On Point Tax

Business, Taxes And COVID-19

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The Federal Government Response Is Extended

Over the weekend both the Prime Minister and Treasurer made various announcements regarding additional support during the coronavirus pandemic. This morning, the treasury website has been updated with very useful information which may be found here: https://treasury.gov.au/

I would like to put here all the relevant information for my clients and attached to this email are the 10 fact-sheets from Treasury which I will provide brief notes on below to help you get to relevant information for you and your business more quickly:

  1. Economic Response the Coronavirus

    • The stimulus package from 12 March and 23 March combined is now worth $189 Billion, which is approx 10% of Australian GDP
  2. Delivering Support for Business Investment

    • Instant Asset Write Off
    • The instant asset write off threshold is now $150,000 (up from $30,000) and now covers businesses with a grouped annual turnover of less than $500 million (up from $50 million)
    • Note: The instant asset write off threshold will revert back to $1,000 from 1 July 2020 (however some sort of extension is widely expected from the business community)
    • Does not include structural work, buildings, renovations
    • Car depreciation is still capped at $57,581
    • Asset must be first used or installed by 30 June 2020
    • Backing Business Investment:
    • 50% deduction of eligible assets on installation first used or installed by 30 June 2021 * See fact sheet for more
  3. Cash flow assistance for business

    • Applies if aggregated annual turnover is under $50,000
    • Minimum payment $20,000, up to $100,000 tax free
    • Payment is delivered by the ATO as an automatic credit in the activity statement system
    • Supporting Apprentices and Trainees
    • Eligible employers can apply for a wage subsidy of 50% of apprentice or trainee wages paid 1 Jan 2020 to 30 Sep 2020
    • Employers reimbursed up to a maximum $21,000 per eligible apprentice ($7,000 per quarter)
    • Employers can register for the subsidy from early April 2020, final claims must be lodged by 31 December 2020 * See fact sheet for more
  4. Payments to Support Households

    • Two separate payments of $750 to social security, veteran and other income support recipients
    • First payment (announced 12 March 2020) will be available to people who are eligible payment recipients and concession card holders any time from 12 March 2020 to 13 April 2020 inclusive
    • Second payment available to people who are eligible payment recipients and concession card holders on 10 July 2020
    • A person can be eligible to receive both a first and second support payment, however they can only receive one $750 payment in each round of payments
    • See fact sheet for more
  5. Assistance for severely affected regions and sectors

    • $1 billion to support:
    • Tourism
    • Agriculture
    • Education
    • See fact sheet for more
  6. Early Access to Superannuation

    • Eligible individuals will be able to apply online through myGov to access up to $10,000 of their super before 1 July 2020 and a further $10,000 from 1 July 2020 if you meet any of the following requirements
    • On or after 1 January 2020: 1. You were made redundant 2. Your working hours were reduced by 20% or more 3. If you are a Sole Trader – your business was suspended or there was a reduction in your turnover of 20% or more
    • The payments from super are tax free and do not affect Centrelink or veteran affairs payments
    • Naturally, the withdrawal reduces your retirement savings and you will need to consider the overall impact on your retirement plans. There is no information on whether you will be allowed to re-contribute the money at a later stage outside the normal contribution caps Apply on mygov.au (which recently has been offline due to being unable to cope with the demand)
    • If you are a member of a SMSF -> separate arrangements will apply, TBA
    • See fact sheet for more
  7. Providing Support For Retirees

    • Temporary reduction in super minimum drawdown requirements
    • See fact sheet for more
  8. Temporary Relief for Financial Distressed Businesses

    • A temporary increase in the threshold at which creditors can issue a statutory demand on a company
    • A temporary increase in the threshold for a creditor to initiate bankruptcy proceedings
    • Temporary relief for directors from any personal liability for trading while insolvent
    • Temporary flexibility in the Corporations Act to provide targeted relief for companies from provision of the Act to deal with unforeseen events that arise as a result of the Coronavirus
    • See fact sheet for more
  9. Supporting the Flow of Credit

    • Coronavirus SME (Small & Medium Enterprises) Guarantee Scheme
    • The government will provide a guarantee of 50% to SME lenders for new unsecured loans to be used for working capital
    • Maximum total size of loan $250,000 per borrower
    • Loans up to three years with initial 6 month repayment holiday
    • Loans in the form of unsecured finance, i.e. no asset used as security for the loan
    • See fact sheet for more
  10. Income Support for Individuals

    • Coronavirus Supplement: paid at $550 per fortnight to existing and new recipients of:
    • JobSeeker payment (and all payments progressively transitioning to JobSeeker payment à see fact sheet)
    • Youth Allowance JobSeeker
    • Parenting Payment (Partnered and Single)
    • Farm Household Allowance
    • Special Benefit Recipients
    • Expanded access to the income support payments listed above. Reduced means testing and reduced waiting times
    • Accelerated claim process
    • Streamlined application process
    • Flexible job seeking arrangements
    • ABC News article: https://www.abc.net.au/news/2020-03-23/coronavirus-supplement-payment-what-is-it-and-how-to-apply/12080326
    • See fact sheet for more

NSW State Government Support For Business And Employees

NSWPayroll Tax

  • https://www.revenue.nsw.gov.au/taxes-duties-levies-royalties/payroll-tax
  • Payroll tax relief for businesses with grouped Australian wages of no more than $10 million
  • Payroll tax customers whose total grouped Australian wages for the 2019/20 financial year are no more than $10 million will have their annual tax liability reduced by 25% when they lodge their annual reconciliation, which is due on 28 July.
  • For those customers who lodge and pay monthly and whose total Australian wages will be no more than $10 million for the current financial year, no payment for the months of March, April or May 2020 will be required.
  • When lodging your annual reconciliation, you will still need to provide wage details paid in these months and will receive the benefit of a 25% reduction in the amount of tax you would have had to pay for 2019-20.
  • Threshold increase - 2020/2021 financial year: The tax-free threshold will increase from $900,000 to $1 million for the financial year commencing on 1 July 2020.

Other ATO Relief

Banks And Insurance Companies

I hope you are all well and safe. This is a continually developing space and I will do my best to provide further updates when relevant information is released.

Chartered Accountants Australia and New Zealand
The Tax Institute - Chartered Tax Adviser
Registered Tax Practitioners Board - Tax Agent 25996489

Our Managing Director Chris Dugan is a Fellow of Chartered Accountants Australia New Zealand, a Chartered Tax Adviser and a Fellow of the Tax Institute of Australia.

Call to have a confidential discussion about any tax or business needs.