Subject to any further announcement from the Government, various economic stimulus support measures will be reaching (or have already reached) their conclusion, some having been extended beyond their original end dates. The key measures are discussed in chronological order below, Figures quoted are sourced from various media releases issued by the Treasurer.
Coronavirus supplement — ends 31 March 2021
The Coronavirus Supplement is a temporary supplement payable to eligible individuals receiving certain income support payments. The assessable payment per eligible recipient:
- was $550 per fortnight from 27 April 2020 to 24 September 2020;
- was $250 per fortnight from 25 September 2020 to 31 December 2020; and
- is $150 per fortnight from 1 January 2021 to 31 March 2021.
From 1 April 2021, income support payments will revert to the normal payment rate for the individual’s situation.
Apprentice/trainee wage subsidy — ends 31 March 2021
Originally, this measure provided eligible employers with a wage subsidy of 50% of an eligible apprentice’s/trainee’s wage paid during the 9 months from 1 January 2020 to 30 September 2020, up to a maximum of $21,000 per eligible apprentice/trainee ($7,000 per quarter).
The measure was extended so that small- and medium-sized employers can continue to access the subsidy equal to 50% of an eligible apprentice’s/trainee’s wage paid until 31 March 2021. An employer cannot claim the apprentice/trainee wage subsidy for any period where they choose to claim JobKeeper for the same apprentice/trainee.
HomeBuilder — ends 31 March 2021
The program is designed to provide eligible owner occupiers with a tax-free grant to build a new home or substantially renovate an existing one. Originally, the program was planned to run from 4 June 2020 until 31 December 2020 with construction required to have commenced within three months of the contract date. On 29 November 2020, the Government announced that the HomeBuilder program would be extended from 31 December 2020 to 31 March 2021. Construction must now commence within six months of the contract date.
The tax-free grant:
- was $25,000 for contracts signed between 4 June 2020 and 31 December 2020; and
- is $15,000 for contracts signed between 1 January 2021 and 31 March 2021.
Eligibility criteria apply, including an income cap of $125,000 for singles or $200,000 for couples, and a new build price cap. Further information is available on the Treasury website. The Assistant Treasurer advised on 1 February 2021 that the program has attracted more than 80,000 applications nationally which far exceeded the Government’s expectations. He also confirmed all the Government’s COVID-19 fiscal support is targeted and time-limited, and that the HomeBuilder program will end on 31 March 2021
Backing Business Investment — ends 30 June 2021
The Backing Business Investment (BBI) measure — in Subdivision 40-BA of the Income Tax (Transitional Provisions) Act 1997 (IT(TP)A) — allows businesses with an aggregated turnover of less than $500 million to deduct 50% of the cost of an eligible depreciable asset on installation, with existing depreciation rules applying to the balance of the asset’s cost. SBEs can deduct 57.5% (instead of 15%) of the cost of assets added to general small business pools. The balance of the cost of the asset is subject to the normal pooling rules thereafter and continues to be deductible at the rate of 30% from the second year onwards.
The asset must be new, acquired on or after 12 March 2020, and first used or installed ready for use by 30 June 2021. The measure excludes second-hand assets, buildings and other capital works depreciable under Division 43 of the ITAA 1997. And yes, the car limit of $59,136 (for 2020–21) still applies!
Full expensing of depreciating assets (FEDA) — ends 30 June 2022
Business with an aggregated turnover of less than $5 billion can fully expense their depreciating assets first held on or after 7:30pm (AEDT) on 6 October 2020 where they are first used or installed ready for use by 30 June 2022.
The rules in Subdivision 40-BB of the IT(TP)A were modified in December to allow businesses to opt out of temporary FEDA and the BBI incentives on an asset-by-asset basis. However, this flexibility does not extend to the requirement for SBEs to fully deduct the balance of their general small business pools on 30 June 2021. The Tax Institute has discussed this inconsistency with the Government which has led to the lodgment on 1 February 2021 of a joint submission on the issue by several of the professional bodies.
Loss carry back — only for 2020–21 and 2021–22 income years
Corporate tax entities with an aggregated turnover of less than $5 billion can carry back a tax loss for the 2019–20, 2020–21 and 2021–22 income years and apply it against tax paid in a previous income year as far back as the 2018–19 income year.
The loss carry back tax offset is claimable only in the 2020–21 and 2021–22 income tax returns. Guidance will be provided by the ATO on how to complete new labels in the tax return.
JobMaker Hiring Credit — ends 6 October 2022
A more recent measure, the JobMaker Hiring Credit, commenced on 7 October 2020 and is available for up to eight quarterly JobMaker periods until 6 October 2022, although the wage subsidy cannot be claimed for an eligible individual for more than 12 months.
Employers can receive fixed payments of $200 per week for an eligible employee aged 16 to 29 years and $100 per week for an eligible employee aged 30 to 35 years, paid quarterly in arrears by the ATO.
Travel agents — until the funds are depleted
Under the COVID-19 Consumer Travel Support Program, the Government is providing one-off grants to travel agents and tour arrangement service providers who have been affected by the reduced consumer travel due COVID-19.
The taxable grants range from $1,500 to $100,000, depending on the annual turnover for the 2019 calendar year which must be at least $50,000 and no more than $20 million. Claimants must wait for Services Australia to obtain a certificate of tax information from the ATO.
There is currently some confusion, and inconsistency, relating to the manner in which supplies made by travel agents and tour arrangement service providers are reported on the business activity statement. Whether gross or net supplies are reported can affect the amount of the grant to which the business is entitled, if any. The Tax Institute has raised this issue with the ATO and, at the time of writing, is awaiting further information.
If you have any questions or would like any further information regarding stimulus support please contact our office on 5333 5144
Source: Taxvine Newsletter- Robyn Jacobson, CTA