Tax Update: Business incentives

Government Incentives

Depreciation – Immediate Deductions

The government have increased the instant asset write off threshold from $30,000 to $150,000 and expanded the programme access to include businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.

What this means – for any purchases of capital (depreciable) items for your business between now and 30 June 2020 you will get a 100% tax deduction in the FY2020 tax return for the cost of the item (up to $150,000 per item). This includes all plant of equipment, motor vehicles, software, machinery etc

Payroll Incentives

Employers will be entitled to receive a cash benefit up to $25,000 with a minimum payment of $2,000 for eligible small and medium-sized businesses. The payment will provide cash flow support to businesses with a turnover of less than $50 million that employ staff, between 1 January 2020 and 30 June 2020. The payment will be tax free. We believe this payment will be based on 50% of the PAYG Withholding on employee’s wages as recorded in the quarterly BAS or monthly IAS.

What this means – the government will refund 50% of the PAYG Withheld from staff wages on each activity statement lodged for March, April, May and June 2020 (capped at $25,000)

Also there is support for small businesses to support the jobs of around 120,000 apprentices and trainees. Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for up to 9 months from 1 January 2020 to 30 September 2020.

What this means – for businesses that employ eligible apprentices and trainees they can register to receive a 50% subsidy for the wages paid between 1 January and 30 September 2020 (capped at $21,000 per apprentice) 

ATO Support

Tax Payments & Instalments

Deferring by up to four months the payment date of amounts due through the business activity statement (including PAYG instalments), income tax assessments, fringe benefits tax assessments and excise. For example the March quarterly BAS, if lodged electronically or through us as Tax Agent is due to be lodged on 26 May and therefore payment won’t be due until 26th of September, 2020.

What this means – payment due dates for your activity statements for March, April, May and June 2020 will be deferred for up to 4 months. Payment due dates for your income tax return will also be deferred up to 4 months.

Allow businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get quicker access to GST refunds they may be entitled to which will be particularly helpful for start up businesses;

Allowing businesses to vary Pay As You Go (PAYG) instalment amounts to zero for the March 2020 quarter. Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters

What this means – businesses that pay quarterly tax instalments towards their FY2020 tax estimate can vary the March instalment to NIL and receive a credit for the September 2019 and December 2019 instalments that have been paid.  This effectively pushes the entire FY2020 tax bill for the business to May 2021 or when the FY2020 tax return is lodged.

Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities

Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low interest payment plans