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Money / Financial management

What you need to know today about the government stimulus package for small business

We've been through the treasury documents regarding the $25k payment and our conclusion is that many are going to need help to fully access and optimise the small business payment. With up to $25k on the line for activity statements between 1 January and 30 June 2020 this should be optimised to maximise your entitlement, writes Flying Solo alumni, James Millar of 360Partners.com.au.

As result of the impending economic downturn the Morrison Federal Government have wisely responded with their first round of economic stimulus measures. At this stage the measures are focused on supporting businesses with employees and supporting older Australians and those that are unemployed. However, as a result of newly introduced virus containment measures we anticipate an announcement this week of further stimulus payments that will be focused on micro businesses and sole traders. Keep an eye out on our Facebook page for immediate updates.

A quick snapshot of the round one measures

1.Temporary uplift to the instant asset write off threshold from $30k up to $150k. This is for acquisitions prior to 30 June 2020.  Note that to access instant asset write off you must be using the simplified depreciation provisions within the Act (which is pooling for other assets). If you use traditional depreciation per Div 40 with useful lives for each asset then YOU CANNOT claim this concession (and you should not have claimed previously). Be careful.

2. Temporary accelerated depreciation to deduct first 50% of asset immediately and rest of normal useful life method (presume for those not using SBE simplified depreciation).This runs until 30 June 2021

3. Up to $25,000 cash payment from ATO / Gov for employers with $50,000 or more in annual PAYG withholding. Update – test period is 1 January 2020 to 30 June 2020. The payment reduces by 50 cents for every dollar less than $50k in PAYG withholding. Example if you have staff and total PAYG withholding is $25,000 for the 6 months test period then your business payment would be $12,500. Timing of credit from ATO depends on your BAS IAS cycle but is instant. Employers that pay wages but are under PAYG withholding thresholds will get $2000.

4. Apprentice wage subsidies – less relevant but good assistance with Govt paying some of those wages this year.

We are expecting round two of stimulus payments for business and hopefully sole traders to be released later this week.

James Millar is partner of 360 Partners, who taxation and accounting solutions for business. He’s also a respected and regular contributor to our Flying Solo forums

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