The year began horrifically for many, as bushfires that started in September 2019 continued to sweep through large tracts of the country, destroying more than 3,000 homes and burning through more than 17 million hectares of land across New South Wales, Victoria, Queensland, the ACT, Western Australia and South Australia. Severe floods then deluged parts of Queensland and New South Wales in February, resulting in further damage to property and livelihoods.
Serious attention then turned to the global spread of COVID-19 which, according to the World Health Organisation at the time of writing, has infected nearly 66 million people and resulted in more than 1.5 million deaths. Although tragic, Australia has remarkably had fewer than 30,000 cases and fewer than 1,000 deaths since the start of the pandemic.
The federal government’s economic response was swift. The initial omnibus legislation was introduced, debated and passed by Parliament in just two days. The ATO was similarly rapid in responding to the new law, and provided a significant and continuous flow of necessary guidance throughout the year, relating (primarily) to JobKeeper, the cash flow boost and other stimulus measures. These measures dominated the legislative agenda in 2020.
According to the Treasurer’s media release issued on 30 November 2020:
Businesses will need to re-test their eligibility again for the final phase of JobKeeper (4 January 2021 to 28 March 2021). Initial indications that the economic recovery is underway point to expectations of a further reduction in the number of JobKeeper registrations for the final phase.
Cash flow boost
The cash flow boost has been similarly successful in supporting businesses through the economic downturn. According to the Minister for Employment, Skills, Small and Family Business, Senator Michaelia Cash (in a statement to the Senate on 30 November 2020), the cash flow boost has delivered over $32 billion to more than 800,000 small and medium business employers.
Temporary early access to superannuation
The temporary early access to superannuation measure has been widely utilised. According to the ATO, between 20 April 2020 and 30 June 2020, around 2.54 million applications were received, totalling $20.6 billion requested for early release. Of these applications, 2.45 million were approved, totalling $20.1 billion; 66,400 were rejected, totalling $420.7 million; and 19,000 were cancelled due to errors or because individuals withdrew them.
The overwhelming majority of applications were made to Australian Prudential Regulation Authority (APRA) regulated superannuation funds; just over 20,000 of applications were made to self-managed superannuation funds (SMSFs).
In July 2020, ABC News reported that “more than half a million Australians are estimated to have ‘completely cleaned out’ their superannuation savings during the COVID-19 crisis”. The measure closes at 11:59pm (AEDT) on 31 December 2020.
Bills before Parliament
While there may be some further movement in bills before the conclusion of the parliamentary year on 10 December 2020, the following key measures remain before the Parliament:
A proposed measure to restrict the use of cash, by imposing a $10,000 cash payment limit, was discharged on 3 December 2020 and the bill is not proceeding. The measure was proposed to commence on 1 January 2020.
Discussion papers and announcements
The following key measures have been announced but have not progressed to a bill before Parliament:
Guidance on the following key matters remains under development:
During 2020, The Tax Institute brought to fruition its ambitious endeavour, The Tax Summit: Project Reform. The project included a lead-in event series of focus sessions, keynote addresses and roundtable discussions, and a two-day Virtual Summit in November. In total, more than 30 sessions were delivered by nearly 100 speakers.
Attention now turns to the development of the core document, as we prosecute the Case for Change and undertake further stakeholder engagement. These efforts will culminate in the submission of the Case for Change to Treasury on behalf of the tax profession. This will position The Tax Institute as the thought leader when it comes to tax, and that ongoing thought leadership activity will continue throughout 2021. To be effective, the tax reform process needs to start mid-electoral cycle in order that the federal government can commit to tax reform in 2021 and take a package to the 2022 election. The package would ideally be implemented in the next term of government.