To assist businesses experiencing financial difficulty as a result of COVID-19 the ATO is implementing a series of relief options.

These relief options will not be automatically applied, contact will need to be made with the ATO to discuss them.

If you or your business are experiencing financial difficulties because of COVID-19, phone the ATO Emergency Support Infoline on 1800 806 218.

How to account for your ‘Boosting cash flow for employers’ payment from the ATO

 Eligible small and medium businesses will begin to receive the cash flow boost from 28 April 2020

 This payment is tax-free and not subject to GST.

 As such, we suggest you account for the income as a separate line item in Other Income with the GST code ‘BAS Excluded’.

 If you account for your business using Xero general ledger software you can follow these steps.

1. Set up a new account in your chart of accounts as follows:

Navigate to settings>click ‘looking for advanced settings?>Chart of Accounts>Add Account

2. If you have received the payment as a refund back to your bank account then code the credit from the ATO directly to the new account you setup in step 1.

3. If you have reduced the amount payable on your March BAS by the cash flow boost amount, you need to dissect the payment by selecting ‘add my details’ in Xero. For example like this:

If in doubt, please contact your client manager directly.

Working from home deductions

The Australian Taxation Office (ATO) is announcing special arrangements this year due to COVID-19 to make it easier for people to claim deductions for working from home.

The new arrangement will allow people to claim a rate of 80 cents per hour for all their running expenses, rather than needing to calculate costs for specific running expenses.

Multiple people living in the same house can claim this new rate.  For example, a couple living together could each individually claim the 80 cents per hour rate.

The requirement to have a dedicated work from home area has also been removed.

Assistant Commissioner Karen Foat said the new shortcut method will make it easier for those who are working from home for the first time.

For more information on these special working from home deduction arrangements, please click here.

Payment deferral

If you or your business has been impacted by COVID-19, the ATO can work with you to defer some payments and vary instalments you have due, such as income tax, activity statement (including PAYG instalments), FBT and excise payments by up to four months.

Monthly GST credits

Businesses on a quarterly reporting cycle may elect to change their GST reporting and payment to monthly, to get quicker access to GST refunds you are entitled to. You can only change from the start of a quarter, so a change now will take effect from 1 April 2020.

Changing your GST reporting cycle to monthly doesn’t mean you have to change your PAYG withholding reporting cycle. You can manage this by specifying the roles you are changing.

Once you choose to report and pay GST monthly, you must keep reporting monthly for 12 months before you can elect to revert to quarterly reporting.

However, if your GST turnover is more than $20 million you must pay and report monthly.

If you’re registered for fuel tax credits, and change your GST reporting from quarterly to monthly, you will also need to claim your fuel tax credits monthly.

You can change your GST reporting cycle through your tax or BAS agent, in the business portal, or by phoning the ATO on 13 72 26.

Pay as you go instalments

If you are a quarterly pay as you go (PAYG) instalments payer you can vary your PAYG instalments on your activity statement for the March 2020 quarter. You can do this by lodging a revised activity statement before your instalment is due and before you lodge your tax return for the year. Businesses that vary their PAYG instalment rate or amount can also claim a refund for any instalments made for the September 2019 and December 2019 quarters.

If you are a monthly payer and have a base assessment instalment income of $500 million or less, and want to vary your instalment rate and claim a refund on previous instalments paid, you will need to phone the ATO on 13 72 26 to discuss.

If you realise you’ve made a mistake working out your PAYG instalment, you can correct it by lodging a revised activity statement or varying a subsequent instalment.

Remitting interest and penalties

 Where your business is affected by COVID-19, the ATO will consider remitting interest and penalties applied to tax liabilities incurred after 23 January 2020.

Low interest payment plans

If your business has been affected by COVID-19 and you need help to pay your existing and ongoing tax liabilities, contact us to discuss entering a low interest payment plan.

Super guarantee payments

Employers still need to meet super guarantee obligations for their employees.

By law, the ATO can’t vary the contribution due date or waive the super guarantee charge where super guarantee payments late or unpaid.