Posted Under: Accounting and Taxation Posted On 28/01/2021
As 2021 is already showing, the year ahead could be earmarked with localised and hopefully short-term lockdowns, whenever a cluster rears its ugly head. Many business owners are still wary of the impact of this on business, cashflow and profitability. So, with the end of Cashflow Boosts and JobKeeper set to end on 28th March 2021, are there any other supports in place for business owners?
JobMaker is a credit available to eligible businesses and non-profit entities that create new jobs. It is not for if you are merely replacing someone who left.
It is available for new jobs created from 7 October 2020 until 6 October 2021 and provides $200 per week for new employees between 16 to 29 years of age and $100 per week for new employees between 30 to 35 years of age.
JobMaker is a credit that is paid quarterly in arrears from the start date of the employee for 12 months, as long as the business and employee remain eligible. It is an incentive for the employer to support wage costs and is not passed onto the employee.
JobMaker can apply to new businesses and the business does not need to satisfy a decline in turnover test to receive payments.
Those excluded from the JobMaker scheme including employers receiving JobKeeper, employees receiving an apprentice wage subsidy, and close associates of the business including some relatives of the business owners.
Click here for more information about JobMaker. https://www.ato.gov.au/general/JobMaker-Hiring-Credit/In-detail/JobMaker-Hiring-Credit-guide/
Coronavirus SME Guarantee Scheme
The Coronavirus Small and Medium Enterprises (SME) Guarantee Scheme guarantees 50% of new loans for lenders and allows lenders to provide cheaper credit (loans) to SMEs including sole trader and not-for-profits.
They are currently delivering Phase 2 of the Scheme which commenced on 1 October 2020 and will be available for loans made by participating lenders until 30 June 2021.
The loans are to support businesses in recovery and to enable continued support for SMEs facing the ongoing impacts of the Coronavirus. They can be used for a broad range of business purposes, including to support investment.
You will need to apply to participating lenders for these loans and fit into their lending criteria still. Amounts borrowed can be up to $1 million in total. Loan terms are up to 5 years and can be either unsecured or secured (excluding residential property). The interest rate on loans will be determined by lenders.
Click here for more information and participating lenders. https://treasury.gov.au/coronavirus/sme-guarantee-scheme
Supporting Apprentices and Trainees Wage Subsidy
The Australian Government is supporting business to manage cash flow challenges and to keep apprentices and trainees employed.
Eligible small business employers can apply for a wage subsidy of 50% of an apprentice or trainee’s wages paid from 1 July 2020 until 31 March 2021. It is worth up $7,000 per quarter, per eligible apprentice or trainee, reimbursed in arrears. Medium business owners are eligible if they had an apprentice in place on 1 July 2020. Subsidies are also available to any new employer who re-engages an eligible apprentice that was displaced by an eligible business.
Instant Asset Write-off
In October 2020, the federal government announced any business earning under $5 billion a year can write off eligible expenses, at any cost, until June 2022. The measure applies to eligible assets purchased 6 October 2020 and first used or installed by 30 June 2022.
For businesses that have a strong cash position, and can apply this write-off wisely, the instant asset write-off could be a good way to expand operations through the acquisition of equipment, vehicles, or other core assets.
Examples include enabling a larger business to make the move to more modern software platform that they may not have been able to afford before, a trucking company being able to upgrade its fleet, a farmer being able to purchase a new harvester and a food manufacturing business being able to expand its production line. Other eligible assets that are used in the running of a business might include computers; tablets; tools for use on a work site such as drills, ladders, toolboxes; phones; and point of sale systems.
What is the Instant Asset Write Off worth? Well, it is not a cash hand-out, but a deduction that reduces your taxable profit. For example, if you operate as a company and spend $40,000 on a capital purchase (not including the GST), then assuming a tax rate of 27.5 per cent, the company will receive an $11,000 reduction in tax. This means that the company will still have a net cash outlay of $29,000 for this purchase.
Of course, if you want to run any of these by us first, particularly regarding the instant tax write-off, give us a call or email us at A Counting House.