COVID-19 Stimulus Package And Other Considerations
We understand that this is a stressful time, especially for small businesses. We are going to do everything we can to keep you informed on what you can and should be doing during this time, and what the government is doing to aid you. Please let us know if you have any questions or concerns regarding the following information.
Last week the Government announced a range of financial measures to assist businesses and individuals in response to the Coronavirus Pandemic. These measures are all subject to the passage of legislation through parliament and are outlined below.
BUSINESS
Investment
The instant asset write off threshold will increase from $30,000 to $150,000 and expand to include businesses with an aggregated annual turnover of less than $500 million until 30 June 2020. This means that any equipment and assets which are eligible will be claimed immediately, effectively reducing your taxable income come end of year. The threshold of $150,000 is per asset.
A time limited 15 month investment incentive (through to 30 June 2021) will be provided to support business investment and economic growth over the short term, by accelerating depreciation deductions to certain assets which may not qualify for the above instant asset write-off. 50 % of the asset cost in the year of purchase will be able to be immediately deducted with the balance of the asset cost being depreciated at the existing rates for businesses with a turnover of less than $500 Million. This has a similar effect to the instant asset write-off where businesses will get the advantage of an increased expense and a decreased taxable profit.
These measures started last Friday and legislation, if passed will be backdated.
Cashflow
Business with a turnover of less than $50 Million that pay salaries and wages and withhold PAYG will benefit upon lodgement of their quarter 3 and quarter 4 BAS (or if the business lodges monthly IAS, for the periods March to June inclusive). Eligible businesses that withhold tax for employees will receive an amount equal to 50% of the PAYG amount withheld (with a maximum payment of up to $25,000 in total). This will be applied in the form of a credit applied by the ATO to the BAS or IAS and if resulting in a refund will be paid within 14 days. This benefit will be tax free and will provide cash flow support to business that currently employ staff between 1 January 2020 and 30 June 2020. Any business that pay wages will get a $2,000 minimum even if they are not required to withhold tax.
Eligible employers can apply for wage subsidy of 50% of the apprentice’s or trainee’s wage for up to 9 months from 1 January 2020 to 30 September 2020. If a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.
HOUSEHOLDS
Stimulus payments
A one-off $750 payment to pensioners, social security, veteran and other income support recipients and eligible concession card holders. Pensioners will make up around half of those who benefit. The payment will be tax free and not included as income for Social Security, Farm household Allowance or Veteran payments. There will be one payment per eligible recipient regardless of if they qualify in multiple ways. Payments will be from 31 March 2020 on a progressive basis, with over 90% of payments expected to be made by mid-April.
ATO LENIENCY
The Government is also offering administrative relief for certain tax obligations, including deferring tax payment up to four months. This is similar to relief provided following the bushfires for taxpayers affected by the coronavirus, on a case-by-case basis. This can be arranged directly through the ATO or through your BAS / Tax agent.
POLICIES AND PROCEDURES
Most small businesses run with employees and safety is the most important legal obligation for companies in the face of this outbreak. There are strong workplace health and safety laws in place in Australia, designed to protect employees from physical harm at work and policies and procedures should be updated to cover the current health pandemic.
Failing to have adequate policies and emergency response plans in place can expose business to a raft of HR-related legal concerns and, at worst, actionable claims for negligence or workers compensation.
Small businesses should already have some workplace health and safety policies in place, and these should be reviewed to include the following:
An office closure policy — Should an employee in your organisation be identified as having contracted the coronavirus, be prepared for how you are going to manage your business and continue to operate your essential business functions at a minimum, should this occur.
A work from home policy — Should the coronavirus be detected in the vicinity of your office or should a risk be deemed simply too high, ensure that you have the information technology and infrastructure capability to support multiple employees who may be able to work from home. Determine whether the company is in a position to operate on a skeleton staff in the interim.
Mandatory health hygiene practices for all employees — This includes the basics such as regular hand washing, providing hand sanitiser throughout the office and keeping office areas clean.
We thank you for your support during this difficult time and encourage you all to take the necessary precautions recommended. Stay safe and stay calm.