The COVID-19 pandemic is impacting small businesses on a large scale. The brokers at SOT Business Brokers have put together a recap of the support available for businesses (and their employees) via Government initiatives.
Small business tax benefits
Instant asset write-off threshold increase from $30k to $150k for small businesses
Own a small business with aggregated annual turnover of less than $500m? You may be eligible for an instant asset write-off on assets of up to the value of $150,000. This amount has been increased from $30,000. The time period applies from 23 March 2020 until 30 June 2020.
The measure applies to new or second-hand assets first used, or installed ready for use, between 12 March 2020 until 30 June 2020 (inclusive). Certain assets are excluded, for example, horticultural plants and capital works deductions.
The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets.
This initiative will mean an additional 5,300 businesses who employ around 1.9 million Australians will be able to access this concession for the first time.
Apprentices and trainees
From 1 January 2020 to 30 September 2020, if you are an eligible employer you can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage paid during the 9 months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
An eligible employer must have less than 20 full-time employees. The apprentice or trainee must be in employment with the business as at 1 March 2020.
You can register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020.
Cash flow boost for employers
With cash flow issues hitting many businesses hard, the Government has announced a maximum payment of $100,000 and a minimum payment of $20,000. The purpose of this initiative is to help with cash flow in order to keep operating, pay bills and retain employees. This is available from 12 March 2020 for eligible small or medium business. Not-for-profit organisations and charities are also included.
How can you receive this relief? The ATO will pay this as an automatic credit to the business upon lodgement of your business activity statement. If this means you are eligible for a tax refund, the ATO will pay the refund within 14 days. You don’t need to fill out any new forms and the payments are tax free.
For more information visit business.gov.au
Temporary relief for financially distressed businesses
For owners or directors of a business who are currently struggling due to the Coronavirus, the ATO will tailor solutions for their circumstances, including temporary reduction of payments or deferrals, or withholding enforcement actions including Director Penalty Notices and wind-ups.
ATO relief for tax obligations
The ATO has committed to providing relief for certain tax obligations for taxpayers impacted by the coronavirus outbreak on a case-by-case basis. Relief includes the ability to defer payment of certain taxes for up to six months and allowing businesses to vary pay as you go (PAYG) instalment amounts to zero for the March 2020 quarter.
The ATO Emergency Support Infoline on 1800 806 218
What is JobKeeper?
The JobKeeper payment is a $1,500 (gross) fortnightly payment per eligible employee of a business. The amount will be paid to the employer and is designed to assist employers to continue paying their employees. Eligible employers will receive payments from the beginning of May and payments will be backdated to 30 March 2020. The payments will be available for a maximum of six months.
Who is an eligible employer?
An employer is eligible if the business has turnover of:
- less than $1 billion which has reduced by more than 30% relative to a comparable period a year ago (of at least a month), or
- more than $1 billion which has reduced by more than 50% relative to a comparable period a year ago (of at least a month), and
- is not subject to the Major Bank levy.
- Therefore, a broad range of businesses will be eligible including not-for-profit organisations
If you are self-employed you can apply for the JobKeeper Payment if:
- you do not have any employees
- your business meets the turnover tests.
From 30 March 2020, you can register your interest to receive the JobKeeper Payment as self-employed via the ATO here.
Who is an eligible employee?
If you are an employee, you are eligible for the JobKeeper Payment if:
- your employer is eligible for the JobKeeper Payment wage subsidy.
- you are currently employed (including if you are stood down or rehired)
- you were employed by the employer as at 1 March 2020
- you are employed full-time, part-time, or a long-term casual, that is, a casual employed on a regular basis for longer than 12 months at 1 March 2020
- you are aged 16 years or older
- you are an Australian citizen, holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder
- you are not in receipt of the JobKeeper Payment from another employer.
How does an eligible employer apply?
To qualify for JobKeeper Payment the employer must:
- self-assess whether it will have, or will experience, the required decline in turnover
- register their intention to apply for the JobKeeper Payment with the Australian Taxation Office (ATO) via this link
- provide the following information to the ATO:
- the number of eligible employees employed as at 1 March 2020
- the number of eligible employees currently employed, including those stood down or re-engaged
- ensure eligible employees are paid wages of at least $1,500 pf (before tax) – this means those who were receiving less than $1,500 pf will be paid increased wages
- notify eligible employees that they are receiving the JobKeeper Payment
- continue to provide monthly updates to the ATO, who will assess eligibility.
What does a business without employees (eg self-employed) need to do?
