What’s the Government doing post JobKeeper?

Whilst the JobKeeper Stimulus Package has already ended for a lot of our clients, today marks the last day of the JobKeeper Stimulus Package. Due to the end of this package and many industries involved in tourism and travel still struggling, the government is introducing a new support package. Already the state government has released its ‘Dine & Discover’ Vouchers which are now eligible to be used at any time (previously they could only be used during the week), but now the Federal government will subsidise flights, allowing for discounts on domestic airfares.

The Support Package is due to subsidise 50 percent of 800,000 domestic flights to select tourist destinations across Australia. The discounts will be based on the average air fares and are subject to final discussions with airlines & will commence tomorrow, 1 April 2021. The destinations due to be included in the scheme include the Gold Coast, Cairns, The Whitsundays, Alice Springs, Broome, Kangaroo Island & Merimbula.

The aim of the scheme is to assist with getting Australians travelling again & supporting tourism operators, businesses, travel agents & airlines who are still doing it tough through COVID-19. Whilst international borders remain shut, the Federal government wants to get Australians travelling to support the tourism industry and give the industry a kick-start as the industry can’t rely on government support forever. The package, combined with the rollout of the vaccine is part of the National Economic Recovery Plan to help get back to normal trading.

The package also includes new international aviation support which is aimed at sustaining more than 8,000 jobs. They will also support airport screening costs & services assistance support programs to relieve the cost burden related to training the on-ground staff at Australian airports.

So if you have an opportunity, take the time to look into how you can help the tourism industry and see what opportunities you can take for a holiday. Also don’t forget the Jobmaker hiring scheme is still in effect, so if you take on an extra staff member who has been on a Centrelink payment you may be eligible. Also make sure you get your Dine & Discover Vouchers to use at local restaurants and tourist attractions.

Bad BAS reporting could lead to Jail

With the introduction of Taxable Payment Annual Reports (TPAR) the ATO has better data to measure sales for certain businesses. A bricklayer in Queensland has been caught out by TPAR as he was under-reporting sales on his BAS, which has lead to him being convicted and sentenced to 2.5 years in jail for $100,000 in tax evasion.

What is a Taxable Payment Annual Report (TPAR)?

A TPAR is an industry-specific report through which businesses inform the ATO the total payments made to contractors for services in a financial year. The information is then used by the ATO to match the contractors’ income declaration to improve their compliance efforts.

Currently a TPAR is required from any business who provides the following services: 

  • Building & construction services
  • Cleaning services
  • Courier or road freight services
  • Information technology services
  • Security, investigation or surveillance services
  • Government entities.

In the past few years this list has grown and we expect it to continue growing to assist the ATO in checking compliance of businesses with their tax obligations.

In the case of the bricklayer, he appeared in a Brisbane Court a few weeks ago and was found to have underreported income across four quarterly BAS’s. He lodged $85,359 in sales, however, was found to have bank statements with deposits of $375,209. The failure to report the actual sales, resulted in a GST bill of $26,570. As he also understated his income on his tax return, he had an income tax shortfall of $70,441. An analysis of TPAR reports revealed he had quoted an ABN of a trust that he claimed was no longer trading with the ATO.

Therefore, the ATO is using the information reported on the TPAR to make sure businesses are complying with their tax obligations. With the introduction of TPAR to more industries, they will be able to catch out more people who are evading their tax obligations. The TPAR system aims to create a level playing-field. By not declaring your income, the ATO says you are ‘stealing from the community & disadvantaging those who do the right thing’.

If you know any contractors that may need assistance in increasing compliance, feel free to pass on our details and we are happy to have a chat with them. It is extremely important as the ATO increases compliance policies that we are all doing the correct thing.

Single Touch Payroll Changes for Closely Held

1 July 2019 saw the introduction of Single Touch Payroll (STP) by the ATO to streamline the reporting of tax and superannuation to the government. This was due to the realisation of the ATO of their need to increase employer compliance in paying superannuation & employee tax obligations on time. STP is an ATO compliance regulation that required employers to send employee payroll information including salary, wages, PAYG-W and superannuation to the ATO at the same time as a standard pay-run.

Most of our clients are already utilising Single Touch Payroll as part of their standard payroll procedures, however some didn’t require STP as they are considered ‘closely held’. Closely Held employees are those employees who are directly related to the entity in which they receive payments from, for example the family members of a family business. Until this point, these members have not been required to report via STP. They were due to start reporting via STP on 1 July 2020, however, due to the pandemic, a one-year exemption was given by the ATO.

As STP reporting for closely held employees is due to begin on 1 July 2021, the ATO have released guidelines on how these businesses can report. There are three methods – report actual payments in real-time, report actual payments quarterly or report a reasonable estimate each quarter.

The first method, reporting actual payments in real-time would require employers to start recording these payments through an STP-enabled payroll system. This is similar to how employers with staff members currently report on the payroll. There is generally an extra two steps whilst processing the payroll. This may mean adding the director or their family to the current payroll or setting up a new payroll software.

