|2. SUPPORTING BUSINESSES
- Increasing the instant asset write off (same as that announced on 12 March 2020)
- From 12 March 2020 until 30 June 2020, increasing the instant asset write off threshold from $30,000 to $150,000, and expanding access to businesses with aggregated annual turnover of less than $500 million (up from $50 million).
- This threshold applies on a per asset basis, to both new and second-hand assets first used (or installed ready for use) in this period.
- Backing Business Investment (same as that announced on 12 March 2020)
- For new assets purchased from 12 March 2020 and first used (or installed) by 30 June 2021, businesses with aggregated annual turnover of less than $500 million will be able to deduct 50% of the asset’s cost on installation, with the remaining cost being depreciated under existing rules, in order to accelerate depreciation deductions.
- Eligible assets are new assets (including intangibles such as patents) that are depreciable under Division 40 of the Income Tax Assessment Act 1997 (“ITAA 1997”). Similar to IAWO, capital works (e.g. buildings, structural improvements, etc) depreciable under Division 43 of the ITAA 1997 do not qualify for BBI. In addition, second hand assets are also excluded.
- Generally, assets that do not qualify for IAWO may qualify for BBI provided they are new assets that do not fall into any categories of excluded assets above.
- This means that in the first eligible year, the business will be able to claim not only 50% of the cost, but also the allowable depreciation of the balance of cost of the asset under applicable depreciation rules.
- Boosting cash flow for employers
- Small and medium businesses as well as not-for-profits (including charities) with aggregated (prior year) annual turnover of less than $50 million which employ workers will qualify for this temporary cash flow assistance.
- For March to June 2020, eligible employers will receive a payment equal to 100% of their salary and wages withheld (up from 50%), with the maximum payment being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000 for eligible businesses that pay salary / wages but are not required to withhold tax.
- Quarterly lodgers will receive this “cash flow boost” in their March 2020 and June 2020 quarters activity statements, while monthly lodgers in their March 2020 to June 2020 monthly activity statements (with payment at a rate of 300% in the March 2020 statement to be on equal footing with quarterly lodgers).
- For July to October 2020, eligible entities must continue to be active to receive an additional payment equal to the total initial “cash flow boost” they have received, meaning a total of at least $20,000 and maximum of $100,000 under both payments.
- The “cash flow boost” will be tax free and automatically credited by the Australian Taxation Office upon employers lodging upcoming activity statements from 28 April 2020.
- Supporting apprentices and trainees (same as that announced on 12 March 2020)
- Small businesses which employ fewer than 20 full-time employees with an apprentice (or trainee), can apply for a wage subsidy of 50% of the apprentice’s (or trainee’s) wage paid from 1 January 2020 to 30 September 2020.
- The wage subsidy is capped at $21,000 ($7,000 per quarter) per eligible apprentice (or trainee). Existing apprentices (or trainees) employed prior to 1 January 2020 can also qualify.
- Employers of any size, and Group Training Organisations that re-engage an eligible out-of-trade apprentice (or trainee) will be eligible for the subsidy, provided the apprentice (or trainee) must have been in-training with a small business as at 1 March 2020.
- Employers can register for the subsidy from early April 2020 to 31 December 2020, and must have their eligibility assessed by an Australian Apprenticeship Support Network (AASN) provider.
- Assistance for coronavirus affected regions and communities
- The Government has set aside an initial $1 billion to support those regions and communities that have been disproportionately affected by the Coronavirus, including those heavily reliant on industries such as:
- The $1 billion will be provided through existing or newly established Government programs, and will be used to help businesses identify alternative export markets or disrupted supply chains.
- In addition, the Government will provide relief to the airline industry from a number of taxes and Government charges estimated up to $715 million.
- Temporary relief for financially distressed businesses
- Temporarily increasing the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands.
- Temporarily providing relief for directors from any personal liability for trading while insolvent, and flexibility in the Corporations Act 2001 to provide targeted relief from provisions of the Act to deal with unforeseen events arisen as a result of the Coronavirus health crisis.
- Tailoring solutions by the Australian Taxation Office for owners or directors of businesses that are struggling, including temporary reduction of payments or deferrals, or withholding enforcement actions (such as director Penalty Notices and wind-ups).
- This measure provides a safety net for otherwise profitable and viable businesses which may be pushed into insolvency and winding up.