FEDERAL GOVERNMENT SUPPORT FOR BUSINESS - COVID-19
16th March 2020
Author: Carl Valentine
As we all consider the impacts of COVID-19 for our communities, families and businesses, it's important to keep in mind the recently announced Federal Government Support package for business. The measures announced include:
Boosting cash flow for employers – payments of up to $25,000
Employers with a turnover of less than $50m will be eligible for a tax-free payment of between $2,000 and $25,000, based on their PAYG withholding reported on the activity statements from March 2020 to June 2020. The full benefit of $25,000 is realised once an employer has withheld at least $50,000 from employee payments during the period to 30 June 2020.
Quarterly payers will receive a credit of 50% of the PAYG withholding in their March and June 2020 activity statements, up to the maximum credit of $25,000.
Monthly payers will receive a credit of up to 150% of their PAYG withholding in the March activity statement and up to 50% in each of their April to June 2020 activity statements, up to the maximum credit of $25,000.
Where this results in a refund position, the ATO will deliver the refund within 14 days.
While the quantum of any assistance payment may be debated, we consider this to be a user friendly and clever way to provide the assistance: all business owners have to do is continue to lodge their activity statements, no separate application process applies nor are there any complex qualifying criteria to consider.
Instant Asset Write-Off
The instant asset write-off threshold has been increased to $150,000 (GST exclusive) for assets (new or second hand) purchased between 12 March 2020 to 30 June 2020. The instant asset write-off is available to all businesses with an aggregated turnover of less than $500 million.
Small business taxpayers (those with an aggregated turnover of less than $10 million) must elect to start using, or continue use, the simplified depreciation rules (including the small business pool) to qualify for the instant asset write-off. The instant asset write-off applies to both new and second hand depreciating assets.
Unless further extensions are announced, the instant asset write-off threshold reverts to $1,000 for small business entities from 1 July 2020.
Businesses with a turnover of less than $500 million will eligible for an upfront 50% deduction for the cost of new depreciating assets purchased between 12 March 2020 and 30 June 2021, with the balance of the cost subject to the existing depreciation rules. This would equate to a deduction of 57.5% for small business taxpayers in the year of purchase.
Assets costing less than $150,000 (GST exclusive) purchased prior to 30 June 2020 will be immediately deductible under the instant asset write-off. For all businesses that turnover less than $500 million, this measure thus has an immediate benefit for higher value asset purchases made up to 30 June 2020 (i.e., those greater than $150,000) and, under current law, for all assets purchased with a value greater than $1,000 during the year ended 30 June 2021.
Apprentice and Trainee Support
Eligible employers can apply for a wage subsidy of 50 per cent of their apprentice’s or trainee’s wage paid during the 9 months from 1 January 2020 to 30 September 2020, up to a maximum of $7,000 per eligible apprentice or trainee per quarter.
The subsidy will be available to small businesses employing fewer than 20 full‑time employees who retain an apprentice or trainee that was employed by the business as at 1 March 2020.
Please contact your advisor at PVW Partners for any further assistance with these matters.