As part of the government’s coronavirus response package, it has provided for the ATO to give administrative relief for some tax obligations for people affected by the coronavirus outbreak, on a case-by-case basis (see more here).
Business operatives affected by the coronavirus should contact the ATO to discuss relief options. Options include:
- deferring by up to four months the payment date of amounts due through BAS (including PAYG instalments), income tax and FBT 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 PAYG instalment amounts to zero for the April 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, and
- 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 SG obligations for their employees.
The government announced the following two temporary measures to support business investment.
- Increasing the instant asset write-off: the instant asset write-off threshold will be increased from $30,000 to $150,000 and access will be expanded to include businesses with an aggregated annual turnover of less than $500 million (up from $50 million). The measure applies from 12 March 2020 to 30 June 2020 to new or second-hand assets first used, or installed to be ready for use in this timeframe.
- A 15-month boost to depreciation deductions: businesses with an aggregated turnover of less than $500 million will be able to deduct 50% of the cost of an eligible asset on installation, with existing depreciation or capital allowance rules applying to the balance. This applies from 12 March 2020 to 30 June 2021 to new assets that can be depreciated under Division 40 (that is, plant, equipment and specified intangible assets, such as patents). It does not apply to second-hand assets, or buildings and other capital works depreciable under Division 43.
Cash flow assistance
The coronavirus package is to provide employers with an aggregated annual turnover of less than $50 million a tax-free payment equal to 50% of pay-as-you-go (PAYG) amounts withheld, with a minimum payment of $2,000 and a cap of $25,000 to be delivered as a credit upon lodgment of the employer’s activity statements with the ATO from 28 April 2020. More here.
Eligible businesses that pay salary and wages will receive a $2,000 minimum payment even if they are not required to withhold tax. The ATO will repay funds if this measure places the business in a refund position.
The measure will be applied for a limited number of activity statement lodgments. The ATO will deliver the payment as a credit to the business upon lodgment of their activity statements. Where this places the business in a refund position, the ATO will deliver the refund within 14 days.
Quarterly lodgers will be eligible to receive the payment for the quarters ending March 2020 and June 2020.
Monthly lodgers will be eligible to receive the payment for the lodgment months of March 2020, April 2020, May 2020 and June 2020. To provide a similar treatment to quarterly lodgers, the payment will be calculated at three times the rate (150%) in the March 2020 activity statement.
The package will also provide eligible small businesses a wage subsidy of 50% of an apprentice or trainee’s wage from 1 January to 30 September 2020, capped at $21,000.
There is also a one-off stimulus payment of $750 to social security, veteran and other income support recipients and eligible concession card holders, and assistance for severely affected regions and communities.
The above measures will be pushed through in the sitting week of 22 to 26 March 2020.
The ATO will also continue to work with the tax profession, other government agencies and local organisations to make sure other impacted communities are also supported.
Outside of business, the ATO will also work with individuals experiencing financial hardship, and their tax agents, and will apply appropriate tax relief measures for serious and exceptional circumstances, such as where people cannot pay for food or accommodation. Unlike the ATO bushfire relief measures, which applied automatically to particular geographic areas, assistance measures for those impacted by COVID-19 will not be automatically implemented.
Anyone affected by COVID-19 should contact the ATO to request assistance on its emergency support number 1800 806 218.
Tax Wrap podcast: If the capital asset you buy is a truck, Ken Mansell has found a hole in the measures that you can probably drive it through. Tax Wrap 210 — Listen here.