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Hit by the bushfire, Coronavirus (COVID-19) and global economy downturn, the Federal Government has announced a $17.6 billion Stimulus Package on 12 March 2020 to maintain Australians in jobs, keep businesses in business and support the severely-affected industries. The stimulus is temporary, targeted and extensible. So what benefit does small and medium business can receive from this Stimulus Package?  It falls into the four main parts:

  • Pay up to $25,000 to employers to help cash flow.
  • Deliver 50% of the wage assistance to small business for each apprentice and trainee they employ.
  • Increase instant assets write-off threshold to $150,000 (from $30,000 previously).
  • Accelerate investment depreciation of 50%.

Cash payment to employer

Eligible employers who paid PAYG Withholding tax to ATO are entitled to an assistance of 50% of the withhold amount with a maximum of $25,000. Businesses that pay salary and wages but are not required to withhold tax will also receive the minimum payment of $2,000. This will be a TAX-FREE payment.

WHO are eligible

Business with a turnover of less than $50 million that employ staff between 1 January 2020 to 30 June 2020.

WHEN can they receive

Business will automatically receive the payment of 50% through their Business Activity Statement (BAS) or Instalment Activity Statement (IAS) from 28 April with refund to then be paid within 14 days.

Apprentices and trainees wage subsidy

Eligible employers can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage for up to 9 months starting from 1 January 2020 to 30 September 2020. Business is entitled to up to $21000 wage subsidy for each eligible apprentice or trainee they employ.

WHO are eligible

Small business with less than 20 full-time employees who employ an apprentice or trainee.

WHEN can they receive

Eligible business can start registering for the subsidy from April 2020. Get in touch with Australian Apprenticeship Support Network (AASN) for further information including registration and eligibility. Please be aware the application must be submitted before 31 December 2020.

Increase instant asset write-off threshold

Instant asset write-off threshold has been increased from $30,000 to $150,000 which will become effective from 12 March 2020 to 30 June 2020. It applies to the newly acquired assets and second-hand assets including equipment, tools and motor vehicles etc.

WHO are eligible

Business with aggregated annual turnover of less than $500 million (from $50 million previously).

WHEN can they receive

You will get the instant asset write- off when you lodge your tax return. The proposal applied from 12 March 2020 to 30 June 2020 only for the assets mentioned above.

Accelerating Depreciation Deductions

From 12 March 2020 to 30 June 2021, businesses are able to deduct an additional 50% of the cost of an eligible asset in the year of purchase. It aims to support business investment and economic growth over the short term. No limit on the value of the asset.

WHO are eligible

It applies to the new assets under DIV 40 of the ITA Act 1997 acquired by the business whose aggregated annual turnover of less than $500 million.

Please be aware that the second – hand assets and assets under DIV 43 of the ITA Act 1997 are not included.

WHEN can they receive

The deduction becomes available when you lodge your tax return. Only assets acquired and installed from 12 March 2020 to 30 June 2021 are entitled to the support.

Other assistance

Besides, stimulus payments to households and targeted affected industries:

  • $4.8 billion to provide a one-off $750 tax free stimulus payment to pensioners, veteran, other income support recipients and eligible concession card holders.
  • $1 Billion is used to offer support to those sectors, regions and communities that have been heavily affected by the Coronavirus, including tourism, agriculture and education industry.  This will include the waiver of fees and charges for those who operates business in Commonwealth National Park. It will also include to assist business with identifying alternative export markets or supply chains.
  • Additional money will be put in place to promote domestic tourism development.

ATO relief

On 12 March 2020, ATO also announced a series of administrative relief to further assist business affected by the COVID-19 outbreak. This includes:

  • Defer the payment for debt via tax lodgement such as income tax, activity statement (BAS), instalments activity statement (IAS), FBT and exercise payments by up to four months.
  • Business on a quarterly reporting cycle are able to change their GST cycle to monthly cycle in order to get quicker access to GST refund if they are entitled to.
  • Affected business can adjust their PAYG instalment to ZERO for the April 2020 quarter. They are also entitled to claim a refund for any instalment made for the September 2019 and December 2019 quarters.
  • Where business is affected by COVID-19, ATO will consider remitting interest and penalties applied to tax liabilities incurred on or after 23 January 2020.
  • Affected business are allowed to enter into a low interest payment plan if they have existing and ongoing tax liabilities with ATO.

Please be noted, the ATO relief is not automatic; rather, it needs to be applied for. Pitt Martin Accountants & Tax Advisers are registered tax agent and able to assist you with the application. If you are not sure about the Stimulus Package and want to know more about it. Please get in touch with us on 02 92213345 or connect@pittmartin.com.au.

Disclaimer: This article is not providing a formal advice and may not suit to all scenarios. Please make an appointment with us to discuss.