Spire Business Services Pty Ltd | Spire Business Services Pty Ltd

More rent relief available through the Commercial Tenancy Relief Scheme

If you’re a commercial tenant struggling with rent payments, further support is here with new regulations through the Commercial Tenancy Relief Scheme.

Small and medium businesses that have experienced a loss in turnover of more than 30% during the pandemic will receive financial relief in the form of proportionate rent reduction. New businesses will also be protected, with special arrangements in place to calculate the turnover for businesses that were not operating in 2019.

As part of the Scheme, the Victorian Small Business Commission will support tenants and landlords with information and free mediation to negotiate an agreement.

The Scheme will apply retrospectively from 28 July 2021 and will run until 15 January 2022.

Our friends at Lawcrest have put together a very helpful summary below to draw out the key information.

Who is eligible for rent relief?

The Regulations apply to tenants of leases in place as at 28 July 2021. The basic eligibility criteria for rent relief for such tenants is as follows:

as at 28 July 2021, a tenant operated a business within Australia;
the tenant’s turnover is less than $50,000,000 (calculated for the financial year ending 30 June 2021, or based on projected revenue for the 2022 financial year if the tenant didn’t operate it’s business for the entirety of the 2021 financial year). Note that turnover of connected or associated entities is aggregated for the purpose of this test;
the tenant has suffered at least 30% decline in turnover;
the tenant isn’t a listed entity (or subsidiary of a listed entity) or otherwise excluded under the Regulations (e.g. due to insolvency).

2. When does rent relief begin and end?

If you make a valid rent relief application by 30 September 2021 (including supplying all supporting documents necessary in line with the Regulations), then rent relief will begin as and from 28 July 2021 and operate until 15 January 2022 (Rent Relief Period). If you fail to make a valid application by 30 September 2021, then rent relief will commence from the date that you make a valid application. Therefore, if you are eligible for rent relief it is essential to make a valid application as soon as possible.

Importantly, the new Regulations do not protect for any amounts owing prior to 28 July 2021. If you are in arrears for any amounts accrued prior to this date, we strongly recommend you make arrangements to pay those debts as soon as possible.

3. How much rent relief are you entitled to?

As with last year’s scheme, rent relief must (at a minimum) correspond with the decline in revenue, with half of that relief waived entirely and the remaining half deferred. So if you have suffered a 100% decline in revenue, then 50% of all rent will be waived and the remaining 50% is deferred until after January 2022. Deferred rent is payable over the greater of 2 years or the remaining term of the lease.

4. How will ‘decline in turnover’ be calculated?

There are two important timeframes that will be used to calculate whether you have suffered a ‘decline in turnover’ for the purposes of the Regulations – the Turnover Test Period and the Comparison Period. These are explained below:

Turnover Test Period: this is the period in which your business has suffered due to Covid in 2021. Your turnover during this period (when compared to the Comparison Period) will determine how much rent relief your are entitled to receive. The Turnover Test Period is any three consecutive months between 1 April 2021 and 30 September 2021. You can elect which three months within that period you want to use to compare your revenue. To make things easier for you we suggest you consider which of the following three month periods had the lowest revenue in total and use that as your Turnover Test Period:
- April, May & June 2021;
- May, June & July 2021;
- June, July & August 2021; and
- July, August & September 2021.

Once you have looked into which three month period had the lowest total revenue, please let us know as that will be your Turnover Test Period.

Comparison Period: this is the “pre-Covid” period that will be used as a comparison timeframe to determine whether your business has suffered as a result of Covid. If your business was operating prior to April 2019, then the Comparison Period is the same 3 month period selected above (for the Turnover Test Period) in the 2019.

For example, if your business was not operating at all during May, June and July of 2021 due to lockdown, you would compare the total revenue in those months (i.e. $0) to the same three months (May, June & July) in 2019 to calculate the percentage decline in revenue.

5. What if your business was not operating in 2019?

The Regulations include several alternative tests for comparing a decline in revenue, and these largely replicate the alternative tests used to determine Jobkeeper eligibility last year. If your business used one of these alterative tests for Jobkeeper purposes, then please contact us to discuss which alternative test will apply to you for the purposes of the Regulations.

