Yesterday, Prime Minister Scott Morrison announced the federal government’s economic response to the coronavirus (COVID-19). The economic response includes tax-related measures and administrative relief, designed to support businesses during this period of uncertainty and economic downturn.

Tax Measures to Support Business Investment

The government will support business investment with the following tax measures:

Tax-free payment to employers

• Businesses that turnover less than $50m will receive a tax-free payment equal to 50% of PAYG withheld from salaries;
• The minimum payment will be $2,000 and the maximum will be $25,000;
• The payment will apply to PAYG withheld from salaries between 1 Jan 2020 and 30 Jun 2020;
• The payment will be calculated based on business activity statements and instalment activity statements lodged from 28 April 2020.

Support to keep apprentices employed

• Small businesses will receive 50% of an apprentice or trainee’s wage from 1 Jan 2020 to 30 Sep 2020, capped at $21,000;
• This will be paid quarterly up to $7,000 per quarter for the Mar 2020, Jun 2020, and Sep 2020 quarters.

Instant asset write-off

• Currently businesses with a turnover of less than $50 million can claim a full deduction for the cost of purchasing assets up to $30,000 until 30 June 2020;
• This measure is now being extended to businesses turning over less than $500 million and will apply to assets costing up to $150,000;
• This change applies from 12 March 2020.

Accelerating depreciation deductions

• Businesses with a turnover of less than $500 million will be able to deduct 50% of the cost of an asset before applying existing depreciation rules;
• This will apply to assets purchased from 12 March 2020 until 30 June 2021.

Stimulus payment

• The government will make a once-off stimulus tax-free payment of $750 to pensioners, social security, veteran, other income support recipients, and eligible concession card holders;
• Payments will start from 31 Mar 2020 and most will be paid by mid-April.

ATO Administrative Relief

On a case by case basis, the ATO will provide administrative relief from some tax obligations for businesses affected by the coronavirus outbreak. Businesses need to contact the ATO to discuss their relief options and requirements. The options include the following:

• Deferring payments of BAS, income tax, and FBT by up to 4 months;
• Allowing businesses, that report GST quarterly, to change to monthly GST reporting in order to access GST refunds sooner;
• Allowing businesses to vary March 2020 PAYG instalments to NIL and claim a refund for Sep 2019 and Dec 2019 instalments paid;
• Remitting interest and penalties imposed on tax liabilities after 23 Jan 2020;
• Allowing businesses to pay tax liabilities via low-interest payment plans.

These measurers will be introduced into parliament between 22 and 26 March 2020 and are subject to being legislated by parliament.

If you have any questions about these measurers, please don’t hesitate to contact us.