To encourage continued employment

One of the drivers of the stimulus package is to encourage and assist small business to continue to keep employees where possible. There are 2 incentives, the first being a reduction in your PAYG Withholding (a rebate) and the second being a payment for Apprentice Wages.

Boosting Cashflow for Employers

For those of you with employees you will be entitled to a rebate equal to 50% of your PAYG Withholding from 1st January to 30 June 2020, up to a maximum of $25,000.

If you employ someone and you don't have to withhold tax on their wages you will still receive $2,000 and they must have been employed as at 1st March 2020.

If you withhold $10,000 a month from your employees wages in PAYG you will receive a $5,000 rebate, until you reach the $25,000 threshold.

This will be paid to you once the March BAS and June BAS have been lodged. For those of you who pay PAYG Withholding monthly the ATO will give you 3 times the March Withholding amount to ensure you are on a level playing field.

If you are unsure how much PAYG Withholding you normally pay, jump into Payroll in Xero, go to pay employees and look at the tax column.

It's important to note that the payment will not be made until after your BAS has been lodged and will only be made to you if your ATO account is in Credit. Ie if you owe the ATO money this will come off your existing debt.

You don't need to 'register' for this, it will automatically happen as part of your BAS. We will of course calculate and let you know how much this will be in April when we are preparing the March Quarter BAS.

Supporting Apprentices

In an effort to keep apprentices and trainees employed, employers will be entitled to 50% of the wages of apprentices and trainees from the 1st January to 30th September. This will be capped at $21,000 or $7,000 per Quarter per eligible apprentice.

This will be available to small business employers who have less than 20 employees in total. It's important to note that if you employ a new apprentice that was displaced from another employer you will be eligible for the rebate.

Eligibility assessments will need to be done by an Australian Apprenticeship Support Network Provider. We will be in contact if you have an Apprentice so we ensure you are registered in April when applications open.

To encourage investment

The government is also mindful of the need to continue investment in assets for business to keep the cycle going. They have introduced another increase to the asset write off threshold and additional accelerated depreciation.

It's important to note that these are not cash back incentives, but an acceleration of a tax deduction, reducing the income tax your business would pay at the end of the year. If your business is making a loss these measures won't give any immediate assistance from a tax or cashflow perspective.

Instant Asset Write Off

Whenever you purchase an asset for your business (a car, computer, machinery etc) you generally need to depreciate or claim the cost of this asset over a number of years in your tax returns. In the last budget the government increased this threshold meaning anything costing less than $30k could be claimed as a tax deduction immediately rather than needing to be claimed over a number of years.

As part of these measures the government has increased this threshold to $150k for all businesses with a turnover up to $500m. That means if you purchase an assets from now until 30 June that costs less than $150k you will be able to claim it as a tax deduction this year.

What this means is that if you purchase a piece of machinery for $100k, you will reduce your income tax bill by $27,500.

Remember you need to a) be making a profit and have to pay tax in order for this to apply, and b) have the cashflow in your business to support and sustain the purchase.

Please ensure you let us know if you are looking at any asset purchases so we can run the cashflow scenarios.

Backing Business Investment

If your asset purchase falls outside of the above thresholds then you will be entitled to claim a 50% of the cost of the asset as an immediate write off as well as the normal depreciation for the remaining 50%.

That means if your asset purchase was $500k, you can claim $250k deduction in this year along with the normal depreciation on the remaining $250k.

Other factors

The guidance on what to do in these times for business is changing daily according to the WHO and health professionals. We suggest you assess for your business the policies you need to put in place and take guidance from the authorities as well as talk to your teams on what measures you are putting in place.

We have implemented a simple 4 step plan for Growthwise to ensure we are all able to help. If you work in an office or these apply to you please feel free to utilise.

Step 1 = Home Isolation

If you are feeling ill please stay at home
If people you live with are ill please stay at home
Of course Home Isolation doesn't mean sick days, we work 100% in the cloud so you can work at home
If you are working from home please ensure you are logged into Slack, calls will be directed to your mobiles

Step 2 = Travel

If you have been on a domestic flight please quarantine yourself at home for 4 days
If you have been on an international flight please quarantine yourself at home for 7 days
Work as normal following the above guidelines

Step 3 = Appointments

Appointments in the office should be limited to emergencies only
We have Zoom, so please utilise this great technology with clients instead

Step 4 = Cleaning

Please wash your hands thoroughly with soap
Please ensure you are using hand sanitiser
Please ensure you are wiping down all hard surfaces with disinfectant daily

We are encouraging everyone to shop locally to support small business. If you are in home isolation check out all the local businesses that deliver to your area.

Next Steps

We will keep you informed when the above passes parliament along with any other incentives put in place.

You don't need to register for the PAYG rebate, we will advise how much that will be. If you are unsure and need to know how just give the office a buzz on 49278982.

For those of you with apprentices we will be in touch in April once the application process has been released.

If you are looking to purchase assets and know you have the cashflow to support please also let us know so we can advise what impact this will have on you.

Any questions as always just let one of the Growthwise team know.