Benefit for all SME's! - Government & ATO Package Small Business Tax Impact

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Benefit for all SME's! - Government & ATO Package Small Business Tax Impact

Can I start by saying, what a strange time we are all experiencing. How things have changed in just a few weeks. I woke this morning to the news that the Australian Government was putting together an economic stimulus package that would add value NOW, and not in a year when you lodge your tax return, so I am super excited to share what was released. All the finer details will come, and we are here to help you get your share of the stimulis package, and get it now. Let's all work together to keep our businesses running, keep our team members employed, and keep this economy moving.

The Australian Government has put forward its plans to navigate the economic implications of the Coronavirus outbreak. The economic response is expected to be in the region of $17 billion, or 0.9% of annual GDP. Most SMEs will be eligible for one or more of the proposed incentives which are expected to be brought before parliament for approval on 23 March 2020.    

WHAT ARE THE INCENTIVES FOR EMPLOYERS?


PAYG

The Government intends to boost cash flow for employers with a turnover less than $50 million by refunding 50% of the Pay As You Go (PAYG) withholding amounts up to a maximum of $25,000.

This will apply for payments starting 1 January 2020 and ending 30 June 2020 (including all months/quarters for that period).

In addition, there will be a minimum payment of $2,000 for those who employ staff but are not required to withhold any PAYG. These incentives will also be tax-free and will be paid within 14 days of lodging activity statements.  

WAGE SUBSIDY

The Government will subsidise 50% of wages paid to apprentices or trainees from 1 January 2020 to 30 September 2020.

INSTANT ASSET WRITE OFF

The current instant asset write-off allows small businesses to immediately deduct the cost of new business assets costing less than $30,000.

This concession will be expanded to allow for the immediate deduction of assets with values up to $150,000 for the financial year ended 30 June 2020. This concession will apply to businesses with aggregated turnovers not exceeding $500 million (up from $50 million).  



WHEN WILL THE INCENTIVES TAKE EFFECT AND WHEN WILL THEY BECOME LAW?


The dates of effect for each incentive are different. See the below table for a summary of when the incentives will take effect as the Government intends to backdate the legislation:

PAYG - Refunds of 50% of PAYG withheld from wages, a minimum of $2,000 up to $25,000

Cover amounts withheld between 1 January 2020 until 30 June 2020


WAGE SUBSIDY - Wage assistance for apprentices and trainees (50% reimbursement)

The Government will subsidise 50% of wages paid to apprentices or trainees from 1 January 2020 to 30 September 2020.


INSTANT ASSET WRITE OFF - Increasing the instant asset write-off to $150,000, and changing the turnover threshold to use the write-off concession to $500 million

Assets acquired from 12 March 2020, until 30 June 2020






ATO joins the party in providing COVID-19 concessions


The proposed concessions will not be automatically applied to assist taxpayers. The ATO will need to be contacted in order to request assistance so please contact the office.  

 
The ATO intends to provide relief to businesses impacted by COVID-19 through the following measures:

  • Deferring payments relating to Activity Statements, Income Tax assessments and Fringe Benefits Tax assessments by up to four months
  • Allowing businesses who report GST quarterly to swap to monthly reporting to access GST refunds faster than they would usually be able to
  • Allowing businesses to vary down their Pay As You Go (PAYG) instalments to zero for the March 2020 quarter
  • Allowing businesses to claim refunds for PAYG instalments paid during the September 2019 and December 2019 quarters
  • Remitting interest and penalties incurred after 23 January 2020 which had been applied to tax liabilities
  • Allowing businesses to enter into low-interest payment plans for their existing and ongoing tax liabilities. 

 

The ATO made a point of mentioning that employers will still need to meet their ongoing Superannuation Guarantee obligations. 

 

HOW WE CAN HELP?

The Government intends to legislate these incentives by 31 March 2020 (in time for the start of the June quarter). Whoo hoo!

With the ATO concessions, the ATO will not automatically apply these concessions. The ATO needs to be contacted. The whole team at SMART are here to help you. It is times like these when you get to see the true value of having the support when you need it. The whole team are making themselves available wherever possible over these coming weeks to accommodate the demand during this time, so please call the office or email Nicole nicole@smartbusinesssolutions.com.au to arrange a time.

And if you're receiving this email, and not yet a client, please don't hesitate to call. At Smart, we are not just about that annual tax return, we are a team with our clients, and it is times like these that you really want the Smart team as part of your team.  We welcome you give us a call on 03 5911 7000 to discuss how we can better support you and your business during this challenging time.

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