The Australian Government announced an economic response to assist the economy last week. I have withheld writing earlier due to difficulty in obtaining the finer details in how it will operate.

I have summarised all items, but have gone into detail where this affects the client base:

Boosting cash flow for employers

Where an employer has annual turnover under $50 million to cover the costs of employee wages and salaries equal to 50 per cent of PAYG withheld for businesses that withhold tax, with a minimum of $2,000 and a maximum of $25,000 over six months from 1 January to 30 June 2020. Businesses that pay salary and wages but are not required to withhold tax will also receive the minimum payment of $2,000. 

How this will operate is:

• The payment will be delivered by the Australian Taxation Office (ATO) as a credit in the activity statement system from 28 April 2020 upon businesses lodging eligible upcoming activity statements.

• Eligible businesses that withhold tax to the ATO on their employees’ salary and wages will receive a payment equal to 50 per cent of the amount withheld, up to a maximum payment of $25,000.

• Eligible businesses that pay salary and wages will receive a minimum payment of $2,000, even if they are not required to withhold tax.

The most important thing is for businesses to lodge their activity statements. Once this is done you will then receive the credit for PAYG withheld.

Quarterly lodgers will be eligible to receive the payment for the quarters ending March 2020 and June 2020.

Monthly lodgers will be eligible to receive the payment for the March 2020, April 2020, May 2020 and June 2020 lodgements.

To provide a similar treatment to quarterly lodgers, the payment for monthly lodgers will be calculated at three times the rate (150 per cent) in the March 2020 activity statement.

Supporting Apprentices and Trainees

Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage paid during the 9 months from 1 January 2020 to 30 September 2020.

Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).

How this will operate is:

  • The subsidy will be available to small businesses employing fewer than 20 full-time employees who retain an apprentice or trainee. The apprentice or trainee must have been in training with a small business as at 1 March 2020.
  • Employers can register for the subsidy from early-April 2020. Final claims for payment must be lodged by 31 December 2020.
  • Further information is available at: • The Department of Education, Skills and Employment website at: www.dese.gov.au
  • Australian Apprenticeships website at: www.australianapprenticeships.gov.au
  • For further information on how to apply for the subsidy, including information on eligibility, contact an Australian Apprenticeship Support Network (AASN) provider.

Enhancing the instant asset write-off

The Government is increasing the instant asset write-off (IAWO) threshold from $30,000 to $150,000 and expanding access to include all businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.

The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets. This proposal applies from announcement until 30 June 2020, for new or second-hand assets first used or installed ready for use in this timeframe.

Investment Incentive

  • A deduction of 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost 
  • Applies to businesses with aggregated turnover below $500 million
  • Eligible assets are new assets that can be depreciated under Division 40 of the ITAA97 (i.e. plant, equipment and specified intangible assets) acquired after today’s announcement and first used or installed by 30 June 2021

Stimulus payments to households

The Government will provide a one-off $750 payment to around 6.5 million social security, veteran and other income support recipients and eligible concession card holders

There will be one payment per eligible recipient. That is, if a person qualifies for the one-off payment in multiple ways, they will only receive one payment.

The one-off payment will be paid automatically from 31 March 2020 by Services Australia or the Department of Veterans’ Affairs. Over 90 per cent of payments will be made by mid-April 2020.

ATO Administrative Relief

The Australian Tax Office (ATO) will provide administrative relief for certain tax obligations (similar to relief provided following the bushfires) for taxpayers affected by the Coronavirus outbreak, on a case-by-case basis. The ATO will set up a temporary shop front in Cairns within the next few weeks with dedicated staff specialising in assisting small business. In addition, the ATO will consider ways to enhance its presence in other significantly affected regions to make it easier for people to apply for relief, including considering further temporary shop fronts and face-to-face options. Eligibility All taxpayers affected by the Coronavirus outbreak can contact the ATO for assistance. Taxpayers can contact the ATO on 1800 806 218 or visit the ATO website at ato.gov.au for further information.

Should you have any questions on the items above please contact me or the staff on 02 9923 2959 or mark@mcaccg.com.au

In the event that the office is forced to be shut down, please contact Mark on 0439 992 838.