6. How is turnover calculated?

There are a few changes to how ‘turnover’ is calculated for the purposes of the Regulations. Importantly, when disclosing your turnover the following is included:

the tenant’s turnover from all sources (including online sales and other premises); and
any amounts you have received from State Government Covid related grants or financial assistance (however, do not include any amounts paid to you from any Commonwealth government grants).

7. What information needs to accompany an application for rent relief?

Technically under the Regulations you can apply for rent relief and submit the supporting documents within 14 days. If you fail to submit the supporting documents in time, your application will lapse. Given that you have until 30 September to put in an application for the full Rent Relief Period, we recommend submitting all of the supporting material at the same time as making a rent relief application. The supporting material will include:

evidence of the decline in turnover – this will involve supplying evidence of your turnover during the Comparison Period as well as the Turnover Test Period (described above). As with last year’s regulations, at least one of the following must be provided as evidence of our decline in turnover:
- extracts from your accounting software;
- a business activity statement for the applicable months;
- bank statements; or
- a letter from a practising accountant;
there is a new requirement under the Regulations requiring you to submit a statutory declaration confirming that the information that you have supplied is true and correct to the best of your knowledge; and
you can also include such other information as you consider relevant in support of your application (for example, that your business is highly susceptible to any density limits or restrictions on gatherings).

8. Can you obtain rent relief for outgoings?

The Regulations include the same provisions regarding outgoings as those that applied last year – a landlord must consider a request for relief from payment of outgoings. Importantly, a recent case decided in VCAT found that this requirement required the landlord to waive liability for payment of outgoings for any period during which the tenant could not operate the business. Note however that you have used the premises for the purposes of online sales, then you are not likely to be successful in arguing that the premises was not operational.

9. What happens to rent deferred from 2020?

If you obtained rent relief in 2020 that included deferred rent payable throughout 2021 (and beyond), those payments are paused between 28 July 2021 and 15 January 2022 (if you make a rent relief application by 30 September 2021). However, please note that any payments of deferred rent that were due and payable prior to 28 July 2021 are still due and payable and have not been deferred – so please ensure that these are paid (if they are outstanding).

10. Important things to be keep in mind

There are a few other important aspects to the Regulations to be aware of:

After making a successful rent relief application, you must have the application re-assessed by 31 October 2021. This involves reconsidering the decline in turnover based on the turnover of the business for the quarter ending 30 September 2021 (and the corresponding quarter in 2019). A failure to submit the required turnover information for re-assessment by 31 October 2021 results in the end of your entitlement to rent relief as and from 31 October 2021.
It is now an offence to provide misleading and deceptive material in a rent relief application.
In order to remain eligible for rent relief, you must continue to pay the percentage of rent agreed with the landlord. For example, if your business has suffered a 90% decline in revenue (resulting in 90% rent relief), you must keep paying the 10% rent or you will lose your entitlement to rent relief.
If the landlord makes a rent relief offer that complies with the minimum requirements set out in the Regulations, then you will be deemed to have accepted that offer unless you apply to the Small Business Commissioner for mediation within 14 days.
The Regulations specify that any rent increases during the Rent Relief Period will not apply. Unlike the old regulations from 2020, a rent increase that falls within 28 July 2021 and 15 January 2022 is not simply ‘paused’ or ‘deferred’ to a later date – it is skipped entirely.

11. How do tenants apply for rent relief?

It is not enough to simply be eligible for rent relief – you also have to apply in the manner set out in the Regulations. Applications for rent relief require some specific wording to be used to confirm eligibility. Importantly, the cases determined at VCAT last year regarding the rent relief scheme consistently found that rent relief applications which did not strictly adhere to the application procedure failed.

Feel free to contact us or Lawcrest if you require any assistance.

COVID-19

Federal and State Government Support for Business and Individuals

The Prime Minister recently announced changes to the COVID-19 Disaster Payment for workers in Victoria and NSW that have been impacted by the current lockdowns to be jointly funded by the Federal and State governments.

The State governments have also announced assistance measures for affected businesses.

Eligibility for Federal Government Assistance

Workers will be eligible to a payment if they have lost 8 or more hours of work during the period of the lockdown and satisfy a list of eligibility criteria found here.

The Prime Minister confirmed that eligibility for the Payment will not be dependent on a liquid assets test.

Payments will be funded by the Commonwealth for those who live or work in areas declared as a Commonwealth Hotspot by the Commonwealth Chief Medical Officer and by the relevant State Government for other eligible workers.

