Keeping you up to date
In this ever changing COVID environment, MBC will do our best to keep you up to date with government announcements with regards to business and individual assistance which will affect our clients and community.
Please continue to watch your email and read the information we send out as it will be important in these trying times.
Should you wish to discuss any concerns regarding your business, or the information below, please don’t hesitate to reach out to the MBC Team.
Coronavirus Stimulus Practical Application
Federal Government Initiatives
Instant Asset Write off – up to $150,000
The Instant Asset Write Off will apply immediately (12/03/2020) but it will only apply until the 30/06/2020. As long as it is quite clear on invoices, we can manage this for you when completing your 2019-2020 tax. Just be aware that while this does appear to be of substantial benefit, you still have to outlay the initial cash yourself, and you only get a tax advantage up to your marginal rate. The instant write off only applies to new or second-hand assets first used.
The instant asset write off that previously existed up to $30,000 is also due to expire at the 30/06/2020, it will be probably then be superseded by the below initiative.
Backing Business Investment – accelerated depreciation
This incentive will be available until the 30/06/2021. Practically, this means that unless you spend over $150,000 on an asset before the 30/6/2020 then the instant asset write off will be used instead of this option. From the 12/03/2020 to 30/06/2021 any eligible asset purchased can have 50% of the value claimed as depreciation up front, with the balance subject to normal rules post 30/06/2021. (Note the asset must be first used or installed by 30/06/2021
Practically this may be a nightmare to manage on depreciation schedules unless software changes are implemented.
Eligible assets include new assets that can be depreciated under Division 40 of the Income Tax Assessment Act 1997 (i.e. plant, equipment and specified intangible assets, such as patents) acquired after announcement and first used or installed by 30/06/2021. This does not apply to second hand Division 40 assets, or buildings and other capital works depreciable under Division 43.
Boosting cash flow for employers
The ATO will deliver a payment of between $2,000 to $25,000 to businesses which employ staff and have a turnover of less than $50 million. Eligibility will be based on the prior year’s turnover and the credit will be delivered via the activity statement system (assume this will go on the integrated client account). If this credit would result in a refund on the BAS the refund should be credited back to your account within 14 days. The amount credited will be 50% of the amount withheld (on wages only) up to a maximum of $25,000.
For business that lodge quarterly activity statements, it appears that the credit will be applied to the March and June BAS so we are assuming that it would be spread over the two quarters.
For monthly lodgers the payment will be applied to all the BAS’s from March to June 2020 with the bulk of the payment being paid on the March BAS.
The minimum payment will be applied to the business first lodgement.
Supporting apprentices and trainees
Eligible employers will receive a wage subsidy up to 50 per cent for up to 9 months from 01/01/2020 to 30/09/2020. The subsidy will be available to small businesses employing fewer than 20 employees who retain an apprentice or trainee. The amount of the subsidy is a maximum of $7,000 per trainee per quarter, up to a total of $21,000.
Employers can register from the 02/04/2020 and final claims must be in by 31/12/2020. Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network (AASN) provider. At this stage we believe you need to contact them to find out how to apply. There are 4 main providers in NSW who should be in contact with you directly if you are registered with them. If you haven’t heard from them in a week or so please contact them directly.
Other support measures have been introduced which are primarily targeted at individuals through Centrelink. The new measures include a new, time-limited coronavirus supplement to paid at a rate of $550 per fortnight to both existing and new recipients of the JobSeeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
There is also a smaller targeted response for affected industries but these mainly seem to be applicable to tourism related activities on the Great Barrier Reef.
Some relief will be also available via the ATO but at this stage this is on a case by case basis.
NSW Government Initiatives
1. Effectively businesses with a payroll tax liability will be exempt for the last quarter of this financial year so they will save 25% of their annual payroll tax bill for 2019/2020;
2. The 2020/2021 Payroll tax threshold will be raised to $1 million (currently $900,000);
3. Some specific charges for small business such as bars, cafe’s, restaurants and tradies will be waived.