With the Coronavirus pandemic affecting the world so drastically this is a time to come together and understand what positive measures are being put in place to help your business get through this unique time.
Business as usual
For Total Accounts, it’s business as usual, and we want you to know we are here for you!! We are a 100% cloud based bookkeeping service with a team of local staff working remotely from their private offices. We will continue to operate as usual, conducting client contact over the phone, via email or online meeting.
If the case occurred that one of our staff members became unwell, we have the capacity to ensure that work can be undertaken by another member of our team, and that there will be no disruption to our client deliverables.
Now, more than ever, is a vital time to continue keeping your accounts up to date, closely monitoring cash flow and forward planning for the uncertain future. If you are expecting to see a downturn in business lets use this time to put systems and processes in place to make sure things hum along for when business gets back to normal, and it will get back to normal!
Australian Government economic response for small businesses
The Australian Government has just unveiled their economic response to the Coronavirus, the detail of which we have included below. There is targeted support for Western Australian businesses offered by the State Government, along with a range of financial support measures offered by the Federal Government plus tax relief on various obligations offered by the Australian Taxation Office.
WA coronavirus relief package for small businesses
The Western Australian Government has announced $114 million in measures to support small business during the coronavirus (COVID-19) pandemic.
The three measures announced for small business include:
- $17,500 grants for small businesses with a payroll between $1 million and $4 million.
- The $1 million payroll tax threshold (announced in October 2019) will be brought forward by six months to 1 July 2020.
- Businesses impacted by COVID-19 can apply now to defer payment of their 2019-20 payroll tax until 21 July 2020.
In addition to these measures, you may also benefit from the freezes applied to household fees and charges. This includes freezes to electricity, water, public transport fares, motor vehicle charges and emergency services levy.
Federal Government Coronavirus stimulus package – small business
On 12 March 2020, the Australian Government announced a $17.6 billion targeted stimulus package to support the Australian economy through the challenges of the coronavirus.
The package is designed to keep small businesses afloat and employees in work, and will focus on supporting the most affected sectors. The government has stated that the measures are temporary, targeted and scalable.
The main areas of support relevant to small businesses are:
- Cash flow payment of up to $25,000 for employers
- 50 per cent wage subsidy for apprentices and trainees
- Increase in the instant asset write-off threshold to $150,000
- 50 per cent accelerated depreciation for investments
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Cash flow payment for employers
Eligible small businesses that withhold income tax from employee salaries and wages and pay it to the Australian Taxation Office can receive a credit / payment equal to 50 per cent of the amount withheld, up to a maximum payment of $25,000. A minimum payment of $2,000 may be available to businesses that pay wages but are not required to pay tax.
Who is eligible?
Businesses with a turnover of less than $50 million that employ staff between 1 January 2020 and 30 June 2020.
When will it be received?
Eligible businesses will automatically receive a credit on their account for 50 per cent of the PAYG amount withheld via their business activity statements (BAS) or instalment activity statement (IAS) once lodged from the 28th April 2020. The PAYGW credits relate to the January to March and April to June 2020 BAS or if you are a monthly lodger the March to June 2020 IAS.
At this stage, there will be no direct action required by our clients who will be eligible to access this measure – it will be dealt with automatically upon lodgement of activity statements. Where the application of the measure places the activity statement account in credit, the ATO will trigger a refund within 14 days.
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Wage subsidy for apprentices and trainees
Eligible employers can apply for a wage subsidy of 50 per cent of an apprentice’s or trainee’s wage for up to 9 months from 1 January 2020 to 30 September 2020. Businesses can be reimbursed up to a maximum of $21,000 per eligible apprentice, (which is $7,000 per quarter for the first three quarters of 2020).
Who is eligible?
Small businesses with fewer than 20 full time employees who retain an apprentice or trainee.
When will it be received?
You will be able to register for the subsidy from early April 2020. For more information on how to apply, including eligibility criteria, contact an Australian Apprenticeship Support Network (AASN) provider. Please note: Claims for this subsidy must be lodged by 31 December 2020.