Details on eligibility for workers impacted by the fifth Victorian lock down will be available here at this link once the Services Australia website is updated. Declared Victorian hotspots include Greater Melbourne, Moorabool Shire, City of Greater Geelong, Borough of Queenscliff and Surf Coast Shire.

Further details on designated NSW hotspots and eligibility criteria for affected workers is available on the Services Australia website here at this link.

Entitlement

The amount of the COVID-19 Disaster Payment:-

$600 per week for people who have lost 20 hours or more of paid employment per week.
$375 per week for people who have lost between 8 and 20 hours per week of paid employment, or a full day of your usual work hours.

Payments will be made in arrears on application to Services Australia 7 days after the commencement of the lockdown (that is from Friday 23 July 2021 in Victoria). The COVID-19 Disaster Payment is taxable income, so be sure to set some aside.

Claims are made directly through Centrelink via your MyGov account, not through the Australian Taxation Office (ATO).

Business support packages

In addition to the above, each of Victoria and NSW are providing some support to business impacted by the current restrictions. Further information on each scheme is below.

We note that there are currently no direct payments from the Australian Taxation Office (ATO) like JobKeeper or CashFlow Boost available. Both of these original programs ended and we await any future Federal Government announcement.

VICTORIA

On 21 July, the Victorian Government announced that eligible businesses experiencing lockdown currently in July 2021 will be welcome to apply for July lockdown support payments.

Further information will be available soon and applications will be open.

We will provide further information as it comes to hand.

The premiers press release can be found by clicking here.

NSW

According to the Service NSW website, the following support measures are available to eligible business impacted by the current Greater Sydney COVID-19 restrictions.

COVID-19 business grant

Businesses, sole traders and not-for-profit organisations may be eligible for a grant the amount of which is to be based on the decline in turnover experienced during the restrictions as follows:- Decline in turnover Maximum grant 30% or more $7,500 50% or more $10,500 70% or more $15,000
Eligibility criteria include that the entity has an active ABN, had an aggregated turnover between $75,000 and $50 million for the year ended 30 June 2020, total annual Australian wages of no more than $10 million and demonstrate that the business is physically located and primarily operating in NSW. In addition, business must maintain their employee headcount as of 13 July 2021.

Micro business grant

Small businesses and sole trader with annual turnover of between $30,000 and $75,000, may be eligible for a payment of $1,500 per fortnight of restrictions if they suffer a decline in turnover of at least 30%.

What the “restriction period” is and how the “decline in turnover” is to be measured for the purposes of these grants are yet to be announced.

If you have any queries regarding the above, your eligibility or require us to apply for the State Government on your behalf please do not hesitate to contact our office on 1300 978 320 or email info@spire-business.com.au.

Victorian Government Grants

Small Business Digital Adaptation Program

The Small Business Digital Adaptation Program has been launched by the Victorian Government to allow eligible small businesses to trial and access digital products to optimise their digital capability in day-to-day operations.

What does the Small Business Digital Adaptation program provide?

An eligible business will be able to receive one purchase rebate of $1,200 to cover 12 months’ access to a digital product available under this program.

Who is eligible for the Small Business Digital Adaptation program ?

This program is available to small businesses, sole traders and micro businesses. To be eligible your business must:

operate a business located in Victoria
hold an Australian Business Number (ABN)
have held that ABN on 13 September 2019
be registered for Goods and Services Tax (GST) on 13 September 2020.

If you are a Not-for-profit entities that is not registered for GST and you are registered with the Australian Charities and Not-for-Profit Commission you will be eligible to apply.

What can I purchase with the $1,200 from the the Small Business Digital Adaptation program?

The product that you choose must be:

a new product not currently used by the business, or
an upgrade of an existing product with additional product features providing specific digital adaptation capability (for example, upgrading an existing website to an e-commerce site), or
a product available under the program that has been used by the business before (more than one year ago) that it would like to resume using.

Registered businesses can participate in training and workshops shown in the training calendar available on the dedicated program page after registering.

The Small Business Digital Adaptation Program will not cover the cost of:

renewals of existing product or software licences, or
minor updates to existing products (for example, a software version update), or
products that are not available under the program.

What Digital products can be purchased?

To qualify for a purchase rebate your business must purchase a digital product available under the program.

