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Introduction to Australian Tax Law

Table of contents


Assistance provided to Taxpayers.

Opinion on the swiftness of Government.

About Assistance.

Benefits from the Assistance.

Effective or Noneffective assistance.



Introduction to Australian Taxation System in Covid-19

The taxation system of Australia is embedded in a way of life for people. Tax is paid on the income, goods, and services. Also, on the assets sell and purchase tax is paid. These taxes are collected and then the government provides benefits to the public and also certain services. The reliance of government on the taxes is heavy due to which some various reforms and reviews are done by the government. From the year 2019, a pandemic has been spread in the country due to which business has shut down, and also every sector is facing losses. In the scenario, the Government has to intervene and provide relief to various sections by lowering the tax or by providing stimulus in the economy. The same has been done by the Australian government. In the essay, the assistance that has been provided by the Australian government to various businesses and taxpayers has been assessed.

Assistance provided to Taxpayers

The government of Australia took various measures and provided economic resources to workers, households, and also to the business houses. The government has supplied around $259 billion or 13.3% of the GDP in the economy to keep it functioning appropriately. Also, various tax relief has been rolled out by the government to support the business.

The government of Australia offered tax relief to small businesses to fight the pandemic of the Coronavirus. The relief was to be provided in the manner of payment deferrals and also by getting faster access to the refunds of taxes for goods and services. Various options would be available to the business houses in which deferrals for 4 months for payments, fringe benefits of taxes and excise, and the quarterly reporting cycle to be converted into monthly cycles to have faster access to GST refunds (Hasan & Sinning, 2018). The GST taxation legislation came into operation in the year 2000. Under this taxation business houses of Australia whose turnover is above $75000 per annum are supposed to register for GST. The business houses get credit from the government for the expenses incurred. The cycle is repeated after 4 months but to have fast access to the cash government has reduced the period to 1 month which will help them in getting cash in a faster manner.

For the manufacturing industry, the government came in support so that jobs can be protected and the industry remains working. The government provided the support that was needed by the manufacturers in getting the raw material that was vital so that employees can keep their job. Also, other support were available that included loans that are interest-free for the first 12 months and the deferment in the payroll and a recovery package amounting to $27.25 million. Also, restrictions were uplifted to allow trucks for supplying the stocks 24 hours a day.

The country is also reforming its insolvency legislation concerning Chapter 11 of US insolvency. This insolvency act is debtor driven. According to this, a debtor provides a method of reorganization which usually is incorporation or partnership. Here the debtor suggests the plan through which, debts can be paid off and business is kept alive. Before in the country, the insolvency protocols involve the creditors and the method was suggested through them. Individuals are also provided relief under Chapter 11 of the US bankruptcy code (Manzer, Wunder & Levine, 2016). This is allowed in rare cases and individuals who have a lot of debt can become eligible for Chapter 11. This chapter allows the business to operate. In the present scenario, the government of Australia is planning to bring in the same laws to keep the businesses afloat.

 Also, the payments for Jobkeeper has been increased until March 2021. This is a policy that the government has started to ensure that people do not lose jobs and the payments are made to the organization for their employees. The ATO has decided to pay around 6 million workers who will have a payment of $1500 per fortnight by their employer before tax. This policy was rolled to tackle the impact of coronavirus on the economy.

Also, the government has allowed withdrawal from the superannuation funds for COVID-19 support measures. The federal government has started to accept the request for release of payments from superannuation funds. This was done by the government for providing support to those who are unemployed or their working hours have been reduced. The tax is charged on the funds at 15% and the person is not allowed to withdraw the funds till they reach a certain age. But in the scenario government has allowed them to withdraw the funds to make sure that things run smoothly in people life.

These are the certain actions that have been taken by the Australian government for reliving the taxpayers and to keep the economy afloat.

Opinion on Swiftness of Government

The government of Australia has released various measures into the economy to safeguard it from the economic downturn that the country has to face. But with these policies there came certain drawbacks as well. For the withdrawal of superannuation, the government has provided scrutiny in the hands of people itself. The people who want to withdraw can do so by filing a self-assessment form and documentation was not required. This created chaos and people started making false claims to withdraw the money. The ATO office is now trying to crack down the people who are skipping the system to avoid the payments of marginal tax. The government started a good initiative but the system was not swift as it was misused by the public. In the present scenario, the government should have adopted a certain methodology wherein a judgment can be passed whether the funds are being drawn for a true reason or are just being misused.

Also, in another program of cash flow boosting for businesses, there is a glitch found where the business has been able to inflate the liabilities of the employees to rort the payments. The firms and business houses have used the programs where they increased the payment of wages to the employees and showed more expenses. The government-funded business to keep the income running and also the business to afloat in the situation. But, with that government should have imposed restrictions on increasing wages and salaries. This would have helped in better control and appropriate allocation of the funds to people. And also it would help the policy to be applied swiftly in the market. Instead, the government didn't take measures that lead to the misusage of benefits that were provided for economic betterment.

Another change that the government is bringing is change in the Bankruptcy laws. The ATO office has decided to adopt the insolvency laws that are prevailing in the US under Chapter 11 of the insolvency act. The change at this movement might hamper the economic conditions and working flow of the economy. Chapter 11 insolvency act is a complicated legislation and requires a lot of calculations and procedures to be followed. Also, the legislation is a costly affair to adopt. In the scenario, it won't be a swift to adopt the changes and it might affect the normal fluency in the economy.

The Jobkeeper payments policy by ATO was swift as people started getting the payments. But a hindrance occurred when people started liking the money at home and ease. Since the government is providing the payments, there is a downfall in the recruitment of Australia. SO, the economy is facing challenges again.

