The uncertainty being created by the coronavirus has caused disruption for everyone across the country. In response the Federal Government has announced a yet to be legislated four-part package that focuses on business investment, sustaining employers and driving cash into the economy.
For Businesses
- Tax-free payments up to $25,000 for employers
This is not a direct cash payment but a credit equal to 50% of the PAYG amounts withheld from salary and wages paid to employees. The employer will need to lodge an activity statement to trigger the entitlement. If the credit puts the business in a refund position the excess amount will be refunded by the ATO within 14 days. If a business pays salary and wages to employees but is not required to withhold any tax then a minimum payment of $2,000 will still be made. - Increase and extend the instant asset write-off
From 12 March 2020, the instant asset write-off threshold will increase from $30,000 to $150,000, and access to the write-off will be expanded to include businesses with an aggregated annual turnover of less than $500 million until 30 June 2020. - Accelerated depreciation deductions
In addition to the increased instant asset write-off rules, accelerated depreciation deductions will apply from 12 March 2020 until 30 June 2021. This will bring forward deductions that would otherwise be claimed in later years.
For example, let’s assume that a business purchases a new machine for $180,000 (exclusive of GST) in July 2021. In the 2021 tax return the business would claim an upfront deduction of $90,000. The business would also claim a further deduction for the depreciation that would have arisen on the balance of the cost. If the business is a small business entity and using the simplified depreciation rules, this would mean an additional deduction of $13,500 (i.e. 15% x $90,000). The total deduction in the 2021 tax return would be $103,500. Without the introduction of this investment incentive, the business would have claimed a deduction of $27,000 (i.e., 15% x $180,000).
For Individuals
There will be a $750 one-off payment to those who are on social security, veteran and other income support recipients and eligible concession cardholders as of 12 March 2020.
Please stay positive and we wish you health, vigour and goodwill during this challenging time.