tax planning 30 June

Tax relief for businesses affected by COVID-19

Businesses affected by COVID-19 can now access support from the ATO on managing their tax affairs

The ATO will allow deferrals of payments for 6 months for income tax, activity statements, FBT and excise payments.

Also, affected businesses will be able to apply for remission of interest and penalties.

Affected businesses are being encouraged to change their GST reporting cycle from quarterly to monthly so that business can access GST refunds earlier.

In addition, affected businesses that pay quarterly pay as you go (PAYG) instalments can vary their PAYG instalments to a lower rate or even zero. PAYG instalments made for prior quarters can also be claimed back from the ATO.

The Government has announced its economic response to novel coronavirus (COVID-19), and the ATO will implement a range of administrative measures to further assist affected businesses.

These relief options, though available, will not be automatically applied, and business owners will have to take action to access them.

For payment deferrals, businesses affected by COVID-19 can work with the ATO to defer some payments and vary instalments due such as income tax, activity statements, FBT and excise payments by up to 6 months.

Businesses reporting quarterly may elect to change their GST reporting to monthly, in order to access the GST refunds earlier. Be aware that they can only change from the start of a quarter, so a change now will only take effect from 1 April 2020. Businesses reporting monthly will have to keep reporting on a monthly basis for 12 months before they are allowed to revert back to quarterly reporting.

In addition, businesses registered for fuel tax credits changing their reporting to monthly will have to claim their fuel tax credits monthly too.

If the business is a quarterly pay as you go (PAYG) instalments payer, you can vary the PAYG instalments on the activity statement for the March 2020 quarter. This can be done by lodging a revised activity statement before the instalment is due and income tax return is lodged for the year.

Businesses that vary their PAYG instalment rate or amount can also claim a refund for any instalments made for the September 2019 and December 2019 quarters.

The ATO will consider remitting interest and penalties incurred after 23 January 2020 for businesses affected by COVID-19. A low-interest payment plan is also available for affected businesses that need assistance for paying their tax liabilities.

We will continue to communicate with our clients the tax relief measures offered by the ATO in order to assist them in meeting their tax obligations. The range of options available can be used to assist with cash flow.

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