Instant Asset Write Off and Other Tax Deductions for trade BUSINESSES!

Tax Deductions for Trade Businesses

As we fast approach the end of the financial year, do you know if your trade business is eligible for the instant asset write off?  Also, what other tax deductions are you entitled to claim to reduce your taxable income?

In Financial Year, Planning, small business, tax minimisation, tax planning, Tax Return, Tradies Tax, strategy, consulting, Tax Law

Useful Links: Services and Assistance during COVID-19

The folowing is a summary of useful links to relevant resource and assistance avaialble to small business entities operating in trade and construciton during COVID-19:

JobKeeper Payment Package
Summary of JobKeeper Payments - Employers https://www.ato.gov.au
Summary of JobKeeper Payments - Employees https://www.ato.gov.au
Registration for JobKeeper for Employers https://www.ato.gov.au
Legislation https://www.legislation.gov.au
Cashflow Assistance for Employers (automatically applied to eligible businesses through BASs)
Summary of Cashflow Boost https://www.ato.gov.au
Wage Subsidy for Apprentices and Trainees
Summary (PDF file) https://docs.employment.gov.au
Registration - Link to Aus Apprenticeships site https://www.australianapprenticeships.gov.au
Payroll Tax Relief
Summary and Application Links https://www.business.qld.gov.au
Land Tax Relief
Summary and Application Links https://www.qld.gov.au
Depreciation and Instant Asset Write-Off
Increased Asset Write-Off https://www.ato.gov.au
Accelerated Depreciation https://www.ato.gov.au
Loan Assistance
Jobs Support Loan - QRIDA http://www.qrida.qld.gov.au
Coronavirus SME Guarantee Scheme https://treasury.gov.au
Early Access to Superannuation
Summary https://www.ato.gov.au
Relief for Commercial Tenants
Summary https://business.gov.au
National Cabinet Mandatory Code of Conduct (PDF) https://www.pm.gov.au
Support for Tax Obligations
Information https://www.ato.gov.au
Manufacturer's Supply Matching Request Form
If you are finding it difficult to obtain vital materials and supplies to keep your business open, complete this form. http://www.dsdmip.qld.gov.au
Regulatory Relief for Companies (automatically applies for 6 months)
Information https://www.business.gov.au
Electricity Rebate for Businesses (automatically applied)
Information https://www.business.qld.gov.au
 Government Grants
 Victoria - $10,000 grant for small businesses https://www.business.vic.gov.au
 NSW - $10,000 grant for small businesses https://www.service.nsw.gov.au

If you require further information, please don’t hesitate to contact us on (07) 3174 5010 or email admin@tradiesaccountant.com

Sincerely,
Tradies Accountant Team.

In cash flow, tax planning, debt, success, strategy, industry update, Tax Law

Government Stimulus Package - JobKeeper Payments

The Australian Parliament passed $130 billion Jobkeeper package which is expected to be accessed by 6 million workers. 

Summary

  • Eligible businesses affected by COVID-19 are able to apply for Jobkeeper payments
  • Eligible businesses will receive $1,500 (pre-tax) per eligible employee per fortnight for up to 6 months
  • Payment must be paid to staff
  • Jobkeeper payments are budgeted to be paid for six months

Eligible Employers

Employers (including not-for-profits) will be eligible for the subsidy if, at the time of applying:

  • their business has an aggregated turnover of less than $1 billion (for income tax purposes) and they estimate their turnover has fallen by more than 30 per cent or more; or
  • their business has an annual turnover of $1 billion or more (for income tax purposes) and they estimate their turnover has fallen or will likely fall by more than 50 per cent; and
  • the business is not subject to the Major Bank Levy.

The employer must have been in an employment relationship with eligible employees as at 1 March 2020, and can confirm that each eligible employee is currently engaged in order to receive JobKeeper Payments.

Note:
Partnerships - one partner in a partnership can be nominated to receive the JobKeeper payments.
Trusts – where beneficiaries of a trust receive distributions, rather than being paid salary and wages for work done, one individual beneficiary can be nominated to receive the JobKeeper payment.
Company – one Director can be nominated to receive the payment, however, the Director may not receive the payment as an employee. Businesses that pay shareholders dividends for their labour can nominate one shareholder to receive the payments.
Self-employed – self employed individuals will be eligible to receive JobKeeper payment where they meet the relevant turnover test and are not a permanent employee of another employer.

Eligible Employees

Eligible employees are employees who:

  • are currently employed by the eligible employer (including those stood down or re-hired)
  • were employed by the employer at 1 March 2020
  • are full-time, part-time, or long-term casuals (a casual employed on a regular and systemic basis for longer than 12 months as at 1 March 2020)
  • are a permanent employee of the employer, or if a long-term casual employee, not a permanent employee of any other employer
  • are at least 16 years of age at 1 March 2020
  • are an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder at 1 March 2020
  • were a resident for Australian tax purposes on 1 March 2020
  • are not in receipt of a JobKeeper Payment from another employer

Assessing Decrease in Turnover

Business needs to establish that the turnover has or will likely fall (30% or 50% depending on annual aggregated turnover) in the relevant month or quarter relative to their turnover in a corresponding period a year earlier. If the business submits quarterly BASs to the ATO, then quarters need to be compared, if the business submits monthly IASs – then monthly figures need to be compared.

