Government Stimulus Package for Business
With many Australian businesses facing significant hurdles from COVID-19, the Federal Government has released a second round of stimulus measures, expanding on the measures initially released last week.
What’s in it for businesses?
The table below is a breakdown of the stimulus package incentives affecting businesses, including dates and details of when they will come into effect.
PAYG withholding refundable credit
Date Available: 12 March 2020
|Businesses with under $50M in turnover who employ staff||Will be eligible to receive refundable credit entitlements relating to PAYG withholding liabilities between $20,000 and $100,000|
*the exact amount of the credit will depend on the PAYG withholding previously paid
|Businesses who employ staff but do not incur PAYG withholding liabilities||Will be eligible to receive the minimum $20,000 entitlement|
|Quarterly remitters of PAYG withholding||Phase one:|
(See below table for example a)
|Monthly remitters of PAYG withholding||Phase one:|
|Increasing the instant asset write-off for businesses||Date applied to: 31 December 2020|
|An increase of the instant asset write-off threshold to $150,000 with the write-off available to any business with turnover of less than $500 million.||Will apply to the purchase of new or second-hand assets will allow business to invest in many types of business related assets and obtain immediate tax deduction|
|Increasing tax depreciation deductions for new investment assets made by business||Assets purchased before 30 June 2021|
|Purchases of new assets by businesses with annual turnover of less than $500 million before 30 June 2021||Businesses will be eligible to claim an immediate tax deduction for 50% of the purchase price of the asset with the existing depreciation rules applying to the balance of the value of the asset|
|Supporting apprentices and trainees||Between 1 January 2020 and 30 September 2020|
|Wage subsidies to small businesses of up to $21,000 to fund 50% of the wage of an apprentice or trainee for a period of up to 9 months||Applies to small businesses that employ less than 20 full-time employees|
|Assistance for regions severely impacted by COVID-19|
|Federal Government will set aside $1 billion to support regions and communities disproportionately impacted by COVID-19||Example industries: tourism, education and agriculture|
|Additional protection to businesses and directors|
|An increase of threshold of when a creditor can issue a statutory demand||From $2,000 to $20,000|
|Providing relief against claims of insolvent trading against directors|
|Deferring the auctioning and issuing of Director Penalty Notices against directors||Applies to penalty notices for unpaid superannuation, PAYG withholding and GST of the business|
|Facilitating funding within the banking sector||These measures are in addition to loan repayment holidays for a 6 month period, removal of fees for the early release of term deposits and significant interest rate cuts for business loans|
|Guarantee of 50% of the value of new loans made to small businesses||Businesses with turnover of under $50 million and loans up to a maximum of $250,000.|
a) Example quarterly remitter of PAYG withholding:
A quarterly remitter that is liable to pay $12,000 of PAYG withholding for March 2020 quarter and $15,000 of PAYG withholding for the June 2020 quarter, the taxpayer will receive a refundable credit of $12,000 when lodging the March 2020 Activity Statement, a refundable credit of $28,500 when lodging the June 2020 Activity Statement (comprising a phase one credit of $15,000 and a phase two credit of $13,500), and a refundable credit of $13,500 when lodging the September 2020 Activity Statement. In total the small business will receive refundable credits of $54,000.
b) Example quarterly remitter of PAYG withholding
For a monthly remitter of PAYG withholding that has a liability to pay $4,000 of PAYG withholding during the month of March 2020 and $5,000 PAYG withholding for the months of April 2020, May 2020 and June 2020, the taxpayer will receive a refundable credit of $12,000 when lodging the March 2020 Activity Statement (i.e. 300% of their March 2020 PAYG withholding), a refundable credit of $5,000 when lodging the April 2020 Activity Statement, a refundable credit of $5,000 when lodging the May 2020 Activity Statement, a refundable credit of $11,750 when lodging the June 2020 Activity Statement (comprising a phase one credit of $5,000 and a phase two credit of $6,750) and refundable tax credits of $6,750 when lodging each July 2020, August 2020 and September 2020 Activity Statements. In total the small business will receive refundable credits of $54,000.
Want to know more?
We stress that the stimulus measures being introduced by Government are evolving and some details are still to be released.
For continuous updates including the webinar recording, follow our COVID-19 Economic Stimulus Package page, or simply click the green ‘Read More’ button below.
Read our blogs on the new stimulus package update and what the ATO is doing to help here:
We’re here to support you through the changes and make the most of the current circumstances. Contact us on 1300 888 803 and book a catch up with a Modoras professional.
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