In my opinion, the government brought policies that helped sustain the economy, and to get the benefits was also easy. They were adopted swiftly in the business. But with that government should have also taken certain measures so that they are not misused which is happening currently. ATO should relieve taxation but then make sure that it is benefiting the people. Certain checks should be implemented for swift and appropriate adoption of government measures.

About Assistance

Australian government has taken various measures to keep the stability in the economy during Pandemic time. The government is ensuring that essential services are transited throughout Australia. The government aid for COVID includes the support for food and supply chains. The government has pledged $A100 million for financial support. The government is trying to make sure that people have a running income and they do not lose jobs in the pandemic. For the purpose government has started a Jobkeeper’s program where they are assisting the employers to pay their staff. Also, the government is assisting manufactures and small businesses. The government is doing the maximum for the people to make sure that the economy remains stable. But in my opinion, there are certain area in which the government still need to take action or provide assistance to. The hospitality industry is once where many people have lost their jobs due to pandemic. There were around 200000 jobs lost by the people. Also, the unemployment rate rose to 6.2% due to the pandemic. The hospitality industry was most affected because all the hotels were closed and also certain small businesses were affected adversely. 

Australian government should punch in the following sections. Providing aid in the area will help people to sustain their livelihood. The government can take action regarding Quarantine travels between the Pacific. This will start the functioning of the hospitality sector and job losses will reduce. The government can also provide specific aid to this industry as this will help them to recover their losses. Another unit that is severely affected are the individual stalls for food. Aids should be provided to them too. The government is allowing faster GST payments to smaller businesses, but many people do not come under that and run very small businesses. Their livelihood has been affected. Aids should be provided for them too to sustain a normal life during the scenario.

Thus, the Government is doing a lot for the public and making sure that a normal life is maintained through the scenario. But it should provide its helping hand more towards the hospitality sector and also to individual small businesses so that they too can face the pandemic and can maintain the stability.

Benefits from the Assistance

Australian government announced 10% of GDP for the aid that is to be distributed among the public. The package sent out for help was of $17.6 billion. The main support which the government aimed was to the small businesses for the cash flow, and to the working households. The maximum benefit that has been derived was too small businesses and also the normal households who are working in the organization. With that government also supported manufacturers to an extent.

Through the scheme of Jobkeeper, households were able to receive payments even when their work hours were cut. People who lost their job were also able to benefit from the scheme. The benefits were derived appropriately by the people and a normalcy was maintained. They have lost their job which might be a problem in the long run but in the present movement with the help of government schemes, they were able to survive. Also, the pandemic government allowed the withdrawal of superannuation funds that was helpful for the public as they have the source for fulfilling their needs.

Another benefit was derived by small businesses who file GST returns. The government started a scheme where the business owners were supposed to file GST at the end of every month rather than quarterly. The government initiated a process where the returns for GST were provided to business houses in a faster manner. This helped the small businesses in boosting their cash flow. For the manufacturing unit, the government ensured the supply of raw materials. Also, for the small business government is bringing new laws for insolvency. This might help them in keeping their business afloat and making sure that debts are paid off through a plan. Thus, in this manner Household, manufacturing unit and the small business houses have been benefitted the most. The government has put in the effort to make sure that the economy is stable and people have enough to survive the pandemic. But the major benefits were derived by these three units from the policies of government.

Effective or Noneffective Assistance

In the pandemic, the Australian government has assisted in various ways. The assistance that was provided was very effective to certain section of the people. With the Jobkeepers plan people were able to derive their salary which is very important or else the livelihood would have been affected. But there was a flaw in the scheme, the government did not put a check on who is drawing how much of the salary due to which it was misused and people now are reluctant in taking a job as Jobkeeper provided them a way of earning by less work. Also, business houses increased the expenditure on wages and salary for deriving benefits from the scheme. But, to the people who lost their job, the assistance provided was very effective. 

Another scheme that the government launched was to increase the cash flow for small businesses by helping them in getting faster returns for their GST. This was an effective assistance as this helped the cash flow for the companies and made sure they have money in difficult times. SO, the scheme was effective.

 Another assistance that the government is bringing in change in the laws of insolvency. Chapter 11 of the bankruptcy code will be followed. This change will help the business houses to keep their business running and will allow them to make a plan regarding their debts. This is an effective measure or assistance that the government is planning to provide but this assistance will bring in more complexities in the working environment as Chapter 11 of insolvency is a complicated procedure. Instead on this government could have delayed insolvencies and provided some time to pay of the debts. 

The assistance was effective up to a certain extent but some areas were lagged behind especially the individual businessman. They do not come under Jobkeeper’s assistance and also not in the cash flow boosting assistance of small businesses. The government can take certain measures regarding them. Thus, the assistance that was provided was effective but there is a scope for more effective assistance by the government.

Conclusion on Australian Taxation System in Covid-19

The essay reads about the aids that were provided by the Australian government in times of pandemic. The government has brought in various schemes for the people. Jobkeeper's plan was initiated, a small business cash flow plan was boosted and also government helped the manufacturing units to get their supply of raw material and allowed trucks for transporting the materials to the supermarket. New insolvency laws are also being brought in so that business can be kept afloat. There were certain areas like the hospitality sector where job losses were huge, the government can start a specific program for them too. Travel with quarantined restrictions can improve the situation. Also, individual small business owners were to be considered in assistance. These inclusions will help in making the assistance package by the government more effective.

References for Australian Taxation System in Covid-19

Hasan, S., & Sinning, M. (2018). GST reform in Australia: implications of estimating price elasticities of demand for food. Economic Record94(306), 239-254.

Manzer, A. R., Wunder, M. J., & Levine, N. E. (2016). Insolvency and Restructuring-The Synergies and Challenges of a Canada-US Insolvency Proceeding. Bus. L. Today, 1.

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