Canberra funds tax breaks, wage subsidies and increased cash flow for businesses as part of its $17.6bn Coronavirus Stimulus
One of the biggest challenges for SME businesses from the Coronavirus is cashflow. At least $8.7bn of the Government’s Economic Response to the Coronavirus is aimed at financially assisting businesses over the next few difficult months.
Instant asset write-off
- The instant asset write-off enables businesses to claim an immediate tax deduction for capital expenditure on new or second hand equipment.
- The Government will Increase the instant asset write-off threshold from $30,000 to $150,000 and expand access to include businesses with aggregated annual turnover of less than $500m (up from $50m).
- The higher thresholds will apply, until 30 June 2020. Assets need to be used in the business or installed ready for use by this time.
- The Government will introduce a 15-month investment incentive which will accelerate depreciation deductions for new assets acquired by businesses.
- Businesses with a turnover less than $500 million will be able to deduct 50% of the asset cost in the year of purchase.
- The measure will apply to new assets used or installed ready for use by 30 June 2021.
- Payments of between $2,000 and $25,000 will be made to businesses with a turnover of less than $50 million that employ staff.
- The payment will be equal to 50% of the PAYG Withholding remitted on activity statements from March 2020 to June 2020, up to a maximum payment of $25,000. A credit will be applied by the ATO to the relevant activity statement.
- The Government will provide wage subsidies of up to 50% of an apprentice or trainee’s wage for up to nine months.
- The measure will apply to businesses which employ less than 20 people.
- The maximum subsidy is $21,000.
The cashflow boost is the largest part of the package and nearly 700,000 SMEs are expected to benefit. The biggest challenge for SMEs during uncertain times is cash flow and the PAYG withholding rebate is a good approach as it benefits all SME businesses. Alternatives like a payroll tax rebates misses smaller employers who may not actually pay payroll tax.
While the asset write-off is a welcome tax break, but it will only benefit businesses with cash to spend.
There are other measures including a one-off $750 payment to welfare recipients and assistance for severely-affected regions, including those heavily reliant on agriculture and tourism.
To find out if you’re eligible for assistance as part of the Economic Stimulus Package, call your local William Buck Tax Services specialists which you can find on our website here.