Government stimuli & help packages - COVID-19
On 12 March 2020 the Federal Government announced a $17.6 billion economic stimulus package to support the Australian economy and households while dealing with the significant challenges posed by the spread of the coronavirus, COVID-19. The Australian Taxation Office has also announced help for affected businesses as has the NSW Government this morning.
The Federal Government announced package has four parts:
1. Support for business investment:
- increase the instant asset, tax deductible write off threshold from $30,000 to $150,000 for eligible assets purchased from 12 March 2020 until 30 June 2020 by businesses with aggregated annual turnover of less than $500 million. Eligible assets include both new and second-hand assets.
- provide an investment incentive for eligible assets purchased from 12 March 2020 to 30 June 2021 by accelerating depreciation tax deductions on eligible asset purchases. Businesses with a turnover of less than $500 million will be able to deduct 50 per cent of the cost of the asset in the year that it is purchased providing it is installed ready for use by 30 June 2021 and the usual depreciation provisions will apply to the other 50 per cent. Eligible assets must be new and do not include buildings or building works or improvements.
2. Cash flow assistance for businesses:
- businesses with a turnover of less than $50 million that employ staff between 1 January 2020 and 30 June 2020, will be able to receive a tax free payment from between $2,000 to $25,000. It will be received by businesses as credit in either their Business Activity Statements (BAS) or Instalment Activity Statement (IAS) lodged from 21 April 2020. The credit will be equal to 50 per cent of the PAYG withheld as shown in each BAS or IAS up to a maximum credit of $25,000. Even if employers do not have any PAYG withheld they can still receive $2,000.
- eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for up to 9 months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.
3. Stimulus payments to households:
- a one-off $750 stimulus payment will be made to pensioners, social security, veteran and other income support recipients and eligible concession card holders.
4. Assistance for severely-affected regions:
- $1 billion to support those sectors, regions and communities that have been disproportionately affected by the economic impacts of the Coronavirus, including those heavily reliant on industries such as tourism, agriculture and education. More detail around this will be released in conjunction with affected industries and communities.
To implement the stimulus plan, a package of Bills will be introduced into Parliament in the final Autumn sitting week in March 2020 for Parliament’s urgent consideration and passage.
The Federal Government has also announced that further stimulus packages may be released.
ATO support measures to assist those affected by COVID-19
The ATO has also announced it will implement a series of administrative measures to assist taxpayers experiencing financial difficulty as a result of the COVID-19 outbreak.
Options available to assist businesses impacted by COVID-19 include:
- Deferring by up to four months the payment date of amounts due through Business Activity Statements (BAS) and Instalment Activity Statements (IAS), income tax assessments, fringe benefits tax assessments, etc.;
- Allow businesses on a BAS 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 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;
- Allow affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low interest payment plans.
The ATO support is not automatic and will be assessed on a case by case basis by the ATO. People will need to contact the ATO to request assistance on the Emergency Support Infoline 1800 806 218, when they are ready, to discuss their situation. As tax agents we can also deal with the ATO on behalf of affected clients.
NSW Government Announcement
The NSW government announced this morning a stimulus package for business which includes:
- A three month waiver of payroll tax for businesses with payrolls of up to $10 million for the months of April, May and June 2020;
- An increase in the annual payroll tax threshold to $1 million for the year commencing 1 July 2020;
- The waiver of a range of fees and charges for small business including bars, cafes, restaurants and tradies.
We await the complete supporting details on the above to be released by the NSW Government.