The Victorian Government is currently partnering with six digital product suppliers for this program. These include:

Mr Yum — food and beverage

MYOB — business management

Victorian Government Small Business Digital Adaptation - MYOB

Xero — business management

Shopify — end-to-end retail

Square — end-to-end retail

Squarespace — website creation

Victorian Government Small Business Digital Adaptation
- Squarespace

More suppliers are expected to be added to the list in early 2021. The high level of interest from product providers wanting to be part of the program means this will be later than first expected.

What Steps need to be taken to participate in the program?

Complete the online registration form to confirm eligibility and participate in product trials and workshops.
Sign up for and purchase their preferred digital product through one of the partner product suppliers available under this program.
Apply for the purchase rebate of $1,200 to cover 12 months’ access to the product of choice.

What will happen after you complete the online registration form?

You will receive an email thanking you for registering in the Small Business Adaptation Program. This email will include a link to trials and workshops in relation to the participating digital products. You will be able to access unlimited free training and workshops and multiple free product trials after you register.
You will be invited by email to apply for a purchase rebate one month after registering. As this is a purchase rebate program, you must sign up for and purchase an available digital product before you apply. The rebate application is an online form. All questions should be answered and information provided to ensure your eligibility for a rebate. This includes proof of your digital product purchase.
You will be contacted by email six weeks after you apply for a rebate to confirm you have begun to adapt your business to a digital operating environment. Your rebate will be paid after you confirm continued product use.
You will be contacted to participate in an evaluation survey after six and 12 months to help the Victorian Government understand the program impact.
You will need to pay the ongoing costs following the first 12 months covered by the program.

Key Dates

The program will be open from 15 November 2020 to 31 March 2021.

Registrations for digital product trials and workshops will remain open from 15 November 2020 until 28 February 2021.

To participate in the program, businesses must register before the trial period closes on 28 February 2021.

Applications for purchase rebates to cover 12 months’ product access will be open from 1 December 2020 to 11.59pm on 31 March 2021, or until funds are exhausted.

Links

Small Business Digital Adaptation Program Guidelines Download

https://www.business.vic.gov.au/support-for-your-business/grants-and-assistance/business-resilience-package/Small-Business-Digital-Adaptation-Program

If you have any questions or require any assistance in registering and applying for this program please contact us on 1300 978 320 or info@spire-business.com.au

COVID-19

Victorian Government Business Support Fund – Expansion

Due to the latest Stage 3 and Stage 4 Restrictions in Victoria, one-off grants will be made available to eligible businesses under the Business Support Fund – Expansion program.

What support is available?

$5,000 for employing businesses in regional areas except Mitchell Shire
$10,000 for employing businesses in metropolitan Melbourne and Mitchell Shire.

What eligibility criteria does a business need to me to apply?

operate a business located within Victoria; and
be a participant in the Commonwealth Government’s JobKeeper Payment scheme; and
employ people; and
be registered with WorkSafe on 30 June 2020; and
have an annual payroll of less than $3 million in 2019-20 on an ungrouped basis; and
be registered for Goods and Services Tax (GST) as at 30 June 2020; and
hold an Australian Business Number (ABN) and have held that ABN at 30 June 2020; and
be registered with the responsible Federal or State regulator.

How can the funding be used?

meeting business costs, including utilities, salaries or rent
seeking financial, legal or other advice to support business continuity planning
developing the business through marketing and communications activities
any other supporting activities related to the operation of the business.

Some important points:

Businesses that have received funding from other components of the Victorian Government’s Economic Survival Package are eligible to apply for this program.
Business owners that do not employ people (non-employing businesses) are not eligible for funding through this program.
Employing businesses must provide their WorkCover Employer Number in the application form for verification.
If you have already applied for the Extension package before the further $5,000 was announced due to Stage 4 restrictions, there is no need to apply again. This extra $5,000 will be credited to you.

As usual, if you have any further questions or require us to apply for this support fund on your behalf please feel free to contact us.

Click here for Application Page – Applications close 14 September 2020

Business Support Fund Expansion Guidelines

COVID-19

JobKeeper Extension

Many would agree that JobKeeper has been a lifeline for many businesses through the COVID19 Pandemic.

The current JobKeeper program is due to come to an end on 27 September 2020 and with the crisis continuing and further lockdowns in Victoria, the Federal Government announced an extension to JobKeeper out to 28 March 2021.

