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Covid-19 Business Concessions

Posted by Matt Connor on 25 March 2020
Covid-19 Business Concessions

The Australian and state governments have announced a number of concessions designed to boost cash flow for businesses that employ staff and purchase and depreciate business equipment. These concessions are available to businesses with turnover (gross income) up to $50 million.

Rather than repeat all the detail, we've summarised the salient points and provided a link to the government concessions.

The second fact sheet for economic reports to the coronavirus can be found at this link.

Boosting cash flow for employers
These are tax-free cash payments to your business bank account and are only available to businesses that actively employed staff as at 12 March 2020. The legislation has included integrity measures that prevent businesses from trying to manoeuvre into satisfying the eligibility criteria.

The only action required is to prepare and lodge your monthly or quarterly BAS, where gross wages and tax withheld are disclosed. In other words, no separate forms or submissions are required. The cash is then automatically refunded to your business bank account within two weeks.

Cash payments of up to $100,000 - $50,000 maximum spread between two designated time periods - for the periods between March and June 2020, and a second $50,000 for the periods June to September. You need to employ staff in both periods to be eligible for both payments.

Note, most employers won't receive the full $100,000, as the amount is calculated on PAYG withholding (disclosed as item W2 on your BAS form).

Even if you're not required to withhold tax, you're still eligible for $20,000 over the two time periods.

There are several examples in the government fact sheet explaining how the scheme would work for businesses lodging on a monthly and quarterly basis.

Payroll tax concession
Each state payroll tax authority has announced different concessions around deferring and reducing your payroll tax obligations.

Qld payroll tax information can be found at this link.

NSW payroll tax information can be found at this link.

Victoria payroll tax information can be found at this link.

Increased instant asset write-off and accelerated depreciation
These concessions relate to how asset purchases are deducted in your 2020 year-end tax return, and don't affect your immediate cash flow.

This relates to business equipment costing up to $150,000 (up from $30,000), purchased between 12 March and 30 June 2020. Unfortunately building work (such as an office or surgery fitout) does not qualify for this concession.

The tax office summary of this concession can be found at this link.

In respect to new assets purchased between 12 March 2020 and 30 June 2021, and not otherwise covered by the immediate write-off concession, an immediate deduction of 57.5% (rather than 15%) is available. To qualify, the asset must be new (not second hand) and be purchased and installed for use. Also, unfortunately, building work expenses do not qualify for this concession.

In relation to motor vehicles, you need to have a logbook to evidence business usage, and concessions are reduced for private usage and the luxury car limit.

The tax office summary of this concession can be found at this link.

If you think any of these concessions are available to you, and you have further questions, please don't hesitate to contact our office.

Author: Matt Connor
Tags: Tax

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The information on this site is of a general nature. It does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions.

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