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Coronavirus Stimulus Package

March 19, 2020

In response to the challenges facing businesses as a result of the COVID-19 epidemic, the Australian Government has announced a $17.6 billion economic plan, including providing cash flow support to business paying employees, increasing the small business instant asset write-off threshold and supporting apprentices and trainees.

Tax incentives and concessions for businesses

Increasing the Instant Asset Write-Off measure

Currently, if a business with turnover of less than $50m acquires an asset for less than $30,000, the cost of the asset can be immediately deducted instead of depreciated over time. The government have announced that the instant asset write-off (IAWO) threshold will increase from $30,000 to $150,000 and will now be available to businesses with turnover of up to $500m, until 30 June 2020.

This means that businesses can acquire individual assets up to this threshold and claim an immediate deduction. Unless further changes are announced, starting from 1 July 2020, the IAWO will be decreased to $1,000 for small businesses with aggregated annual turnover of less than $10 million.

Should you go out and buy a bunch of new assets?

Our advice would be not to spend unnecessarily and during times of disruption, cash flow remains key for businesses. These measures introduced by the government provide an accelerated deduction for new assets, not an additional deduction, so don’t feel that you are missing out.

Backing Business Investment (BBI) measure

The Government is introducing a 15-month investment incentive aimed at supporting business investment and economic growth over the short-term, by accelerating depreciation deductions.

Businesses with aggregated annual turnover of less than $500 million will be able to claim a tax deduction of 50% of the cost of an eligible asset upon installation with existing depreciation rules applying to the balance of the asset’s cost. The asset must be acquired after 12 March 2020 and first used or installed by 30 June 2021. There is no maximum asset value threshold for this 50% investment incentive.

ATO relief

The ATO has announced a series of administrative concessions to assist businesses impacted by COVID-19, including:

  • deferring the payment of tax amounts due through BAS (including PAYG instalments), income tax assessments, FBT assessments and excise by up to 4 months;
  • allowing affected businesses on a quarterly reporting cycle to opt into monthly GST reporting to get quicker access to any GST refunds;
  • allowing affected businesses to vary PAYG tax instalment amounts to Nil for the March 2020 quarter. Businesses that vary their PAYG instalment to Nil can also claim a refund for any instalments made for the September 2019 and December 2019 quarters;
  • Remitting any interest and penalties, incurred by affected businesses on or after 23 January 2020, that have been applied to tax liabilities; and
  • allowing affected businesses to enter into low-interest payment plans for their existing and ongoing tax liabilities.

Access to these ATO concessions is not automatic and taxpayers must firstly contact the ATO to request assistance. If eligible, the ATO will ‘tailor the assistance package’ for the relevant taxpayer.

We are here to help.

We have contacted the ATO directly and have received confirmation that business should continue to lodge tax returns and activity statements by the relevant due date. All payment dates for income tax, GST and FBT liabilities may be extended to 13 July 2020 by negotiation. The ATO have also confirmed that payment arrangements entered into will not incur general interest charges.

Contact Apiary Financial today if you need assistance in liaising with the ATO in relation to your tax obligations or with applying for concessions.

Support if you are experiencing difficulties

If you are experiencing difficulties with tax obligations because of COVID-19, the ATO have established an Emergency Support Infoline on 1800 806 218 and a temporary email contact point for additional issues or specific questions on COVID-19.  Email: COVID-19Taxissues@ato.gov.au

Cash flow Measures

Assistance for Employers

This first round of stimulus measures are focused on boosting cash flow for employers by applying a credit to the amounts due for PAYG Withholding liabilities for the period March to June 2020.

All small and medium business entities with aggregated annual turnover under $50 million and that have employees are eligible for this measure.

When submitting activity statements for the period March 2020 to June 2020, the Australian Taxation Office (ATO) will supply a credit equal to 50% of the amount of tax withheld from employee wages, thereby reducing the amount to be paid to the ATO. This payment will have a minimum of $2,000 (even if your company is not required to withhold tax) and a maximum limit of $25,000.

For businesses submitting quarterly activity statements this measure will be in full effect for the 3rd quarter (due 28th April) and 4th quarter (due 28th July) lodgements.

For those submitting monthly activity statements, the payment for March (due 21st April) will be increased to 150% to match the treatment of the quarterly lodgers. The April (due 21st May), May (due 22nd June) and June (due 21st July) monthly lodgements will receive the listed 50% payment.

The first lodgement submitted by a business will have the minimum payment of $2,000 applied.

Need Assistance?

We have started working with our clients in relation to the mechanics of the cash flow concessions provided by the ATO. If you have any queries or would like to discuss these measures further, please contact our office.

Supporting Apprentices and Trainees measure

Eligible small business employers will be able to apply for a wage subsidy of 50% of the wages paid to apprentices or trainees (in training as at 1 March 2020) for up to 9 months from 1 January to 30 September 2020, up to $21,000 per apprentice. Registrations for the subsidy open from early April 2020 with final claims for payment due by 31 December 2020.

Other measures

Stimulus payments

A one-off $750 payment will be available from 31 March 2020 to social security, veteran and other income support recipients and eligible concession cardholders including pensioners. There will be one payment per eligible recipient.

Assistance for severely affected regions

The Government has set aside $1 billion to support those regions and communities that have been disproportionately affected by the economic impacts of COVID-19, including those heavily reliant on industries such as tourism, agriculture and education.

In the pipeline

Recent articles suggest that the government is looking to implement additional measures targeted at the businesses most at risk as a result of the epidemic. The precise timing for unveiling round two of the stimulus package is unclear, however it appears that options are being considered urgently, and the package will be announced prior to the May budget.

 

If you would like more information or require our services, please contact our team on 07 3217 2477.