The Government handed down the Federal Budget last night which was all about jobs and getting the economy moving again. The key tax related measures are outlined below.

Clarifying the corporate residency test

The Government will make technical amendments to clarify the corporate residency test. The Government will amend the law to provide that a company that is incorporated offshore will be treated as an Australian tax resident if it has a ‘significant economic connection to Australia’. This test will be satisfied where both the company’s core commercial activities are undertaken in Australia and its central management and control is in Australia. The measure will have effect from the first income year after the date of Royal Assent of the enabling legislation.

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If you are currently receiving JobKeeper, you would be aware that the program was due to finish on 27 September 2020 after running for six months.  We now know that the program is being extended to 28 March 2021. However, there will be new eligibility requirements.  The rules governing JobKeeper 2.0 were recently released by the Treasurer and further guidance from the ATO has also been released, with more detail to come.

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On Friday afternoon, the Government released amendments to the JobKeeper rules.  These amendments clarify and confirm some aspects of the announcements made on Friday 7 August.

Change in employment date

The amendments confirm that employers who are currently eligible for the JobKeeper scheme, need to consider the eligible of employees who were employed as at 1 July 2020.  There are a number of reasons employees may now be eligible including:

• Casuals who didn’t satisfy the definition of “long term casual” as at 1 March 2020
• Having reached the appropriate age by 1 July 2020
• May now hold the appropriate visa as at 1 July 2020

New permanent employees, employed after 1 March 2020 may also now be eligible.

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The JobKeeper Payment has been in the news again with further tweaks being announced late last week.  It’s important that businesses understand these proposed changes and the impact they may have on your business in the 2020/21 financial year.

In particular:

• The amendments to the eligibility tests for the JobKeeper extension; and
• The amendment to the eligible employee date – now 1 July 2020

There are a number of things you should be considering now.

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Yesterday the Government announced their plan for the winding back of the JobKeeper program.  The impact of the program finishing abruptly on the 27^th September has been a talking point in business circles for quite some time now, especially with the rise of COVID-19 infections in the eastern states.  The changes announced will hopefully assist businesses to prepare for the end of the program and plan their future with some certainty.

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