The Federal Government’s COVID-19 Economic Response – how will this impact you?
Businesses, families and pensioners are set to receive billions of dollars in handouts and tax breaks, as the Federal Government attempts to protect Australian jobs and protect the country from a COVID-19-induced recession.
But what does all this talk of tax breaks, asset-write offs, investment incentives and stimulus mean?
Sinclair Wilson’s team of business and tax specialists have analysed the very early information to try and decode it for you. It’s important to note this information is very new – it’s important that it’s considered in conjunction with discussions with your tax or business advisory professional before you take any action.
HOW DO I APPLY, or FIND OUT IF I’M ELIGIBLE FOR ASSISTANCE?
Contact your Accountant, or one of Sinclair Wilson’s own tax and advisory specialists, located in Warrnambool, Hamilton, Colac, Camperdown or Mount Gambier. We can help identify if the packages apply to you, or your business, and guide any application process that may be required.
Actions in place to attempt to keep businesses in business include:
An immediate asset write-off
The current immediate asset write-off threshold has increased from $30,000 to $150,000. This will be available from Thursday 12 March 2020 until 30 June 2020, to businesses with an aggregated turnover of less than $500 million (up from $50 million). This will only be available for businesses purchasing depreciating business assets (eg: it won’t apply to trading stock.) At this early stage, we believe the write-off will apply to new and second-hand assets, although this is still to be confirmed. If you’re unsure, speak to one of our experts about what can be done.
Yesterday’s announcement includes a 50% write-off for the cost base of depreciable assets (those not eligible for immediate asset write off), with existing depreciation rules applying to the balance. Once again, this is applicable from Thursday 12 March 2020 until 30 June 2021, for those businesses that have an aggregated turnover of less than $500m. At this stage, it appears this will only apply to new depreciating assets. To ensure your business receives what it needs and deserves, contact a Sinclair Wilson tax and business advisor about what can be done.
BAS Cash flow assistance
A tax-free payment of between $2,000 and $25,000 will be made to businesses to cover 50% of PAYG withheld for the period between 1 January 2020 and 30 June 2020. A minimum of $2,000 will be paid to employers even if they are not required to withhold PAYG. This will be made available to businesses that employ staff between 1 January 2020 and 30 June 2020 and have an aggregated turnover of less than $50 million. At this stage, it is expected this will be paid via a credit to ATO accounts once a business lodges its BAS/IAS. Monthly lodgers will receive credit for March, April, May and June lodgements. Those businesses that pay quarterly will receive payments for March and June 2020. Once again, the best way to ensure your business receives what it needs and deserves is to contact a Sinclair Wilson tax and business advisor.
Apprentice & Trainee wage subsidy
Employers with less than 20 full time employees can apply for a 50% subsidy for apprentice or trainee wages. This will be available for wages paid between 1 January 2020 and 30 September 2020, with the maximum subsidy per apprentice or trainee to be $21,000.
Employers will have access to the subsidy once assessed by an Australian Apprenticeship Support Network (AASN) provider, and deemed eligible.
Employers can register for this subsidy from early-April 2020. Final claims for payment will have to be lodged by 31 December 2020.
The Government has announced it will ease tax obligations and extended payment terms for tax debts. Announcements are expected very soon regarding packages to help prop up severely impacted industries, such as tourism, agriculture and education. We are also expecting an announcement of specific geographical regions that will be provided additional support packages.
$750 stimulus payments
A $750 tax-free, one-off cash payment will be made to eligible residents, including those on Newstart, the Disability Support Pension, Carers’ Allowance, Youth Allowance, veterans support payments, Family Tax Benefits and Commonwealth senior health card-holders. These payments will flow from 31 March 2020. The Government has advised most, if not all payments should be made by mid to late April.
Casual workers who have contracted COVID-19 or who must isolate themselves due to COVID-19 will be eligible for a Newstart welfare payment while not working. The typical wait time to access the payment will be waived, but applicants will face an assets test before receiving the money.
As already mentioned, it is vital any information like this is considered in conjunction with discussions with your tax or business advisory professional before you take any action. Sinclair Wilson’s specialist team of tax and business advisors can help with more information and direction to identify how this might impact your business, household or personal circumstances.
Please understand that the above is general information only, and further clarification will be provided as Government legislation and guidelines unfold.
We will provide updates and more information via our website if and as they become available.
Clients, businesses and individuals should seek specific advice from their financial advisers, or Sinclair Wilson. Click here to contact us.