Current Information As of 24 March, 2020.

Below is information regarding the Federal Government Coronavirus Stimulus Packages and ATO announcements introduced to us as of today.
The Government intends to introduce legislation in late March 2020 to implement them. Once the legislation receives royal ascent, we will know more concrete details on them.

 

Federal Government Coronavirus 1st Stimulus Package

1. Increasing the instant asset write off
Increasing the instant asset write-off threshold from $30,000 to $150,000 if your aggregated annual turnover is less than $500 million (for the period 12 March 2020 to 30 June 2020). Eligible assets are Depreciating assets (whether new or second-hand) first used, or installed ready for use in the period.

Example
You carried on a business via a company. The company has a new truck for $149,999 (GST exclusive) for use in the business on 19 March 2020.
Under existing tax arrangements, the company would depreciate the truck using the small business simplified depreciation pool. Under the pooling rule, the company would deduct 15 per cent of the asset’s value upon entry to the pool, leading to a tax deduction of $22,499.85 for the 2019-20 income year.
Under the new IIAWO, the company would instead claim an immediate asset write off and claim a deduction of $149,999 for the 2019-20 income year. This is $127,499.15 more than under the existing arrangements. At the company rate of 27.5 per cent, the company will pay $35,062.27 less tax in the 2019-20 income year.

2. Backing business investment
The accelerating depreciation deduction is available if your aggregated annual turnover is less than $500 million. You can deduct 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset cost (for the period 12 March 2020 to 30 June 2021). Eligible assets are Depreciating assets (only new assets not for second-hand assets) first used, or installed ready for use in the period.

Example
You carried on a business via a company. The company has a new truck for $260,000 (GST exclusive) for use in the business on 19 March 2020.
Under existing tax arrangements, the company would depreciate the truck using the small business simplified depreciation pool. Under the pooling rule, the company would deduct 15 per cent of the asset’s value upon entry to the pool, leading to a tax deduction of $39,000 for the 2019-20 income year.
Under the new BBI, the company would instead claim an up-front deduction of 50 per cent of the truck’s value ($130,000) before placing the asset in the small business simplified depreciation pool. The company would then claim a further 15 per cent deduction on the depreciated value of the truck ($19,500). As a result of the two deductions, the company is able to claim a deduction totalling $149,500 in the 2019-20 income year, $110,500 more than under existing arrangements. At the company rate of 27.5 per cent, the company will pay $30,387.50 less tax in the 2019-20 income year.

3. Boosting cash flow for employers
Up to $25,000 back to small and medium-sized business, with a minimum payment of $2,000 if your aggregated annual turnover is less than $50 million and you employ workers (period 1 January 2020 to 30 June 2020). Note that the payment will be benchmarked to 50 per cent of the amount withheld on employee’s salary and wages (e.g., if you withheld $40,000 for the March 20 quarter, you get a payment of $20,000 not $25,000. If you withheld $80,000 for the March 20 quarter, you get a payment of $25,000 not $40,000).

The payment will be delivered by the ATO as a credit in the BAS system from 28 April 2020 when you lodge upcoming activity statements.
• 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 lodgement months of March 2020, April 2020, May 2020 and June 2020. To provide a similar treatment to quarterly lodgers, the payment will be calculated at three time the rate (150%) in the March 2020 activity statement.
• Minimum payment will be applied to the business’s first lodgement.

4. Supporting apprentices and trainees
Eligible employers (i.e., small business who employ less than 20 people) can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage (period 1 January 2020 to 30 September 2020). The maximum is $7,000 per quarter. It is expected that these payments will be received via the Australian Apprentices Program.

ATO tailored support plan (some of the relief options will not be automatically applied, so we need to contact the ATO to request)

1. A four-month deferral for the payments of amounts due through BAS (including PAYG Instalments), Income Tax Assessments, and FBT Assessment.
2. Switch to a monthly GST reporting cycle from a quarterly reporting so that they can gain quicker access to any available GST refunds (You can only change from the start of a quarter, so a change now will take effect from 1 April 2020).
3. Variation of PAYG Instalment amounts to zero from the March 2020 quarter. You can do this by lodging a revised BAS before your instalment is due. Businesses that opt to do so may then be able to claim refunds for instalments made for the Sep 19 and Dec 19 quarters.
4. Remission of any interest and penalties incurred since 23 January, which have been applied to tax liabilities, and will allow business to enter into low-interest payment plans for existing and ongoing tax liabilities

