Prime Minister Scott Morrison has unveiled a stimulus package in response to COVID 19 in order to assist small to medium businesses. See below for first details of the package.
Increasing the Instant Asset Write Off (IAWO)
The Government is increasing the IAWO to $150,000 and will include all businesses with an aggregated annual turnover of less than $500m until 30 June 2020.
This incentive means that businesses will be able to get an immediate tax deduction for asset purchases up to the $150k limit which will provide a cash flow benefit equal to the purchase price times the tax rate.
Backing Business Investment
The Government is introducing a time limited 15 month investment incentive to support business investment by accelerating depreciation deductions.
- Deduction of 50% of the cost of an eligible asset on installation with existing depreciation rules to apply to the balance
- Applies to new assets that can be depreciated and that are acquired after announcement and first used and installed by 30 June 2021
ATO Administrative Relief
The ATO will provide administrative relief for certain tax obligations for taxpayers affected by the Coronavirus outbreak. This includes extensions for lodgement and payment of liabilities and can be discussed directly with the ATO.
Boosting cash flow for Employers
The government will provide temporary cash flow support up to $25,000 to small and medium businesses that employ staff and have an aggregated turnover under $50 million.
Eligible businesses that withhold tax to the ATO on their employees’ salary and wages will receive payments as follows:
- Payment equal to 50% of the amount withheld, up to a maximum of $25,000
- Minimum payment of $2,000 for eligible businesses who pay salary & wages, even if they are not required to withhold tax.
- The ATO will deliver the payment as a credit to the business upon lodgement of their activity statements. Refunds will be received within 14 days where the credit results in a refund.
- The measure will apply to quarterly BAS lodged for the March 2020 and June 2020 Qtr’s
- The measure will apply to monthly lodged for March 2020 through to June 2020
Support Apprentices and Trainees
Eligible small businesses employing fewer than 20 full-time employees will be able to apply for a wage subsidy of 50% of an apprentice’s or trainee’s wage up to a maximum of $21,000 ($7,000 per quarter) per apprentice or trainee.
The subsidy will apply to wages paid during the 9 months from 1 January 2020 to 30 September 2020 and employers can register for the subsidy from early April 2020.