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.
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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