Author Alan Maddick 18/03/2020
Hi there as you are no doubt aware the current Carona virus / Covid 19 crisis is having a large impact on businesses across the country. To help with this the Government has announced some assistance for small business;
INCREASING THE INSTANT ASSET WRITE-OFF
- Threshold increased from $30,000 to $150,000
- Applies to businesses with aggregated turnover of less than $500 million (up from $50 million)
- Applies from the announcement to 30 June 2020
- The $150,000 threshold applies on a per asset basis so eligible businesses can immediately write-off multiple assets
- Applies for new or second-hand assets first used or installed ready for use by 30 June 2020.
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 the announcement and first used or installed by 30 June 2021 (NOTE: This measure does not apply to second-hand Division 40 assets or capital works subject to Division 43).
TAX-FREE PAYMENTS UP TO $25,000 FOR EMPLOYERS
- Tax-free cash flow support between $2,000 and $25,000 will be available to eligible businesses with a turnover of less than $50 million that employ staff between 1 January 2020 and 30 June 2020.
- This is not a direct cash payment but a credit equal to 50% of the PAYG amounts withheld from salary and wages paid to employees. The employer will need to lodge an activity statement to trigger the entitlement. If the credit puts the business in a refund position the excess amount will be refunded by the ATO within 14 days.
- If a business pays salary and wages to employees but is not required to withhold any tax then a minimum payment of $2,000 will still be made.
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 (and this subsidy will be available to a new employer where the business is unable to retain an apprentice)
- Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee (i.e. $7,000 per quarter)
- Eligible small businesses are those employing fewer than 20 full-time employees who retain an apprentice or trainee (with the apprentice or trainee being in training with a small business as at 1 March 2020)
At the date of this article (18th March 2020) the above are just proposed by the federal government. The proposals still need to be written as law, pass the upper house of parliament and then the Tax Office and other involved regulators will add the details so please keep an eye on this and preferably wait until all the laws are in place before making any business decisions based on this.
If you want help claiming your subsidies then please contact our business accountants here