In response to the potential economic downturn which may be caused by the Coronavirus pandemic, the government has issued several announcements and measures which may help with your business’s cash flow.
These are:
This assistance will be in the form of a “credit” to your Activity Statements between now and June 2020. The government will allow this credit against your PAYG tax withheld on staff wages.
That is, you will only have to pay 50% of the PAYG tax withheld on your upcoming Activity Statements.
This benefit is capped at $25,000 for any business. This is how this will work…
A business which employs staff and lodges monthly activity statements. All staff are on salary, and a monthly withholding of $15,000 is declared each activity statement.
On the March 2020 activity statement, the $15,000 is claimed in W2-PAYG Withholding. The ATO will automatically apply a credit in the Running Balance Account of $22,500 ($15,000 × 50% × 3 times).
On the April 2020 activity statement, the $15,000 is claimed in W2-PAYG Withholding. The ATO will automatically apply a credit of $2,500, being the balance of the amount receivable under the announcement. (ie $15,000 × 50% = $7,500. $25,000 – $22,500 (already credited) = $2,500)
On the May and June 2020 activity statements, the $15,000 is claimed each month. There will be no credit to the Running Balance Account in these months as your client has already “received” the maximum allowable benefit.
The government has introduced a wage subsidy to support small businesses in retaining their apprentices and trainees. You may be eligible to receive 50 per cent of their apprentice’s wages, capping at $21,000, per apprentice, for the nine months from 1 January 2020 to 30 September 2020.
Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network provider. Like other assessments, this is expected to be completed via a SmartForm on the Australian Apprenticeship website.
Employers can register for the subsidy from 31 March 2020, and final claims of payment must be lodged by 31 December 2020.
We recommend that you review your staffing arrangements, and if you believe that you have eligible apprentices, to apply for this government subsidy. The apprentice is required to be on your books as at 1 March 2020 to be eligible.
Over the past year, the Government has announced a slew of tax changes as they relate to depreciation. The Coronavirus Stimulus Package was not different.
As a result of the package, if you have already purchased an asset during the current income year (2019/20) where you cannot claim an immediate write-off, you will get an additional 50% deduction in depreciation. That is, 50% of the asset’s cost, significantly reducing your potential tax liability.
In addition if you:
a. purchased an asset after 12 March 2020, and
b. installed it ready for use by 30 June 2020.
The instant asset write-off amount will be $150k