As businesses look to transition to or apply for JobKeeper 2.0, many are also looking for opportunities to avoid or reduce cash shortages.
We have outlined five Government support measures that may assist your business with cash flow and forecasts for the financial year ended 30 June 2021.
1. Payroll tax waivers and deferrals
The Queensland Government is offering a two-month waiver of payroll tax for July and August 2020 for businesses with annual Australian taxable wages up to $6.5 million.
Businesses who apply for the two-month waiver will receive a refund of payroll tax paid for July and August 2020. If either of these months have not been paid, the business will not need to pay the associated liability. However, in order to receive the benefit of the relief, businesses need to:
- lodge their return for July and August 2020 (if this has not already been done); and
- apply for the July and August 2020 payroll tax waiver here before 30 October 2020.
JobKeeper subsidy payments continue to be exempt from payroll tax.
Additionally, payroll tax payment deferrals are available for March 2020 and later periods in calendar year 2020. Businesses will need to apply for the payroll tax deferral here if they have not already done so by 31 December 2020.
2. PAYG variations for the 2020–21 financial year
The Australian Taxation Office (ATO) has announced that penalties and interest will not be applied to excessive pay as you go (PAYG) income tax instalment variations in the 2020–21 financial year. This provides businesses with the opportunity to reduce their tax instalments for the 2021 financial year to use the money for business purposes now. When varying instalments, businesses must still make their best attempt to estimate their expected 2021 financial year tax liability.
The PAYG tax instalment variations may be requested as early as the September 2020 quarter. Pre-COVID we would typically recommend varying later in the financial year when the tax liability for the financial year could be forecast more accurately to avoid penalties and interest. The ATO have removed this risk for the 2021 financial year.
3. Instant asset write-off for eligible businesses
An immediate deduction for the business portion of the cost of depreciable assets first used, or installed ready for use, from 12 March 2020 to 31 December 2020 may be available where:
the cost of the asset is $150,000 or less (unless subject to the car limit); and
your business has an aggregated turnover less than $500 million.
Where the asset is a passenger vehicle (except a motorcycle or similar vehicle) designed to carry a load less than one tonne and fewer than nine passengers, the depreciation deduction is capped at the car limit. The car limit is $59,136 for the 2020–21 income year.
4. Accelerated depreciation for first income year
For depreciable assets which don’t qualify for the instant asset write-off or for assets purchased post 31 December 2020, an accelerated rate of deduction may instead be available. Eligible business must have an aggregated turnover less than $500 million. Additionally the $59,136 car limit still applies.
Eligible assets must be first used or first installed ready for use for a taxable purpose between 12 March 2020 and 30 June 2021.
The depreciation deduction available in the first income year is effectively:
- half the asset’s cost; plus
- the applicable depreciation rate applied to the other half of the asset’s cost.
The depreciation deduction for the following years is calculated based on the standard depreciation rates.
5. ATO support measures
The ATO have implemented a number of administrative measures to assist businesses during COVID-19. The ATO have encouraged impacted businesses to engage with them to discuss relief options and tailored support plans to fit their circumstances. Such support may include the deferral of tax payments, the remission of penalties and interest, and the provision of low interest payment plans.
If you would like to discuss how these support measures could help your business, please contact Kylee Smith from our Tax team or your Pilot Advisor on (07) 3023 1300.