17 Sep 2020 Tax Time 2020
On Tuesday 8 September 2020, Senior Advocate, Robyn Jacobson CTA attended the weekly meeting of the ATO’s Tax Practitioner Stewardship Group to discuss Tax Time 2020 matters. The following key matters were discussed at the meeting:
- ATO Legal Database — ATO systems continue to perform well this tax time. Changes made to the ATO Legal database are performing as expected and the major issues have been resolved, with only minor performance issues still being experienced. Users experiencing intermittent or minor issues with the Legal database are requested to raise these through the support section of the Legal database page. To do this, select ‘Help’ in the right-hand menu, then ‘Contact us’ from the drop-down list. Then click on the link to create an email to ATOLawsupport@ato.gov.au.
- Debt and lodgment — The ATO will recommence making outbound calls to re-engage clients of agents with outstanding debt or lodgment obligations. The ATO’s outbound system is currently configured to contact the client directly in the first instance to discuss support options available for their outstanding obligations. The ATO acknowledges that agents have different preferences for dealing with client debts and this may not be their preference. For this reason, the ATO will pilot this approach to determine if is appropriate or whether a change is required. Initial feedback from the community will indicate whether contacting clients directly is the most suitable option for these calls, and the ATO will review whether there is a need to change the call configuration and instead contact the agent in the first instance.
- Superannuation guarantee amnesty — The superannuation guarantee (SG) amnesty closed at 11:59pm on 7 September 2020. Clients will need to lodge a SG charge statement disclosing any unpaid super and pay the SG charge to the ATO. Agents should be aware that while there was a significant amount of interest and information downloaded prior to the closure, some clients may contact their agents advising they missed the amnesty. Equally, agents might be contacted by individuals asking what it means for those that haven’t been paid their superannuation entitlement.
- Cash Flow Boost — There have been issues raised about the perceived approach the ATO is taking in relation to payments from closely held entities particularly to associates and directors. The ATO advised that the principle applied when looking to substantiate salary and wages for the purpose of cash flow boost is that the ATO are looking for a payment in the general sense. There have been instances where clients have recorded salary and wages and withholding amounts in their activity statements and there has been no payment made. The ATO recognise with closely held entities there are some different scenarios, and throughout the year there might be payments made to directors or owners. At the end of the year those payments may be reconciled as being salary and wages. In this case for the purposes of cash flow boost this will be accepted by the ATO.
Activity that attracts attention is if all transactions are done after 12 March 2020 and there is no record of this pattern or behaviour in the past, or record of employer relationship or directors fees etc. Each of these cases will have to be looked at individually, taking into consideration the facts and circumstances. There may be scenarios where salary and wages are being paid to a director or owner but it is agreed it will be offset against existing loans. This is also be accepted for the purposes of cash flow boost, however evidence of the loan being in place will need to be substantiated, and evidence of the agreement that salary and wages will be a constructive payment against the loan.
- JobKeeper — The ATO has published their position on whether JobKeeper payments are considered ordinary income or statutory income. The ATO considers that JobKeeper payments received by a business is ordinary income. However, the ATO does not consider that JobKeeper payments are included in the calculation of ‘aggregated turnover’. The ATO has updated its guidance to confirm this position.
A link to the key messages from this meeting is here. (Note: the key messages were not released by the ATO until the Monday following the meeting.)