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Accessing COVID-19 Cash Flow Boost

 

Legislation has been enacted to provide temporary cash flow support to small and medium businesses and not-for-profit organisations that employ staff during the economic downturn associated with COVID-19 (novel coronavirus). This will be done through two sets of cash flow boosts delivered from 28 April 2020 to support employers to retain employees.

 

We will provide tax-free cash flow boosts of between $20,000 and $100,000 to eligible businesses, delivered through credits in the activity statement system, when eligible businesses lodge their activity statements.

 

You must lodge your activity statement to receive the cash flow boost.

 

You do not need to apply for the cash flow boosts. If you are eligible, the cash flow boosts will be automatically applied to your account when you lodge your activity statement for the relevant periods.

 

To access the cash flow boost, you must lodge your activity statement. If you do not need to lodge an activity statement in respect of you PAYG withholding ATO is working through a solution and will update their website with more information on what you need to do.

 

The cash flow boosts will be applied to reduce liabilities arising from the same activity statement. This will result in eligible entities being required to pay less to the ATO.

 

Generally, where a credit exceeds your other tax liabilities, ATO will provide you with a refund of the excess amount. Where a credit exceeds your other tax liabilities, ATO will provide you with a refund of the excess amount.

 

You may also receive a refund if you overpay your activity statement because your system was unable to take the cash flow boost into consideration when working out how much was payable.

 

If you are placed in a refund position, ATO will generally deliver the refund within 14 days.

 

 Tax consequences

 

All cash flow boosts are tax free (non-assessable non-exempt income) and are not required to be paid back when your cash flow improves. However, if you have been paid more cash flow boosts than you are entitled to, you will be required to repay the excess.

 

The boost is not subject to GST as you are not making or agreeing to make a supply for the payment.

 

You will still be entitled to a deduction for PAYG withholding paid.

 

There is no effect on tax paid by employees in respect of their salary and wages.

 

Schemes

 

You will not be eligible for cash flow boosts if you (or a representative) have entered into or carried out a scheme for the purpose of:

 

  • becoming entitled to cash flow boosts when you would otherwise not be entitled, or
  • increasing the amount of the cash flow boosts.

 

This may include restructuring your business or the way you usually pay your workers to fall within the eligibility criteria, as well as increasing wages paid in a particular month to maximise the cash flow boost amount.

 

Any sudden changes to the characterization of payments made may cause ATO to investigate whether the payments are in fact wages. If the payments are wages, ATO may consider the characterization of past payments, including whether they should have been subject to PAYGW and whether super guarantee contributions should have been made.

 

Contact Expert Tax on 0449 952 855 or 1300 869 829 for assistance on tax related matters.

 

 

Very often we are asked if meal expenses incurred while driving Uber, Ola, DIDI or using any other ride sourcing platform are deductible.

 

We’ve noticed a spike in inquiries relating to deduction for meal expenses.

 

In most cases, clients tell us that other accountants are claiming meal expenses on GST returns for ride sourcing and have been told by other accountants that these expenses are deductible.

 

There are some expenses that can’t be claimed because they’re personal expenses or not allowed under the law. This includes personal or private expenses, such as meals you purchase while on a break.

 

Next time, if an accountant tells you that meal expenses incurred while ride sourcing are claimable, ask them to show an ATO weblink confirming the same.

 

Contact Expert Tax on 0449 952 855 or 1300 869 829 for assistance on tax related matters.

 

If you’re working from home, you may be able to claim some of your home office expenses at tax time.

You’ll need to make sure your deductions meet the three golden rules when working out your claim:
💵 You must have spent the money yourself (and have not been reimbursed)
💼 Your costs must directly relate to earning your income
🧾You must have a record to prove your claim

 

If you’re an employee who regularly works from home, you may be able to claim a deduction for expenses relating to that work. These are generally home office running expenses, and phone and internet expenses.

In limited circumstances you may also be able to claim occupancy expenses. One such circumstance is if your home is your principal place of business.

 

Expenses you can claim

Check out the table below for the expenses you can claim as well as the three ways you can work at home, which include:

  • home is your principal place of work and you have a dedicated work area that is unlikely to be suitable for domestic use
  • home is not your principal place of work but you have a dedicated work area – for example a study
  • you work at home but you don’t have a dedicated work area – for example, you use a room with a dual purpose such as a lounge room.

 

Home office expenses you can and can’t claim
Expenses Home is principal workplace with dedicated work area Home not principal workplace but has dedicated work area You work at home but no dedicated work area
Running expenses Yes Yes No (see note 1)
Work-related phone & internet expenses Yes Yes Yes
Decline in value of a computer (work related portion) Yes Yes Yes
Decline in value of office equipment Yes Yes Yes
Occupancy expenses Yes No No

 

Contact Expert Tax on 0449 952 855 or 1300 869 829 for assistance on tax related matters.

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