COVID-19: Economic Stimulus Update

Today the Federal Government announced a second round of Economic Stimulus measures. We include below a summary of these measures as they currently stand.
There are a number of key areas, with the following directly impacting on business:

Full details of the complete assistance (for both business and individuals) can be found here but in summary, here is what business will be able to access:

Boosting Cash Flow for Employers

This measure will provide up to $100,000 back to eligible small and medium sized businesses and Not For Profits that employ people, with a minimum payment of $20,000 to eligible business that employ staff (this is an increase to a previously announced measure). The payment will be tax free.

Eligible to business entities with an aggregated annual turnover <$50 million, and NFPs, including charities, with aggregated annual turnover <$50M
Must employ workers
Will be delivered by the ATO as a credit in the activity statement system from 28 April 2020 upon lodgement of activity statements
Payment will be equal to 100% of the amount withheld from employees salary and wages, up to a maximum payment of $50,000
Eligible businesses that pay salary and wages will receive a minimum payment of $10,000 even if they are not required to withhold tax.
An additional payment is being introduced in the July-Oct 2020 period, where eligible entities will receive an additional payment equal to the total of the previous payments they have received. This means eligible entities will receive at least $20,000 up to a total of $100,000 for both payments.

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.

Supporting Apprentices and Trainees

Eligible employers can apply for a wage subsidy of 50% of an apprentice or trainees wage paid during the 9 months from 1 Jan 2020 to 30 Sep 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer.

Eligible to businesses employing fewer than 20 full-time employees who retain an apprentice or trainee
The apprentice or trainee must have been in training with a small business as at 1 Mar 2020
Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network (AASN) provider
Employers can register for the subsidy from early April 2020, and final claims for payment must be lodged by 31 Dec 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.

Temporary Relief for Financially Distressed Businesses

Temporary increase to the threshold at which creditors can issue a statutory demand on a company and initiate bankrupt proceedings on an individual, and an increase to the time companies and individuals have to respond to statutory demands that have been received.
Threshold increases from $2,000 to $20,000.
Time frame increases from 21 days to 6 months.
Temporary relief for directions from any personal liability for trading while insolvent.
Temporary flexibility in the Corporations Act 2001 and to provide targeted relief from provisions of the act to deal with unforeseen events that arise because of the Coronavirus health crisis.
Tailored solutions for owners and directors of business currently struggling, including temporary reduction of payments or deferrals, or withholding enforcement action including DPNs and windups.

Increasing the Instant Asset Write-Off **

The Government is increasing the instant asset write-off threshold from $30,000 to $150,000 and expanding access to include all businesses with an aggregated turnover of less than $500 million (previously $50 million).

Threshold applies on a per asset basis – businesses can immediately write-off multiple assets
Applies from the announcement (12 March 2020) until 30 Jun 2020, for new or second hand assets first used or installed ready for use in this time frame

If you are considering purchasing assets, please consider the cashflow 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% recognized this financial year. Please contact us to discuss the cash flow implications further.

Backing Business Investment **

The Government is introducing a time limited 15 month investment incentive to support business investment and economic growth, by accelerating depreciation deductions.

A deduction of 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the assets cost.
Eligible to businesses with an aggregated turnover below $500 million
Eligible assets are new assets that can be depreciated under Division 40 of the Income Tax Assessment Act 1997, acquired after the announcement (12 March 2020) and first used or installed by 30 Jun 2020.
Does not apply to second hand Division 40 assets, or buildings and other capital works depreciable under Division 43.

We recommend that prior to purchasing assets that may be deductible under this measure, that you contact us 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

Support for Immediate Cash Flow Needs for SMEs

A guarantee of 50% to SME lenders to support new short term unsecured loans to SMEs

Quick and Efficient Access to Credit for Small Business

Cutting red tape by providing a temporary exemption from responsible lending obligations for lenders providing credit to existing small business customers