Tax Cuts & JobMaker – The End of The Covid Year

“Growth has its season. There are spring and summer, but there are also fall and winter. And then spring and summer again. As long as the roots are not severed, all is well and all be well.”
― Jerzy Kosinski, Being There

The above quote from the seminal novel and film ‘Being There’ encapsulates the Federal government response to the COVID-19 emergency this year. Let us hope that, a year from now, all is well and all be well.

In terms of preserving the roots of Australia’s economy, the major economic stimulus programs of Cashflow boost, JobKeeper and JobSeeker have already expired for many taxpayers or they are to run out by Easter 2021. The instant asset write-off scheme, expanded at the beginning of the COVID-19 emergency to $150,000 per eligible depreciable asset, will cease at the end of the current financial year.

The Federal government is now pinning its hopes on tax cuts for individuals and companies and the new JobMaker program, announced in the recent 2020 Budget, to get us through to the spring and summer of next year.

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TAX CUTS – INDIVIDUALS

Employers must make sure they are withholding the correct amount from salary or wages paid to employees for any pay runs processed in their system from no later than 16 November onwards.

Some employees will notice the tax cuts in their take home pay within a few days or weeks. For others it may be longer. You can let your employer know whether or not to make adjustments in tax withheld backdated to 1 July.

If you don’t, any over-withholding that occurred prior to the updates to payroll software or processes will be applied as refunds when you lodge your 2021 income tax return.

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TAX CUTS – COMPANIES

The table below illustrates the fall in the company tax rate for base rate entities, defined as a trading entity with turnover of $50 million or less, to 26% in this financial year and 25% in 2021/22:

Progressive changes to the company tax rate
Income year Aggregated turnover threshold Tax rate for base rate entities under the threshold Tax rate for all other companies
2017–18 $25m 27.5% 30.0%
2018–19 to 2019–20 $50m 27.5% 30.0%
2020–21 $50m 26.0% 30.0%
2021–22 $50m 25.0% 30.0%

https://www.ato.gov.au/rates/changes-to-company-tax-rates/

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JOBMAKER

To be legislated, however eligible employers will have access to a JobMaker Hiring Credit for each new job they create over the 12 months from 7 October 2020, for which they hire an eligible employee, for a maximum claim period of 12 months from their employment start date.

Employers must register with the ATO and make claims quarterly, with claims commencing in February 2021.

The JobMaker Hiring Credit will be:

  • $200 per week for each eligible employee aged 16 to 29
  • $100 per week for each eligible employee aged 30 to 35.

An employer cannot claim JobKeeper and JobMaker Hiring Credit at the same time.

To be eligible, employers must:

  • hold an Australian Business number (ABN)
  • be up-to-date with their tax lodgement obligations
  • be registered for Pay As You Go (PAYG) withholding
  • be reporting through Single touch payroll (STP).

Eligible employees must have worked an average of at least 20 hours per week over the quarter for the employer to qualify for the payment. Employees that start and/or stop employment during a quarter must meet a similar test based on the length of time in employment.

For the employer to be eligible, new employees must be in receipt of income support payments, such as JobSeeker or Youth Allowance, for at least one of the three months before they were hired.

Further eligibility conditions will apply to employers based on the employer’s headcount and payroll on 30 September 2020.

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JOBKEEPER FOR CLIENTS OF THE PRACTICE

The practice has applied for and maintained the JobKeeper support scheme for our clients as a complimentary service since its introduction in March this year.

It has been a tremendous success, thanks to the hard work in particular of Kim and Marianne. We have been able to help navigate this difficult year for hundreds of clients with most payments being made by the ATO in the first week of every month of the program.

The JobKeeper extension, for the December 2020 quarter and the March 2021 quarter, has presented its challenges to the workload of the practice. As a result, a fee will be payable for any applications after 31 December.

Please contact the practice for further assistance:
Marianne: JobKeeper applications for sole traders
mariannec@artsaccountants.com.au
Kim: JobKeeper applications for employers, directors and partners
kim@artsaccountants.com.au
Jane: single touch payroll enquiries
jane@artsaccountants.com.au
Lachlan: nomination forms
lachlan@artsaccountants.com.au

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Featured Image: Shannon Smiley, This must be the place (2020). Oil on canvas, 30 cm by 36 cm.
Preview Shannon Smiley’s solo show Current State here.