RSM Australia

Impact of COVID-19 on Small and Medium-Sized Businesses (SMEs)

Business Insights

Enhanced instant asset write-off

Immediate deduction for eligible assets1 costing less than $150,000 (excluding GST credits) first used or installed ready for use between 12 March 2020 to 30 June 2020.

The cost threshold applies on a per asset basis, allowing an immediate deduction for multiple assets.  This measure applies to both new and second-hand assets.

Backing business investment SMEs

Immediate deduction of 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.

The asset must be acquired after announcement (12 March 2020) and first used or installed ready for use by 30 June 2021.  There is no cost limit.   

The measure will not apply where the contract to acquire the asset was entered into prior to 12 March 2020.

It only applies to new assets. Second-hand assets are not eligible.

Warning: Integrity Measures

Integrity measures will apply to deny the immediate deduction of 50% where the taxpayer engages in conduct that results in a contract being entered into post 12 March 2020, the asset being constructed post 12 March or the asset being held in another way post 12 March 2020 for the purposes of accessing the deduction.

Boosting cash flow for employers asset_19.png

Providing up to $100,000 to eligible SMEs, and not-for-profits (including charities) that employ people, with a minimum payment of $20,000.

1 - Cash Boost Payment (made March to June)

Maximum payment: $50,000               Minimum payment: $10,000

Eligible employers will receive a refundable credit of up to $50,000 (minimum of $10,000) for the following activity statement periods: March, April, May and June 2020. 

The $50,000 is the maximum credit payment in total over this period and will be applied as a credit to the employers’ integrated client account with the Australian Taxation Office (ATO).

The credit is broadly calculated as 100% of the PAYG withholding tax liability amount for the relevant activity statement period (or 300% of the March 2020 PAYG withholding tax liability for monthly lodgers).

2 - Additional Payment (made July to October 2020)

Maximum payment: $50,000               Minimum payment: $10,000

Eligible employers will receive additional payments equal to the total of all of the Cash Boost Payments they have received up to a maximum of $50,000.

Warning: Integrity Measures

Integrity measures will apply to deny the employer access to the cash boost if the employer or their agent, enters into or carries out a scheme with the sole or dominant purpose of accessing or increasing entitlement to, the cash boost.

Supporting apprentices and trainees asset_42.png

Eligible employers can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wages paid during the nine months from 1 January 2020 to 30 September 2020. 

The subsidy has a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter). The apprentice or trainee must have been in training with an eligible employer as at 1 March 2020.  The subsidy entitlement may pass with an apprentice to a new employer during the above-mentioned nine-month period.

The subsidy is subject to an eligibility assessment to be undertaken by an Australian Apprenticeship Support Network (AASN) provider.

Coronavirus SME Guarantee Scheme

This Scheme is designed to provide working capital support to SMEs (businesses with turnover of less than $50 million) to get through the impact of the coronavirus.

Under the Scheme, the Federal government will guarantee 50% of new SME unsecured loans issued by eligible lenders up to the value of $250,000.  This effectively represents a guarantee of $125,000.

The government will encourage lenders to provide facilities to SMEs that only have to be drawn if needed by the SME, and will remain available into the future, with interest only on the funds that are drawn down.

The Scheme will commence in April 2020 and loans will be made available by participating lenders until 30 September 2020.  The loans will be made under a term of three years with an initial six month repayment holiday.  No assets will be required as security for these loans. 

These conditions apply only to new loans, not refinanced loans.

No fees will be payable on the establishment of the loans.


1. It is anticipated that most tangible assets will be eligible for the instant asset write-off and backing business investment deduction, except a small number of exclusions. Among the likely excluded assets are trading stock items, land, non-farming buildings and capital works, horticultural plants, water facilities, fodder storage assets and farm fencing.  These items all have their own tax treatment. Certain specified intangibles, including patents, are likely to be eligible assets.


For more information on the COVID-19 situation, visit our resources page today.

VISIT THE COVID-19 ADVISORY PAGE >>

Authors

Adam Crowley
National Leader, Property and Construction