Coronavirus – Small Business Tax Relief

Jane Cooper 22 March, 2020

A great concern for all small businesses at the moment is the impact the Coronavirus will have on your business and business around you.  The Australian government is working through this difficult time to introduce various tax relief packages for small businesses and those affect by the Coronavirus.

Small Business Stimulus Package

A summary below of the measures introduced so far.

  1. Instant Asset Write-off
  • A business with a turnover of less than $500 million per annum will receive an immediate tax deduction for any business related asset purchased up to $150 000 until 30 June 2020. 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.
  • There is no limit to the number of assets you can purchase.
  • This applies to all assets bought between 12 March 2020 and 30 June 2020.
  • The benefit will be claimed when your 2020 tax return is lodged.

2. Investment Incentive

  • A business with a turnover of less than $500 million per annum will receive a tax deduction of 50% of the cost of the asset.
  • There is no threshold to the value of the asset that may be purchased.
  • There is no limit to the number of assets you can purchase.
  • This applies to all assets bought between 12 March 2020 and 30 June 2021.
  • The balance of the assets cost would be depreciated under the existing rules.

3. Tax-Free Payments for Employers

·         The Government is providing up to $100,000 to eligible small and medium sized businesses, and not-for-profits (including charities) that employ people, with a minimum payment of $20,000. These payments will help businesses’ and not-for-profits’ cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff.

  • An eligible business has a turnover of less than $50 million per annum AND employs staff.
  • Eligible employers will initially receive 100% of the PAYG withholding tax for employees up to a maximum of $50,000 for the period 1 January 2020 to 30 June 2020.
  • A business that does not need to withhold PAYG tax because the salaries are too low will still receive $10,000 applied against the their account.
  • This money will not be included in taxable income of the business.

·         The payments will be available to active eligible employers established prior to 12 March 2020.

·         The ATO will deliver the payment as a credit to the entity upon lodgment of their activity statements. Where this places the entity in a refund position, the ATO will deliver the refund within 14 days.

  • An additional payment ‘is also being made in the July – October 2020 period. Eligible entities willreceive an additional payment equal to the total of all of the Boosting Cash Flow for Employers paymentsthey have received (again a maximum of $50,000).
  • This means that eligible entities will receive at least $20,000 up to a total of $100,000under both payments.

4. Apprentices and Trainees Support 

  • A business who employs apprentices and trainees AND employs fewer than 20 full-time employees.
  • A wage subsidy of 50% of the apprentices wage is paid up to a maximum per apprentice of $21 000.
  • This applies to wages paid from 1 January 2020 to 30 September 2020.
  • Employers will have to register for this claim from 1st April 2020.
  • An eligibility assessment will be conducted by an Australian Apprenticeship Support Network provider.
  • The benefit will be paid on a successful assessment.

5. ATO Administrative Relief

There are various tax payment allowances which can be applied which are specific to each business as follows;

  • Defer up to 6 months amounts owing from BAS returns.
  • Remit interest and penalties incurred after 23rd January 2020.
  • Vary PAYG amounts to zero.

The overall intention is to assist businesses with making payments to the ATO and we at GM Tax are here to assist you in anyway possible through this difficult time.

Should you wish to discuss any of the above issues further please call me.