Federal Government Coronavirus 2nd Stimulus Package

1. SME cash payments (This will build on the initial tax-free cash payments to small and medium business, rising up to $100,000, with a minimum payment of $20,000, up to from the previously announced $25,000 and $2000 limits)
The enhanced scheme will be delivered in two phases: Firstly, with employers set to receive a first payment equal to 100 per cent of their salary and wages withheld, up to a maximum of $50,000, when businesses lodge their activity statements for the 28 April and 28 July quarterly due dates.
• Quarterly lodgers will be eligible to receive a first payment equal to 100 per cent of their salary and wages withheld, up to a maximum of $50,000, when businesses lodge their activity statements for the March 2020 quarter. Secondly, an additional payment equal to the first payment will be made after businesses lodge the June 2020 BAS.
• Monthly BAS lodgers will receive the first payment for the March 2020, April 2020, May 2020 and June 2020 lodgements, with a 300 per cent calculation in the March activity statement to provide the same treatment as quarterly lodgers. The second payment for monthly BAS lodgers will be released once they lodge their June 2020, July 2020, August 2020 and September 2020 lodgements.
• Eligible businesses that pay salary and wages will receive a minimum payment of $10,000, even if they are not required to withhold tax. Secondly, an additional payment equal to the first payment will be made after businesses lodge the June 2020 BAS.

2. Temporary insolvency relief
Directors will now be temporarily relieved of their duty to prevent insolvent trading with respect to any debts incurred in the ordinary course of the company’s business, with the
measure set to run for six months. However, egregious cases of dishonesty and fraud will still be subject to criminal penalties. Any debts incurred by the company will still be payable by the company.
The government will increase the current minimum threshold for creditors issuing a statutory demand on a company under the Corporation Act 2001 from $2,000 to $20,000 for six months. The statutory time frame for a company to respond to a statutory demand will be also be extended temporarily from 21 days to six months.
Likewise, the threshold for the minimum amount of debt required for a creditor to initiate bankruptcy proceedings against a debtor will temporarily increase from its current level of $5,000 to $20,000. The time a debtor has to respond to a bankruptcy notice will be temporarily increased from 21 days to six months.

3. Sole trader support ($550 fortnightly coronavirus supplement payment)
Permanent employees who are stood down or lose their employment, sole traders, the self-employed, casual workers and contract workers will be able to access the new coronavirus supplement under expanded access to the JobSeeker Payment, formerly known as Newstart.

4. Access to superannuation

Employees who have been made redundant, or those who have their working hours reduced by 20 per cent or more, or sole traders whose businesses have been suspended or see a reduction in turnover by 20 per cent or more will also now be allowed to access up to $20,000 of their superannuation. People will not pay tax on the money they access, and withdrawals will not affect Centrelink or veteran’s payment.

Eligible individuals will be able to apply online through myGov to access up to $10,000 of their superannuation before 1 July 2020, and be able to access up to a further $10,000 from 1 July 2020 for approximately three months.

The government will also reduce the minimum drawdown requirements for account-based pensions and similar products by 50 per cent for the 2019-20 and 2020-21 income years.

5. Coronavirus SME Guarantee Scheme

The Coronavirus SME Guarantee Scheme will provide support for these businesses. Under the scheme, the Government will provide a guarantee of 50 per cent to small and medium enterprise (SME) lenders for new unsecured loans to be used for working capital. This will enhance these lenders’ willingness and ability to provide credit, which will result in SMEs being able to access additional funding to support them through the upcoming months.
SME’s with a turnover of up to $50 million will be eligible to receive these loans.
The Government will provide eligible lenders with a guarantee for loans with the following terms:
• Maximum total size of loans of $250,000 per borrower.
• The loans will be up to three years, with an initial six month repayment holiday.
• The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.
Loans will be subject to lenders’ credit assessment processes with the expectation that lenders will look through the cycle to sensibly take into account the uncertainty of the current economic conditions. The scheme will commence by early April 2020 and be available for new loans made by participating lenders until 30 September 2020.

Example 1 (Monthly lodgers with monthly withholding between $10,000 to $16,667)

 

You own a business in ACT and employ workers on average full-time weekly earnings who each earn $89,730 per year. In the month of March, April and June for the 2019-20 income year, you report withholding of $15,008 for your employees on each BAS.

 

Your prior year turnover is less than $50 million, and your business continue to be active.

