With a large part of the government’s $214 billion economic stimulus package to be administered by the ATO, the profession has now called for urgent guidance to help advise clients correctly.
“My overall impression is that it’s far too complex for what is needed at a time when people are looking for certainty,” the Tax Institute’s senior tax counsel, Professor Robert Deutsch, told Accountants Daily.
“We don’t need complex statutory provisions that require interpretation and analysis to figure out what you’re going to get.
“I think there’ll be a lot of situations where the ATO will need to provide guidance.”
A particular measure that will need significant guidance is the boosting cash flow measure that will see employers receive a minimum of $20,000 and a maximum of $100,000.
Practitioners have already been cautioned against “manufacturing” an entitlement for clients by re-characterising payments, but Professor Deutsch believes further guidelines will be needed.
“We need some examples of where the ATO thinks the integrity measures will work to defeat people who might improperly be trying to recast arrangements,” he said.
“I’ve already heard of examples of people who are now trying to go back to January and say, well, we forgot to register as an employer but we want to do it now.
“The answer is probably no, but I’d like to know if the Tax Office is going to stop that and what if there is a case where it could be legitimate that you didn’t register before the 12th of March.”
Professor Deutsch also believes there should be clarification around those who run a business but have not drawn down a wage before 12 March.
These enterprises may be paying out dividends to shareholders who work for the company.
“They seem to miss out even though they run a business and technically ‘employ’ staff,” Professor Deutsch said.
“I think I know the answer, which is bad luck, but I’m not sure and I’m hoping that that might not be the case.”
RSM associate director Tracey Dunn also believes satisfying the eligibility criteria of having an “active” ABN will require further clarification.
In particular, entities who have not lodged their 2019 income tax return, or are not required to be registered for GST, or are registered for GST but due to the nature of the business has not made a taxable supply during the 2019 year, will require guidance.
“This may have potential application to small-business owners who are not registered for GST and businesses such as junior exploration companies or the forestry industry, where the entity is registered for GST and carrying on a business but have not made taxable supplies because of the cyclical nature of the business,” Ms Dunn said.
“In these scenarios, while the business may have employees, they do not technically meet the eligibility criteria to receive the cash boost.
“The issue may be overcome by requesting an extension of time from the commissioner. However, urgent clarification is required on the process required in order to do this, and whether entities such as those described above will slip through the cracks and not be eligible for the cash boost for business to support their employees.”
Jotham Lian is the news editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.