As you probably have heard and read already, the Australian Government released its economic response to the current Coronavirus (COVID-19) crisis on 12/3/2020. At this stage, these measures will be introduced in parliament next week and are likely to get passed urgently. This is a summary of concessions that may apply to your business. Please contact your tax agent for specific advice where relevant.
Thankfully, there are a couple of items regarding PAYG Withholding to assist small businesses:
Cash Flow for Employers
You may be eligible for a tax free credit of up to $25,000 for small businesses that meet the following criteria:
✓ Aggregate Turnover of less than $50 million (based on your prior year turnover)
✓ You employed workers between 01 January 2020 and 30 Jun 2020
You will receive a credit equal to 50% of the PAYG Withheld from January 2020 to June 2020 on your BAS Statements commencing March 2020. If you lodge monthly, you will receive 150% credit based on your March 2020 BAS PAYG figure.
Note that this credit is set to be a minimum of $2,000 and capped at $25,000. Even if you were not required to withhold but still employ staff, you will still be likely to receive the minimum credit. We cannot get a confirmation that this will be for each branched entity but so far it reads to this being the case as each branch pays its own PAYG(W) and lodges separately.
Wage Subsidy for Employers with less than 20 Apprentices/ Trainees
You could apply for a wage subsidy of up to 50% of the apprentice or trainee’s wages. This payment will cover up to 9 months from January to September 2020. The maximum amount will be up to $21,000 per apprentice/ trainee. The apprentices/ trainees need to be in training as of 1 March 2020.
ATO Payment & Lodgement Relief
The ATO will work shoulder-to-shoulder with businesses to assist them through this difficult period and do what they can to ease the pressure. Businesses are to apply for these initiatives by contacting the ATO or letting us know, so we can act as BAS Agent on your behalf.
✓ Deferral of up to 4 months of tax payments including BAS, PAYG Instalments, and Income Tax Assessments
✓ Allowing businesses to enter into a low interest payment plan for existing and ongoing obligations
✓ Change to monthly BAS
✓ Allowing affected businesses to modify its PAYG Instalments (Income Tax) to zero → To be discussed with the business Tax Agent
✓ Remission of interest and penalties incurred from 23 January 2020
NOTE: There is no discretion available for Super Payments. Super must be paid as per normal.
Instant Asset Write-Off Increased to $150,000
Any “new or second hand business asset” first used or installed ready to use costing $150,000 or less can be written off in full in the current financial year. The conditions for this asset write off are:
✓ Business aggregate annual turnover of less than $500 million
✓ Asset value up to $150,000
✓ Asset must be purchased and ready to use between 12 March and 30 June 2020
The important thing about this concession is that it is valid until 30 June 2020. From the 01 July 2020, the value of assets will revert to the original $1,000 value per asset and annual turnover for businesses of $10 million. From the 1 July 2020 you may be entitled to a 50% investment incentive.
Regional Support available
$1b funding has been made available to support regions on a case by case basis – we are currently waiting for further information to be published on this by our Government.
Newstart & Pensioners – one off Payments available
A one off payment of $750 is available to more than six million Australians to spend in our economy now (almost two and a half million pensioners will receive this support).
BUSINESS INVESTMENT INCENTIVE
As mentioned above, if your asset is NOT eligible for the Business write off above, it may be subject to this special Depreciation concession. Essentially any assets not written off under the small asset write off concession mentioned above, will be eligible to write off 50% of its cost in the year of acquisition.
The conditions are:
1. Your business must have an aggregate turnover of less than $500 million per annum.
2. Asset acquired after 12 March 2020.
3. Asset first used by 30 June 2021.
4. No actual restriction on the value of the asset, just that it has not been written off under any other concession (e.g. costing over $1000 after 1 July 2020).
5. Depreciation of 50% in the year of purchase.
6. Balance of depreciation under applicable depreciation rules at the time.
7. Does not apply to capital work assets.
Please note that the above stated details are not law at this stage. They are however extremely likely to become law very soon as both sides of Parliament have indicated their support for these measures.
Throughout the next weeks/ months, we will try our best to keep you updated constantly with the latest news. Meanwhile, if you have any questions or concerns, please do not hesitate to contact us via phone or email. As business owners ourselves, we understand your situation and realise that this will be a tough time for everyone. Please be assured that we are here for you if you need us.
Kind Regards,
Joanne, Tricia & Therese
The Three Bookkeeping & Admin Services