New stimulus packages have recently been introduced by both the Federal and State Governments, to support small and medium sized businesses through the impact of the Coronavirus Covid-19. At the time of writing it is reported that a second Federal Government package is currently under review, with further measures expected to be announced well ahead of the May 2020 Budget.
Please note that some measures below are subject to the relevant legislation passing through federal parliament, which is scheduled to resume on Monday the 23rd of March.
Support Offered to your Business
Tax-free payment of up to $25,000 for small-to-medium businesses:
Eligibility – Businesses with turnover of up to $50 million (based on prior year), that employ staff and withhold tax on behalf of their employees in the period between 1 January and 30 June 2020: –
- You will receive a payment equal to 50% of the amount withheld, up to a maximum payment of $25k in total.
- If your business is eligible but you are not required to withhold tax from wages and salary paid, you are still likely to receive a minimum payment of $2,000
- The payment is delivered as a credit in the ATO activity statement system from 28 April 2020 upon lodging eligible upcoming activity statements
- This payment is applied across a limited number of activity statement periods: –
– Quarterly lodgers will be eligible to receive the payment as a credit against their liabilities due for the March and June 2020 quarters
– Monthly lodgers will be eligible to receive the payment as a credit against their liabilities for the March, April, May and June 2020 lodgements. To provide similar treatment to quarterly lodgers, the payment will be calculated at three times the rate (150%) in the monthly March 2020 activity statement.
- Where the credit applied results in a refund, the ATO will deliver this within 14 days.
Increased instant asset write off on assets costing up to $150,000 each:
Eligibility – Businesses with an aggregated annual turnover of less than $500m (up from $50m).
- Qualifying purchases will be fully tax-deductible in the year of purchase.
- The threshold for the cost of the asset has been increased from $30,000 to $150,000 per asset (excluding GST, if you are registered for GST). Please note multiple assets can be purchased.
- This applies to new or second-hand assets first used or installed ready for use from 12 March until 30 June 2020.
- The threshold will revert to $1,000 from 1 July 2020.
Accelerated depreciation for investments
Eligibility – Businesses with an aggregated annual turnover of less than $500m.
- You can deduct 50% of the cost of a new asset on installation, with normal depreciation rules applying to the balance of the cost. There is no limit to the cost of a depreciating asset that can qualify for this concession.
- This measure will apply for approximately 15 months and will apply to eligible new depreciating assets acquired from 12 March 2020 and first used or installed by 30 June 2021.
- This does not apply to second hand assets; or buildings or capital works depreciable under Division 43.
Keeping apprentices and trainees employed:
Eligibility – Businesses with turnover up to $50m and employing fewer than 20 full-time employees which retain an apprentice or trainee.
- Eligible employers can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage paid during the 9 months from 1 January 2020 to 30 September 2020.
- Employers will be reimbursed up to a maximum of $21k per eligible apprentice or trainee ($7k per quarter).
- The apprentice or trainee must have been in training with a small business as at 1 March 2020.
- Access to the subsidy will be available after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network (AASN) provider.
- Employers can register for the subsidy from early-April 2020. Final claims for payment must be lodged by 31 December 2020.
Other measures and tax relief
- Targeted regional and community support aimed at businesses and communities particularly affected by the economic downturn due to coronavirus (e.g. Those in the tourism, agriculture and education industries). This support will include waiving fees and charges for tourism businesses operating in national parks, plus assistance in identifying new export markets and supply chains.
- The Australian Tax Office (ATO) has also announced certain administrative concessions, upon application by businesses which have been affected by the pandemic, including deferring tax payments up to 4 months, and low interest payment plans.
WA State Government – Payroll Related Concessions
Eligibility – Businesses with turnover of up to $50 million, that employ staff in the period between 1 January and 30 June 2020
- Payroll tax paying businesses with a payroll between $1 million and $4 million will receive a one-off grant of $17,500
- Payroll tax threshold increase to $1 million will be brought forward to 1 July 2020, six months earlier than planned. The payroll tax threshold was increased to $950,000 from 1 January 2020 and was due to increase again to $1 million from 1 January 2021.
- You can apply to defer the payment of 2019–20 payroll tax until 21 July 2020, if your business pays less than $7.5m in taxable wages each year.
Support Offered to Individuals and Households
Federal Government – Tax-Free Stimulus Payment:
Eligibility – you must be residing in Australia and be receiving one of several government payments or hold certain concession cards on 12 March 2020.
- A one-off $750 payment per eligible person.
- The payment will be tax exempt and will not count as income for Social Security, Farm Household Allowance and Veteran payments.
- The amount will automatically be paid from 31 March 2020 by Services Australia or the Department of Veterans’ Affairs.
WA State Government – Household Fees and Charges Frozen
Please note that you will still have to pay household fees and charges. There will be no increases to a range of bills which were previously set to rise this year, including: –
- Electricity charges
- Water charges
- Car licenses and registration
- Public transport fares
- Emergency Services Levy which is added to your council rates to fund services like firefighters and the State Emergency Services.
WA State Government – New Paid Leave Benefit of 20 Days
Extends also to WA public sector employees, including casual workers, who are required to take leave due to the impact of Covid-19.
Changes in Normal Business Practices
More Staff Working from Home
Many businesses are considering having employees work from home, where possible, to support the practice of ‘social distancing’, in the wake of the coronavirus outbreak. The ATO has provided some useful guidance on claiming home office expenses to assist your employees at tax time. Please click here to assist you to answer any tax-related questions from your employees on working from home.
Cashflow Impact of Business Disruption
If you are concerned that disruption to your business operations may cause you to fall behind with your tax and super obligations, refer to the ATO’s information on Covid-19, or speak to us to discuss any concerns regarding these or other financial obligations.