September 2020 and Phase 2 is due to end on 30 June 2021.
As a result of the changes, the Scheme will be open only to businesses (including self‑employed individuals and non-profit businesses) with up to $250 million turnover which received the JobKeeper payment between 4 January 2021 and 28 March 2021. Participating lenders will be offering guaranteed loans on the following terms:
the Government guarantee will be 80% of the loan amount (up from 50%);
lenders are allowed to offer borrowers a repayment holiday of up to 24 months (the time was previously unspecified);
loans can be used for a broad range of business purposes, including to support investment (see below);
borrowers can access up to $5 million in total, in addition to the Phase 1 and Phase 2 loan limits;
loans are for terms of up to 10 years (up from 5 years);
loans can be either unsecured or secured (excluding residential property); and
the interest rate on loans will be determined by lenders, but will be capped at around 7.5%, with some flexibility for interest rates on variable rate loans to increase if market interest rates rise over time (previously capped at 10%).
Lenders can offer any product suitable to the borrower – with the exception of credit cards, charge cards, debit cards or business cards. Loans issued under the Scheme may take any other form of credit, provided the Scheme’s eligibility criteria are met.
Loans will be available from 1 April 2021 and must be approved prior to 31 December 2021.
Loans backed by the Scheme will be available through participating commercial lenders. The decision on whether to extend credit, and management of the loan, will remain with the lender.
Eligible loan uses
Loans may be used to refinance any pre-existing debt of an eligible borrower, including those from Phase 1. Loans that are more than 30 days in arrears cannot be refinanced and borrowers who have entered external administration, or are insolvent, cannot refinance debts.
Loans can be used to purchase non-residential real property (such as commercial property) or for the acquisition of another business.
Loans issued under the Scheme can be used to refinance existing loans or for a broad range of businesses purposes (including to support investment) but cannot be used to purchase residential property or financial products and cannot be lent to an associated entity. Loans also cannot be used to lease, rent, hire or hire purchase existing assets that are more than half way into their effective life.
Investment incentives: What’s changed?
There are two temporary measures to encourage business investment:
full expensing for the cost of new depreciating assets acquired from 7:30pm (AEDT) on 6 October 2020 (i.e. 2020–21 Budget night) and first used or installed by 30 June 2022; and
an accelerated rate of depreciation for new depreciating assets first held on or after 12 March 2020 and first used or installed ready for use on or after 12 March 2020 and before 1 July 2021.
Note! The law has changed so that you can now choose not to apply full expensing or accelerated depreciation to particular depreciating assets if you want. But once the choice is made, you are locked in (i.e. the choice cannot be reversed).
George Samaras
Principal
Taxation, Family and Business Lawyers
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