The entire world has been grappling with the chaos created by the lethal coronavirus. With 1.3 million positive cases across the globe and over 72,000 deaths, the devastating virus has ravaged through every country and brought them to a standstill.
Most of the nations are under lockdown, and this has severely affected their economies. The stock markets have crashed, and businesses are struggling to survive during the catastrophic COVID-19 pandemic. Besides the human suffering, it has cast a shadow of a slowdown which has started showing its colour.
From industrial production to retail sales, everything has come to a halt and is reminiscent of the global recession of 2007-08. While bookkeepers in Melbourne are putting their best foot forward to devise ways of salvaging businesses in the challenging times, the Federal Government has also come forward with a slew of benefits.
As per the IMF and OECD, Australia is placed advantageously with its developed economy among other countries and can offer financial assistance to its businesses without risking debt sustainability. Leveraging this, the Government has announced new tax measures for COVID-19 affected businesses in the country.
Here is what you need to know about the relief-related guidelines.
1. JOBKEEPER PAYMENT
As a business owner in Melbourne, you will be informed by your bookkeeping company about the Government’s plan to offer payments to affected employers. You can now claim a fortnightly payment of $1500 per eligible employee starting from March 30, 2020.
The amount can be claimed for up to six months to retain your talented workforce. However, the employers will have to provide evidence of a 30% reduction in their revenue to claim this payment. Eligible sole traders in Melbourne and charity workers can also avail this wage subsidy even though they don’t have employees.
Your bookkeeper will aid you in getting registered for the payment and send the monthly information to the ATO. You will have to pay the full amount to the eligible employees, and they must be notified about it.
2. CASH-FLOW IMPROVEMENT FOR BUSINESSES AND NFPS
Temporary cash flow support will be provided to small and medium-sized businesses as well as not-for-profit organisations in Melbourne to help them hold on to their employees.
The tax-free cash flow will range from $20,000 to $100,000, which will be paid in the form of credits in the activity system at the time of submission of the activity statements.
Your bookkeeper will help you to go through the eligibility criteria to get the credits into your account after April 28, 2020. There will be an additional cash flow boost which will be given from June to September 2020.
3. INCREASING THE INSTANT ASSET WRITE-OFF
The instant asset write-off threshold has been increased to $150,000, which can be now claimed by eligible businesses in Melbourne that have an annual turnover of less than $500 million until June 30, 2020.
The instant asset write-off is applicable to new as well as second-hand assets which were installed from March 12, 2020 to June 30, 2020. From July 1, 2020, it will be applicable to only small businesses that have a turnover of less than $10 million, and the threshold will be $1000.
4. SUPPORTING BUSINESS INVESTMENT
Businesses with a turnover of less than $500 million for the financial year 2019-20 and 2020-21 have been given the incentive of deducting the cost of depreciating assets at an accelerated rate.
Your bookkeeper can help you understand the benefit of this accelerated depreciation on the purchase of some specific new depreciable assets in Melbourne. It is applicable to only eligible assets bought and used for the first time or installed between March 12, 2020 and June 30, 2021.
5. PROVIDING SUPPORT TO APPRENTICES AND TRAINEES
Small businesses can claim a wage subsidy of 50% of the wage paid to an apprentice or a trainee in Melbourne during the period starting from January 1, 2020 to September 30, 2020. It will help the organisations to keep these youngsters employed during the testing times as they will be reimbursed with a maximum of $21,000 per apprentice or trainee who is eligible for the subsidy.
If the business is unable to keep them employed, the subsidy can be claimed by the new employer in Melbourne. It will help in the development of skilled employees in various industries.
6. ALTER YOUR PAYG INSTALMENTS
PAYG instalment can be altered on your activity statement with the help of your bookkeeper to get through the difficult times. You can also claim a refund on the instalments made during the income year of 2019-20. The ATO will not penalise the businesses that will be varying the PAYG instalments or charge any interest.
You must make sure that the bookkeeper aids you in making the changes so that you don’t have to go through the hassle of submitting it again with corrections. It will help you to stay in control of your business finances by utilising these funds.
7. ADJUST YOUR GST REPORTING CYCLE
To get more capital into the business, you can adjust your GST reporting cycle for a temporary period. For instance, if you change your cycle to monthly reporting, then you can get your GST refunds quickly.
Your bookkeeper can help you in making the change at the beginning of the quarter and without making changes to the PAYG withholding reporting cycle. Your bookkeeper will then help you to report monthly for twelve months and return to the original cycle after its completion.
If you are changing your GST reporting to monthly, then you must claim the fuel tax credits every month as well.
8. PAYMENT DEFERRALS
Businesses which have been severely affected by COVID-19 in Melbourne can contact the ATO to inform them about the condition of their organisation in the ongoing crisis. The ATO will learn about your challenges and provide assistance by deferring income tax, excise payment and FBT deadlines to September 12, 2020.
They will also help by ceasing the interest accruing on tax liabilities and entering a low-interest payment plan. The ATO can also consider remitting interest and penalties incurred after January 23, 2020. However, you will have to meet your super guarantee obligations for your workforce.
The current global economic conditions have put everyone on the back foot. However, the Federal Government is making sure that small businesses do not suffer and are able to pull through the COVID-19 emergency. So make use of the measures mentioned above under the guidance of your bookkeeper in Melbourne to sustain your business.