Government Support for Businesses and Employers during Covid-19

The main types of federal government support for businesses and employers during the Covid-19 crisis are the following:

• JobKeeper Payment
• Boosting cash flow for employers
• Increasing the instant asset write-off
• Backing business investment

This is a brief view of each one of them to help you assess if any available support really applies to your business and if so, what you can do next to take advantage of it.

JobKeeper Payment​
The time to enrol for the initial JobKeeper periods has been extended, from 30 April 2020 until 31 May 2020.
If you enrol by 31 May you will still be able to claim for the fortnights in April and May, provided you meet all the eligibility requirements for each of those fortnights.
The requirement is that you had paid your employees by the appropriate date for each fortnight.
For the first two fortnights (30 March – 12 April, 13 April – 26 April), a minimum payment of $1,500 for each fortnight must have been paid by you even if it has been paid late, provided it is paid by 8 May 2020.

If you do not pay your staff by this date, you will not be able to claim JobKeeper for the first two fortnights.
You can use the MyGov portal to enrol for the JobKeeper support.
More links on how this support scheme works and how to enrol below:

• JobKeeper guides
• About the payment
• Enrol for the JobKeeper payment
• JobKeeper timeline of content updates.​

Boosting cash flow for employers
Temporary cash flow support to small and medium businesses and not-for-profit organisations will be available to organisations that:

• employ staff
• have been affected by the economic downturn associated with COVID-19 (novel coronavirus).

Eligible businesses and not-for-profit (NFP) organisations will receive between $20,000 to $100,000 in cash flow boost amounts by lodging their activity statements up to the month or quarter of September 2020.
The cash flow boosts will be delivered as credits in the activity statement system, and will generally be equivalent to the amount withheld from wages paid to employees for each monthly or quarterly period from March to June 2020. In practice, this means you keep the amounts you have withheld from payments for these periods, however, there are some exceptions.
An additional cash flow boost will be applied when activity statements for each monthly or quarterly period from June to September 2020 are lodged. These credits are equal to the total boosts credited for March to June 2020. They will be paid out in either two or four installments depending on your reporting cycle.
You must lodge your activity statement to receive the cash flow boosts.
More links to help you assess if this applies to your business or NFP:

• What you need to know
• Eligibility
• Delivery of the cash flow boosts
• Accessing the cash flow boosts
• What you will receive
• Tax consequences

Increasing the instant asset write-off​
Under instant asset write-off eligible businesses can:

• immediately write off the cost of each asset that cost less than the threshold
• claim a tax deduction for the business portion of the purchase cost in the year the asset is first used or installed ready for use.

Instant asset write-off can be used for both new and second-hand assets. Some exclusions and limits apply.
​
From 12 March 2020 until 30 June 2020 the instant asset write-off:

• threshold amount for each asset is $150,000 (up from $30,000)
• eligibility has been expanded to cover businesses with an aggregated turnover of less than $500 million (up from $50 million).

More links to help you with understanding and applying for this benefit:

• Eligibility
• Thresholds
• Exclusions and limits
• Work out your deduction
• Later sale or disposal of asset

​Backing business investment – accelerated depreciation
To be eligible to apply the accelerated rate of deduction, the depreciating asset must:

• be new and not previously held by another entity (other than as trading stock)
• be first held on or after 12 March 2020
• first used or first installed ready for use for a taxable purpose on or after 12 March 2020 until 30 June 2021
• not be an asset to which an entity has applied the instant asset write-off rules or depreciation deductions.

There are conditions for the eligible assets. The following do not apply:

• second-hand depreciating assets
• some specific Division 40 assets subject to low value and software development pools
• certain primary production assets
• buildings and other capital works for which you can deduct amounts under Division 43
• other specific capital asset and expense deductions
• assets you were committed to acquiring before 12 March 2020.

​Under the measures, different rules apply depending on whether or not an entity is using the simplified rules for capital allowances for small businesses.

Small business entity
If you are a small business with an aggregated turnover of less than $10 million, and you use the simplified depreciation rules, those assets over the instant asset threshold which are eligible for the accelerated depreciation are added to the general small business pool. You can deduct an amount equal to 57.5% (rather than 15%) of the business portion of a new depreciating asset in the year you add it to the pool. In later years the asset will be depreciated under the general small business pool rules.

If you are a small business with an aggregated turnover of less than $10 million, and you use the simplified depreciation rules, those assets over the instant asset threshold which are eligible for the accelerated depreciation are added to the general small business pool. You can deduct an amount equal to 57.5% (rather than 15%) of the business portion of a new depreciating asset in the year you add it to the pool. In later years the asset will be depreciated under the general small business pool rules.
​Use can use this link to Work out if you are a small business entity

Other business entities
If you are an entity with aggregated turnover less than $500 million in the income year and do not use the simplified depreciation rules, you may be eligible to deduct an amount if the asset is a qualifying asset.
The amount your entity can deduct in the income year the asset is first used or installed ready for use is:

• 50% of the cost (or adjustable value where applicable) of the depreciating asset
• plus the amount of the usual depreciation deduction that would otherwise apply but calculated as if the cost or adjustable value of the asset were reduced by 50%.

Effectively, together with the instant asset write-off rules, the accelerated depreciation deduction applies to assets with a cost (or adjustable value if applicable) of:

• $150,000 or more in the 2019–20 income year
• $1,000 or more in the 2020–21 income year.

​You can see EXAMPLES of how the accelerated depreciation rules works HERE.

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Source used for this post: Australian Government Australian Taxation Office, www.ato.gov.au

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