The Tax Commissioner will also have discretion to consider additional information that the business can provide to establish that they have been adversely affected by the impacts of COVID-19. This will be done with the following cases:
- the business was not in operation a year earlier
- the turnover a year earlier was not representative of the usual average turnover (due to a large interim acquisition, newly established business or highly variable turnover)

Turnover is calculated as it is for GST purposes, and is reported on Business Activity Statements. It includes all taxable supplies and all GST free supplies but not input taxed supplies.

Eligible Payment Periods

Employers will need to satisfy payment requirements for their eligible employees in respect of each 14 day period covered by the scheme. The first period starts on Monday 30 March 2020 and ends 12 April 2020.

The payment requirement is that the employer pays their eligible employees a minimum of $1,500 per fortnight in the scheme payment periods. Where an employer pays their staff monthly, the ATO will be able to reallocate payments between periods, however, overall an employee must have received the equivalent of $1,500 per fortnight.

The final payment period is from 14 September 2020 to 27 September 2020.

Payment Process

Eligible employers will be paid $1,500 per fortnight per eligible employee. Eligible employees will receive, at a minimum, $1,500 per fortnight, before tax, and employers are able to top-up the payment.

Where employers participate in the scheme, their employees will receive this payment as follows:

  • If an employee receives $1,500 or more in income per fortnight before tax, they will continue to receive their regular income according to their prevailing workplace arrangements. The JobKeeper Payment will assist their employer to continue operating by subsidising all or part of the income of their employee.
  • If an employee would otherwise receive less than $1,500 in income per fortnight before tax, their employer must pay their employee, at a minimum, $1,500 per fortnight before tax.
  • If an employee has been stood down, their employer must pay their employee, at a minimum, $1,500 per fortnight before tax.

Superannuation: Where an employee is paid more than $1,500 a fortnight ordinarily, the employer’s superannuation obligations will not change when the employee gets paid JobKeeper payments. Where an employee is having their wages topped up to $1,500 per fortnight by the JobKeeper payment, it will be up to the mployer if they want to pay superannuation on any additional wages paid by the JobKeeper payment.

Payments will be made to the employer monthly in arrears by the ATO. However, for the month of April, the Commissioner can make an advance payment.

Application Procedure

The ATO lists detailed steps for JobKeeper application. The business needs to register through their tax agent or through their Business Portal, the employees need to sign Employee Nomation Forms and every eligible employee need to be registered through the payroll software. All details on this process can be found on the ATO website:

https://www.ato.gov.au/general/jobkeeper-payment/

Integrity Measures

Employers are warned that serious consequences, including large penalties and possible imprisonment, will apply to businesses trying to illegally benefit under the JobKeeper scheme. Businesses using Single Touch Payroll will need to submit supporting information for the JobKeeper payment claims for their eligible employees. Businesses should not be entering into artificial schemes in order to get inappropriate access to payments.

Frequently Asked Questions

The following is a useful link to frequently asked questions on JobKeeper payments where you can search for key words by pressing Ctrl+F:

https://treasury.gov.au/

If you require further information, please don’t hesitate to contact us on (07) 3174 5010 or email admin@tradiesaccountant.com

Sincerely,
Tradies Accountant Team.

In cash flow, tax planning, debt, success, strategy, industry update, Tax Law

Government Stimulus Package - Latest Update

The Australian Government announced a $66.1 billion support package, just 10 days after announcing an initial $17.6 billion to help protect the Australian economy from arising implications caused by Coronavirus epidemic.

 

The following is a summary of the economic stimilus package:

Aim

Description

When

Boosting cash flow assistance for employers

Boosting cash flow for employers

Helping small and medium-sized businesses and now not for-profits (NFP) to cover the costs of employee wages and salaries (100% of PAYG withheld with a minimum $20,000 payment and up to a cap of $100,000)

Covers amounts withheld between 1 January and 30 September 2020

Supporting apprentices and trainees
Wage assistance to help small businesses to keep their apprentices and trainees

1 January 2020 to 30 September 2020

Support for Sole trader and employees who have been made redundant

Support for Sole Traders
Financial support by establishing a new $550 fortnightly coronavirus supplement payment.

Commence from 27 April 2020

Access to Superannuation
Employees and sole traders who have been made redundant, or those who have their working hours reduced by 20 per cent or more, will now be allowed to access up to $20,000 of their superannuation

As soon as possible

Temporary relief for financially distressed businesses

Temporary relief for insolvent trading
Temporarily increase the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive. Temporary relief for directors from any personal liability for trading while insolvent as a result of the Coronavirus health crisis.

