Government Assistance Announcement: The implications for your business
Prime Minister Scott Morrison recently announced a suite of measures aimed at stimulating the economy, following the World Health Organisation's declaration of the Coronavirus COVID-19 as a pandemic.
Increased instant asset write-off
The package will see the government inject $700 million to increase the instant asset write-off threshold by fivefold, rising from $30,000 to $150,000.
Access to the write-off will also be expanded to include businesses with an aggregated annual turnover of less than $500 million, up from $50 million.
The expanded measure will only run until 30 June 2020.
SME cash boost
The government will also roll out a measure that will see businesses with a turnover of less than $50 million receive payments of up to $25,000 tax-free, with a minimum payment of $2,000.
These payments will be benchmarked to 50 per cent of the amount withheld on employees’ salary and wages, up to a maximum payment of $25,000.
Eligible businesses that pay salary and wages will receive a minimum payment of $2,000, even if they are not required to withhold tax.
Employers who lodge the BAS on a quarterly basis will be eligible to receive the payment for the quarters ending March 2020 and June 2020.
Monthly BAS lodgers will be eligible to receive the payment for the March 2020, April 2020, May 2020 and June 2020 lodgements. There will be a 150 per cent calculation in the March activity statement to provide the same treatment as quarterly lodgers.
Other options may be available to assist businesses severely impacted by COVID-19 and at ATO discretion include
- 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 tax
- Allow businesses on a quarterly reporting cycle to opt into monthly GST reporting to get quicker access to GST refunds they may be entitled to
- 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
- 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.
WLM recommended small business measures
We don’t want to add to any hysteria. Still, all businesses should currently be assessing the impact of the following scenarios:
- Staff only being able to work remotely; or
- The business is forced to shut down for a period of time – particularly relevant to the hospitality and childcare-related industries as seen in other countries around the world.
Our recommendations for those with staff working from home are:
- Make sure staff have access to the necessary software and hardware systems they require to do their work as well as a reliable internet connection.
- Define a policy for how communications are to take place internally and externally. Internally you may wish to use software such as Skype, Microsoft teams or Slack and externally use Zoom, Skype and email. You also need to ensure all staff are appropriately trained on how to use these systems.
- Make sure you have a clearly defined work from home policy that the employee signs off to ensure they maintain a safe workplace.
Our recommendations for those who are at risk of their businesses being closed due to government-enforced shutdowns:
- Prepare a three-month P&L and cash flow forecast that shows what expenses and cash outflows would occur in this situation. If this analysis shows a cash shortfall, consideration needs to be given as how to fund the shortfall. i.e. personally or via finance facilities.
- Speak to your landlords to see if they are willing to provide some rent reduction during the closure time.
- Speak to an employment lawyer about what your obligations are to staff and what liabilities would be incurred in the event you need to make some staff redundant.
- Speak to your insurance broker to see if your business insurance policies cover you for losses in this event. Unfortunately, there would likely be an exclusion, but it is still worth asking the question.
- Try and run your perishable stock as low as possible.
State Government Announcements
State Governments are also announcing (NSW, QLD and WA to date) payroll tax relief. Please refer to our advice about these measures here: