On 12 March 2020 the government announced the first phase of an economic stimulus package in response to the impact of the coronavirus (COVID-19) pandemic.
Eligible welfare recipients will receive a once off economic support payment of $750. This includes people receiving family tax benefits and anyone with a Veteran gold card. This will be paid after 31 March 2020 (pending legislation approval).
This is a non-taxable, non-assessable lump sum paid. To ensure recipients can spend the money, it will not be withheld to cover existing debts such as child support or Centrelink debts.
Employers with less than $50 million turnover will receive between $2,000 and $25,000 to alleviate the cashflow burden of paying employees.
The benefit will be calculated at 50% of the PAYGW remitted in your March and June activity statements (as well as April and May if applicable). If you have less than $4,000 in PAYGW, then you will simply receive the minimum $2,000 payment after lodging your March Activity Statement. If your total PAYGW exceeds $50,000 over this period, then your benefit will be capped at the maximum payment of $25,000.
Instant Asset Write Off
To encourage businesses to invest in asset purchases, until 30 June 2020 all businesses with a turnover of up to $500 million will be able to instantly write off any assets costing up to $150,000. These write-offs will be claimed as tax deductions in your 2020 tax return.
For the 2021 tax year businesses with a turnover of up to $500 million will be able to immediately deduct 50% of the cost of new assets.
Eligible assets include any new asset that is installed to be used by your business and any second hand asset that you purchase and install to be used for the first time by your business. Normal deductibility rules apply, meaning that if the asset would otherwise have been depreciable, you can now claim an instant write off deduction in your tax return. If the asset is used for a mixture of business and personal use then only the business portion can be claimed as an immediate deduction.
Say you purchase a ute that is exempt from the car limit (because it qualifies as a commercial vehicle that is not designed for the principal purpose of carrying passengers), for $60,000. It is to be used exclusively for your business. In this situation you would be able to claim the entire $60,000 cost in your 2020 income tax return.
However, if you purchased a motor vehicle for $60,000 that is to be used exclusively for your business then you would still be limited by the car limits for depreciation. For the 2020 financial year, the maximum you can claim for a fuel-efficient vehicle is $57,581.00. If the car was used partially for work purposes and partially for business purposes then you would further be limited to only claiming the work related percentage.
For further details see the government’s fact sheet.
Additional support measures include:
- Wage subsidies for employers hiring apprentices or trainees
- Unspecified funds to support the regions and industries most impacted by the coronavirus (to be determined).
- Fee waivers for significantly impacted industries such as the tourism industry.
If you are having trouble paying ATO debts you can contact them for debt deferrals, extensions and repayment arrangements. If you need help, please give us a call.
The government is set to monitor the situation and deliberate on further decisions this week. This could include the next phase of a stimulus package.