Government Cash and Tax Initiatives for the Economy

Media Release - Friday March 13

The government yesterday has announced range of measures to support the economy, business and employment in the face of the coronavirus health crisis. The measures include the below.

Increasing the instant asset write off

The government is proposing to increase the threshold for the instant asset write off from $30,000 to $150,000 and expand access to businesses with an aggregated annual turnover of up to $500 million (up from $50 million).

Noted - the increase will only be available from 12 March to 30 June 2020 for new or second-hand assets first used or installed ready for use by 30 June 2020.

Trading stock (e.g. broodmares) not eligible for this write-off

Just so you are crystal on how this write-off works, it does not relate to the purchase of trading stock (e.g. broodmares, stallion shares & pin-hook weanlings) or racehorses within an integrated breeding and racing business.

Cash Flow Boost for employers

Employers with an aggregated annual turnover of under $50 million (based on prior year turnover) will receive a payment of $2,000 to $25,000 from the government to help with cash flow.

Businesses that remit PAYG withholding for employees will receive a maximum payment of 50% of the withheld amount (but capped at $25,000).

Quarterly lodgers will be eligible to receive the payment for the quarters ending March 2020 and June 2020.

Monthly lodgers will be eligible to receive the payment for the March 2020, April 2020, May 2020 and June 2020 lodgements. To provide a similar treatment to quarterly lodgers, the payment for monthly lodgers will be calculated at three times the rate (150 per cent) in the March 2020 activity statement.

Example

If the PAYG withholding remitted in the March 2020 quarter BAS is $10,000, the employer will receive a payment of $5,000 (50%) of this amount.

Eligible businesses that pay salary and wages will receive a minimum payment of $2000, even if they are not required to withhold tax.

The payment will be delivered as a credit in the activity statement system from 28 April 2020 upon businesses lodging eligible upcoming activity statements. Where this places the business in a refund position, the ATO will deliver the refund within 14 days.

3. Accelerated deprecation (only for new assets)

For assets not eligible for the above treatment, the government is proposing an accelerated deprecation deduction for eligible assets acquired from 12 March and first used or installed by 30 June 2021. Eligible taxpayers will receive a deduction of 50 per cent of the cost of the eligible asset on installation, with existing depreciation rules applying to the balance. Eligible businesses are those with an aggregated turnover below $500 million. Eligible assets are those that can depreciated under Division 40 of the Income Tax Assessment Act 1997 (that is plant, equipment and specified intangible assets, such as patents), but does not apply to second-hand Division 40 assets, or buildings and other capital works depreciable under Division 43.

Note – in reference to the release I issued only in the last few days, these new rules do not impact on the new 100% write-offs for fencing and water facilities for all eligible primary producers.

Apprentice and trainee wage subsidy

The government will offer employers a wage subsidy of 50 per cent of an apprentice’s or trainee’s wage from 1 January to 30 September 2020, capped at $7000 each quarter per each eligible apprentice or trainee. Businesses with less than 20 full-time staff will be eligible, however employers of any size and Group Training Organisations that re-engage an eligible out-of-trade apprentice or trainee will continue to be eligible for the subsidy.

5. Direct payment to individuals

the government will make a one-off payment of $750 to around 6.5 million social security, veterans and other income support recipients and eligible concession card holders residing in Australia.

6. ATO support measures for those affected by coronavirus outbreak

The ATO will implement a series of administrative measures to assist Australians experiencing financial difficulty as a result of the COVID-19 outbreak.

Businesses impacted by the coronavirus are encouraged to get in touch with the ATO to discuss relief options. Options available to assist impacted businesses include:

deferring by up to four months the payment date of amounts due through the business activity statement (BAS, including PAYG instalments), income tax assessments, FBT assessments and excise;
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 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.

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

Unlike the bushfire relief measures, which applied automatically to particular geographic areas, assistance measures for those impacted by COVID-19 will not be automatically implemented.

If you wish to expand or clarify on any of the above matters raised above, please do not hesitate to contact me.

End of release.

Prepared by:

PAUL CARRAZZO CA

CARRAZZO CONSULTING PTY LTD