Currently, the World Health Organization (WHO) has announced that COVID-19 is a pandemic.
The Australian Government has just released their economic response to the Coronavirus.
What assistance is being provided to business?
On 12 March 2020, the Australian Government announced their economic response to the Coronavirus. There are two areas directly affecting on business & two other key areas
- Delivering Support for business investment
- Cash Flow Assistance for Business
Full details of the assistance can be found here but in brief, here is what business will be able to access:
Boosting Cash Flow for Employers
This will provide up to $25,000 back to business, with a minimum payment of $2,000 to eligible business that employ staff. This will be tax free.
- Eligible to business entities with an aggregated annual turnover <$50 million
- 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 50% of the amount withheld from employee’s salary and wages, to a maximum payment of $25,000
- Eligible businesses that pay salary and wages will receive a minimum payment of $2,000 even if they are not required to withhold tax.
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.
Increasing the Instant Asset Write-Off **
The Government is increasing the instant asset write-off threshold from $30,000 to $250,000 and increasing access to include 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 timeframe.
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% recognised this financial year. Please contact your accountant or AURIC Financial to discuss the cashflow implications.
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 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
AURIC Financial’s business continuity strategy
For a number of years, AURIC Financial have been using cloud based systems to service and support our clients. This has meant that the majority of our work is conducted off-site, with no requirement for face to face contact with our clients.
We will continue to support and assist our clients in this manner, and we do not expect that any interruption to our business operations, we have staff capacity to ensure that work can be undertaken by another member of our team, and that there is no disruption to our client’s work.
Sometimes we need to meet with our clients, and with the rapid global spread of Covid-19, our focus is on the safety of our employees & clients.
With this in mind, and in line with our legal obligations and official guidance from relevant authorities, we have decided to minimise face to face contact with clients.
We are available by phone, email or via Zoom video conferencing and we do not expect that there will be any disruption to our services.
For information regarding best practice, we are relying on the following sources of information:
The immediate future will be challenging for businesses and individuals in Australia, and across the world. If you have questions about the government assistance packages being provided to business, please contact us.
Dai is a Master of Business Administration graduate of the University of New England, Registered BAS Agent and member of the Institute of Certified Bookkeepers. For 16 years he owned, operated and managed businesses in the tourism and hospitality industry – particularly Accommodation, Event Management, and Food & Beverage Management. In recent years, Dai has worked in the Not for Profit sector, Real Estate, Motorsports, and Motor Trades industry and business services, in Finance, Administration, and Practice Management roles, before becoming a Professional Bookkeeper in 2009.