Small businesses given financial boost by ATO in response to coronavirus

As a result of the global consequences that the COVID-19 has brought, The Australian Government announced on 12^th March 2020 an Economic Stimulus Package aimed to assist businesses to remain in business, to keep employment rate unchanged and to support households that depend on Centrelink payments.

Chris Jordan, commissioner of taxation, has urged businesses that are being affected by the coronavirus to contact the ATO to access a tailored support plan.

He commented, “We know that many businesses and communities are being heavily affected by the challenging economic conditions created by the outbreak of COVID-19.

“The ATO will work shoulder-to-shoulder with businesses to assist them through this difficult period and do what we can to ease the pressure.”

The options available for affected businesses include:

• The instant asset write off threshold has been increased from $30,000 to $150,000. This applies from 12^th March 2020 to 30 June 2020 for new or second-hand assets first used or installed ready for use in this timeframe.

  For example: Our client UR-BIZ PTY LTD's annual turnover is less than $500 million for the year 2019/20, on 1st April 2020 they decided to purchase a second-hand tractor for $125,000, exclusive of GST, to use in their business.

  At TaxAssist Accountants we will be able to claim an immediate deduction of $125,000 for our client, which will equal a $34,375 tax savings when lodging the company tax return for 2019/20.

• A 15-month investment incentive by accelerating depreciation deductions. This applies to eligible assets acquired from 12 March 2020 and first used or installed by 30 June 2021. Businesses with a turnover of less than $500 million will be able to deduct 50% of the cost of an eligible asset on installation (i.e. plant, equipment and specified intangible assets, such as patents), with existing depreciation rules applying to the balance of the asset cost.
   
• Boosting cash flow for employers by providing $25,000 back to small and medium-sized businesses, with a minimum payment of $2,000 for eligible businesses. The payment will provide cash flow support to businesses with a turnover of less than $50 million that employ staff. The payment will be tax free.

  For example: Our client Mike Harris is a sole trader who runs a café and has an aggregate turnover of less than $50 million, Mike employs his wife Bonnie Harris and pays wages for hours worked as a barista. Mike will receive a minimum payment of $2,000, even when his wife's wages are low and do not attract any tax withheld. TaxAssist Accountants will be able to report this when lodging Mike Harris' BAS or IAS due in April 2020.

  On the other hand, if the wages paid to Bonnie attract tax withheld, then TaxAssist Accountants will report this in the BAS or IAS due in April 2020; and Mike will receive a payment equal to 50% of the amount withheld, up to a maximum payment of $25,000.

• Support if you employ an apprentice or trainee with a wage subsidy of 50 per cent of their wage paid from 1 January 2020 to 30 September 2020. Eligible small businesses must employ fewer than 20 full-time employees and wish to retain the apprentices or trainees, who must have been in training with a small business as at 1 March 2020. You can register for the subsidy from early April 2020.
   
• Targeted support for the most severely affected sectors, regions and communities. 

  The Government has set aside an initial $1 billion allocation to support those regions and communities that have been disproportionately affected by the economic impacts of the Coronavirus, including those heavily reliant on industries such as tourism, agriculture and education. The $1 billion will be provided through existing or newly established Government programs.

  This will include the waiver of the Environmental Management Charge for tourism businesses that operate in the Great Barrier Reef Marine Park and the waiver of entry fees for Commonwealth National Parks. It will also include additional assistance to help businesses identify alternative export markets or supply chains.

  Targeted measures will also be developed to further promote domestic tourism.

• Stimulus payments to households to support the wider economy. 
  
  The Government will provide a one-off $750 payment to around 6.5 million social security, veteran and other income support recipients and eligible concession card holders. Around half of those that benefit are pensioners. There will be one payment per eligible recipient.

  The payment will be exempt from taxation and will not count as income for Social Security, Farm Household Allowance and Veteran payments.

  To be eligible, you must be residing in Australia and currently receive a payment from Centrelink or hold one of the specific concession cards on 12 March 2020. We can provide you a digital copy of the list of the payments you must be receiving from Centrelink or confirm you have the specific concession card that might entitle you to the $750 additional payment.

• Businesses on a quarterly reporting cycle may be able to switch to monthly GST reporting to gain quicker access to any available GST refunds.
   
• Businesses may be permitted to vary PAYG instalment amounts to zero for the April 2020 quarter. This option may then mean businesses can claim refunds for instalments made for the September and December 2019 quarters.
   
• The possibility to remit any interest and penalties incurred since January 23 which have been applied to tax liabilities allowing businesses to enter into low-interest payment plans for existing and ongoing tax liabilities.
   
• If you need help to pay your existing and ongoing tax liabilities, you could enter a low interest payment plan.

Please note, employers do still need to meet super guarantee obligations for their employees.

Any business affected by coronavirus can contact the ATO to discuss relief options by calling the Emergency Support Infoline on 1800 806 218.

TaxAssist Accountants are a network of small businesses specialist accountants and small businesses themselves. They are here to help you navigate through these difficult times. Call in today for advice and guidance.

Article written by Badi Ceren, Director of TaxAssist Accountants Collingwood

Date published 17 Mar 2020 | Last updated 18 Mar 2020