ECONOMIC RESPONSE TO THE CORONA-VIRUS WHAT YOU NEED TO KNOW
Instant asset write-off increased For new or second-hand assets first used or installed ready for use from 12 March until 30 June 2020, the instant asset write-off threshold will be increased from $30,000 to $150,000 for businesses with aggregated annual turnover of less than $500 million (up from the current $50 million threshold). The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets. The threshold will revert to $1,000 for small businesses (turnover less than $10 million) from 1 July 2020, however businesses not entitled to the instant asset write off from 1 July 2020 may be entitled to the 50% investment incentive as below.
Backing business investment incentive The Government is introducing a time limited 15 month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating depreciation deductions. Businesses with aggregated annual turnover of less than $500 million per annum will be able to deduct 50 per cent of the cost of an eligible asset upon installation, provided it was acquired after 12 March 2020 and first used or installed by 30 June 2021. There is no asset value threshold for this 50% investment incentive. Existing depreciation rules applying to the balance of the asset’s cost.
Cash flow assistance for businesses - Boosting cash flow for employers Up to a $25,000 tax-free payment to small and medium-sized businesses with aggregated annual turnover of less than $50 million that employ workers, between 1 January 2020 and 30 June 2020. These eligible businesses will receive a payment equal to 50% of their PAYG withheld, delivered as a credit in their BAS from March to June 2020, with a minimum $2,000 payment and up to a cap of $25,000.
Supporting apprentices and trainees Eligible small business employers will be able to apply for a wage subsidy of 50% of the apprentice’s or trainee’s (in training as at 1 March 2020) wage for up to 9 months from 1 January to 30 September 2020, up to $21,000 per apprentice. Employers can register for the subsidy from early April 2020 with final claims for payment due by 31 December 2020.
Non-tax 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.
ATO relief On 12 March 2020, the Australian Taxation Office (ATO) announced a series of administrative concessions to assist businesses impacted by COVID-19, which include:
deferring by up to 4 months the payment of tax amounts due through the BAS (including PAYG instalments), income tax assessments, FBT assessments and excise by affected businesses;
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 instalment amounts to zero for the March 2020 quarter. Businesses that vary their PAYG instalment to zero 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.
The ATO assistance is not automatic, taxpayers must first contact the ATO to request assistance, and if eligible, the ATO will ‘tailor the assistance package for the relevant taxpayer.
BDO Comment We note that whilst increasing the instant asset write off will bring forward tax deductions for the cost of depreciating assets and encourage spending by profitable businesses on additional equipment, it will provide no immediate support to loss making businesses. Miranda Accounting is here to support you and your business. Our role during this time is to educate and assist you in accessing the new government incentives for your business during these uncertain times. If lodge your Business Activity statement with our firm, we will recognise you have employees, apprentices or trainees. This incentive will be an automated process from the ATO and your employee tax payable will be reduced in your BAS. If you have purchased any assets that are eligible for the write off, we will recognise these when we prepare your tax return at year end and claim appropriately. If you require payment plans with the ATO or have a debt you wish to renegotiate, you can contact our office to arrange your new payment plan. If you have any further questions, please don’t hesitate to contact our office. Legislation to give effect to these measures will be introduced into Parliament, which resumes on 23 March 2020. It is expected that it will be passed urgently. As certain incentives in the economic package will only be available for a short period of time, businesses should consider taking action as soon as practicable. State Governments are also anticipated to release their own stimulus packages in the coming weeks.
MIRANDA ACCOUNTING SERVICES 8/263 – 271 Wells Road, Chelsea Heights Vic 3196 PO Box 476, Patterson Lakes VIC 3197 Tel 03 9773 3647 www.mirandas.com.au