spacer
spacer
spacer
spacer



CPA LOGO
spacer
Latest News
Hot Issues
Small businesses may ‘collapse under strain of payday super’, IPA warns
ATO’s hands tied with scrapping on-hold debts, expert says
What Drives Your Business Growth and Profits?
Australian Taxation Office (ATO) shifting to firmer debt collection activity
Why employee v contractor comes down to fine print
Sharing economy reporting regime for platform operators
Countries producing the most solar power by gigawatt hours
Illegal access nets $637 million
Accessing superannuation benefits.
Does your business have a company Power of Attorney?
Labor tweaks stage 3 tax cuts to make room for ‘middle Australia’
GrantConnect
2 in 3 SMEs benefit from instant asset write-off, survey reveals
Updated guidance on R&D claims
Do you know how to recover debts?
Wheat Production by Country
Types of small business benchmarks
What is a Commercial Lease?
ATO warns advisers against suspect R&D tax claims
The year of workplace law upheaval
How to Resolve Invoice Payment Disputes
Raft of revenue tweaks in MYEFO to raise millions
The Countries that Export the Most Wine in the World
Articles archive
Quarter 4 October - December 2023
Quarter 3 July - September 2023
Quarter 2 April - June 2023
Quarter 1 January - March 2023
Quarter 4 October - December 2022
Quarter 3 July - September 2022
Quarter 2 April - June 2022
Quarter 1 January - March 2022
Quarter 4 October - December 2021
Quarter 3 July - September 2021
Quarter 2 April - June 2021
Quarter 1 January - March 2021
Quarter 4 October - December 2020
Quarter 3 July - September 2020
Quarter 2 April - June 2020
Quarter 1 January - March 2020
Quarter 4 October - December 2019
Quarter 3 July - September 2019
Quarter 2 April - June 2019
Quarter 1 January - March 2019
Quarter 4 October - December 2018
Quarter 3 July - September 2018
Quarter 2 April - June 2018
Quarter 1 January - March 2018
Quarter 4 October - December 2017
Quarter 3 July - September 2017
Quarter 2 April - June 2017
Quarter 1 January - March 2017
Quarter 4 October - December 2016
Quarter 3 July - September 2016
Quarter 2 April - June 2016
Quarter 1 January - March 2016
Quarter 4 October - December 2015
Quarter 3 July - September 2015
Quarter 2 April - June 2015
Quarter 1 January - March 2015
Quarter 4 October - December 2014
COVID-19 disaster payments to be tax-free: Prime Minister Scott Morrison

 

Prime Minister Scott Morrison has declared that COVID-19 disaster payments will now be tax-free, a policy change that will have ramifications for accountants and their clients, say tax experts.

 



       


Mr Morrison told ABC Radio on Thursday morning that the federally funded income support scheme would now provide tax-free payments of $750 a week to workers who lose 20 or more hours of work a week, and $450 a week to those who lose between eight and 20 hours.


The PM then stressed his point on Seven Network’s Sunrise, stating, “I’ve made that very clear this morning, back through the system, they won’t be taxable. JobKeeper, by the way, was.”


Mr Morrison’s position comes despite the Treasury, the ATO and Services Australia all publicly noting that COVID-19 disaster payments are taxable income.


A Treasury official told Accountants Daily that a policy change had indeed been made and that the Treasury was in the process of updating its guidance as of Friday morning.


A legislative change is unlikely to be required, given the COVID-19 disaster payment is authorised under regulations issued by the Governor-General rather than through legislation.


The Institute of Public Accountants general manager of technical policy, Tony Greco, said granting the $750 a week payment with a tax-free status would mean workers will take home more than they did under the original JobKeeper program.


Disaster payment recipients can expect to be better off by $90 a week compared with the JobKeeper wage subsidy, based on an annualised $39,000 income of $750 each week.


“The main concern is that these payments have always been stated as assessable, so now there’s confusion,” said Mr Greco. “It is a significant shift in treatment from what people have been told and what we have come to expect.


“This is a seismic shift in the tax treatment for recipients and a windfall which will come at a huge cost to the taxpayer.”


Michael Croker, tax leader at Chartered Accountants Australia and New Zealand, said the policy change would come at a bigger cost to taxpayers and open up questions around the taxable status of payments made since 3 June — the day the COVID-19 disaster payment was announced.


“Tax policy wonks will be concerned about the so-called income and substitution effects,” said Mr Croker.


“Within the hard-hit NSW business community, the new policy will be factored into the question often put to accountants: ‘Is it better to stand down workers, lower business labour costs and send them to Services Australia for the COVID-19 disaster payment?’.


“For some low-paid workers, $750 tax-free a week could even be a temporary pay rise, an outcome at odds to the take-home pay of a comparable employee still on the business’s payroll.”


According to Mr Morrison, more than $490 million in COVID-19 disaster payments have been paid to over 955,000 workers in NSW and Victoria.


The payments, which were increased on Wednesday from $600 to $750 a week for workers who lost more than 20 hours, and raised from $450 from $375 for those who lost between eight and 20 hours, are expected to cost the federal government $750 million a week.


 


 


Jotham Lian 
30 July 2021
accountantsdaily.com.au


 




30th-August-2021
spacer
Privacy Policy | Disclaimer