ENHANCING THE INSTANT ASSET WRITE-OFF

The government is increasing the instant asset write-off (IAWO) threshold from $30,000 to $150,000 and expanding access to include businesses with aggregated annual turnover of less than $500 million (up from $50 million). This proposal applies from 12 March 2020 until 30 June 2020, for new or second-hand assets first used, or installed ready for use in this timeframe. Enhancing the IAWO will require legislative changes before it can take effect.

BACKING BUSINESS INCENTIVE

The government is introducing a time limited 15-month investment incentive to support business investment and economic growth over the short-term, by accelerating depreciation deductions. A deduction of 50% of the cost of an eligible asset on installation will apply, with existing depreciation rules applying to the balance of the asset’s cost.

Eligible businesses are businesses with aggregated turnover below $500 million. Eligible assets are new assets that can be depreciated under Division 40 of the Income Tax Assessment Act 1997 (that is, plant, equipment and specified intangible assets, such as patents). This does not apply to second-hand Division 40 assets, or buildings and other capital works depreciable under Division 43.

BOOSTING CASHFLOW FOR EMPLOYERS

As announced on 22 March, the government is providing up to $100,000 to eligible small and medium sized businesses and not-for-profits (including charities) that employ people, with a minimum payment of $20,000. These payments will help business and not-for-profit cash flow so they can keep operating, pay their bills and retain staff.

Small and medium sized business entities with aggregated annual turnover under $50 million and that employ workers are eligible. Not-for-profit entities (NFPs), including charities, with aggregated annual turnover under $50 million and that employ workers will now also be eligible. This will support employment activities at a time where NFPs are facing increasing demand for services.

The ATO will deliver the payment as an automatic credit in the activity statement system from 28 April 2020 upon employers lodging eligible upcoming activity statements. Eligible employers that withhold tax to the ATO on their employees’ salary and wages will receive a payment equal to 100% of the amount withheld, up to a maximum payment of $50,000. Eligible employers that pay salary and wages will receive a minimum payment of $10,000, even if they are not required to withhold tax. An additional payment will be introduced for the July – October 2020 period.

The payments will only be available to active eligible employers established before 12 March 2020.

The ATO will deliver the payment as a credit to the entity upon lodgment of their activity statements. If this places the entity in a refund position, they will deliver the refund within 14 days.

For further information, contact your Client Manager at FinCare