The Government Business Incentives – Summary
With the panic over the Corona Virus the Australian government has announced its $17.6 billion economic stimulus package.
The package includes both cash and tax incentives, as follows:
Cash money for small business owners
- 50% cashback on PAYGW, up to $25,000
Eligible small and medium-sized employers (turnover up to $50mil) will be provided with a 50% tax-free “cashback credit” of up to $25,000 (and a minimum of $2,000) on their PAYG Withholding on wages between January 1, 2020, and 30 June 2020.
Please note the incentive is 50% of the PAYGW associated with the wages, not the wages cost themselves.
If your business will have $50,000 or more in PAYGW for the six-month period between January 1 and June 30, 2020 you should receive $25,000 in a cash incentive. If you have less than $50,000 in PAYGW for the same period, you will get 50% of your actual PAYGW.
The payment will be tax-free and delivered by the ATO as a credit in your Business Activity Statement (BAS) system effective from April 28, 2020.
If you lodge a quarterly BAS, you will get the credit in the June 2020 quarterly BAS. If you lodge a monthly IAS, the total amount will be credited by 50% from the March 2020 IAS up to the June 2020 IAS.
As the business owner and currently on take your income as a dividend or directors drawing (not a true salary with PAYGW) you may consider changing your income to a salary for January to June 2020 to maximise your ‘cashback’.
It is unknown at this time if the ATO may offset this cashback credit against any existing debt you may have with ATO.
- 50% subsidy on apprentice wages, up to $21,000
Eligible employers (turnover up to $50mil) can apply for a wage subsidy of 50% of apprentice or trainee wages for up to nine months from January 1, 2020, to September 30, 2020. (Up to a maximum of $21,000 per eligible apprentice or trainee.)
If a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.
Tax incentives for small business owners
The immediate asset write-off tax deduction threshold has been increased from $30,000 to $150,000, meaning you can now claim an immediate tax deduction for each new asset purchased.
Other new assets over $150,000 will attract an additional
50% depreciation rate of the asset cost in the year of purchase.
These tax incentives are not cashback incentives. You actually need to purchase the asset with cash or finance in order to get the benefit of the extra tax deduction, but this can still have a cashflow flow-on effect into the future with reduced income tax payments.
The claim for these additional tax deductions will be in your FY2020 tax return.
ATO will also offer small businesses tax relief in response to coronavirus
The Tax Commissioner, Chris Jordan, called for businesses that are being affected by the coronavirus to contact the ATO to get access to an indivdual support plan.
A number of options will be available to affected businesses, including four-month deferrals for the payments of amounts due through business activity statements (including Pay-As-You-Go instalments), income tax assessments, fringe benefits tax assessments and excise.
The ATO may also allow businesses that are on a quarterly reporting cycle to switch to monthly GST reporting so they can gain quicker access to any available GST refunds.
Businesses may also be permitted to vary PAYG instalment amounts to zero for the April 2020 quarter, said the ATO. Businesses that opt to do so may then be able to claim refunds for instalments made for the September 2019 and December 2019 quarters.
Further, the ATO said it may also be able to remit any interest and penalties incurred since January 23, which have been applied to tax liabilities, and will allow businesses to enter into low-interest payment plans for existing and ongoing tax liabilities.
The ATO said employers must still meet ongoing super guarantee obligations for employees during this time, and unlike relief measures offered to businesses affected by the bushfires, which were applied automatically in designated geographic areas, these measures to support those affected by coronavirus will not be automatically rolled out.
Businesses affected by the coronavirus outbreak can contact the ATO to discuss relief options by calling the Emergency Support Infoline on 1800 806 218.
If you need any assistance with either the Government business incentives or approaching the ATO for relief on BAS payments, PAYG Instalment variations, quicker GST refunds or other ATO debt matters please contact MyAccountants as soon as possible.
MyAccountants (Aust) Pty Ltd