The government has announced coronavirus assistance for Australian businesses as part of their $17.6 billion dollar stimulus package.
The assistance is focused on helping small to medium business stay in business, and continue to employ their staff.
The following assistance measures are expected to support over 3.5 million businesses:
Tax free payments up to $25,000 for employers
Businesses with a turnover less than $50 million will receive a one-off refund of 50% of the PAYG withheld from their employees’ wages to a maximum of $25,000. A minimum amount of $2,000 will be paid to eligible businesses that pay wages but are not required to withhold PAYG.
The 50% PAYG refund applies to wages paid between 1st January to 30 June 2020 and will be credited against BAS and IAS lodgements made for the periods between March and June 2020.
Eligible monthly lodgers will receive the credit against their March to June 2020 lodgement up to the maximum amount of $25,000. Quarterly lodger will have their refund credited against their March and June 2020 lodgement with a calculation of 3 times the rate (150%) to provide the same treatment as monthly payers.
Supporting apprentices and trainees
A wage subsidy of 50% of an apprentice or trainee’s wage for the nine-month period 1 January 2020 to 30 September 2020 to a maximum of $7,000 per quarter for businesses employing fewer than 20 full-time employees. If a business is not able to retain their apprentice or trainee, the subsidy will be available to the new employer.
Employers can register for the subsidy from early April with final claims due by 31 December 2020.
Vary your Pay As You Go (PAYG) instalments
Quarterly payers can elect to vary their PAYG instalment rate or amount to Zero on their March 2020 quarterly lodgement.
It is also possible to claim a refund for the September and December 2019 quarters if the PAYG instalment rate or amount is varied down.
For monthly PAYG payers with base assessible instalment income of $500 million or less who want to vary their rate and claim a refund on previous instalments paid, will need to phone the ATO on 13 72 26.
Increasing the instant asset write-off
The current threshold will be increased from $30,000 to $150,000 and will now include businesses with aggregated annual turnover of less than $500 million (up $50 million). The write-off is based per asset (new or second-hand) so multiple assets can be written off, up to the value of $150,000 each. This increase is only available for assets installed and ready for use from 12 March 2020 until 30 June 2020.
At this point in time, the instant asset write-off will revert back to $1,000 for a business with turnover less than $10 million from 1 July 2020.
Increased asset write-off
A business with a turnover less than $500 million will be able to deduct a 50% upfront depreciation write-off with the balance written off over the useful life of the asset.
For example, a business buys a piece of equipment for $260,000. They can immediately write of $130,000 (50%) with the balance depreciated over the useful life of the asset.
The increased asset write-off will be available for assets acquired and installed from 12 March 2020 until 30 June 2021.
Change Quarterly GST Reporting to Monthly
A business with a turnover less than 20 million that currently reports GST on a quarterly basis can elect to change their reporting and payments to monthly. This will also apply to a business claiming fuel tax credits.
This measure will allow for quicker access to any GST refunds.
The change from quarterly to monthly can only occur from the start of a quarter, for example, 1 April, 1 July, 1 October, 1 January.
Once GST reporting has been changed to monthly, it cannot revert back to quarterly for the next 12 months.
PAYG can continue to be lodged and paid on a quarterly basis or included in the monthly return.
If the business has GST turnover greater than $20 million, they must continue reporting and paying on a monthly basis.
ATO payment assistance
The ATO is committed to helping businesses directly affected by the coronavirus with the following assistance:
The option to defer some payments and varying instalment payments for income tax, BAS, IAS, PAYG instalments, fringe benefits tax and excise payments for up 4 months.
Getting help with your ATO penalties and interest charges
Businesses can apply to the ATO to have penalties and interest charges that apply to tax liabilities remitted (reduced or possibly cancelled). This will only apply to tax liabilities incurred after 23 January 2020.
Low interest payment plans
If help is needed to pay existing and ongoing tax liabilities a business directly affected by the coronavirus can apply to the ATO for a low interest payment plan.
Start date for the business assistance measures
The assistance measures commenced on the 12 March 2020 but are subject to the passing of legislation with the bill expected to be introduced to parliament in the final sitting week of March 2020.
ATO emergency hotline
Businesses affected by the coronavirus can phone the ATO’s Emergency Support Infoline on 1800 806 218 for help tailored to their individual circumstances.
If they prefer to speak to the ATO in a language other than English, phone the Translating and Interpreting Service (TIS) on 13 14 50 for help with your call.
Aboriginal and Torres Strait Islander peoples can phone the Indigenous Helpline on 13 10 30.
For those with difficulty hearing or speaking to people who use a phone, they can contact the ATO through the National Relay Service External Link (NRS).
It is too early for the government or peak business groups to be in a position to predict exactly how the coronavirus may impact on the economy and business operations.
There is certainly no doubt that many businesses will suffer some form of disruption to their normal activities due to the virus.
All businesses should be thinking ahead and formulating a plan where possible, to minimise the effects the virus may have on their operations.
Take advantage of the assistance offered by the government and the ATO, and ensure you keep well informed on all new developments that may affect your business.