Please note that none of the changes below have passed through parliament at the time of this article being written. Further updates will be provided, if any, once these changes have passed through parliament.

What has changed with Business Eligibility?

From 28 September 2020, all businesses and not-for-profits will need to re-assess their eligibility to be eligible from 28 September to 3 January 2021 and then re-assess again to be eligible from 4 January 2021 to 28 March 2021

Eligibility will be assessed as follows:

JobKeeper Extension period 28 September 2020 to 3 January 2021:

Eligibility re-assessment based on Actual Turnover during the September 2020 quarter (1 July 2020 to 30 September 2020)

JobKeeper Extension period 4 January 2021 to 28 March 2021:

Further Eligibility re-assessment based on Actual Turnover during the December 2020 quarter (1 October 2020 to 31 December 2020)

Alternative tests are yet to be released for businesses and not-for-profits who don’t have a suitable comparison period to assess decline in turnover

What has changed with Employee Eligibility and payment rates?

The reference date for assessing which employees are eligible for the JobKeeper Payment is now 1 July 2020 with effect from 3 August 2020.
From 28 September 2020 to 3 January 2021, the payment rates will be the following:
- $1,200 per fortnight for all eligible employees who, in the four weekly pay periods before the reference period, were working in the business or not-for-profit for 20 hours or more a week on average and for business participants who were actively engaged in the business for more than 20 hours per week
- $750 per fortnight for employees who were working in the business or not-for-profit for less than 20 hours a week on average and business participants who were actively engaged in the business less than 20 hours per week in the reference period.
From 4 January 2021 to 28 March 2021, the payment rates will be the following:
- $1,000 per fortnight for all eligible employees who, in the four weekly pay periods before the reference period, were working in the business or not-for-profit for 20 hours or more a week on average and for business participants who were actively engaged in the business for more than 20 hours per week
- $650 per fortnight for employees who were working in the business or not-for-profit for less than 20 hours a week on average and business participants who were actively engaged in the business less than 20 hours per week in the reference period.
The reference period for employees regarding their hours worked to determine their tier of payment will be the two fortnightly pay periods prior to 1 March 2020 or 1 July 2020. The period with the higher number of hours is to be used for employees who were eligible at 1 March 2020.

Please note that the current JobKeeper program continues to run until 27 September 2020 and if you have not enrolled in the program, however feel that your income is declining due to the Stage 4 lockdowns in Victoria or if you have any further questions in relation to the JobKeeper Extension please feel free to contact us for assistance.

Fact Sheet – JobKeeper Payment Extension

ATO News, COVID-19

JobKeeper – Further Information

Most people who have already registered their interest in the JobKeeper payment would have received over the past few days, further information from the Australian Taxation Office (ATO).

The ATO has released a large amount of information and further detail relating to the JobKeeper Payment on their website. The three areas that we will focus on are:

Employer Eligibility Criteria
Employee Eligibility Criteria
Enrolling in the JobKeeper Payment (from 20 April)

Most of the information below is taken directly from the ATO website and is accurate at the time of this article being published. For further information please visit the ATO JobKeeper web page.

Before we go into the three points above, below are some key points on the JobKeeper payments:

If you are a business expecting a JobKeeper payment for the month of April you should already be paying your employees $1,500 per fortnight. You must ensure that your business is eligible first.
For the first two fortnights (30 March – 12 April, 13 April – 26 April), the ATO will accept the minimum $1,500 payment for each fortnight has been paid by you even if it has been paid late, provided it is paid by you by the end of April. This means that you can make two fortnightly payments of at least $1,500 per fortnight before the end of April, or a combined payment of at least $3,000 before the end of April
Send the JobKeeper employee nomination notice to your nominated employees to complete and return to you by the end of April if you plan to claim JobKeeper payment for April. Keep it on file and provide a copy to your registered tax agent if you are using one.
Ensure your payroll system has the appropriate pay codes and descriptions setup to make the payments. You will need to contact your Software provider to clarify this.
Determine your businesses eligibility and ensure you have adequate documentation to prove that you are eligible and your fall in turnover is due to COVID-19.
Pay your employees the correct amount and in accordance with the JobKeeper fortnights. Please contact us if you require further information about how and when to pay.
Sole Traders and Business Owners who are not employees but actively involved in their business are also eligible. We will provide further information soon about the eligibility.

