In response to the Coronavirus, the Government yesterday announced a range of measures to assist business and individuals. These measures are all subject to the passage of legislation through Parliament.
$700 million to increase the instant asset write off threshold from $30,000 to $150,000 and expand access to include businesses with aggregate annual turnover of less than $500 million (up from $50 million). This measure will run until 30 June 2020.
$3.2 billion to back business investment by providing a time limited 15-month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating depreciation deductions. Businesses with a turnover of less than $500 million will be able to immediately deduct 50 percent of the asset cost in the year of purchase with the balance of the asset cost being depreciated at the existing rates.
These measures start today (legislation, if passed, will be backdated to today).
The Government is also offering administrative relief for certain tax obligations, including deferring tax payments up to four months. This is similar to the relief provided following the bushfires and is assessed on a case by case basis.
Cash flow assistance for businesses
$6.7 billion to Boost Cash Flow for Employers. Businesses with turnover of less than $50 million that pay salaries and wages and withhold PAYG will benefit from this measure upon lodgement of their quarter 3 and quarter 4 BAS, or if the business is a monthly lodger, the IAS’s for the periods March to June inclusive.
Eligible business that withhold tax from their employees’ salary and wages will benefit by an amount equal to 50 percent of the PAYG amount withheld, up to a maximum payment of $25,000 in total (not per BAS/IAS).The benefit will provide cash flow support to businesses that currently employ staff, between 1 January 2020 and 30 June 2020. Any enterprises that pay wages will get a $2000 minimum even if they are not required to withhold tax.
$1.3 billion for small businesses to support the jobs for around 120,000 apprentices and trainees. Eligible employers can apply for a wage subsidy of 50 percent of the apprentice’s or trainee’s wages for up to 9 months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.
Discussions amongst our members and industry peers has raised cashflow management as the greatest challenge faced by small business going forward, especially with the increase to the instant asset write off. If you have questions about cashflow/asset purchases, there are a number of local member businesses that can assist you with your concerns.
As always, the BCCI is here to support our members and your business.