The second method is to report the actual payments made on a quarterly basis. This will be due on or before the due date for the quarterly BAS. This will be using the payments a closely held member has been paid over the quarter & determining the tax & super required on these payments.

The final method is to report a reasonable estimate quarterly. This will allow employers to report a quarterly amount that is equal to or greater than 25% of the payees total gross payments & tax withheld from the previous finalised payment summary (PSAR).

The ATO will not impose failure to withhold penalties as long as businesses have complied with the reasonable quarterly estimate. There will, however, be general interest charges if Super Guarantee obligations have not been met.

Dine & Discover NSW Vouchers Available Soon

The New South Wales Government launched an initiative ‘Dine & Discover NSW’ to encourage the community to get out & about, supporting dining, arts & tourism businesses & stimulating spending in the economy. The scheme will initially invite customers to use these vouchers with participating COVIDSafe businesses.

Each NSW resident aged 18 & over will be eligible for four $25 vouchers worth $100 total to use at participating NSW businesses. They will be divided into 2 categories – two of the $25 vouchers will be for use when eating in a restaurant, café, bar, pub or club from Monday to Thursday, excluding public holidays. The other two $25 vouchers will be for use with entertainment & recreation including cultural institutions, live music and arts venues and will be available 7 days a week, excluding public holidays.

To apply for the vouchers, participants must have a service NSW account. Anybody can download the app and register for an account before the vouchers become available. On the Service NSW website people will be able to search for participating businesses where the Dine & Discover Vouchers can be used. Vouchers must be redeemed in person at the participating businesses and may only be used once. They cannot be used for retail, tobacco, alcohol, gaming & accommodation.

As a small business, to be eligible, they must have an active ABN and be GST registered, which will be validated through the ABR, operate in NSW, be registered as COVIDSafe & have a COVID safety plan in place. The business must also operate in one of the following industries: cafes & restaurants, pubs, taverns, bars, wineries & clubs, scenic & sightseeing transport, cinemas, museums, galleries & historic sites, zoos, botanic gardens, wildlife parks & nature reserves, performing arts operations, theatre & entertainment centres, amusement, theme & waterparks, recreational activities e.g. go-karting, bowling, indoor climbing & mini-golf, outdoor adventures, travel agencies & tours.

So if you haven’t already, get onto service NSW & check your account, so you will be ready when the vouchers do become available.

Preparing for a Post Covid World

A couple of months ago, Accountants Daily released an article on 5 ways small & medium enterprises can prepare for a post-Covid world. As there is a new vaccination on the horizon that has now started to land in Australia with the intention of being supplied to everyone over time, 2021 will have a ‘new normal’ and businesses will have to adapt. It is extremely important that businesses develop strategies around profitability and managing cash-flow, especially for those that are on Jobkeeper Extension 2.0.

The first tip was to check eligibility for Jobkeeper Extension 2.0 as businesses that weren’t eligible prior, may have become eligible. The deadline for this was in January and Graham & I and went through our entire list of clients to assess their eligibility and ensure no-one would miss out if they were eligible.

Tip number two is to analyse and improve your cash-flow. The ‘lifeblood’ of a business is its cash-flow as without a healthy cash-flow, the business won’t be able to meet its debts, obligations, pay employees wages or undertake its regular activities. Some simple tips to manage cashflow:

  • Debtor management – tighten up payment terms, chase overdue invoices, offer incentives for early payments, but most of all COMMUNICATE with your customers
  • Creditor management – stagger payments, negotiate payment plans and do bulk orders for a discounted price
  • Cut down on costs – negotiate better utility deals, purchase needed items in bulk, reduce or eliminate non-critical spending, look into working from home to eliminate office rent
  • Review your finances – check out low-cost loans, renegotiate loans with your bank, check your vehicle and equipment leases, know where you are at with them and if you can get a better price
  • Develop conservative forecasts & budgets – while things currently are still unpredictable, it is important to have budgets & cashflow forecasts, doing so helps to avoid shocks to the business

Tip number three is to create & strengthen your presence online. This is due to lockdowns, the world changing to work from home, less people going out-and-about, there is an increase in online spending. Operating over the internet has been helping many businesses survive the pandemic and if you aren’t online, now is the time to set up as Commerce is unlikely to return to how it was prior to Covid.

The fourth tip is to adapt to new technologies. Technology is going to become necessary to help save on administration & operating costs whilst providing connection points with customers & stakeholders.  Office businesses examples are cloud accounting, digital marketing, Skype or Zoom, social media. Retail may also benefit from online ordering coupled with courier & delivery services.

The final tip is consider working remotely where possible. A lot of our clients are ahead of the game in this area but having working-from home allows employees flexibility, reduces their commute as well as reducing expenses for employers such as office rent. Remote work also comes with risks, such as both physical and mental health so it is important to put mitigation strategies in place and have regular communication with workers, safe work practices & safe work-station set-ups.

The main thing to keep in your mind is that the pandemic is an opportunity and things are unlikely to go back to how they are. Consider adapting, resetting & strengthening your business.