The government’s $17.6 billion Coronavirus stimulus package was released last Thursday, with speculation that an additional stimulus package could be released as early as this week. The NSW government has also announced a $2.3 billion Coronavirus package containing $700 million in health funding and $1.6 billion in tax relief for small businesses.

Here’s what it means for you.

The Federal government’s key tax measures

• Instant Asset Write-Off

From Thursday 12 March 2020, the instant asset write-off threshold will increase from $30,000 to $150,000 and will be expanded to include businesses with aggregated annual turnover of less than $500 million until 30 June 2020. This means that your business can claim an upfront deduction for depreciating assets in the year the asset was purchased or installed.

The instant asset write-off only applies to certain depreciable assets and these items must have a relationship with how your business generates income. Please note that assets purchased prior to 12 March 2020 will not qualify for this higher threshold, but will qualify for one of the previous thresholds.

• Accelerated Depreciation Deductions

In addition to changes to the instant asset write-off, accelerated depreciation deductions will apply from 12 March 2020 until 30 June 2021. This means that businesses with a turnover of less than $500 million will immediately be able to deduct 50% of the cost of a new eligible asset on purchase/installation, with existing depreciation rules to apply to the balance of the asset’s cost.

For example, a business that purchased a truck for $250,000 (excluding GST) in July 2020 would be able to claim an upfront deduction of $125,000 in their 2021 tax return. This incentive only applies to new assets purchased after 12 March 2020 and doesn’t apply to second-hand assets or buildings, or other capital works expenditure.

• Cash flow assistance for small and medium business

Tax-free payments of between $2000 and $25,000 are available for small and medium businesses with a turnover of less than $50 million that employ staff between 1 January 2020 and 30 June 2020.

This isn’t a direct cash payment, but a credit equal to 50% of the PAYG amounts withheld from salary and wages paid to employees. The employer will need to lodge an activity statement to trigger the entitlement. Businesses that are not required to withhold any tax will still receive the minimum payment of $2000.

• Wage subsidy of up to 50% of an apprentice or trainee wage

Employers of less than 20 full-time employees can apply for a wage subsidy of 50% of an apprentice’s or trainee’s wage for up to 9 months from 1 January 2020 to 30 September 2020. The maximum subsidy for each apprentice/trainee is $21,000. If an employer is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.

Employers will be able to register for the subsidy from 2 April 2020.

• Administrative relief from the ATO

There have been a series of concessions announced for businesses affected by the COVID-19 outbreak. These include:

• Payment of tax amounts due through BAS (including PAYG instalments), income tax assessments, FBT assessments and excise have been deferred by up to 4 months
• Businesses operating on a quarterly reporting cycle can opt in to monthly GST reporting to get quicker access to GST refunds
• Businesses can vary their PAYG instalment amounts to zero for the April 2020 quarter, and can then claim a refund for any instalments made for the September 2019 and December 2019 quarters
• Interest and penalties on tax liabilities incurred by affected businesses on or after 23 January 2020 will be remitted
• Affected businesses can enter into low-interest payment plans for their existing and ongoing tax liabilities.
• Tax-free $750 payment to social welfare recipients

A one-off cash payment of $750 will be made to pensioners, social security, veteran and other income support recipients and eligible concession card holders. Payments will be made from 31 March 2020.

NSW to deliver $2.3 billion over the next 6 months

The NSW state government has also just announced a $2.3 billion Coronavirus package containing $700 million in health funding and $1.6 billion in tax relief for small businesses. More details are yet to come, but here is what we know so far.

• Payroll tax liability waivers

$450 million has been allocated to waive payroll tax for businesses with payrolls of up to $10 million for 3 months. The NSW government has said that these businesses will not have to pay the tax for the rest of this financial year.

• Payroll tax cuts

The next round of payroll tax cuts has been brought forward, raising the threshold to $1 million for the next financial year. There is also $80 million in fees and charges to be waived for small businesses such as cafes, restaurants and those in trades.

At TJL we understand that these are uncertain times and we are committed to helping each of our clients in any way we can. If you have any questions or concerns regarding any of the information above, please don’t hesitate to get in touch with your Client Manager or call our office on (02) 6554 9511.