The following is a broad summary of the key aspects of the Federal Government's stimulus package in response to the Coronavirus, as recently announced and enacted.
These measures were implemented via various Bills introduced into Parliament, which very quickly received Royal Assent on 24 March 2020 (including the Coronavirus Economic Response Package Omnibus Bill 2020), so as to give effect to the Government's stimulus package.
The Government is also providing cash flow assistance for eligible businesses in the form of two separate measures.
Boosting cash flow for employers
Small and medium-sized businesses and not-for-profit entities, with an aggregated annual turnover of less than $50 million (usually based on their prior year's turnover) that employ people, may be eligible to receive a total payment (in the form of a refundable credit) of up to $100,000 (with a minimum total payment of $20,000), based on their PAYG withholding obligations in two stages:
STAGE 1 PAYMENT (CREDIT)
Commencing with the lodgement of activity statements from 28 April 2020, eligible employers that withhold PAYG tax on their employees' salary and wages will receive a tax-free payment equal to 100% of the amount withheld, up to a maximum of $50,000.
Eligible employers that pay salary and wages will receive a minimum (tax-free) payment of $10,000, even if they are not required to withhold PAYG tax.
The tax-free payment will broadly be calculated and paid by the ATO as an automatic credit to an employer, upon the lodgement of activity statements from 28 April 2020, with any resulting refund being paid to the employer. This means that:
Note that, the minimum payment of $10,000 will be applied to an entity's first activity statement lodgement (whether for the month of March or the March quarter) from 28 April 2020.
STAGE 2 PAYMENT (CREDIT)
For employers that continue to be active, an additional (tax-free) payment will be available in respect of the June to October 2020 period, basically as follows:
Again, the ATO will automatically calculate and pay the additional (tax-free) payment as a credit to an employer upon the lodgement of their activity statements from July 2020, with any resulting refund being paid to the employer.
Editor: It should be noted that eligibility for the above payments is subject to a specific integrity rule that is designed to stamp out artificial or contrived arrangements that are implemented to obtain access to this measure. In particular, if an employer or an associate enters into a scheme with the sole or dominant purpose of obtaining or increasing any of the above payments for a particular employer, for a period, the employer will not be eligible for any such payments for the relevant period.
Wages subsidies for apprentices and trainees.
Wages subsidies for apprentices and trainees
Employers with less than 20 full-time employees, who retain an apprentice or trainee (who was in training with the employer as at 1 March 2020) may be entitled to Government funded wage subsidies.
These will be equal to 50% of the apprentice's or trainee's wage paid during the nine months from 1 January 2020 to 30 September 2020.
The maximum wage subsidy over the nine-month period will be $21,000 per eligible apprentice or trainee ($7,000 per quarter).
Employers can register for the subsidy from early April 2020.
Support will also be provided to the National Apprentice Employment Network, the peak national body representing Group Training Organisations, to co-ordinate the re-employment of displaced apprentices and trainees throughout their network of host employers across Australia.
Increasing the instant write-off threshold for business assets
Under instant asset write-off eligible businesses can:
The instant asset write-off eligibility criteria and threshold have changed over time. You need to check your business's eligibility and ensure you apply the correct threshold amount.
CHANGES FROM 12 MARCH 2020
From 12 March 2020 until 30 June 2020 the instant asset write-off:
The measure applies to both new and second-hand assets first used or installed ready for use in the period beginning on 12 March 2020 (i.e., the date on which this measure was announced) and ending on 30 June 2020.
SMALL BUSINESS ENTITIES ('SBEs')
These are businesses with a turnover of less than $10 million.
You are eligible to use instant asset write-off if all of the following apply:
MEDIUM BUSINESS ENTITIES
These are businesses with a turnover from $10 million to less than $50 million.
You may be eligible to use instant asset write-off if all of the following apply:
For any assets purchased and used or installed ready for use prior to 7.30pm (AEDT) 2 April 2019, you must use the general depreciation rules.
MEDIUM AND LARGE BUSINESSES
These are businesses with a turnover from $50 million to less than $500 million.
You may be eligible to use instant asset write-off if all of the following apply:
For any assets purchased and used or installed ready for use prior to 12 March 2020, you must use the general depreciation rules.
Thresholds
The thresholds have changed over the last few years and are as follows:
EXCLUSIONS AND LIMITS
There are a small number of assets that are excluded.
In addition, if you purchase a car for your business, the instant asset write-off is limited to the business portion of the car limit of $57,581 for the 2019–20 income tax year.
Accelerating depreciation deductions for new assets
Broadly, a new time-limited 15-month investment incentive (available for eligible assets acquired from 12 March 2020 up until 30 June 2021) will also be introduced to accelerate certain depreciation deductions for businesses with an aggregated turnover below $500 million.
The amount that an eligible entity can deduct in the income year in which an eligible depreciating asset is first used or installed ready for use is:
Different rules will apply where an SBE is using the general small business pool (i.e., for assets not qualifying for the instant asset write-off). In this case, an SBE may deduct an amount equal to 57.5% (rather than 15%) of the business-use portion of the cost of an eligible depreciating asset in the year is it allocated to the pool.
Unless specifically excluded, an eligible asset is a new asset that can be depreciated under Division 40 of the ITAA 1997 (i.e., plant and equipment and specified intangible assets, such as patents), where the asset satisfies all of the following conditions:
Note that a depreciating asset is not an eligible asset where a commitment to acquire or construct the asset was entered into before 12 March 2020.
Support for Coronavirus-Affected Regions, Communities and Industries
The Government has set aside an initial $1 billion to support those regions, communities and industries that have been disproportionately affected by the economic impacts of the Coronavirus, including those heavily reliant on industries such as tourism, agriculture and education. The $1 billion will be spent through existing or newly established Government programs or initiatives. As an initial measure, the Government will waive the Environmental Management Charge for tourism businesses that operate in the Great Barrier Reef Marine Park. The $1 billion fund will also be used to provide additional assistance to help businesses identify alternative export markets or disrupted supply chains. Targeted measures will also be developed to further promote tourism. The Deputy Prime Minister will work with affected industries and communities to develop recovery plans and measures.
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