COVID Continues To Capture Headlines
Kitty Miv, Editor
18 December, 2020
Alongside the Brexit trade talks – which seem at the time of writing to have turned a corner – and the political tilting at windmills in the US, one of the recent constants in the news is the resurgence of the Coronavirus pandemic, and it is to COVID-related measures that we turn our attention in this week’s column.
Vaccination programs are being developed around the world, and the EU has decided to support these in Europe, announcing recently that member states will be permitted to temporarily exempt COVID-19 vaccines and testing kits from VAT.
The European Council has adopted amendments to the VAT Directive to allow for the temporary exemption. The measures cover only COVID-19 vaccines authorized by the European Commission or by member states and COVID-19 test kits that comply with the applicable EU legislation.
The measures will allow EU countries to put in place a temporary VAT exemption for vaccines and testing kits being sold to hospitals, doctors, and individuals, as well as closely related services.
Currently, member states can apply reduced VAT rates on sales of vaccines but cannot apply a zero rate. Testing kits cannot benefit from reduced rates. Under the amended directive, member states will be able to apply either reduced or zero rates to both vaccines and testing kits if they so choose. The concession will be available until December 31, 2022.
Elsewhere, the focus has been on supporting employment, with the Australian Taxation Office (ATO) opening applications for the new JobMaker Hiring Credit scheme, a COVID-19 wage subsidy intended to incentivize businesses to employ additional job seekers aged 16 to 35.
Eligible employers can access the payment for up to 12 months for each eligible additional employee they hire between October 7, 2020, and October 6, 2021. They will be able to claim up to AUD200 a week for each additional eligible employee they hire aged 16 to 29 years, and up to AUD100 a week for those aged 30 to 35 years.
In Canada, meanwhile, the Canada Revenue Office (CRA) has simplified the way employees can claim the home office expenses deduction and expanded eligibility for the 2020 tax year.
On December 15, 2020, the CRA said that employees who worked from home more than 50 percent of the time over a period of at least four consecutive weeks in 2020 due to COVID-19 will now be eligible to claim the home office expenses deduction for 2020. The use of a shorter qualifying period will mean that more employees can claim the deduction than would otherwise have been possible under longstanding practice.
The CRA also said that a new temporary flat rate method will allow eligible employees to claim a deduction of CAD2 for each day they worked at home in that period, plus any other days they worked from home in 2020 due to COVID-19, up to a maximum of CAD400. If using this method, employees will not be required to get Form T2200 or Form T2200S completed and signed by their employer. They will not be required to calculate the size of their workspace.
Against this background, the UK Government is being urged by experts to consider a "one-off" wealth tax on the UK's wealthiest taxpayers, to repair the fiscal hole created by the pandemic. The call is from the Wealth Tax Commission, which was formed at the start of the COVID-19 crisis, and brought together a network of experts on tax policy, including academics, policymakers, and tax practitioners.
The Commission has argued that a one-off wealth tax could raise vast sums of revenue. After accounting for non-compliance and administration costs, a one-off wealth tax payable on all individual wealth above GBP500,000 and charged at one percent a year for five years would raise GBP260bn. Alternatively, with a threshold of GBP2m, the tax could raise GBP80 billion, the Commission suggested.
For reasons quite unrelated to COVID, however, readers would be well-advised not to hold their breath waiting for this to appear on the statute books...
Until next week!
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