2020 Stimulus Package for Small Businesses

In response to the ongoing COVID-19 pandemic in Australia, the Federal Government has announced a raft of economic stimulus measures aimed at cushioning the impacts of COVID-19 on the Australian economy. The 2020 stimulus package for small businesses is designed to support business investment, help small to medium businesses manage short-term cash flow challenges, and work towards keeping millions of Australians employed.

For inquiries pertaining to the 2020 stimulus package and how it might affect your business operations over the coming months, please get in touch with a small business accountant at Taggart & Partners. Please note that announcements on the following economic stimulus measures continue to change regularly. We will be updating this page as new information is made available.

2020 Stimulus Package

Instant Asset Tax Write Off – Small Business Asset Write Off

The Federal Government has announced that they are temporarily increasing the instant asset tax write off simplified depreciation scheme also known as small business asset write off until June 30, 2020. This will allow eligible businesses to instantly write off assets at the end of this financial year, which could have a significant effect on a business’ taxable revenue.

Key Takeaways

Current instant asset tax write off threshold of $30,000 increased to $150,000 per asset.
The cost of each asset must be less than $150,000. For assets greater than this, accelerated depreciation will be applied instead.
Eligibility has increased from businesses with a turnover of $50 million to $500 million.
Applies to all new or second-hand assets installed and ready for use by June 2020.
The small business asset write off will revert to $1,000 on 1 July 2020.
There will be no change to the depreciation limit for passenger vehicles. This will remain capped at $57,581.

Accelerated Depreciation for New Depreciable Plant & Equipment Assets

As part of the ‘Backing Business Investment’ stimulus measures, accelerated depreciation for new depreciable plant & equipment assets will allow businesses to deduct the cost of depreciating assets at an accelerated rate.

Key Takeaways

Applies to businesses with a turnover of up to $500 million.
Applies to assets purchased and installed for use up to 30 June 2020 costing more than $150,000 with no maximum asset value.
Will also apply to assets purchased and installed for use from 1 July 2020 to 30 June 2021 costing more than $1,000.
Only applies to new assets – not used assets.
Eligible Assets can immediately be depreciated 50% plus the usual depreciation rate applied to the remaining balance.
Doesn’t apply to buildings or other capital works (Division 43 assets).
Assets eligible for the expanded instant asset tax write off simplified depreciation scheme will not be eligible for accelerated depreciation.

Cashflow Boost for Employers

The cashflow boost for employers will benefit around 690,000 small businesses employing around 7.8 million Australians. Under the 2020 Stimulus Package, eligible businesses will receive a maximum total of $100,000 and a minimum total of $20,000 to aid in cash flow.

Key Takeaways

Businesses that withhold tax will receive a credit equal to 100% of the amount withheld.
Maximum amount of $50,000 with a minimum of $10,000 (even if the withheld amount is zero)
The total of initial cash flow boosts cannot exceed the $50,000 limit across Quarter 3 and Quarter 4 reporting periods.
Businesses will not be required to submit any special forms to receive the cash flow boost.
The cash flow boosts will be automatically applied to a business when lodging an activity statement for the periods.
Cash flow boosts will be applied to reduce other liabilities that arise from the same activity statement with any excess being refunded within 14 days.
Cash flow boosts are tax-free, are not required to be paid back and are not subject to GST.
Businesses will not be eligible for the cash flow boosts should the ATO deem the business has restructured the business to gain access to the cash flow boost when otherwise not entitled or if the business has increased the amount of the cash flow boosts.

Eligibility

Small to medium businesses including not-for-profit organisations, sole traders, partnerships, company or trusts.
Must have held an ABN on 12 March 2020 and continue to be active.
Have a turnover of under $50 million.
Made eligible payments (even if the amount to withhold was zero)

Eligible Periods

Businesses will receive the credit for the following periods provided that the total does not exceed the $50,000 limit set.

Quarterly lodgers will receive the credit for Quarter 3, March 2020 and Quarter 4, June 2020.
Monthly lodgers will receive the credit for March 2020, April 2020, May 2020, June 2020, with the March period calculated at 300% instead of 100% to align with quarterly lodgers.

Additional Cash Flow Boost

Businesses eligible for the initial cash flow boost will receive an additional cash flow boost of up to 100% of the value of the total of their initial cash flow boosts. Quarterly lodgers will receive an additional payment of 50% of the value upon filing their June 2020 activity statement and a further payment of another 50% upon filing their September 2020 activity statement. Monthly lodgers will receive payments equal to 25% of the value of their initial cash flow boost for four months beginning June 2020. In total, these additional payments will have a maximum amount of $50,000 and a minimum of $10,000.

