Dear Valued Client,
In an effort to keep the economy running efficiently in the face of the Coronavirus health crisis, the government has announced economic stimulus measures to halt the downturn and keep economic conditions on a working and healthy level until the crisis is over.
Acting on this latest development, we are writing to you to advise you, how you might take advantage of the economic stimulus package.
The economic stimulus targets Australian businesses, lower-income Australians, and those living in severely affected regions and communities; and it impacts you if you are:
An employer with an aggregated annual turnover of under $50 million
A business that is not required to withhold tax but pay salary and wages
A business with new or second-hand assets first used or installed ready for use by 30 June 2020 and has an aggregated annual turnover of up to $500 million
A business with assets acquired from 12 March and first used or installed by 30 June 2021 and has an aggregated turnover below $500 million
A business with less than 20 full-time staff with eligible apprentices and trainees
A veteran, social security and income support recipient, and eligible concession card holder living in Australia
Here are the salient details of the economic stimulus package:
1. Cash flow boost for employers
Eligible businesses will receive a payment equal to 50 per cent of taxes withheld from employees’ salary and wages up to $25,000. Those who are not required to withhold tax will get a minimum payment of $2000.
Payments will be delivered as a credit in the activity statement system from 28 April 2020. If the calculations put you in a refund position, you will be issued a refund within 14 days.
2. Increased instant asset write-off
Up to $150,000 (from $30,000) instant asset write-off for businesses with an aggregated annual turnover of up to $500 million (up from $50 million) from 12 March to 30 June 2020. Eligible assets are new or second-hand assets first used or installed ready for use by 30 June 2020.
3. Accelerated depreciation deduction
Deduction of 50 per cent of the cost of the eligible asset on installation, with existing depreciation rules applying to the balance for businesses with an aggregated turnover below $500 million for eligible assets acquired from 12 March and first used or installed by 30 June 2021.
Eligible assets are those that can depreciate under Division 40 of the Income Tax Assessment Act 1997.
4. Apprentice and trainee wage subsidy
Subsidy of 50 per cent of an apprentice’s or trainee’s wage from 1 January to 30 September 2020, capped at $7000 each quarter per each eligible apprentice or trainee.
Eligible businesses are those with less than 20 full-time staff and employers of any size and Group Training Organisations that re-engage eligible out-of-trade apprentice or trainee.
5. Direct payment to individuals
A one-off payment of $750 to around 6.5 million for Australian resident social security, veterans and other income support recipients and eligible concession cardholders
Further administrative measures for businesses include:
✔ Up to four months of deferred payment due date for BAS, income tax assessments, FBT assessments, and excise
✔ An option to go into a monthly GST reporting for those on a quarterly reporting cycle
✔ An option to vary Pay As You Go (PAYG) instalment amounts to zero for the April 2020 quarter and claim a refund for any instalments made for the September 2019 and December 2019 quarters
✔ Remittance of any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities
✔ Availability of low-interest payment plans for businesses with existing and ongoing tax liabilities.
Please note that these reliefs will not be applied automatically to those impacted by the COVID-19.
You are encouraged to get in touch with us or the ATO to discuss your relief options.
Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019
On a different note, we’d also like to take this chance to tell you that the Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019 has received assent as Act No 21 of 2020 on 6 March 2020.
The Act introduces a one-off amnesty for historical underpayment of superannuation guarantee (SG) that begins on 24 May 2018 and ends six months after the Bill receives assent, that is Sunday 6 September 2020. The amnesty only applies to SG shortfalls arising from 1 July 1992 to the March 2018 quarter, and not for subsequent quarters. The ATO advised that amnesty applications must be lodged and received by the ATO before 11.59 pm on Monday 7 September.
Stay healthy and positive!