Tax

Covid-19. Financial Support for Australian Businesses

Federal Government Stimulus Package

The federal government has recently released details of a stimulus package designed to keep the money flowing through the economy and prevent, or at least delay or minimise a recession brought on by the coronavirus.

Set out below is a summary of the elements of the package assisting businesses and their cash flow.

Increasing the Instant Asset Write-Off

Small businesses can currently claim an immediate tax deduction for expenditure on depreciable assets of up to $30,000 per item. From now until June 30 this year this limit has been increased to $150,000, for all businesses with aggregated annual turnover of less than $500 million.

Presumably this will apply to purchases of any assets for which the business would be entitled to claim depreciation deductions, and would need to be installed ready for use on or before 30 June.

Boosting Cash Flow for Employers

The Boosting Cash Flow for Employers measure will provide cash flow assistance of between $2,000 and $25,000 for eligible businesses, who employ staff.

The payment will be provided through the ATO in the form of applying credits through the activity statement system from 28th of April on lodgement of activity statements. Eligible businesses that withhold tax from employee wages will receive a credit equal to 50% of the amount of tax withheld, up to a maximum of $25,000. Eligible businesses that pay wages will receive a minimum credit of $2000, even if they are not required to withhold tax from those wages. If these credits result in a net refund position, the ATO will deliver the refund within 14 days.

This measure is available to small and medium business entities with aggregated annual turnover under $50 million. This will generally be determined by reference to previous year’s annual turnover.

Where activity statements are lodged on a quarterly basis, the applicable periods will be for the quarters ending 31 March and 30 June 2020.  For monthly lodgers, the applicable periods will be the months of March April May and June 2020.

Amounts paid under this arrangement will be non-taxable.

Supporting Apprentices and Trainees

To assist eligible employers to retain their apprentices and trainees, you can apply for a wage subsidy of 50% of your apprentice or trainee wages paid during the nine months from 1 January to 30 September 2020. Where a small business is unable to retain an apprentice, the subsidy will be available to a new employer for that apprentice.

The maximum subsidy will be $21,000 per eligible apprentice or trainee.

Eligible businesses are those employing fewer than 20 full-time employees who retain an apprentice or trainee. The apprentice or trainee must have been in training with a business as at 1 March 2020.

Eligible employers will be able to access the subsidy after completion of an eligibility assessment by an Australian Apprenticeship Support Network provider.

Employers can register for the subsidy from early April, and final claims must be lodged by 31 December. Further information is available at the websites for the Department of Education, Skills and Employment and Australian Apprenticeships, www.dese.gov.au and www.australianapprenticeships.gov.au respectively.

For more information on the Australian Government’s Economic Response to Coronavirus visit www.treasury.gov.au/coronavirus

Please contact us if you have any queries regarding any of the above.

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