If you have apprentices and/or trainees, please reach out to us for assistance and we can work with you to ensure you are correctly registered and able to claim for this measure.
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Increase in the instant asset write-off threshold**
The instant asset write-off threshold will be increased from $30,000 to $150,000. The higher threshold is in place from 12 March until 30 June 2020 and applies to new or second-hand assets installed in businesses during these dates.
Who is eligible?
Businesses with aggregated annual turnover of less than $500 million (up from $50 million).
When will it be received?
The instant asset write-off is generally claimed back via your business tax return. At this stage, no specific details have been announced on how to access this incentive. We will update this information when more details are announced by the federal government.
If you are considering purchasing assets, please consider the cash flow implications of the purchase. The increase to the instant asset write off DOES NOT mean that you will receive a tax refund, but rather that your taxable position as at 30 Jun 2020 will be reduced due to the expense being 100% recognised this financial year. Please contact your accountant or ourselves to discuss the cash flow implications further.
** This information is of a general nature and should not be considered taxation advice __________________________________________________________________________
Accelerated depreciation for investments**
Businesses will be able to deduct an additional 50 per cent of an asset cost in the year of purchase from 12 March 2020 until 30 June 2021. This is designed to support business investment and economic growth over the short term.
Who is eligible?
Businesses with a turnover of less than $500 million that are purchasing new depreciable assets. Eligible assets covered are new assets that can be depreciated under Division 40 of the Income Tax Assessment Act 1997.
Please note: second hand assets are not eligible for this initiative.
When will it be received?
Depreciation is generally claimed back via your business tax return. At this stage, no specific details have been announced on how to access this incentive earlier. We will update this information when more details are announced by the federal government.
We recommend that prior to purchasing assets that may be deductible under this measure, that you contact your Tax Agent and seek their specific advice, to ensure your business, and the asset being purchased is eligible for the measure.
** This information is of a general nature and should not be considered taxation advice
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Other measures
A number of other measures designed to support households and boost the economy are also included in the package:
- A tax free, one-off $750 stimulus payment to individual income support recipients and eligible concession card holders, being rolled out from 31 March 2020.
- Targeted regional and community support aimed at businesses and communities particularly affected by the economic downturn due to coronavirus, for example those in the tourism, agriculture and education industries. This support will include waiving fees and charges for tourism businesses operating in national parks, plus assistance in identifying new export markets and supply chains.
- There will also be a push to promote domestic tourism.
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Tax relief
ATO Support Measures include:
- Deferral of payment dates for activity statements, income tax assessments, FBT assessments and excise
- Option to change from quarterly to monthly reporting to access GST refunds
- Option to vary PAYGI to nil for the March quarter BAS and claim a refund for any instalments made for Sep and Dec 2019 quarters
- Remission of interest and penalties incurred on or after 23 Jan 2020
- Availability to enter into low interest payment plans
Please be aware that superannuation obligations are still due and payable by the normal dates.
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More information
A more detailed overview of all these measures is available from business.gov.au and WA Small Business Development Corporation
https://www.smallbusiness.wa.gov.au/coronavirus
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Fair Work
Coronavirus and Australian Workplace Laws
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Bank and Financial Institutions
The following are a list of releases by banks regarding support to their customers as a result of the financial challenges being experienced:
https://www.bendigobank.com.au/help/coronavirus-assistance-package/
https://www.commbank.com.au/latest/coronavirus.html
https://news.nab.com.au/coronavirus-response/
https://www.anz.com.au/promo/covid-19/
In addition, here is a comprehensive list of links to your banks financial hardship teams, from the Australian Banking Association
https://www.ausbanking.org.au/campaigns/financial-hardship/
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What next
We highly recommend you subscribe to the Small Business Development Corporation newsletter for all the latest facts and updates.
Go to the bottom of their Blog page (https://www.smallbusiness.wa.gov.au/blog) and select subscribe or follow this link:
https://analytics.clickdimensions.com/smallbusinesswagovau-askrd/pages/7tv42srzeeea6wbqvojobw.html