Do you know what your business might be entitled to under the governments stimulus package?

The Australian economic stimulus package in response to coronavirus includes payments and tax relief. Read more to find out what your business may be entitled to during this period.

On 12 March 2020, the Australian Government released its initial economic response to the coronavirus (COVID-19). The ATO also released a series of administrative concessions for taxpayers to provide relief across most sectors.

UPDATE: Further stimulus packages have since been announced 30 April, including but not limited to a JobKeeper package. Article updated below to outline these.

The below information is taken directly from the Australian Treasury, we encourage you to check back on these resources during this crisis as further stimulus could be implemented.

Stimulating Investment

Increasing the instant asset write-off

From today, the Government is increasing the instant asset write-off threshold from $30,000 to $150,000 and expanding access to include businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020. In 2017-18 there were more than 360,000 businesses that benefited from the current instant asset write-off, claiming deductions to the value of over $4 billion.

Backing business investment incentive

The Government is introducing a time limited 15 month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating depreciation deductions. Businesses with aggregated annual turnover of less than $500 million per annum will be able to deduct 50 per cent of the cost of an eligible asset upon installation, provided it was acquired after 12 March 2020 and first used or installed by 30 June 2021. There is no asset value threshold for this 50% investment incentive. Existing depreciation rules applying to the balance of the asset’s cost.

Cash flow assistance for businesses

Boosting cash flow for employers

Up to a $25,000 tax-free payment to small and medium-sized businesses with aggregated annual turnover of less than $50 million that employ workers, between 1 January 2020 and 30 June 2020. These eligible businesses will receive a payment equal to 50% of their PAYG withheld, delivered as a credit in their BAS from March to June 2020, with a minimum $2,000 payment and up to a cap of $25,000.

Supporting apprentices and trainees

Eligible small business employers will be able to apply for a wage subsidy of 50% of the apprentice’s or trainee’s (in training as at 1 March 2020) wage for up to 9 months from 1 January to 30 September 2020, up to $21,000 per apprentice. Employers can register for the subsidy from early April 2020 with final claims for payment due by 31 December 2020.

Non-tax measures

Stimulus payments

A one-off $750 payment will be available from 31 March 2020 to social security, veteran and other income support recipients and eligible concession cardholders including pensioners. There will be one payment per eligible recipient.

UPDATE: there will now be a second payment of $750 made in July 2020.

Assistance for severely affected regions

The Government has set aside $1 billion to support those regions and communities that have been disproportionately affected by the economic impacts of COVID-19, including those heavily reliant on industries such as tourism, agriculture and education.

ATO relief

In addition to these government stimulus, the Australian Taxation Office (ATO) announced on 12 March 2020, a series of administrative concessions to assist businesses impacted by COVID-19, which include:

  • Payment deferrals – deferring by up to 4 months the payment of tax amounts due through the BAS (including PAYG instalments), income tax assessments, FBT assessments and excise by affected businesses;
  • Change GST reporting cycle – allowing affected businesses on a quarterly reporting cycle to change to a monthly GST reporting cylce to obtain quicker access to GST refunds;
  • Vary PAYG instalments – allowing affected businesses to vary PAYG instalment amounts to zero for the March 2020 quarter. Businesses that do this can also claim a refund for any instalments made for the September 2019 and December 2019 quarters;
  • Remitting interest & penalties – remitting any interest and penalties, incurred by affected businesses on or after 23 January 2020, that have been applied to tax liabilities; and
  • Low interest payment plans – affected businesses may be able to enter into low-interest payment plans for their existing and ongoing tax liabilities.

New JobKeeper & PLUS the Cash Boost Stimulus

Resident Financial Coach, Michael Wark summarises the Job Keeper and cash payments available for Small Business and Individuals.

Key Assistance Available for Small Business:

  1. JobKeeper Wage Subsidy of $1500 a fortnight (Announced 30th March). This is a huge lifeline for a lot of small businesses right now. It’s paid to employers who will pass this onto employees in full.
  2. Cash Boost payment for entities with staff
  3. Cash Subsidy to keep employing apprentices & trainees
  4. Easier access to unsecured loans from banks
  5. What the ATO is doing to help us through this period – outlined above.

If your staff member is on $1,700 a fortnight currently. They continue to get paid this, and government will subsidise you $1,500 for them. This reduces your wage bill to $200 a fortnight.

If your staff member normally receives LESS than the $1,500 payment per fortnight – congrats! They now get a raise to $1,500 and can step up their involvement in your business.

JobKeeper Wage Subsidy

Key Assistance Available for Households & Individuals:

  1. Job Seeker Payments Doubled
  2. Defer your home loan by 6 months
  3. Access up-to 20k of your superannuation
  4. Support available for pensioners & retirees

Bean Ninjas Comment

PAYG obligations will need to be managed carefully as businesses may still be required to meet their full payment obligation and then receive a rebate. Good cash flow planning is essential to manage this.

Super guarantee payments cannot be changed as these are prescribed by law, if you hare having trouble meeting these contact the ATO.

Instant asset write-off is a great investment booster for the economy but it is limited in helping businesses already making a loss. Be sure to assess any investment decision prudently as your business navigates through the economic challenges the economy is facing.

This year tax planning is more essential than ever! Speak to your accountant now, if you haven’t.

These measures offer a great deal to small business over the coming months, be sure to keep an open line of communication with your bank, accountant, creditors, including the ATO! Seeing the ice-burg before it hits is key, but keeping 3rd party stake-holders abreast of financial management issues is also crucial.

Related reading: Some helpful tips for small businesses in an uncertain time

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