If you are self-employed without any employees, you will need to:
- provide an ABN for your business
- nominate an individual to receive the payment
- provide the individual’s Tax File Number
- provide a declaration as to your recent business activity
- provide a monthly update to the ATO to declare continued eligibility for the payments.
- The ATO may assess eligibility using information provided in business activity statements, instalment activity statements, tax returns and single touch payroll systems.
What payments will eligible employees receive?
If you’re an eligible employee, you will receive a minimum of $1,500 per fortnight, before tax.
Depending on your circumstances, you may receive $1,500 per fortnight in a number of different ways.
- If you ordinarily receive $1,500 per fortnight of income before tax, you will continue to receive your regular income according to your workplace arrangements. The JobKeeper Payments will subsidise part, or all of, your income.
- If you ordinarily receive less than $1,500 in income per fortnight before tax, your employer must pay you $1,500 per fortnight, before tax.
- If you have been stood down, that is, you can’t be usefully employed and your employer is not required to pay your wages, your employer must pay you $1,500 per fortnight, before tax.
- If you were employed on 1 March 2020, subsequently ceased employment and then were re-employed by the same eligible employer, you will receive $1,500 per fortnight, before tax.
The following examples illustrate how the wage subsidies apply to payments to eligible employees, assuming the business qualifies for the JobKeeper Payment:
Example 1: Eligible employee who earns more than $1,500 per fortnight
Steve is an eligible permanent full-time employee receiving a salary of $3,000 per fortnight before tax and continues to be employed. Steve will receive the same salary, however, the employer will receive $1,500 per fortnight JobKeeper Payment to partially subsidise Steve’s salary as long as the business remains eligible. The business will continue to pay Superannuation Guarantee (SG) on Steve’s income.
Example 2: Eligible employee who earns $1,500 or less per fortnight
Claire is a permanent part-time employee earning $1,000 pf before tax and continues to be employed. The business will increase her wages to $1,500 pf and will receive $1,500 pf which fully subsidises Claire’s salary. The business must pay SG on at least $1,000 of Claire’s income. It may choose to pay SG on the additional $500 pf Claire receives.
Is super guarantee (SG) payable on JobKeeper payments?
Your employer still needs to pay your compulsory super contributions known as the Superannuation Guarantee. However, your employer is not required to pay Superannuation Guarantee on any JobKeeper Payment that exceeds your original fortnightly pay.
For example, if your original fortnightly pay was $1,000 and you now receive the $1,500 fortnightly JobKeeper Payment, your employer is only required to pay Superannuation Guarantee on $1,000.
How is the payment treated for social security and tax purposes?
JobKeeper payment is treated as income for social security purposes and may impact eligibility for income support. It is expected that this payment is taxable income of the employee, however, this has not been clarified.
Can an employee be receiving both JobKeeper and the JobSeeker Payment from Centrelink?
Because the JobKeeper payment is assessable for social security purposes, individuals who start to receive JobKeeper will need to report any change in their income to Services Australia (formally Department of Human Services) within 14 days.
The current income test cut off point for JobSeeker payment is $1,086.50 pf for a single person with no dependants. This means that a single person receiving JobKeeper is effectively ineligible for JobSeeker payment due to the income test.
How do you know if your employer is eligible?
If your employer is eligible, they will notify you and all other employees who will receive the JobKeeper Payment.
What about eligible employees with multiple employers?
If you have multiple employers, only one employer will be eligible to receive the payment. You will need to notify your primary employer to claim the JobKeeper Payment on your behalf. If you claim the tax-free threshold with an employer, this will, in most cases be sufficient notification that that employer is your primary employer.
If your primary employer is eligible, you will receive the minimum JobKeeper Payment of $1,500 per fortnight from that employer.
Example – Anita works multiple jobs
Anita currently works two permanent part-time jobs, one at a retail store during weekdays, and the other at a café on the weekend. Due to the impact of the Coronavirus, the retail store has closed, and Anita has been stood down without pay under the Fair Work Act. Anita continues to work at the café delivering take-away orders. Anita can only receive the JobKeeper Payment once, from the employer from whom she nominates as her primary employer. As Anita only claims the tax-free threshold from her job at the retail store, this will be treated as her nomination of the retail store as her primary employer. Assuming the retail store is eligible for the JobKeeper Payment, they will pass the JobKeeper Payment on to Anita. So, she will receive $1,500 per fortnight before tax. During the application process, the retail store will notify the ATO that Anita receives the payment from them. The retail store is also required to advise Anita that she has been nominated to the ATO as an eligible employee to receive the payment. The café is not eligible to receive the JobKeeper Payment for Anita. The income that Anita receives from her job at the café does not change her entitlement to the JobKeeper Payment that she receives from the retail store.