Federal Government Measures:
The Government has released an updated stimulus package aimed at easing the cost of retaining staff during this difficult period. The features of the stimulus measures being taken by the Government are as follows:
Relief for Small Businesses:
Boosting Cash Flow for Employers:
The main feature of the stimulus package is in the form of a credit payment made to the activity statement account of businesses with employees. This amount is equal to 100% of the PAYG withholding paid, with a minimum of $20,000 and a maximum of $100,000. The cash payment of $100,000 is split into two tranches of $50,000:
1st Tranche – this period covers the period between now and 30 June 2020. The refund on the March BAS is equal to 300% of the PAYG withholding paid for the month of March, up to a maximum of $50,000. If the amount received in March is less than $50,000, then you can receive additional payments in the months of April, May and June. If you’re withholding for this first period is less than $10,000, then you will receive this as a minimum stimulus payment.
2nd Tranche – You will only receive the 2nd payment if you continue to employ and pay staff wages. This period relates to payments of salary 01/07/2020 – 31/10/2020. The amount to be received for this payment is equal to the first tranche, which is to be divided across the remaining lodgements.
Supporting Apprentices and Trainees:
Eligible employers will be provided with a reimbursement of 50% of wages paid to a full-time apprentices and trainees, for up to $21,000 (maximum of $7,000 per quarter) per employee.
- Businesses must employee no more than 20 full-time employees.
- Apprentices and trainees must have begun training before 1 March 2020.
- This subsidy only applies for wage payments made between 1 January 2020 and 30 September 2020.
Stimulus Measures for New Asset Purchases:
Instant asset write-off provisions:
The Australian Government have increased the rules surrounding the instant write-off of business assets.
- Assets purchased with a value below $150,000 may be immediately deducted in your 2020 income tax return. This applies for new and second-hand assets.
- The threshold for businesses that are permitted to use this method has increased from an aggregated turnover of $50 million to $500 million.
- This increased provision applies for assets purchased before 30 June 2020.
Backing Business Investment:
In addition to these provisions, the Government have also introduced a measure to increase the deductibility of the cost of assets used for business.
- This measure applies for all assets purchased – there is no threshold for cost. If a business is eligible, then it may claim a 50% deduction of the initial cost of the new asset, with the remaining value to be depreciated over the asset’s useful life. These rules do not apply to second-hand assets or capital works (structural improvement) assets.
- The annual turnover threshold to be able to access this is also $500 million.
- These provisions apply to all assets purchased before 30 June 2021.
Additional Tax Administration Relief:
- The ATO will allow both individuals and business to defer certain payments for the 2020 financial year.
- PAYG instalment variations may be applied for impacted taxpayers, and previously paid instalments for the 2020 financial year may be refunded if appropriate.
- Low interest payment plans may be granted for ATO debt.
- To assist with cash-flow and to accelerate GST refunds, business with a turnover less the $20 million can elect to prepare monthly instalments, rather than quarterly – if elected, businesses must continue to lodge monthly for at least 12-months.
- Businesses can request remittance of interest and penalties applied to tax liabilities incurred after 23 January 2020.
- Employers must ensure that SG obligations are still being met – there have been no relief measures put in place to vary the due date, so it is imperative for businesses with staff to continue to meet this obligation as normal.
State Government Measures:
Payroll Tax Relief:
The State Revenue Office of Victoria have announced that they will provide relief from payroll tax obligations for employers for the 2020 financial year.
- Employers will be eligible for this relief if their total annual taxable Australian wages is below $3 million
- If eligible, payroll tax liabilities for the 2020 financial year will be waived
- If 2020 tax obligations were paid in instalments throughout the first 8-9 months of the financial year, then these amounts may refunded
- All future payments for this year will not need to be paid.
Land Tax Payment Deferral:
The State Revenue Office have also announced that they will allow for the deferral of 2020 land tax payments.
- You must have at least one non-residential property
- Total landholdings must be below $1 million
- Payments may deferred until after 31/12/2020.
- The State Revenue Office will be contacting eligible land-holders.