[UPDATE MARCH 31, 2020 – View Updated Federal Government Stimulus Measures here]
The government has announced a range of measures to support the economy, business and employment in the face of the coronavirus health crisis. The measures include the below.
Cash Flow Boost for Employers
Employers with an aggregated annual turnover of under $50 million (based on prior year turnover) will receive a “payment” of $2000 to $25,000 from the government to help with cash flow. Eligible businesses will receive a payment equal to 50 percent of taxes withheld from employees’ salary and wages up to $25,000.
The “payment” will be delivered as a credit in the activity statement system from 28 April 2020 upon businesses lodging eligible upcoming activity statements (March BAS). Where this places the business in a refund position, the ATO will deliver the refund within 14 days.
Eligible businesses that pay salary and wages will receive a minimum payment of $2000, even if they are not required to withhold tax.
ATO Extensions & PAYG Instalments
The ATO has advised that they will work with businesses impacted by COVID-19 to allow payment deferrals of payments such as income tax, activity statements (IAS & BAS), FBT and excise payments by up to four months.
If you are paying PAYG Instalments quarterly you can vary your PAYG instalment on your March 2020 BAS as well as vary any PAYG Instalments paid for the September 2019 & December 2019 quarters and receive a refund for those payments (or likely have them offset against the payment required for your March 2020 BAS).
This will of course mean that those instalments will not offset your 2020 income tax liability once assessed, assuming the entity paying the instalments is profitable for tax purposes come the end of the financial year.
Increasing the instant asset write off
The government is proposing to increase the threshold for the instant asset write off from $30,000 to $150,000 and expand access to businesses with an aggregated annual turnover of up to $500 million (up from $50 million). The increase will only be available from 12 March to 30 June 2020 for new or second-hand assets first used or installed ready for use by 30 June 2020.
The government is proposing an accelerated depreciation deduction for eligible assets acquired from 12 March and first used or installed by 30 June 2021. Eligible taxpayers will receive a deduction of 50 per cent of the cost of the eligible asset on installation, with existing depreciation rules applying to the balance.
Eligible businesses are those with an aggregated turnover below $500 million. Eligible assets are those that can be depreciated under Division 40 of the Income Tax Assessment Act 1997 (plant, equipment and specified intangible assets, such as patents), but does not apply to second-hand Division 40 assets, or buildings and other capital works depreciable under Division 43.
Apprentice and Trainee Wage Subsidy
The government will offer employers a wage subsidy of 50 per cent of an apprentice’s or trainee’s wage from 1 January to 30 September 2020, capped at $7000 each quarter per eligible apprentice or trainee.
Businesses with less than 20 full-time staff will be eligible, however employers of any size and Group Training Organisations that re-engage an eligible out-of-trade apprentice or trainee will continue to be eligible for the subsidy.
Direct Payment to Individuals
The government will make a one-off payment of $750 to around 6.5 million social security, veterans and other income support recipients and eligible concession card holders residing in Australia.
The ATO will implement a series of administrative measures to assist Australians experiencing financial difficulty as a result of the COVID-19 outbreak.
We understand that this is a stressful time both personally and as a business owner. Please don’t hesitate to get in touch if you have concerns about how COVID-19 may impact your business and/or industry, or what measures we can take to assist you to get through this difficult period.