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March 24, 2020

Government Stimulus Package for Business

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James Morris
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 break-down of the stimulus package incentives affecting businesses, including dates and details of when they will come into effect.

Stimulus MeasureDetails

PAYG withholding refundable credit

Date Available: 12 March 2020

Businesses with under $50M in turnover who employ staffWill 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 liabilitiesWill be eligible to receive the minimum $20,000 entitlement
Quarterly remitters of PAYG withholdingPhase one:

  • Refundable credit will provide small businesses with a refundable credit equal to 100% of PAYG withholding liabilities for the March 2020 quarter Activity Statement and June 2020 quarter Activity Statement.
  • Refundable credit will be $10,000 minimum and $50,000 maximum dependent on the level of PAYG withholding liability for the quarters.

Phase two:

  • Quarterly remitters will become entitled to refundable credit that matches the total phase one entitlement
  • Refundable credit will be credited by (i) 50% lodgment of the June 2020 Quarter Activity Statement and (ii) 50% on lodgment of the September 2020 quarter Activity Statement

(See below table for example a)

Monthly remitters of PAYG withholdingPhase one:

  • Will provide small businesses with a refundable credit equal to 300% of the PAYG withholding liability for the month of March 2020 when lodging the March 2020 Activity Statement.
  • After this initial payment, entitlement to further refundable credits equal to 100% of the PAYG withholding liabilities for April, May and June 2020. Minimum refundable credit of $10,000 and maximum of $50,000, dependent on the level of PAYG withholding remitted for the quarters.

Phase two:

  • Refundable credit will match the total phase one entitlement. Second phase refundable credit will be credited (i) 25% on lodgment of their June 2020 Activity Statement; (ii) 25% on lodgment of their July 2020 Activity Statement; (iii) 25% on lodgment of their August 2020 Activity Statement; and (iv) 25% on lodgment of their September 2020 Activity Statement.See below table for example b
Increasing the instant asset write-off for businessesDate 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 businessAssets purchased before 30 June 2021
Purchases of new assets by businesses with annual turnover of less than $500 million before 30 June 2021Businesses 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 traineesBetween 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 monthsApplies 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-19Example industries: tourism, education and agriculture
Additional protection to businesses and directors
An increase of threshold of when a creditor can issue a statutory demandFrom $2,000 to $20,000
Providing relief against claims of insolvent trading against directors
Deferring the auctioning and issuing of Director Penalty Notices against directorsApplies to penalty notices for unpaid superannuation, PAYG withholding and GST of the business
Facilitating funding within the banking sectorThese 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 businessesBusinesses 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 MORE

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.

IMPORTANT INFORMATION: This blog has been prepared by Modoras Accounting (QLD) Pty. Ltd. ABN 81 601 145 215. The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals’ personal circumstances have been taken into consideration for the preparation of this material. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Accounting (QLD) Pty. Ltd. recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this blog can change without notice. Modoras Accounting (QLD) Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Accounting (QLD) Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Accounting (QLD) Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication. Liability limited by a scheme approved under Professional Standards Legislation.

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