The COVID19 situation is changing very quickly and the government is continuing to evaluate their response. Strict measures are being introduced to stop the spread of the virus – and they will have a huge impact on businesses in Australia.
Employers are anxious and confused about what relief is available to them and they have many questions.
The government is allowing tax relief for some businesses – while also introducing a stimulus package, in an attempt to stimulate the economy and support those who are facing financial hardship.
The ATO has also introduced some useful tax relief measures if you are having cash flow difficulties and need an extension of time to pay. Below are answers to common questions.
Remitting interest and penalties incurred before 23 January 2020
Question: My business has been affected by COVID-19. Am I entitled to have all interest and penalties I currently owe remitted?
The COVID-19 remission only applies to interest and penalties that were incurred on or after 23 January 2020. It will not apply to interest or penalties that were already incurred before 23 January 2020. However, for debts you owed before 23 January 2020, the ATO can:
- consider whether you your circumstances before 23 January 2020 would enable you to be granted a remission of interest and/or penalties
- arrange to stop interest being charged while the COVID-19-affected period continues, and for the life of a payment arrangement if you put one in place.
Remitting interest and penalties incurred after 23 January 2020
Question: My business has been affected by COVID-19. If I get an ATO debt now, will interest and penalties be remitted?
The COVID-19 remission applies to interest and penalties that were incurred on or after 23 January 2020. You can request a deferral of due dates – for example, for up to six months.
Entering into a low interest payment plan
Question: What kind of low interest payment plan could I request?
The ATO is currently able to consider payment arrangements where interest stops being charged going forward while the payment arrangement is in place.
Your payment arrangement will still need to be something you are able to comply with. It also needs to be acceptable to the Commissioner (in that you will be paying back your debt as soon as possible in the circumstances). Call the ATO to work with them to make sure the options available are suitable for your situation.
Adjusting an existing payment arrangement
Question: I am currently in a payment arrangement for my business debt. Due to the impact of COVID-19, I can’t keep paying instalments at the same rate. Can I get a change in my repayment rate or defer my next payment date?
Yes, the ATO can consider adjusting your repayments to something that is manageable within your current cash flow while ensuring you are paying back your debt as soon as possible in the circumstances. A low interest arrangement could also be available to help you address your debt.
PAYG income tax instalment rates and payments
Question: I am not going to make enough income from my business this year to have a tax liability. Can I claim back the PAYG instalments I have already paid?
Yes – if the instalments you have been paying will be more than the tax liability you will owe at the end of the year, you can vary the instalment amount.
You can vary your rate and/or amount to zero so no payment is required for this quarter and/or you can claim a credit for the instalments you paid for the Sept 19 and Dec 19 Quarters.
However, please take into account that you will still need to pay your full tax liability when you lodge your tax return at the end of this financial year, without the benefit of credits from your pre-paid instalments.
PAYG withholding amounts
Question: Can I vary my PAYG withholding amounts from employees to zero for the next quarter?
No. The PAYG instalment reduction option only applies to instalments you pay in advance towards your own expected tax liabilities.
You will still need to report and pay the amounts you withhold from your employee’s wages although other tax relief is available for employers regarding PAYG withholding amounts.
Excise and fuel tax credits
Question: What if I can’t lodge my excise return or pay amounts owing due to COVID-19?
You need to contact the ATO to discuss alternative arrangements.
Question: Can I get a fuel tax credit for my business use of fuel without lodging a BAS?
No – you need to make a claim for fuel tax credit on your business activity statement.
Expert advice to support you
The long term impact COVID19 will have on the economy is still to be seen. We understand many business owners are feeling anxious during this uncertain time.
If you need further advice about what tax relief and government assistance you may be eligible for or how your business can weather this storm, please contact our team. DFK Everalls provides a full suite of services including asset protection, so we can help with more than just tax!
We are well set up to provide our quality services while prioritising the health & safety of our team members – and our clients. We can conduct consultations via phone, email or video conference. You can also swap documents via our secure client portal.
So, give us a call if you’d like some help navigating what support is available for you and your business. We can work with you to make sure which options out there are suitable for your situation.