For Small Business re COVID-19
To encourage continued employment
One of the drivers of the stimulus package is to encourage and assist small business to continue to keep employees where possible. There are 2 incentives, the first being a reduction in your PAYG Withholding (a rebate) and the second being a payment for Apprentice Wages.
Boosting Cashflow for Employers
For those of you with employees you will be entitled to a rebate equal to 100% of your PAYG Withholding from 1st January to 30 June 2020, up to a maximum of $50,000. (This has increased from 50% of the withholding and a maximum of $25,000 which was announced last week)
If you employ someone and you don't have to withhold tax on their wages you will still receive $10,000.
If you withhold $10,000 a month from your employees wages in PAYG you will receive a $10,000 rebate each month, until you reach the $50,000 threshold.
This will be paid to you once the March BAS and June BAS have been lodged. For those of you who pay PAYG Withholding monthly the ATO will give you 3 times the March Withholding amount to ensure you are on a level playing field, then the rest in each BAS to the end of June.
On top of this an extension has also been applied from 1st July to 31st October. This extension means you will receive the same rebate again as you received between January - June. That means an additional $10,000 as a minimum up to $50,000 depending on how much you were eligible for previously.
Whilst this takes the total payment to a minimum of $20,000 and maximum of $100,000 it's important to note the DATES. This won't all be paid between the March and June BAS, but will instead by paid between March - September.
It's important to note that the payment will not be made until after your BAS has been lodged and will only be made to you if your ATO account is in Credit. ie. if you owe the ATO money this will come off your existing debt.
You don't need to 'register' for this, it will automatically happen as part of your BAS. We will of course calculate and let you know how much this will be in April when we are preparing the March Quarter BAS.
In an effort to keep apprentices and trainees employed, employers will be entitled to 50% of the wages of apprentices and trainees from the 1st January to 30th September. This will be capped at $21,000 or $7,000 per Quarter per eligible apprentice.
This will be available to small business employers who have less than 20 employees in total. It's important to note that if you employ a new apprentice that was displaced from another employer you will be eligible for the rebate.
Eligibility assessments will need to be done by an Australian Apprenticeship Support Network Provider. We will be in contact if you have an Apprentice so we ensure you are registered in April when applications open.
To encourage investment
The government is also mindful of the need to continue investment in assets for business to keep the cycle going. They have introduced another increase to the asset write off threshold and additional accelerated depreciation.
It's important to note that these are not cash back incentives, but an acceleration of a tax deduction, reducing the income tax your business would pay at the end of the year. If your business is making a loss these measures won't give any immediate assistance from a tax or cashflow perspective.
Instant Asset Write Off
Whenever you purchase an asset for your business (a car, computer, machinery etc) you generally need to depreciate or claim the cost of this asset over a number of years in your tax returns. In the last budget the government increased this threshold meaning anything costing less than $30k could be claimed as a tax deduction immediately rather than needing to be claimed over a number of years.
As part of these measures the government has increased this threshold to $150k for all businesses with a turnover up to $500m. That means if you purchase an assets from now until 30 June that costs less than $150k you will be able to claim it as a tax deduction this year.
What this means is that if you purchase a piece of machinery for $100k, you will reduce your income tax bill by $27,500.
Remember you need to a) be making a profit and have to pay tax in order for this to apply, and b) have the cashflow in your business to support and sustain the purchase.
Please ensure you let us know if you are looking at any asset purchases so we can run the cashflow scenarios.
Backing Business Investment
If your asset purchase falls outside of the above thresholds then you will be entitled to claim a 50% of the cost of the asset as an immediate write off as well as the normal depreciation for the remaining 50%.
That means if your asset purchase was $500k, you can claim $250k deduction in this year along with the normal depreciation on the remaining $250k.
Payroll Tax Relief
There are a range of Payroll Tax Concessions in each state. For the states where you need to apply for an exemption we will be doing this on your behalf with the April returns.
- No Payroll Tax to be paid for March, April or May
- When your annual reconciliation is lodged in July you will get an exemption of 25% of your total payroll liability for the year (note this includes the wages you paid in March - June)
- For those with Annual Payroll of up to $3million this year NO PAYROLL TAX. If you have already paid during the year you will receive a refund. We will chase this refund for you next month.
- Deferral of lodgement date until 3rd August for each month from now on. Note you still have to pay, just not until August.
- One off grants are available for employers with Australian wages between $1million and $4million. Grant total is $17,500
To encourage banks to continue to lend
The government is encouraging banks to lend to small business by guaranteeing 50% of loans issued to small businesses. These loans are short term unsecured loans (up to 3 years) , which means we should see some new products being provided by lenders over the coming weeks. They can only be for a maximum of $250,000 with a 6 month repayment holiday.
On top of this some of the banks have announced support and reductions for small businesses :
- Automatically deferring BetterBusiness Loan and Asset Finance repayments for eligible small business with total lending limits up to $3 million in April, May and June 2020. From July, customers will be able to opt-in to receive a further three month deferral if needed.
- Waiving merchant fees for effected customers
- Waiving early redraw fees on term deposits
- Waiving establishment fees on temporary excess products
- Deferral of repayments on loans for up to 6 months, assessed on a case by case basis
- Extending terms of loans by up to 3 months
- Deferral of credit card payments
ANZ have also announced deferral of repayments on loans up to 6 months to be assessed on a case by case basis.
You will need to contact your relationship manager for more details from a banking perspective. As always give us a buzz first for any cashflow requirements.
Retirees will have more flexibility with super. You will no longer have to withdraw 4% of your super if you are paying a pension, but instead will only have to withdraw 2%. We will be running these scenarios this week and will be in touch with everyone effected.
For some effected businesses & individuals you will be able to withdraw up to $10k of your super between now and 30 June as well as an additional $10k after June if your income has been reduced by 20%
We will continue to update this as new measures are announced.
Let me reiterate, there is no application for the PAYG Rebate, we will advise how much this will be with your March BAS.
For those of you with apprentices we will be in touch in April once the application process has been released.
We will also ensure your payroll tax reductions are lodged when April hits.
If you are looking to purchase assets and know you have the cashflow to support please also let us know so we can advise what impact this will have on you.
Any questions as always just let one of the All About Business team know.
If you are unsure and need to know how just give the office a call on 03 94341103.