To ensure correct calculations please contact a small business accountant at Taggart & Partners before lodging your March 2020 BAS.

Apprentice & Trainee Support

The Government has earmarked $1.3 billion that will be made available to approximately 70,000 small businesses to help keep 117,000 apprentices and trainees across the country at work.

Key Takeaways

Eligible Employers will receive assistance in the form of a wage subsidy at 50% of an apprentice’s or trainee’s wage.
Will be reimbursed in arrears.
Available for a maximum of 9 months from 1 January 2020 to 30 September 2020 or from the date of re-employment should the apprentice or trainee have been let go.
A maximum of $7,000 per quarter, per eligible apprentice or trainee.
Final claims for payments must be made by 31 December 2020.

Eligible Businesses

Businesses who retain apprentices and trainees in their Australian Apprenticeship.
Small businesses with fewer than 20 employees; or
Small businesses who use a Group Training Organisation; and
The apprentice must have been undertaking an Australian Apprenticeship with the employer on the 1 March 2020.

How to Apply

Small businesses can register with an Australian Apprenticeship Support Network (AASN) provider to receive the subsidy from the 2^nd April 2020. The AASN will undertake an eligibility assessment with the employer following a completed claim form as well as any supporting documentation required.

JobKeeper Payment – Government Wage Subsidy

The latest measure announced as part of the 2020 stimulus package is expected to cost $130 billion across the 2019-20 and 2020-21 financial years. The ‘JobKeeper’ payment will provide a temporary Government wage subsidy to businesses that are or will be significantly affected by COVID-19. The JobKeeper payment is intended to help businesses retain their employees during the crisis so that businesses can return to business as fast as possible when the crisis over.

Key Takeaways

The government will provide a wage subsidy of $1,500 per fortnight per employee for up to 6 months to businesses who have experienced a fall in revenue.
Eligible employees will receive a minimum $1,500 of per fortnight before tax and employers can top-up this payment.
Employees who receive more than $1,500 a fortnight will continue to receive their regular income. The JobKeeper payment will assist the employer by subsidising the income of the employee.
Employers who receive the Government wage subsidy must ensure that all eligible employees receive a minimum of $1,500 before tax, and should employees be receiving less than this currently, the employer will be required to top-up the amount paid to the employee up to this amount.
The wage subsidy will start on 30 March 2020, with the first payments being made in the first week of May.
Payments will be backdated to 1 March 2020.
In determining eligibility, the Tax Commissioner will have the discretion to set alternate tests to establish eligibility for businesses unable to establish a fall in turnover due to special circumstances (i.e. new businesses not operating the previous financial year).

Eligible Employers

Businesses including not-for-profits and sole traders impacted by COVID-19.
Businesses with a turnover of less than $1 billion with turnover having fallen by 30 percent or more of at least a month.
Businesses with a turnover of $1 billion or more with turnover having by 50 percent or more of at least a month.
Businesses not subject to the Major Bank Levy.

ATO Relief and Support

The Australian Tax Office will provide administrative relief for some tax obligations on a case-by-case basis, these include:

BAS, FBT and Income Tax payment dates to be deferred by up to four months.
Allowing businesses to vary PAYG Income Tax Instalments to zero for the March quarter.
Businesses varying their March PAYH instalment to zero may also claim a refund for any instalments paid in September and December 2019.
Remission of interest and penalties incurred on or after 23 January 2020 that have been applied for tax liabilities.

Payroll Tax Lodgment Deferral

All Businesses with payroll tax lodgments (Monthly, Quarterly or annually) normally due from the 9 of March 2020 to 21 July 2020 will now be due on the 3 August 2020.

Superannuation Guarantee Amnesty

The Superannuation Guarantee Amnesty was passed as law on the 10 of March 2020. Businesses will be allowed to pay all outstanding superannuation guarantee obligations from 1992 to 31 March 2018 with no further penalties and will receive an income tax deduction for these payments.

The Superannuation Guarantee Amnesty is available from the 6 March 2020 to the 6 of September 2020 and lodgments must be made on the specific form provided by the ATO.

Information regarding the 2020 stimulus package and the ongoing crisis in Australia continues to change. At Taggart & Partners, we are continuing to monitor for new stimulus measures or amendments and will update this page when new information is available. Please get in touch with our dedicated team of small business accountants if you have any questions regarding the stimulus package and your business.

This publication is for guidance only, and professional advice should be obtained before acting on any information contained herein. Neither the publishers nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication. Publication April 2020.