 

Under the Government Coronavirus Stimulus Packages, you will be eligible to receive on lodgement of each of your BAS. Your business receives:

 

  • A credit of $45,024 for March period, equal to 300 per cent of your total withholding (i.e., $15,008 * 300%)

 

  • A credit of $4,976 for the April period, before you reach the $50,000 cap ($50,000 less $45,024)

 

  • No payment for the May period, as you have now reached the $50,000 cap

 

  • An additional payment of $12,500 for the June period, equal to 25 per cent of your total Boosting Cash Flow for Employers payments

 

  • An additional payment of $12,500 for the July period, equal to 25 per cent of your total Boosting Cash Flow for Employers payments

 

  • An additional payment of $12,500 for the August period, equal to 25 per cent of your total Boosting Cash Flow for Employers payments

 

  • An additional payment of $12,500 for the September period, equal to 25 per cent of your total Boosting Cash Flow for Employers payments

 

Example 2 (Monthly lodgers with monthly withholding between $6,250 to $10,000)

 

You own a business in ACT and employ workers on average full-time weekly earnings who each earn $50,000 per year. In the month of March, April and June for the 2019-20 income year, you report withholding of $8,788 for your employees on each BAS.

 

Your prior year turnover is less than $50 million, and your business continue to be active.

 

Under the Government Coronavirus Stimulus Packages, you will be eligible to receive on lodgement of each of your BAS. Your business receives:

 

  • A credit of $26,364 for March period, equal to 300 per cent of your total withholding (i.e., $8,788 * 300%)

 

  • A credit of $8,788 for the April period

 

  • A credit of $8,788 for May period

 

  • A credit of $6,066 for the June period, before you reach the $50,000 cap. You will also receive an additional payment of $12,500 for the June period, equal to 25 per cent of your total Boosting Cash Flow for Employer payments.

 

  • An additional payment of $12,500 for the June period, equal to 25 per cent of your total Boosting Cash Flow for Employers payments

 

  • An additional payment of $12,500 for the July period, equal to 25 per cent of your total Boosting Cash Flow for Employers payments

 

  • An additional payment of $12,500 for the August period, equal to 25 per cent of your total Boosting Cash Flow for Employers payments

 

  • An additional payment of $12,500 for the September period, equal to 25 per cent of your total Boosting Cash Flow for Employers payments

 

 

Example 2 (Monthly lodgers with monthly withholding between $6,250 to $10,000)

 

You own a business in ACT and employ workers on average full-time weekly earnings who each earn $50,000 per year. In the month of March, April and June for the 2019-20 income year, you report withholding of $8,788 for your employees on each BAS.

 

Your prior year turnover is less than $50 million, and your business continue to be active.

 

Under the Government Coronavirus Stimulus Packages, you will be eligible to receive on lodgement of each of your BAS. Your business receives:

 

  • A credit of $26,364 for March period, equal to 300 per cent of your total withholding (i.e., $8,788 * 300%)

 

  • A credit of $8,788 for the April period

 

  • A credit of $8,788 for May period

 

  • A credit of $6,066 for the June period, before you reach the $50,000 cap. You will also receive an additional payment of $12,500 for the June period, equal to 25 per cent of your total Boosting Cash Flow for Employer payments.

 

  • An additional payment of $12,500 for the June period, equal to 25 per cent of your total Boosting Cash Flow for Employers payments

 

  • An additional payment of $12,500 for the July period, equal to 25 per cent of your total Boosting Cash Flow for Employers payments

 

 

Example 3 (Quarterly lodgers with no withholding)

 

You own a business in ACT and employ workers two casual employees who each earn $10,000 per year. In your quarterly BAS, you report withholding of $0 for your employees as your workers are under the tax-free threshold.

 

Your prior year turnover is less than $50 million, and your business continue to be active.

 

Under the Government Coronavirus Stimulus Packages, you will be eligible to receive on lodgement of each of your BAS. Your business receives:

 

  • A credit of $10,000 for March quarter, as you pay salary and wages but are not required to withhold tax.

 

  • An additional payment of $5,000 for the June period, equal to 50 per cent of your total Boosting Cash Flow for Employers payments

 

  • An additional payment of $5,000 for the September period, equal to 25 per cent of your total Boosting Cash Flow for Employers payments

 

  • If you begin withholding tax for the June quarter, you would need to withhold more than $10,000 before you receive additional payment.
  • An additional payment of $12,500 for the August period, equal to 25 per cent of your total Boosting Cash Flow for Employers payments

 

  • An additional payment of $12,500 for the September period, equal to 25 per cent of your total Boosting Cash Flow for Employers payments