What does this mean for your business?

The Coronavirus pandemic has had a whirlwind effect on Australia and the world. Apart from the obvious health issues associated with COVID-19, some businesses have been forced to close, schools have been put on high alert, and employers are scrambling to ensure the right policies are in place for the safety and wellbeing of their employees.

In response to the pandemic, the Federal Government has today announced a $17.6 billion stimulus package made up of four elements.

The 4 Elements

1. Support business investment by:

  • Increasing the instant asset write-off threshold from $30,000 to $150,000 until 30 June 2020 and expanding access to include businesses up to an aggregated turnover of $500 million (previously $50 million). This applies to purchases made from 12 March 2020 through to 30 June 2020; and
  • Introducing a depreciation incentive (through to 30 June 2021) by accelerating depreciation deductions. Businesses with a turnover of less than $500 million will be able to deduct 50% of the cost of a depreciable asset, with existing depreciation rules applying to the balance of the asset's cost.

2. Cash flow assistance for businesses by:

  • Providing a Tax-free payment of 50% of Pay As You Go (PAYG) withholding from 1 January 2020 to 30 June 2020. A minimum of $2,000 and maximum of $25,000 will be made available to eligible businesses; and
  • Supporting businesses who employ apprentices and trainees with a 50% wage subsidy of apprentices and trainees' wages for up to nine months from 1 January 2020.

3. Stimulus payments to households to support growth by:

  • Providing a one-off $750 payment to pensioners, social security, veteran and other income support recipients and eligible concession card holders.

4. Assistance to severely affected regions by:

  • Supporting those sectors, regions and communities that have been disproportionately affected by the economic impacts of the COVID-19, including those heavily reliant on industries such as tourism, agriculture and education.

ATO Response to Stimulus Package

The ATO has responded to the stimulus package by stating that they understand this is a time of significant uncertainty and that the ATO will be flexible in assisting businesses.

Options available to assist businesses impacted by COVID-19 include:

  • Deferring the payment date of amounts due on business activity statement (including PAYG instalments), income Tax assessments, fringe benefits Tax assessments and excise by up to four months;
  • Allowing businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get quicker access to GST refunds they may be entitled to;
  • Allowing 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 on or after 23 January 2020, that have been applied to Tax liabilities; and
  • Working with affected businesses to help them pay their existing and ongoing Tax liabilities by potentially allowing them to enter low interest payment plans.

Employers will still need to meet their ongoing super guarantee obligations for their employees.

What does this mean?

The above information briefly summarises the economic stimulus package as released by the Federal Government today. We strongly recommend talking with your usual Hall Chadwick adviser to determine how you can maximise the potential benefits arising out of this government initiative.