Further to our message earlier this week around the ongoing situation regarding COVID-19 (Coronavirus), a lot has happened in a short period of time.
This read is a longer one, but well worth your time.
Federal Stimulus Package
On March 12, Prime Minister Scott Morrison announced a series of measures that form the basis of a $17.6bn stimulus package in response to the impact of COVID-19 on the Australian economy. For small businesses, it includes a range of measures designed to lessen the negative effects associated with this pandemic.
Boosting Cash Flow for Employers
This payment is designed to provide temporary cash flow support to small and medium businesses that employ staff. The payment will be tax free. The minimum payment is $2,000 with a maximum payment of $25,000 to eligible businesses. In order to get this payment, your business will need to:
- Have annual turnover of less than $50 million (as reported in the 2019 financial year)
- Employ staff (ie pay salary/wages and remit PAYG Withholding)
- Have lodged all business activity statements up to and including the March & June 2020 quarters when they become due
Eligible businesses that withhold tax to the ATO on their employees’ salary and wages will receive a payment equal to 50 per cent of the amount withheld, up to a maximum payment of $25,000.
For example, if your total amount of PAYG withholding for March to June 2020 is more than $50,000, you will receive the full amount.
The payment will be delivered by the ATO as a credit in the activity statement system based on the lodgements made from March to June 2020. Below is a summary of the lodgements and their due dates.
Please note: should you have existing debts/payment arrangements with the ATO for any of your business accounts, we expect that this cash payment will offset those debts and will not result in a cash refund.
Supporting Apprentices & Trainees
Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage paid during the 9 months from 1 January 2020 to 30 September 2020. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
The subsidy will be available to small businesses employing fewer than 20 full-time employees who retain an apprentice or trainee. The apprentice or trainee must have been in training with a small business as at 1 March 2020.
Employers can register for the subsidy from early-April 2020. Final claims for payment must be lodged by 31 December 2020.
Instant Asset Write-Off Extension
There will be an increase to the instant asset write off threshold from $30,000 to $150,000 and expand access to include businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.
What this effectively means for any small business is that barring a huge capital purchase, any asset bought for the business will be able to be written off for tax purposes in the year it’s purchased. This is a temporary measure and will expire at the end of this financial year.
Cash Payment to support growth
A one-off $750 stimulus payment will be made to pensioners, social security, veteran and other income support recipients and eligible concession card holders. Around half of those that will benefit are pensioners.
The payment will be tax free and will not count as income for Social Security, Farm Household Allowance and Veteran payments. There will be one payment per eligible recipient. If a person qualifies for the one off payment in multiple ways, they will only receive one payment.
Further to the stimulus package announcement, the Australian Taxation Office (ATO) have also announced a series of measures designed to make things easier for small business during this time of uncertainty. Measures include:
- Deferring by up to four months the payment date of amounts due through the business activity statement (including PAYG instalments), income tax assessments, fringe benefits tax assessments and excise
- Allow 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 Pay As You Go (PAYG) instalment amounts to zero for the April 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
- Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low interest payment plans.
What all of this effectively means is that the ATO are ready to play ball if your business needs some temporary assistance in meeting the payments. As always, if you are feeling the pinch, speak to our team and we’ll assist you in negotiating terms with the Tax Office. We’re here to help and have a lot of experience in this area.
State Government Stimulus
Over the past week or so, there has been a lot of buzz around several state governments including NSW, QLD and VIC announcing their own stimulus packages to assist small business.
As of today, nothing has been formally announced but we expect this to be forthcoming in the next few days. Some of the touted assistance potentially includes a payroll tax ‘holiday’, but before we get too excited, best to wait until the details are released. We will keep you updated.
If you have any questions or concerns about how the stimulus package applies to your business, please don’t hesitate to get in touch by calling We’re here to help!