Australian & Victorian Government Support to Business Taxpayers in Response to the Coronavirus Pandemic
The Australian Government has announced two stimulus packages which have now passed through both Houses of Parliament. These packages include a number of plans to support Australian Businesses during the current Coronavirus Pandemic, with the most relevant highlighted below.
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Tax-free payments up to $100,000 for small business and not-for-profit employers.
Under this proposal any business who employ staff and have an aggregated annual turnover of less than $50 million (for the most recent income year) are eligible to receive 2 rounds of tax-free payments with each round worth a maximum of $50,000 with a minimum payment of $10,000.
These payments will be made to eligible employers by way of a credit equal to 100% of the PAYG amounts withheld from salary and wages paid to employees during the relevant period, up to the maximum amount of $50,000.
The “relevant period” depends on a business’s PAYG Withholding cycle. Those lodging monthly IAS returns will have a relevant period covering March 2020 to June 2020 whereas those with a quarterly obligation will have a relevant period covering January 2020 to June 2020.
The credits are automatically calculated by the ATO and employers 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.
In addition to this first round of payments, a second round of payments will be made up to a maximum of $50,000, accessible from July 2020. The second phase ensures that eligible employers receive another series of credits, equal to the credits that were received under the first phase and will be paid over the period of July 2020 – October 2020 with lodgement of activity statements.
What you need to do:
- Lodge your Business Tax Return for the year ended 30th June 2019. This is used to confirm your business income is below the aggregated annual turnover of $50 million.
- Prepare and lodge your monthly or quarterly activity statements as soon as possible after the end of each period – the ATO will then automatically calculate and apply your relevant credit
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Business Investment – increase and extension of the instant asset write-off and accelerated depreciation
From 12 March 2020, the instant asset write-off threshold will increase from $30,000 to $150,000, and access to the write-off will be expanded to include businesses with aggregated annual turnover of less than $500 million until 30 June 2020.
The instant asset write-off is a tax deduction that reduces the tax liability of your business. It enables your business to claim an upfront deduction for depreciating assets in the year the asset was purchased and used (or installed ready to use).
Assets will need to be used or installed ready for use from when the changes were announced on 12 March 2020 until by 30 June 2020 to qualify for the higher threshold. Anything previously purchased does not qualify for the higher rate but may qualify for one of the other thresholds. Similarly, anything purchased but not installed ready for use by 30 June 2020 will not qualify.
In addition to the increased instant asset write-off rules, accelerated depreciation deductions will apply from 12 March 2020 until 30 June 2021. This will bring forward deductions that would otherwise be claimed in later years. Any assets eligible for the Instant Asset Write-off do not qualify for this Accelerated Depreciation incentive
What you need to do:
- To qualify for the Instant Asset Write-off, trading businesses will need to purchase a new asset (up to $150k) and have it installed and ready for use by the 30th June 2020.
- To qualify for the Accelerated Depreciation, trading businesses will need to purchase a new asset and have it installed and ready for use by the 30th June 2021.
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Wage subsidy of up to 50% of an apprentice or trainee wage
Eligible employers can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage for up to 9 months from 1 January 2020 to 30 September 2020. The payments are accessible to businesses with less than 20 employees. Employers will receive up to $21,000 per apprentice ($7,000 per quarter).
Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.
In order to qualify for this payment, the apprentice or trainee must have been in training with the business as at 1 March 2020. Employers of any size and Group Training Organisations that re-engage an eligible out-of-trade apprentice or trainee will also be eligible for the subsidy.
It is expected that employers will be able to register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020.
What you need to do:
- Contact your relevant Australian Apprenticeship Support Network (AASN) to register for the subsidy from 2nd April 2020.
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Access to working capital for SMEs – SME Guarantee Scheme
The Government has announced a Coronavirus SME guarantee scheme that will guarantee 50% of new loans to SMEs up to $20 billion. These loans are new short-term unsecured loans to eligible SMEs with turnover up to $50 million.
The guarantee will apply to 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 uncertainly 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.
What you need to do:
- Contact your bank or financial institution to confirm they are “eligible lenders” under the scheme
- Engage with your eligible lender to complete the application before the 30th September 2020
In addition to the announcements made by the Australian Government there have also been proposals released by the Victorian Government to support Victorian Businesses. The most significant of these are outlined below.
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Payroll Tax to be Waived for the 2019-2020 financial year for eligible employers
Businesses with annual taxable wages up to $3 million will have their payroll tax for the 2019-2020 financial year waived. There is still a requirement to continue to lodge payroll tax returns however no further payments will be required for eligible businesses for this financial year.
The State Revenue Office will contact eligible businesses directly in relation to refunding any payroll tax already paid for this year from 27th March 2020.
These businesses are also eligible to defer paying payroll tax for the period 1st July 2020 to 30th September 2020 until January 2021.
What you need to do:
- Continue to lodge your payroll tax returns each month but do not make any further payments for the 2020 financial year
- The SRO will contact all eligible businesses with instructions on how to request refunds of previously paid amounts – this will be done online via PTX Express
- Details regarding the process to defer the Sept 2020 Quarter payments will be provided by the SRO in July 2020
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2020 Land Tax payments to be deferred
Some land owners are eligible to defer their 2020 land tax payment until after 1 January 2021.
Eligible land owners must have at least one taxable non-residential property and total taxable landholdings below $1 million to qualify for the deferral.
Under the deferral mechanism land owners can request a refund of 2020 land tax already paid but full payment will be required by the 31st March 2021.
What you need to do:
- The State Revenue Office will contact all eligible land owners and provide further information so nothing further needs to be done at this stage.