COVID-19: Australian employment tax matters

By Hayley Lock, Nathan Hamilton and David Sofra

The Australian Taxation Office (ATO) and state revenue authorities are working with both the Federal and State Governments to implement a broad range of measures and provide relief to employers.

We outlined some of the key announcements and responses to employment tax concerns below.

Payroll tax relief

New South Wales

• Payroll tax paying businesses whose total grouped Australian wages for the 2019/20 financial year are no more than $10 million, are not required to make payroll tax payments for the months of March, April or May 2020.
• Wages paid in these months still are still required to be disclosed in the annual reconciliation, however a 25 percent reduction in the amount of tax the business would have had to pay for the financial year will be applied.
• Details are expected shortly with respect to the process for claiming the waiver (if required)
• The NSW payroll tax threshold will also be increased to $1 million, from 1 July 2020.

Victoria

• The Government will provide full payroll tax refunds for the 2019-20 financial year to small and medium-sized businesses with payroll of less than $3 million. This assistance is a refund, not a loan.
• The same businesses will also be able to defer any payroll tax for the first three months of the 2020/21 financial year until 1 January 2021, freeing up a further $83 million in cashflow.

Queensland

• Payroll tax returns for periods between 1 February 2020 and 30 June 2020 (including the annual reconciliation) are not required to be lodged or paid until 3 August 2020.
• At this stage the payroll tax liabilities for these periods continues to be payable, albeit on a deferred date.
• The deferral is granted by application.

Western Australia

• Payroll tax paying businesses with total Australian wages between $1 million and $4 million will receive a grant of $17,500 to assist them with managing the impacts of COVID-19. The grants will be issued by cheque to eligible taxpayers in July 2020 (no application necessary).
• Additional payroll tax relief will also apply for small businesses as a result of the payroll tax threshold increasing to $1 million from 1 July 2020 (six months earlier than planned).
• There is also a payroll tax payment deferral available for businesses with total Australian wages below $7.5 million or those that are impacted by COVID-19. The deferral is granted by application and applies to the period between 1 March and 30 June. Payroll tax returns for these periods are still required to be lodged where payment deferral is granted.

Tasmania

• Payroll tax waiver for the last four months of this financial year for employers in the hospitality, tourism, and seafood industries during 2020. These organisations will still be required to lodge their annual payroll tax reconciliation by 21 July 2020.
• Small to medium businesses with an annual payroll of up to $5 million in Australian wages will be able to apply to have their payroll tax waived for the three months from March to May 2020. These organisations will still need to lodge their annual reconciliation and pay payroll tax for the month of June.
• To encourage businesses to employ young people the Government will introduce a youth employment payroll tax rebate scheme for young people from 1 April 2020. The Scheme provides a payroll tax rebate for one year, to businesses that employ a young person aged 24 and under. We are awaiting further information on this.
• Additional details (including the application process) are expected shortly.

Fringe benefits tax relief

There is currently no automatic FBT deferral, however the ATO has indicated that they intend to implement a series of administrative measures and FBT payment deferrals may be granted for up to 4 months to businesses impacted by coronavirus.

ATO contact numbers and further information can be found here.

The ATO has updated their website on COVID-19 issues and have provided FAQ responses in relation to various issues including the following fringe benefits tax (FBT) matters:

1. Confirmation that the emergency assistance exemption can apply to emergency accommodation, food, transport or other assistance provided to an employee affected by COVID-19, if the employee has been located in a high-risk area and has been relocated or otherwise required to self-isolate.
2. Confirmation that FBT will apply to employers who pay for their employees’ ongoing medical or hospital expenses. However, the cost of transporting an employee from their workplace to seek medical assistance is exempt from FBT.
3. Confirmation that the work related item exemption can apply to a laptop, portable printer, or other portable electronic devices provided to an employee to enable them to work from home or from another location, if they are used primarily for use in the employee’s employment.