- Increasing the instant asset write-off
The instant asset write-off allows a business to immediately write off and claim the value of an asset that does not exceed the current threshold. 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) on assets purchased after 12 March 2020 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.
- Time Limited Business Investment Incentive (available on investments through to 30/06/2021)
The Government is introducing an investment incentive (on assets that exceed the $150,00 immediate write off) that will benefit businesses by accelerating depreciation deductions. Businesses with a turnover of less than $500 million will be able to deduct 50 per cent of the cost of an eligible asset in the year of purchase, with existing depreciation rules applying to the balance of the asset’s cost (50% total cost then 30% on remaining portion in the 1st year) .
- Boosting cash flow for employers
The Government is enhancing the Boosting Cash Flow for Employers measure it announced on 12 March 2020. The Government is providing up to $100,000 to eligible small and medium-sized businesses, and not for-profits (NFPs) that employ people, with a minimum payment of $20,000 (in total over the 2 payment periods). These payments will help businesses and NFPs with their cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff. This comes in the form of a reduction of PAYG liability on the activity statement when lodged with the ATO.
Small and medium-sized business entities with aggregated annual turnover under $50 million and that employ workers are eligible. NFPs, including charities, with aggregated annual turnover under $50 million and that employ workers will now also be eligible. This will support employment at a time where NFPs are facing increasing demand for services.
Under the enhanced scheme, employers will receive a payment equal to 100 per cent of their salary and wages withheld (up from 50 per cent), with the maximum payment being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000 (for the period January to June 2020).
An additional payment is also being introduced in the July – October 2020 period. Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments they have received. This means that eligible entities will receive at least $20,000 up to a total of $100,000 under both payments.
- Apprentice wage subsidy (available from 01/01/2020 – 30/09/2020)
The Government is supporting small business to retain their apprentices and trainees. Eligible employers with aggregated annual turnover less than $50 million can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage for up to a maximum of 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. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
- Temporary relief for financially distressed businesses
The Government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive. The package also includes temporary relief for directors from any personal liability for trading while insolvent, and providing temporary flexibility in the Corporations Act 2001 to provide temporary and targeted relief from provisions of the Act to deal with unforeseen events that arise as a result of the Coronavirus health crisis.
The ATO will tailor solutions for owners or directors of business that are currently struggling due to the Coronavirus, including temporary reduction of payments or deferrals, or withholding enforcement actions including Director Penalty Notices and wind-ups.
- Support for immediate cash flow needs for SMEs
Under the Coronavirus SME Guarantee Scheme, the Government will provide a guarantee of 50 per cent to SME lenders to support new short-term unsecured loans to SMEs. This will provide businesses with funding to meet cash flow needs, by further enhancing lenders’ willingness and ability to provide credit. This will assist otherwise viable businesses across the economy who are facing significant challenges due to disrupted cash flow to meet existing obligations. These loans are to a maximum of $250,000 guaranteed by the government for a period of 3 years.
The Government is cutting red tape by providing a temporary exemption from responsible lending obligations for lenders providing credit to existing small business customers. This reform will help small businesses get access to credit quickly and efficiently.
- Centrelink Stimulus payments
The Government is providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders (for a full list refer centrelink). The first payment will be made from 31 March 2020 (you must be on an approved centrelink benefit as at 27 April 2020) and the second payment will be made from 13 July 2020 (you must be on an approved centrelink benefit as at 10 July 2020). Around half of those that benefit are pensioners. This payment will help to support confidence and domestic demand in the economy. The second payment will not be made to those eligible for the Coronavirus supplement.
Over the next six months, the Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight. This will be paid to both existing and new recipients of JobSeeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
You will still need to meet the usual centrelink rules.
- Income and assets test
- Residency rules
- Have work to return to.
Furthermore, casual workers who have been stood down from work, don’t need to meet any waiting periods when applying for centrelink benefits.
Sole traders earing less than $1,075 per fortnight can also apply for the supplement.
- Reducing social security deeming rates
On 12 March, the Government announced a 0.5 percentage point reduction in both the upper and lower social security deeming rates. The Government will now reduce these rates by another 0.25 percentage points.
As of 1 May 2020, the upper deeming rate will be 2.25 per cent and the lower deeming rate will be 0.25 per cent. The reductions reflect the low interest rate environment and its impact on the income from savings. The change will benefit around 900,000 income support recipients, including around 565,000 Age Pensioners who will, on average receive around $105 more of the Age Pension in the first full year the reduced rates apply.
- Temporary early release of superannuation
The Government is allowing individuals affected by the Coronavirus to access up to $10,000 of their superannuation in 2019-20 (up till June 30 2020) and a further $10,000 in 2020-21 (1 July 2020 to 30 June 20121). Individuals will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments. This measure applies to all workers and sole traders who have seen a decrease in income from work by more than 20%.
- Assistance for severely affected regions
This measure provides $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. This will include the waiver of fees and charges for tourism businesses that operate in the Great Barrier Reef Marine Park and Commonwealth National Parks. It will also include additional assistance to help businesses identify alternative export markets or supply chains. Targeted measures will also be developed to further promote domestic tourism.
- Temporarily reducing superannuation minimum drawdown rates
The Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50 per cent for 2019-20 and 2020-21. This measure will benefit retirees holding these products by reducing the need to sell investment assets to fund minimum drawdown requirements.
- ATO Concessions
The Australian Tax Office (ATO) is also providing administrative relief for some tax obligations (income tax, BAS, PAYG, FBT and Excise)for people affected by the Coronavirus outbreak, on a case-by-case basis including deferring tax payments up to four months.
General Interest Charges accrued after 23 January 2020 may also be eligible for remission in business affected by Coronavirus. Similarly, if you already have an ATO approved payment plan, you may be eligible to have this plan reviewed with a reduced payment plan approved.
The ATO have stated that all super guarantee payments for employers will still be due by the due dates with no changes to these arrangements
The ATO will set up a temporary shop front in Cairns within the next few weeks with dedicated staff specializing in assisting small business. In addition, it will consider ways to enhance its presence in other significantly affected regions, making it easier for people to apply for relief. The ATO is considering further temporary shop fronts and face-to-face options.
If you need further information from the ATO, they have set up an emergency hotline manned by ATO staff. Ph: 1800 806 218