Employer Eligibility Criteria

Employers will be eligible for the JobKeeper payment if all of the following apply:

On 1 March 2020, you carried on a business in Australia or were a not-for-profit organisation that pursued your objectives principally in Australia.
You employed at least one eligible employee on 1 March 2020.
Your eligible employees are currently employed by your business for the fortnights you claim for (including those who are stood down or re-hired).
Your business has faced a
- 30% fall in turnover (for an aggregated turnover of $1 billion or less)
- 50% fall in turnover (for an aggregated turnover of more than $1 billion), or
- 15% fall in turnover (for ACNC-registered charities other than universities and schools).
Your business is not in one of the ineligible categories.

Most Businesses will be subject to the 30% decline in turnover test to be eligible for the JobKeeper Payment.

To work out your fall in turnover, you can compare either:

GST turnover for March 2020 with GST turnover for March 2019;
projected GST turnover for April 2020 with GST turnover for April 2019;
projected GST turnover for the quarter starting April 2020 with GST turnover for the quarter starting April 2019.

If your business does not qualify now, it may qualify in the future so it is important to monitor your trading and projections regularly.

If your business does not have a comparable period, for example because your business is newly established, the Commissioner of Taxation will have discretion to set “Alternative Tests”. Further information on the alternative tests is not yet available and will be released by the ATO in due course.

Please note that the ATO have advised that they will be expecting you to have strong records to prove that your business meets the eligibility criteria. If you are audited in the future and can not prove your eligibility, penalties will apply and there may be a requirement to repay the JobKeeper payments back to the ATO.

Employee Eligibility Criteria

You are an eligible employee if you:

are currently employed by the eligible employer (including if you were stood down or re-hired).
were for the eligible employer (or another entity in their wholly owned group), either a
- permanent full-time or part-time employee at 1 March 2020
- long-term casual employee (employed on a regular and systematic basis for at least 12 months) as at 1 March 2020 and not a permanent employee of any other employer.
were aged 16 years or older at 1 March 2020.
were either
- an Australian resident (within the meaning of the Social Security Act 1991) – visit the Services Australia website and read residence descriptions for more details
- an Australian resident for the purpose of the Income Tax Assessment Act 1936 and the holder of a Subclass 444 (Special Category) visa as at 1 March 2020.
were not in receipt of any of these payments during the JobKeeper fortnight
- government parental leave or Dad and partner pay under the Paid Parental Leave Act 2010
- a payment in accordance with Australian worker compensation law for an individual’s total incapacity for work.

If you started work with your current employer after 1 March 2020, your employer will not be eligible to claim the JobKeeper payment on your behalf.

Enrolling in the JobKeeper Payment (from 20 April 2020)

You or a registered tax professional can enrol for the JobKeeper payment:

Step 1 – Register your interest and subscribe for JobKeeper payment updates.
Step 2 – Check you and your employees meet the eligibility requirements.
Step 3 – Continue to pay at least $1,500 to each eligible employee per JobKeeper fortnight (the first JobKeeper fortnight is the period from 30 March to 12 April).
Step 4 – Notify your eligible employees that you are intending to claim the JobKeeper payment on their behalf and check they aren’t claiming JobKeeper payment through another employer or have nominated through another business.
Step 5 – Send the JobKeeper employee nomination notice to your nominated employees to complete and return to you by the end of April if you plan to claim JobKeeper payment for April. Keep it on file and provide a copy to your registered tax agent if you are using one.
Step 6 – From 20 April 2020, you can enrol with us for the JobKeeper payment using the Business Portal and authenticate with myGovID. You must do this by the end of April to claim JobKeeper payments for April.
Step 7 – In the online form, provide your bank details and indicate if you are claiming an entitlement based on business participation, for example if you are a sole trader.
Step 8 – Specify the estimated number of employees who will be eligible for the first JobKeeper fortnight (30 March – 12 April) and the second JobKeeper fortnight (13 April – 26 April).

If you prefer to engage our office to administer the JobKeeper program on your behalf with the ATO please click here and opt-in. We will then contact you with further information.

COVID-19

Home Office Tax Deductions (Shortcut Method)

On 7 April 2020, the Australian Taxation Office (ATO) announced a temporary short cut method for claiming home office expenses.

