Tax relief measures
- The tax relief measures include tax-free withdrawals from superannuation funds. The package includes one-off stimulus payments to individual taxpayers, to be made through the social security system.
- For businesses and non-profits, there are to be tax-free payments made to certain employers (to support small and medium-size businesses). The payment would be delivered as a credit in the business activity statement system.
- To accelerate business investment, the tax depreciation write-off rules are significantly expanded with an increased instant asset write-off for immediate deductions of certain asset purchases and a 50% accelerated depreciation deduction in addition to the existing depreciation deduction for certain eligible asset purchases.
- Subject to certain conditions, cash-flow boosts will be automatically credited for those employers who filed their 2018-19 income tax return of activity statement prior to 12 March 2020.
- Businesses can claim an immediate deduction for multiple assets, new or second-hand, provided each asset costs less than AU$150,000. From 12 March 2020 until the end of 2020, the instant asset write-off threshold amount is AU$150,000 (up from AU$30,000); and eligibility has been expanded to businesses with an aggregated turnover of less than AU$500 million (up from AU$50 million).
- The “backing business investment” initiative allows eligible businesses to accelerate their depreciation deductions on the purchase of certain new depreciating assets. A business is eligible for accelerated depreciation when the business has an aggregated turnover of less than AU$500 million; the asset is a new depreciating asset acquired and first used, or installed ready for a business use, from 12 March 2020 until 30 June 2021; and the business did not already apply other depreciation deductions or the instant asset write-off.
- Tasmania announced a waiver of payroll tax for the last four months of this financial year for hospitality, tourism and seafood industry businesses; a waiver of payroll tax payments for the remaining three months from March to June 2020 for other small to medium businesses with an annual payroll of up to AU$5 million in Australian wages based on the immediate impact of the virus on their businesses.
- New South Wales announced AU$450 million for the waiver of payroll tax for businesses with payrolls of up to AU$10 million for three months (the rest of 2019-20), with a deferral available for larger businesses; and AU$56 million to bring forward the next round of payroll tax cuts by raising the threshold limit to AU$1 million in 2020-21.
- Queensland announced that small and medium Queensland businesses affected by the coronavirus outbreak can defer their payroll tax payment for six months under a new deferral measure, with refunds and waivers also available depending on the size of the business.
- Western Australia announced that Small businesses that pay payroll tax will receive a one-off grant of AU$17,500; AU$1 million payroll tax threshold brought forward by six months to July 1, 2020; and payroll tax will be waived for a four-month period between March 1, 2020 to June 30, 2020 for small-to-medium sized businesses.
- Victoria announced that businesses with annual taxable wages up to $3 million will have their payroll tax for the 2019-20 financial year waived. This has been further extended under Stage 4 restrictions.
- South Australia has also announced a payroll tax waiver for SMEs.
- The Australian Capital Territory and Western Australia Governments have announced similar deferrals.
- All states and territories have provided a payroll tax exemption to the government’s JobKeeper support payment.
Business tax measures
- The Federal Government is allowing individuals affected by the economic impacts of COVID-19 to access up to $10,000 of their superannuation savings in 2019-20 and a further $10,000 in 2020-21 ($20,000 in total). Individuals will not need to pay tax on amounts released, and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments
- The temporary Boosting Cash Flow for Employers is an initiative with a significantly expanded support measures for small and medium sized businesses to manage cash flow and retain employees. The support payments will also extend to not-for-profit employers (including charities).
- To accelerate business investment, the Government has significantly expanded the tax depreciation write-off rules. Two key temporary business investment measures have been announced in the stimulus package:
- Increasing the instant asset write-off: Eligible businesses will be able to immediately deduct purchases of eligible assets costing less than $150,000. Access to the instant asset write-off will be expanded to include all businesses with aggregated turnover of less than $500 million (up from $50 million) until the end of 2020. The asset threshold applies on a per asset basis, which would enable businesses to immediately write-off multiple assets. The benefit will also apply to both new and second hand assets first used or installed ready for use in this timeframe.
- Business investment incentive: A temporary business investment allowance for businesses with aggregated turnover below $500 million purchasing certain new depreciable assets acquired after 12 March 2020 and first used or installed by 30 June 2021. This measure will allow a 50 per cent accelerated depreciation deduction in addition to the existing depreciation deduction. Eligible assets include those depreciable under Division 40 of the Income Tax Assessment Act 1997. It does not apply to second hand Division 40 assets, or buildings and other capital works depreciable under Division 43.
Filing/Payment Deadline Extension
The ATO announced a series of administrative relief measures, including:
- Deferring by up to six months the payment date of amounts due through the business activity statement (including “pay as you go” (PAYG) installments), income tax assessments, fringe benefits tax assessments and excise.