For 6 months

Detailed explanation of business assistance offered:

Cashflow Assistance for Employers
The Government has enhanced this measure as part of the second economic response package. Under the enhanced scheme, employers will receive a payment equal to 100% of the tax withheld from salary and wages (up from 50%), with the maximum payment being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000

An additional payment is also being introduced in the July – October 2020 period. Eligible entities will receive an additional payment equal to the total of all of the ‘Boosting Cash Flow for Employers’ payments they have received. This means that eligible entities will receive at least $20,000 up to a total of $100,000 under both payments. This additional payment continues cash flow support over a longer period, increasing confidence, helping employers to retain staff and helping entities to keep operating. The cash flow boost provides a tax-free payment to employers and is automatically calculated by the Australian Taxation Office (ATO). There are no new forms required.

 

If you’re reporting wages to the ATO on quarterly basis (quarterly BAS): you will receive a 100% credit towards the PAYGW payable on wages for March quarter (up to a total of $50,000). For the June and September quarters a credit equal to 50% of the total initial Boosting Cash Flow for Employers payment (up to a total of $50,000).
 
If you’re reporting wages to the ATO on monthly basis (monthly IAS): you will receive a 300% credit towards the PAYGW payable on wages for March and then use up remaining $50,000 cap credit on April and May monthly IASs. For the June, July, August, September activity statements a credit equal to 25% of their total initial Boosting Cash Flow for Employers payment (up to a total of $50,000).

 

Example for Quarterly BASs:

March quarterly BAS lodged
W1 Wages: $60,000
W2 PAYG withholding: $20,000
Amount payable: $0 and Government credits $20,000

June quarterly BAS lodged
W1 Wages: $50,000
W2 PAYG withholding: $15,000
Amount Payable: $5,000 and Government credits $10,000 (equal to 50% of the total ‘Boosting for Cash Flow for Employers’ payments received in March quarter)

 

September quarterly BAS lodged
W1 Wages: $70,000
W2 PAYG withholding: $30,000
Amount Payable: $20,000 and Government credits $10,000 (equal to 50% of the total ‘Boosting for Cash Flow for Employers’ payments received in March quarter)

 

Supporting Apprentices and Trainees
Small businesses employing fewer than 20 full-time employees, who retain and apprentice or trainee, can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage paid during the 9 months from 1 January 2020 to September 2020. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
Employers can register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020.
Further information is available at:

 

Temporary Insolvency Relief
Directors will now be temporarily relieved of their duty to prevent insolvent trading with respect to any debts incurred in the ordinary course of the company’s business, with the measure set to run for six months.

According to Treasury, egregious cases of dishonesty and fraud will still be subject to criminal penalties. Any debts incurred by the company will still be payable by the company.
Further, the government will increase the current minimum threshold for creditors issuing a statutory demand on a company under the Corporations Act 2001 from $2,000 to $20,000 for six months. The statutory timeframe for a company to respond to a statutory demand will also be extended temporarily from 21 days to six months.

Likewise, the threshold for the minimum amount of debt required for a creditor to initiate bankruptcy proceedings against a debtor will temporarily increase from its current level of $5,000 to $20,000. The time a debtor must respond to a bankruptcy notice will be temporarily increased from 21 days to six months.

 

Sole trader support
Permanent employees who are stood down or lose their employment; sole traders; the self-employed; casual workers; and contract workers will be able to access the new coronavirus supplement of $550 a fortnight under expanded access to the Jobseeker Payment, formerly known as Newstart. Payments are set to commence from 27 April.
The supplement will also be paid to both existing and new recipients of the JobSeeker Payment, Youth Allowance jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.

Access to superannuation
Employees who have been made redundant, or those who have their working hours reduced by 20 per cent or more, or sole traders whose businesses have been suspended or see a reduction in turnover by 20 per cent or more will also now be allowed to access up to $20,000 of their superannuation.
Eligible individuals will be able to apply online through myGov to access up to $10,000 of their superannuation before 1 July 2020 and be able to access up to a further $10,000 from 1 July 2020 for approximately three months.

The government will also reduce the minimum drawdown requirements for account-based pensions and similar products by 50 per cent for the 2020 and 2021 financial years.
Package Implementation
A package of Bills will be introduced into Parliament in the final Autumn sitting week in March 2020 for Parliament’s urgent consideration and passage.

BAS and IAS Processing
We've had a large number of enquiries regarding the stimulus packages announced. We will prioritise completing BASs and IASs in order to help businesses secure the PAYGW credits, however, we rely on the business' internal bookkeepers to code all the transactions to enable us to complete the BAS/IAS. Please note that BAS for the March 2020 quarter is due for lodgement and payment on 26 May (if lodging through a tax agent).

If you require further information, please don’t hesitate to contact us on (07) 3174 5010 or email admin@tradiesaccountant.com

Sincerely,
Tradies Accountant Team.

In cash flow, tax planning, debt, success, strategy, industry update, Tax Law

Cash Flow Assistance from the Government - Everything You Need to Know

Yesterday the Australian Government announced an economic response package totalling $17.6 billion to help protect the Australian economy from arising implications caused by Coronavirus epidemic. This package is subject to review by the Parliament in the final sitting week in March 2020.

In cash flow, tax planning, debt, success, strategy, industry update, Tax Law

2019 FY Lodgement Dates

16 Jul 2018 – Issue PAYG withholding payment summaries to employees

In ATO compliance, Financial Reporting, Planning, Tax Law, Compliance, DueDates