Government business stimulus package #2 - 23.03.2020
The rapidly evolving nature of the coronavirus and the government stimulus packages that have been used to keep the economy afloat are, understandably, a topic of conversation for many people, especially those that own , operate or work for small businesses. The team at MBH are doing our best to keep our clients informed with these updates.
Please be sure to have a look at the article we published last week which includes some other stimulus measures put in place by the government, some of which have been updated in the information below. For further notifications, we will also be positing updates to our Facebook site, so please give us a like to stay informed.
On the 22nd of March, the government made further announcements to the economic stimulus plan that it rolled out last week. This announcement included an increased boost to small businesses through rebates of PAYGW, changes to benefits provided through Centrelink for casual employees and sole traders and changes to laws allowing the early access of superannuation. There has also been a relief package released by the Western Australian State Government for Payroll Tax obligations.
Boosting cash flow for employers –
The government is now providing up to $100,000 to eligible small businesses and not for profits, with a minimum payment of $20,000. This is a significant increase to the payments proposed in last week’s media release and will go a long way to help provide some relief to small businesses. To be eligible to receive this, your business must fill the following criteria –
The business was registered for PAYGW prior to the 12th of March 2020.
The business has a turnover of under $50 million.
The business continues to be active.
These payments are made up of two parts. The first is a ‘Boosting cash flow for employers’ payment which will be received in the March and June quarterly activity statements, with a follow up payment which will be received in the June – September activity statements. These payments will be delivered as an automatic credit in the activity statement account, which will work to offset your BAS obligations. Any excess funds will be refunded to the business within 14 days.
Quarterly lodgers will receive the initial payment in their March and June 2020 activity statement. This is calculated as the businesses PAYGW for the quarter, up to a maximum of $50,000, with a minimum payment of $10,000. The business will also receive additional payments to match this in the June and September 2020 activity statements. Depending on the amount of PAYGW paid by the business, this could result in $100,000 of relief in the form of credits to the businesses ATO BAS account (with any excess being paid back to the business).
For monthly activity statement lodgers, the initial payment will be delivered as an automatic credit in the March 2020 activity statement. The amount to be received back is three times the PAYGW declared in the March 2020 activity statement. The rest of the entitlement will then be credited from the April, May and June activity statements, up to $50,000 (depending on the amount of PAYGW withheld). As is the case with quarterly instalments, the business will then receive additional payments to match this payment in the June, July, August and September activity statements.
We realise this may be somewhat confusing, which is completely understandable. We have found some worked examples of how this would work practically on the government website, please click here to see these examples.
Backing Business investment –
The Government is increasing the instant asset write off threshold from $30,000 to $150,000 and also increasing the eligibility for this by including all businesses with a turnover of up to $500 million. This increase in the instant asset write off applies immediately until the 30th of June 2020 and will assist small businesses by providing extra incentive to purchase assets for their businesses that cost up to $150,000. Previously any assets purchased above $30,000 had to be depreciated over their useful life. These new measures allow an immediate deduction for assets up to $150,000. As it stands, there is still no guidance from the ATO as to how this works for the purchase of non-commercial vehicles (ie. cars), which currently have a depreciation and GST limit of $57,581.
Another measure taken to increase business investment is to offer businesses accelerated depreciation rates to assist with depreciation deductions when completing tax returns. This measure allows 50% of the initial purchase price to be written off immediately, with the remainder depreciated at 30%. This is limited to a 15 month investment incentive (through to 30th of June 2021). This measure applies to businesses with a turnover under $500 million and applies to assets purchased after the 12th of March 2020.
It must also be noted that both of these measures are not a cash stimulus as such, but will provide significant tax relief for business owners when they complete their 19/20 tax returns.
Payroll Tax Relief – Western Australian State Government -
The WA state government has also come to the party, bringing forward the payroll tax threshold increase of $1 million to the 1st of July 2020. Employers with $7.5 million or less in annual taxable wages, who have been impacted by the coronavirus, can apply to defer their monthly payroll tax payments until 21/07/2020.
There is also a one-off grant of $17,500 that is available for employers with annual taxable wages of $1 million - $4 million, these will be paid automatically by cheque from July.
For our client’s interstate, please check to see if your respective state has brought in any relief measures.
Temporary changes to superannuation laws –
Special access to existing superannuation is available to those who have experienced significant reductions to their income. Our friends at Heffron Superannuation have provided an in depth review of this measure, which can be accessed here.
Financial assistance for casuals and sole traders –
Individuals who are sole traders, or employed as casual employees, that have found themselves affected by the economic downturn will be able to access a ‘coronavirus supplement’ payment of $550 a fortnight for the next 6 months. Sole traders and casual workers who are currently making less than $1,075 a fortnight will be eligible to receive the full supplement payment. This payment will be received on top of other benefits.
It is likely that there will be further stimulus package announcement as the days and weeks roll on. We will advise our clients as more information comes to hand however, in the meantime, please don’t hesitate to contact us for further clarification.
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