SME’S GET SOME WELCOME CASH WITH THE CORONAVIRUS STIMULUS PACKAGE
Are you concerned the coronavirus may affect your business? Well, Scott Morrison has unveiled his $23 billion Coronavirus stimulus package which will be released over this and next financial year, with a focus on keeping Australians employed and businesses open.
It is essential for small businesses to have a plan to deal with the fallout from the virus which includes a drop in customers and sales, disruption to supply chains and ultimately, cash flow shortages. Therefore, it is important to seek timely professional advice. We are here to guide you and provide assistance to manage the challenge.
Here are the key elements to the stimulus package:
CASH FLOW ASSISTANCE FOR BUSINESSES
1. CASH INJECTION
Small and medium businesses will receive a TAX FREE cash payment of between $2,000 and $25,000 to help pay wages or hire extra staff. To qualify, your turnover must be less than $50 million as an employer, between 1 January 2020 and 30 June 2020.
The tax free payment is calculated as 50 per cent of the PAYG Withholding tax for employers paid in the above noted 6 month period, up to a maximum payment of $25,000.
Businesses will be credited with these amounts upon lodgement of activity statements for the periods March, April, May and June 2020.
2. INCENTIVISED APPRENTISHIP SUPPORT
Under the plan, the government will offer small businesses who employ apprentices, with fewer than 20 employees, up to $21,000 per apprentice in wage assistance payments and will be available for the period January – September 2020.
3. DEFERRAL OF TAXES
The ATO is also allowing affected businesses to delay their tax obligations for four months, including amounts due on business activity statements, income tax assessment & fringe benefit tax. Also, remitting any interest and penalties incurred on or after 23rd January 2020 that have been applied to tax liabilities. “Affected businesses” are yet to be defined, however, it is difficult to see any business that won’t be affected.
Furthermore, the ATO will allow businesses on a quarterly reporting cycle to opt into a monthly GST reporting to receive quicker access to GST refunds they may be entitled to.
Additionally, businesses impacted will be able to vary PAYG Instalments to Zero for the March 2020 quarter. They will also be able to claim a refund for any instalments made for the September 2019 and December 2019 quarters
Communication with the ATO about your circumstances, as always is critical.
4. NEW ASSET WRITEOFF
The Instant Asset Write-off previously up to a maximum of $30,000, will be significantly lifted, allowing small to medium companies to write off new assets now up to $150,000 until 30 June 2020. It’s expected to increase acquisition of cars, utes and trucks, harvesters and tradies’ equipment.
For new assets costing over $150,000, then the 100% is reduced to 50% of the cost as an immediate deduction, PLUS the first year’s normal depreciation amount.
Please refer to this fact sheet for further details.
5. STIMULUS PAYMENTS TO HOUSEHOLDS TO SUPPORT GROWTH
Welfare recipient and pensioner households will receive a one-off $750 cash payment as part of the federal government’s economic response to the coronavirus pandemic.
Those who receive Newstart, the disability support pension, carer’s allowance, youth allowance, veteran support payments or family tax benefits will be eligible for the payment. As will Commonwealth senior health cardholders and aged pensioners.
In addition to the stimulus package, the government is reducing the deeming rate- which is used to assess pensioners’ and veterans’ assets – by 0.5 per cent which will increase the amount of funds to pensioners and veterans.
The one-off, tax-free payment will be paid automatically from 31st March. There will be one payment per eligible recipient. If a person qualifies for the one off payment in multiple ways, they will only receive one payment
Casual workers will be another beneficiary of the fund, with the government pledging to provide immediate access to a sickness payment if they need to self-isolate.
ACTION
We will be able to provide you with professional advice to cope with the challenge and learn more about the Coronavirus Stimulus Package, please contact us on 9266 0000 or admin@connollysbs.com.au and we will be happy to discuss the matter further.
