Business stimulus covid 19
To encourage continued employment
Today the government announced additional rebates for PAYG Withholding. The Apprentice Rebate remains unchanged from last week.
Boosting Cashflow for Employers
For those of you with employees you will be entitled to a rebate equal to 100% of your PAYG Withholding from 1st January to 30 June 2020, up to a maximum of $50,000. (This has increased from 50% of the withholding and a maximum of $25,000 which was announced last week)If you employ someone and you don't have to withhold tax on their wages you will still receive $10,000.If you withhold $10,000 a month from your employees wages in PAYG you will receive a $10,000 rebate each month, until you reach the $50,000 threshold. This will be paid to you once the March BAS and June BAS have been lodged. For those of you who pay PAYG Withholding monthly the ATO will give you 3 times the March Withholding amount to ensure you are on a level playing field, then the rest in each BAS to the end of June. On top of this an extension has also been applied from 1st July to 31st October. This extension means you will receive the same rebate again as you received between January - June. That means an additional $10,000 as a minimum up to $50,000 depending on how much you were eligible for previously. Whilst this takes the total payment to a minimum of $20,000 and maximum of $100,000 it's important to note the DATES. This won't all be paid between the March and June BAS, but will instead by paid between March - September. If you are unsure how much PAYG Withholding you normally pay, jump into Payroll in Xero, go to pay employees and look at the tax column. It's important to note that the payment will not be made until after your BAS has been lodged and will only be made to you if your ATO account is in Credit. Ie if you owe the ATO money this will come off your existing debt. You don't need to 'register' for this, it will automatically happen as part of your BAS. We will of course calculate and let you know how much this will be in April when we are preparing the March Quarter BAS.
In an effort to keep apprentices and trainees employed, employers will be entitled to 50% of the wages of apprentices and trainees from the 1st January to 30th September. This will be capped at $21,000 or $7,000 per Quarter per eligible apprentice. This will be available to small business employers who have less than 20 employees in total. It's important to note that if you employ a new apprentice that was displaced from another employer you will be eligible for the rebate. Eligibility assessments will need to be done by an Australian Apprenticeship Support Network Provider. We will be in contact if you have an Apprentice so we ensure you are registered in April when applications open.
To encourage investment
The government is also mindful of the need to continue investment in assets for business to keep the cycle going. They have introduced another increase to the asset write off threshold and additional accelerated depreciation. It's important to note that these are not cash back incentives, but an acceleration of a tax deduction, reducing the income tax your business would pay at the end of the year. If your business is making a loss these measures won't give any immediate assistance from a tax or cashflow perspective.
Instant Asset Write Off
Whenever you purchase an asset for your business (a car, computer, machinery etc) you generally need to depreciate or claim the cost of this asset over a number of years in your tax returns. In the last budget the government increased this threshold meaning anything costing less than $30k could be claimed as a tax deduction immediately rather than needing to be claimed over a number of years. As part of these measures the government has increased this threshold to $150k for all businesses with a turnover up to $500m. That means if you purchase an assets from now until 30 June that costs less than $150k you will be able to claim it as a tax deduction this year. What this means is that if you purchase a piece of machinery for $100k, you will reduce your income tax bill by $27,500. Remember you need to a) be making a profit and have to pay tax in order for this to apply, and b) have the cashflow in your business to support and sustain the purchase. Please ensure you let us know if you are looking at any asset purchases so we can run the cashflow scenarios.
Backing Business Investment
If your asset purchase falls outside of the above thresholds then you will be entitled to claim a 50% of the cost of the asset as an immediate write off as well as the normal depreciation for the remaining 50%. That means if your asset purchase was $500k, you can claim $250k deduction in this year along with the normal depreciation on the remaining $250k.
Payroll Tax Relief
There are a range of Payroll Tax Concessions in each state. For the states where you need to apply for an exemption we will be doing this on your behalf with the April returns.
No Payroll Tax to be paid for March, April or May
When your annual reconciliation is lodged in July you will get an exemption of 25% of your total payroll liability for the year (note this includes the wages you paid in March - June)
Most banks have hardship assistance programs in place to help those in need. They can be found on their websites. Specifically relating to COVID-19 the following has been announced.
The Australia Banking Association is a great resource to understand what you bank is offering - check their info our here.
CBA - check more info our here
Reducing commercial interest rates by 0.25
Extended hours for lending teams for faster decisions
Deferring repayments on a variety of business loan and overdraft products, for 90 days.
Waiving merchant terminal fees for impacted customers with CBA payment terminals, for 90 days.
Waiving early redraw fees on business term deposit accounts (including Farm Management Deposit accounts).
Waiving establishment fees and excess interest on Temporary Excess products.
Deferring repayments on vehicle and equipment finance loans, and providing tailored restructuring options that meet individual customer needs.
ANZ - check more info our here
Suspending interest repayments
Providing early access to term deposits without incurring break fees
Providing access to additional credit subject to approval
NAB - check more info out here
Deferral of business loan repayments for up to three months, assessed on a case-by-case basis
Extension of a business loan term by a period of up to three months, where individual circumstances warrant
Support to restructure existing business loans, including equipment finance
Business credit card deferred repayments.
Westpac - check more info our here
Continuing it's hardship assistance program
Deferring repayments for 3 months
Bendigo - check more info out here
Home Loan and Business Loan customers can apply for relief on loans for up to three months
Waiver of fees for the restructuring or consolidation of loans
Credit card customers can apply for an emergency credit card limit increase
Discounted interest rates on new personal loans taken out by existing Bendigo Bank customers
Waiver of interest rate reduction for early withdrawals on term deposits prior to maturity
Deferral of payments and extensions for Equipment Finance on a case by case basis
during the year you will receive a refund