***Instant Asset Write-Off Tax Boost Extended For Another Six Months***
By now the words ‘coronavirus’ and ‘Covid-19’ are in everyone’s minds. It’s hard to avoid the news and updates regarding Covid-19 and how it is impacting people and economies all around the world. Social distancing, telecommuting, timed entry to supermarkets, and self-isolation have quickly become the norm in Australia and has left many Australians wondering, ‘What is the government doing to help?’ On the 22nd of March, the Morrison Government has unveiled a further round of relief to add to the 2020 stimulus package announced earlier in the month. For businesses in Australia, the next few months will certainly be a bumpy road, but it may actually be the perfect time for businesses who are financially able to invest in themselves and their business and ultimately help boost the Australian economy during its time of need.
The Australian building industry is the largest non-service-related industry employing over one million Australians and contributes $134 billion to the country’s economy. Investing in your business during this crisis may seem counter-intuitive given the current economic landscape but investing in an office fitout today may actually have several key benefits. We take a closer look at the small business stimulus package from the Australian Government and how investing in a fitout for your business before the end of financial year could not only potentially help save you money through the improved instant asset tax write off measures, but also contribute to the health of the Australian economic landscape. Continue reading for more information regarding the 2020 stimulus package and the temporary changes to the ATO’s simplified depreciation and instant asset tax write off methods.
Get in touch with us at Future Fitouts for the latest information regarding the small business stimulus package, and to see how we might be able to incorporate the 2020 tax write offs and office furniture tax deduction into your office fitouts over the coming months.
The 2020 Stimulus Package – What is it?
The 2020 stimulus package is so far a combined $189 billion assistance package from the Australian Government that aims to deliver relief and support during the on-going Covid-19 pandemic in Australia. The stimulus is targeted at bolstering the Australian economy and focuses on ensuring businesses can keep running and employees can keep working. Some of these measures include:
- Individual assistance through increased Jobseeker payments for those who lose their jobs or are looking for a job, and easier superannuation access for the next two years for those most affected.
- Wage support for apprentices.
- Assistance for big businesses in the hardest hit industries.
- A Small business stimulus package including significant 2020 tax write offs, guaranteed unsecured interest-free loans for up to three years and tax-free cash payments for businesses with PAYG liabilities.
Small Business Stimulus Package
To support the many SME businesses in Australia, the small business stimulus package will provide support and relief in three key areas; Loan guarantees, an increase in the previously announced PAYG wage subsidy and investment incentives through the expansion of the small business asset write off depreciation method.
The new “Coronavirus SME guarantee scheme” will support lending to small and medium-sized businesses and is available to businesses with a turnover of less than $50m. The Australian government will guarantee fifty percent of new loans issued by eligible lenders to SMEs which will cut red tape allowing SMEs to gain access of up to $250,000 in credit faster.
PAYG Wage Subsidy for Small Businesses
Not-for-profits and small businesses with a turnover of under $50m will receive a tax-free cash payment of up to $100,000 delivered through the Tax Office as a credit on activity statements. Small businesses that employ people will receive the credit to aid in cash flow and help pay rent, electricity and retain staff. Employers who file their returns quarterly will receive a payment equal to 100 percent of their salary and wages withheld with a minimum of $10,000 and a maximum of $50,000 to be made on their quarterly return on April 28th, 2020. Quarterly lodgers will also additional payments in July and October 2020. For more information regarding the additional payments and for employers who lodge monthly please refer to the Treasury Department’s fact sheet.
Small Business Asset Write Off
The simplified depreciation method was a key feature of the 2015/2016 Federal Budget and allowed businesses to instantly write off eligible assets. Originally allowing businesses to write off assets valued at less than $20,000 within the same year of purchase, it was increased to $30,000 on 12th of March following the first round of stimulus and has been subsequently increased again to $150,000 on the 22nd of March in the second round of stimulus from the Australian Government. The increase in small business asset write off threshold was certainly unexpected but with this new round of support, choosing to bring forward your shop fit-out plans before 30 June, could not only potentially save your business money but will also help keep many Australians at work in their time of need.
2020 Stimulus Package Changes
- Asset write off changed from $30,000 to $150,000 per asset written off, pooling rules may still apply.
- Businesses that are eligible has increased to those with a turnover of up to $500m from $50m.
Assets eligible for simplified depreciation include any depreciable plant and equipment asset or fit-out installed in your business. Mr. Morrison said in Canberra that ‘any such purchase from now until 30 June (*Updated to 31st December 2020), including a truck, a tractor, a shop fit-out, can be written off immediately’.
Deadline for Instant Asset Tax Write Off
Under the recent changes, the increase to $150,000 will end on the 30th of June 2020 (*Updated to 31st December 2020) and assets need to be purchased and ‘ready-to-use’ by then to be eligible. Recent updates from Canberra state that this may be extended to a 15-month window until June 2021. For the latest advice please consult your business tax accountant.
Start Your Office Fitout with Future Fitouts Today
At Future Fitouts our passion is to design and deliver workplaces, creating the environment and foundation to set up businesses for success. Since 2010, we have continually delivered quality shops, offices, industrial warehouses and commercial spaces for a range of clients across a range of industries in South East Queensland. Stress-free and a guarantee of high-level communication, service, and delivery every step of the way is what defines “The Future Fitouts Way”. While investing in your business’ fitout during uncertain times may seem like a scary prospect, by continuing to support the building industry in Australia, many Australians can remain employed, continue spending and together, help keep the economy running to reduce the overall impact that Covid-19 has on our economy. Opportunity is everywhere! Changing your business model, branching into new products and services, requiring additional storage or space facilities to keep up with demands. There is endless opportunity and many, many businesses commence during downturns!
If your business was planning an office or commercial fitout but have put your plans on hold due to the recent Covid-19 situation, the 2020 tax write offs offered by the Australian Government’s most recent stimulus package could be the reason to get your fitout completed sooner rather than later. With up to $150,000 potentially available to write off your fitout as an office tax deduction, and the potential of an additional $150,000 as an office furniture tax deduction, starting your fitout now might be more financially viable than you think. At present, our team is fit, healthy and able to transform your space while your team are working remotely (and working in occupied spaces is not something new to us – we will just be practising social distancing and spacing out our trades).
Get in touch with us today at Future Fitouts for the latest in 2020 office design trends and to discuss how we might be able to assist your business take advantage of the small business stimulus package and temporarily increased instant asset tax write off for your next office fitout.
**Please note that the Covid-19 situation in Australia is constantly evolving and rules regarding the office tax deduction and further additions or amendments to the 2020 stimulus package are likely in the coming weeks and months. We will continue to monitor for relevant updates and how these changes might affect your business. Watch this space for more updates as they filter through.
***This publication is for guidance purposes only. While we have endeavored to provide accurate and up to date information regarding the small business stimulus package, office furniture business expense, and 2020 tax write offs, we encourage you to seek the specialist advice of a qualified small business accountant before acting upon any information contained herein. Neither the publishers nor the distributors can accept any responsibility for losses incurred to any persons as a result of action taken or refrained from in consequence of this publication.