This temporary measure makes it easier for individual tax payers to claim deductions for additional running expenses in this time of working from home due to Coronavirus (COVID-19) restrictions.

The ATO will allow an individual to claim a deduction for all running expenses during the period 1 March 2020 to 30 June 2020 at a rate of 80 cents for each hour that an individual conducts genuine work duties from home.

Who is eligible to claim this shortcut method?

You can claim a deduction of 80 cents for each hour you work from home due to COVID-19 as long as you are:

working from home to fulfil your employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls,
incurring additional deductible running expenses as a result of working from home.

How does it work?

The 80 cents per hour covers all deductible running expenses associated with working from home in the period 1 March 2020 to 30 June 2020.

The expenses included in the 80 cents per hour are the following:

electricity for lighting, cooling or heating and running electronic items used for work (for example your computer), and gas heating expenses
the decline in value and repair of capital items, such as home office furniture and furnishings
cleaning expenses
your phone costs, including the decline in value of the handset
your internet costs
computer consumables, such as printer ink
stationery
the decline in value of a computer, laptop or similar device.

This means that you can not claim a separate tax deduction for any of the above expenses while claiming the 80 cents per hour. Given this, in some cases, claiming the 80 cents per hour may result in a lower deduction than the existing home office arrangements.

What’s the difference between the shortcut method (80 cents per hour) and the existing method (52 cents per hour)?

The key differences are displayed in the table below. You will notice that the main differences are in the requirements around record keeping. The Shortcut method requires you to keep less records however you can not claim any other separate expenses:

	Shortcut Method (80 cents p/h)	Existing Method (52 cents p/h)
Can separately claim – phone and internet expenses – computer consumables and stationery – decline in value on computers or other equipment.	No	Yes
RECORDS TO KEEP
keep a record of the hours you worked at home, for example timesheets or diary notes	Yes	No
diary entries for a representative four-week period to show your usual pattern of working at home that show – you worked from home and made work – related phone calls how you work out how much you used your equipment, home office and phone for work purposes over a representative four-week period	No	Yes
receipts or other written evidence, including for depreciating assets you have purchased	No	Yes
diary entries to record your small expenses ($10 or less) totalling no more than $200, or expenses for which you can’t get any kind of evidence	No	Yes
itemised phone and internet accounts (paper or electronic) from where you can identify work-related calls and internet use, or other written records, such as diary entries if you don’t get an itemised bill.	No	Yes

Can I choose which method to use?

Yes, home running expenses incurred prior to 1 March 2020 must use the existing method (52 cents per hour) however after 1 March 2020, the individual can choose to use the shortcut method (80 cents per hour) or the existing method.

If you have would like to discuss any of the above further please do not hesitate to contact us 1300 978 320.

COVID-19

Victorian Government Business Support Fund

Further to the Federal Government Stimulus packages, the Victorian Government has launched a $500 million Business Support Fund.

This fund has been setup to help small businesses survive the impacts of the Coronavirus pandemic and to also keep people in a job.

The potential value of the grant is $10,000 per business and will be allocated through a grant process.

The following information has been taken from the Business Support Fund Application page where you can begin the application process. If you would like further information or would like assistance with applying for this grant please feel free to contact us.

Who is Eligible?

You are an eligible business if you meet the following criteria:

Have been subject to closure or highly impacted by Non-Essential Activity Directions issued by the Deputy Chief Health Officer to-date; and
Employ people; and
Have a turnover of more than $75,000; and
Have payroll of less than $650,000; and
Hold an Australian Business Number (ABN) and held that ABN at 16 March 2020 (when the State of Emergency was declared); and
Have been engaged in carrying out the operation of the business in the Australian State of Victoria on 16 March 2020.

How can the funding be used?

Examples of what the grant funding could be used for include:

Meeting business costs, including utilities, salaries, rent
Seeking financial, legal or other advice to support business continuity planning
Developing the business through marketing and communications activities
Other supporting activities related to the operation of the business.

What evidence of eligibility and compliance is required?

Applicants will be subject to audit by the Victorian Government or its representatives and will be required to produce evidence, such as payroll reports to demonstrate impact, at the request of the Victorian Government for a period of four years after the grant has been approved.
If any information in the application is found to be false or misleading, or grants are not applied for the purposes stated in the terms of funding and application, the grant will be repayable on demand.