Over the past week, there has been mounting concern with regards to the coronavirus (COVID-19) outbreak.  With restrictions in place for travel and gatherings across Australia, and schools and workplaces braced for closures, it is increasingly important to be aware of what this means financially for individuals and businesses.

On the 12 of March 2020, the Government announced its economic response to COVID-19, subject to passage of legislation, the Australian Taxation Office will implement a series of measures to assist Australians experiencing financial difficulty as a result of the COVID-19 outbreak.

 

Businesses and Cash Flow Support

Options available to assist businesses impacted by COVID-19 include:

  • An increase to the instant asset write-off (IAWO) threshold from $30,000 to $150,000 and expanding access to include businesses with aggregated annual turnover of less than $500 million, up from $50 million. This increase will only be available for new or second-hand assets first used or installed for use by 30 June 2020.
  • Accelerated depreciation for eligible plant and equipment until 30 June 2021. Eligible taxpayers will receive a deduction of 50 per cent of the cost of the eligible assets on installation, with existing depreciation rules applying to the balance. Until 30 June 2020, this will apply to assets over $150,000. From 1 July 2020, this will apply to assets over $1,000. The introduction of this measure may mean that the government does not intend on extending the increased amount of instant asset write off beyond 30 June 2020.
  • Temporary cash flow support of up to $25,000 for small and medium businesses that employ staff between 1 January 2020 and 30 June 2020, with a minimum payment of $2,000 for eligible businesses. The payment will be tax-free.
  • The Government will offer eligible employers a wage subsidy of 50 per cent of an apprentices or trainees wages from 1 January to 30 September 2020, capped at $7,000 each quarter per eligible apprentice or trainee.

 

ATO Administrative Relief

Options available to assist businesses impacted by COVID-19 include:

  • Deferring by up to four months, the payment due date for business activity statements (including PAYG instalments), income tax assessments, fringe benefits tax assessments and excise.
  • Allowing 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.
  • 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.

Employers will still need to meet their ongoing super guarantee obligations for their employees.

 

Individuals

If you were living in Australia on 12 March 2020, and receive one of the eligible pension payments, you will automatically receive a $750 one off payment. Payments will begin being distributed from 31 March 2020, with most people receiving it by the 17 April 2020.

A full list of eligible pension payments can be found at: https://www.servicesaustralia.gov.au/individuals/news/750-one-economic-support-payment

It is important to note, unlike relief which was provided automatically during the bushfire crisis, COVID-19 administrative relief options will not be automatically applied. If your business has been financially impacted by COVID-19, we recommend you make an appointment with your tax adviser to discuss your eligibility for the Governments support measures.