We are aware that there is a lot of information at the moment about the Coronavirus and that this is rapidly developing, but we wanted to provide you with a summary that reflects the most up-to-date information available in relation to the Government’s economic stimulus package, aimed at maintaining confidence, supporting investment, employment and business continuity.
Cashflow assistance for businesses
Boosting cashflow for employers
Small and medium businesses whose aggregated annual turnover was under $50 million for the 2018-19 income year, and that employ workers, will be eligible to receive a credit of up to $25,000 against their PAYG withholding obligations arising between 1 March and 30 June 2020.
The payment will be delivered by the Australian Taxation Office (ATO) as a tax-exempt credit in the activity statement system from 28 April 2020 upon businesses lodging eligible upcoming activity statements.
- If you lodge quarterly, you will receive a credit of 50% of the total PAYG withheld for the quarters ending March 2020 and June 2020, up to a maximum total credit of $25,000.
- If you lodge monthly, you will receive a credit of 150% of the March BAS PAYG withheld (in lieu of a credit for January and February to provide similar treatment to quarterly lodgers), and 50% of the PAYG withheld in your April, May, and June BASs, until your total credit reaches $25,000.
- If the credit puts you into a refund position, refunds will be paid within 14 days after lodgement, from 28 April 2020.
Eligible businesses that pay salary and wages but are not required to withhold tax will still receive a payment of $2,000.
Supporting apprentices and trainees
Small business employers, employing fewer than 20 full-time employees, who employ apprentices and trainees can apply for wage subsidies of up to 50% of the apprentice or trainee’s wage paid during the 9 months from 1 January 2020 to 30 September 2020. Employers can register for the subsidy from early-April 2020. Final claims for payment must be lodged by 31 December 2020.
The subsidy, which is capped at $21,000 per eligible apprentice or trainee, is limited to small businesses that and who retain an apprentice or trainee as at 1 March 2020.
Further information regarding eligibility and claims for payment is available at:
- The Department of Education, Skills and Employment website: www.dese.gov.au
- Australian Apprenticeships website: australianapprenticeships.gov.au
The following Government fact sheet is available for more information on these two cash flow measures:
https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Assistance_for_businesses.pdf
Delivering support for business investment
Expansion of instant asset write-off
The Government is increasing the instant asset write-off threshold from $30,000 to $150,000 and expanding access to include all businesses with aggregated annual turnover of up to $500 million (up from $50 million) until 30 June 2020. The threshold applies on a per asset basis to new or second-hand assets purchased and ready for use between 12 March 2020 until 30 June 2020, so eligible businesses can immediately write-off multiple assets.
The instant asset write-off is due to revert to $1,000 for small businesses (turnover less than $10 million) from 1 July 2020.
Accelerated depreciation for higher cost assets
Businesses with an aggregated annual turnover of up to $500 million will be entitled to accelerated depreciation deductions for assets purchased and used or installed ready for use between 12 March 2020 and 30 June 2021.
The key benefit is an up-front deduction of 50% of the cost of an eligible asset in the first year that the asset is used or installed ready for use, while the existing depreciation rules will continue to apply to the balance of the asset’s cost from the first year.
This benefit is available only for new depreciating assets, not to second-hand assets, nor to capital works depreciated under Division 43.
The following Government fact sheet is available for more information on backing business investment: https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Support_for_business_investment.pdf
Stimulus payments to households
The Government will provide a one-off, tax-exempt additional payment of $750 from 31 March 2020 to individuals residing in Australia who either receive certain listed income support payments or hold certain eligible concession cards. The Government will contact eligible cardholders not already receiving direct payments.
Individuals aged 22 or over and under ‘Age Pension’ qualification age, who are unable to attend work due to being diagnosed with COVID-19 or being under self-isolation may qualify for the Sickness Allowance. Eligibility generally depends on the individual not having any employer leave entitlements (e.g. sick leave), and meeting certain other residency, income and asset tests.
The following Government fact sheet is available for more information on assisting lower income Australians and eligible income support payments and concession cards: https://treasury.gov.au/sites/default/files/2020-03/fact_sheet_3_individuals_-_revised_for_clearance.pdf
Assistance for severely affected regions
The government has set aside an initial $1 billion to support regions and communities specifically and significantly affected by the economic impacts of the Coronavirus, including those heavily reliant on industries such as tourism, agriculture and education.
The following Government fact sheet is available for more information on the measures to support communities most affected:
https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Assistance_for_regions.pdf
ATO and tax relief
The Australian Tax Office (ATO) will provide administrative relief for certain tax obligations for taxpayers affected by the Coronavirus outbreak, on a case-by-case basis. These will not be automatically applied. The types of available relief include:
- Payment deferrals for up to four months.
- Allowing businesses on a quarterly reporting cycles to change to monthly to get quicker access to GST refunds.
- Varying PAYG instalments to nil for the March 2020 quarter, with refunds for instalments paid for the September and December 2019 quarters.
- Remission of interest and penalties.
- Other administrative relief.
For further information on the relief available, please visit the ATO website:
Payroll tax relief New South Wales
In addition to what’s been offered in the federal government’s stimulus, being currently the Australian state worst affect by the outbreak, the New South Wales is offering additional support. The NSW Government has announced the waiver of payroll tax for businesses with payrolls of up to $10m, for the months from April to June 2020.
The government is also bringing the next round of payroll tax cuts forward, meaning the payroll tax threshold will rise to $1 million in the financial year 2020-21.
As part of its support package, additional measures include waiving of fees and charges for small businesses in vulnerable sectors, employment of additional cleaners of public infrastructure, and bringing forward maintenance of public assets and capital works.
More details on this announcement can be found here:
Please contact Kinsella Partners if you have any questions about how these measures affect you and your business.
