Social-distancing and self-isolation measures to tackle the spread of COVID-19 have seen Federal, State and Territory Governments pass unprecedented legislation in an attempt to protect Australia’s economy as best as possible. In particular, the Government passed a package of Bills to implement the $17.6 billion economic stimulus package on 12 March 2020, and a second $66 billion economic stimulus package on 22 March 2020. Further support will be provided by way of Federal Government loan guarantees, $15 billion of support for smaller lenders and Reserve Bank measures, and ATO administrative measures.
The key tax-related measures provided by the Federal, State and Territory Governments are summarised in the tables below. Businesses will need to carefully understand the measures available to their circumstances, the method and timing through which the stimulus is to be provided in order to factor this into financial forecasts and revised budgets.
Please contact a member of the HWL Ebsworth National Taxation Group if you have any questions or require assistance.
Note: This publication is current as of 25 March 2020, subject to further tax and business related incentives that may be enacted.
|Support for businesses
|Instant asset write off
Instant asset write-off threshold for depreciating assets under $150,000 for businesses with aggregated annual turnover of less than $500m.
The depreciable assets applies to both new and second hand assets first used or installed ready for use from 12 March 2020 to 30 June 2020.
The instant asset write off will revert to $1,000 for small businesses (turnover less than $10 million) from 1 July 2020.
|12 March 2020 to 30 June 2020
|Business accelerated rate of depreciation
Immediate deduction of 50% for eligible expenditure that does not fall within the above instant asset write-off, either because the item exceeds the $150,000 threshold, or the item is not first used or installed ready for use by 30 June 2020 for businesses with aggregated annual turnover of less than $500m.
Eligible asset are new depreciable assets acquired after 12 March 2020 and first used or installed by 30 June 2021. This incentive does not apply to second-hand Division 40 assets, or buildings and other capital works depreciable under Division 43.
|12 March 2020 to 30 June 2021
|Cash payments for SMEs employers and charities
Businesses and not for profit organisations with turnover less than $50 million will receive cash flow boost payment between a minimum of $20,000 and up to $100,000.
Eligible employers that withhold tax on their employees’ salary and wages will receive a payment equal to 100 per cent of the amount withheld, up to a maximum payment of $50,000 for each phase of the payment.
The payment will be made in two periods, firstly the quarters ending in March 2020 or June 2020 and secondly the quarters ending June 2020 and September 2020 for quarterly BAS lodgers and the relevant monthly periods for monthly BAS lodgers.
It will be generated automatically and will be a tax free amount. It will be included as credit on the relevant entity's Business Activity Statements.
Entity must have held an ABN on 12 March 2020 and have carried on an enterprise at that time.
|March 2020 BAS to September 2020 BAS
|50% subsidy apprentice wages
Wage subsidy of 50% of apprentice or trainee wages for up to 9 months from January 2020 to September 2020, maximum benefit is $21,000 per apprentice or trainee, for small businesses with fewer than 20 full time employees.
|January 2020 to September 2020
PAYG concession SMEs can vary the PAYG instalment amounts to zero from the March 2020 quarter, and claim a refund for any instalments made for the September 2019 and December 2019 quarters taxpayers.
BAS payment deferral: Taxpayers can request the ATO to allow deferral of payments of BAS (GST liability, PAYG instalments and FBT) for 4-6 months.
Monthly BAS: taxpayers on quarterly GST reporting can opt into monthly GST reporting.
Remission of interest and penalties: Remitting any interest and penalties incurred on tax liabilities on or after 23 January 2020 for taxpayers impacted by COVID-19.
|From March 2020 quarter determined per case
|Support for individuals and households
individuals affected by the Coronavirus to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21. Individuals will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.
|From mid-April 2020
State and Territory Governments
|Payroll tax waived for the March 2020, April 2020 and May 2020 payroll tax returns;
25% reduction on payroll tax payable in the payroll annual reconciliation due by 28 July 2020, for business whose total grouped Australian wage for FY19/20 is less than $10 million;
Payroll tax threshold increased to $1 million from 1 July 2020.
|Payroll tax waived for 6 months for businesses in the hospitality, arts and entertainment industry;
Payroll tax deferral for FY20/21 for businesses grouped with Australian wages up to $10 million until July 2022;
Commercial general rates rebate of $2,622 for FY19/20 for commercial property owners with an Average Unimproved Value of $2m or less.
|Payroll tax waived for FY19/20 for businesses with annual taxable wage up to $3 million. The eligibility threshold applies to each employer, so any member of a group that pays taxable wages of less than $3 million per annum will be eligible;
Payroll tax deferral for first quarter of FY20/21 for businesses with annual taxable wage up to $3 million until January 2021;
Land tax deferral for the 2020 land tax payment until 31 December 2020, for land owners with at least one non-residential property and total taxable landholding below $1 million. Payment will be required in full by 31 March 2021.
|Refund of your payroll tax for 2 months. Need to make online refund/holiday application before 31 May 2020;
Payroll tax holiday for 3 months if you are an employer who pays $6.5m or less in Australian taxable wages. Need to make online refund/holiday application before 31 May 2020;
6 months payroll tax deferral for all businesses until 3 August 2020. Need to make online payroll tax deferral application.
|Payroll tax deferral for FY19/20 for businesses with annual Australian taxable wage <$7.5 million until 21 July 2020. Need to make online payroll tax deferral application;
An one off grant of $17,500 to be automatically paid to businesses with annual Australian taxable wages between $1 million and $4 million, paid from July 2020;
Payroll tax threshold increased to $1 million from 1 July 2020.
|Extend the existing payroll tax exemption for hiring Territory employees to 30 June 2021.
|Payroll tax waived for the March 2020, April 2020, May 2020 June 2020 payroll tax returns for businesses in the hospitality, tourism, seafood industry businesses and businesses with annual payroll of up to $5 million;
Discretionary ministerial power to waive the payment of payroll tax for a specified period on the taxable wages, paid to an employee or class of employees, by an employer;
12-month payroll tax rebate for businesses that employ full-time or part-time persons under 24 between April and December 2020.
This article was written by Nima Sedaghat, Partner, Shaun Cartoon, Partner, Matthew Payne, Partner, John Caravousanos, Partner and Amy Liu, Associate.