- Allowing businesses on a quarterly reporting cycle to opt into monthly goods and services tax (GST) reporting in order to get quicker access to GST refunds to which they may be entitled.
- Allowing businesses to vary PAYG instalment amounts to zero for the April 2020 quarter. Businesses that vary their PAYG instalment to zero will also be permitted to claim a refund for any instalments made for the September 2019 and December 2019 quarters.
- Remitting any interest and penalties, incurred on or after January 23, 2020, that have been applied to tax liabilities.
- Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low interest payment plans.
- In Queensland, applications are open for a deferral of tax payment for SMEs until 31 July 2020. In addition, a business impact survey was implemented. Mentoring support (50 mentors available) and financial workshops are being delivered in several locations in Queensland to support SMEs, with an emphasis on local business communities. Sectorial support targeting tourism operators and the commercial fishing industry has also been announced in the state. Queensland offers AUD 500 million in interest free loans.
- Victoria announced a package of AUD 1.7 billion for business.
On April 20th, the Australian Taxation Office (ATO) announced filing (lodgement) deferrals for tax agents for certain company income tax, self-managed super funds, fringe benefits tax, and other tax returns in response to the coronavirus (COVID-19) pandemic.
- Filing and payment deferrals will be automatically applied to the following obligations due on 15 May 2020:
- Company 2018-19 income tax returns are now due by 5 June 2020.
- SMSF 2018-19 annual returns are now due by 30 June 2020.
- The 2018-19 income tax returns for individuals, partnerships, and trusts can be lodged by the 5 June 2020 concessional due date, provided taxpayers pay any liability by this date.
- The filing and payment due date for 2019-20 Fringe Benefits Tax (FBT) annual returns has been automatically deferred to 25 June 2020.
- If tax agents need more time, they can on a case-by-case basis seek a request for deferral.
The Australian Taxation Office (“ATO”) has issued frequently asked questions (“FAQs”) to provide guidance on tax questions about the impact of COVID-19, including on:
- Corporate residence: A non-Australian incorporated company can be treated as resident in Australia if it carries on business in Australia and has its central management and control in Australia. The FAQs state that if the only reason for holding board meetings in Australia or directors attending board meetings from Australia is because of impacts of COVID-19 (i.e., travel bans or the board deciding to halt international travel due to COVID-19), that by itself will not affect the company’s residency status for Australian tax purposes.
- Permanent establishment: The FAQs state that the impacts of COVID-19 will not, by itself, result in a foreign company having an Australian permanent establishment (“PE”) if it meets all of the following: (i) the foreign incorporated company did not have a PE in Australia before the impacts of COVID-19; (ii) there are no other changes in the company’s circumstances; and (iii) the unplanned presence of employees in Australia is the short-term result of them being temporarily relocated or restricted in their travel as a consequence of COVID-19.
- Employment tax withholding: The FAQs state that if the only reason that an employee of a foreign employer is working in Australia is because of the impacts of COVID-19 on travel, and it is anticipated that the employee will leave before June 30, 2020, then the foreign employer is not expected to register for pay-asyou-go withholding.
- The ATO has also provided guidance regarding thin capitalisation that taxpayers who breach the safe harbour debt to equity ratio due to decline in asset value can apply the arm’s length debt test.
- Payments and reporting and interest and penalties.
Announced regarding Land Tax
- With respect to the “Land Tax”, the South Australian government announced that commercial and residential landlords will benefit from a 25% reduction on their 2019-20 land tax liability when this tax relief benefit is passed on to their tenants as of 30 March 2020, or would be provided to tenants up to and including 30 October 2020.
- The Western Australian premier announced land tax relief for commercial landlords, with the relief equal to 25% of the landlord's land tax bill for 2019-20, provided that landlords reduce the rent for small business tenants affected by COVID-19.
- A similar discount will be available in New South Wales, Victoria, and Queensland.
Commercial and Residential Rent relief
- The National Cabinet announced the Mandatory Code of Conduct (the Code) on 7 April 2020 for eligible commercial tenancies and State and Territory government have subsequently released frameworks for implementation of the guidelines in the Code and funding of the required rental relief.
- Incentive programs exist across states and territories that provide landlords land tax relief where they provide a rent waiver and rent deferral to their tenants. For example, in Western Australia, commercial landlords must provide rent relief that equates to a minimum of three months' rent and freeze outgoings to small businesses that have suffered at least a 30 per cent reduction in turnover due to COVID-19. Grants equivalent to 25 percent of the landlord's land tax bill for 2019-20 for the property in which an eligible tenant is provided relief will be paid to landlords. Many states and territories are now extending these schemes until the end of the year.
Additional information regarding employment-related measures, economic stimulus measures and other measures.