The following discussion does not address the status of all Coronavirus Support measures that have been implemented. For example, it does not include the various state-based revenue concessions (eg for payroll tax), nor other measures that have already ended (eg cash flow boost payments, early access to super). Its purpose is to highlight that, as the pandemic (hopefully) recedes, so too government support winds back. Advisors and clients need to prepare for a business environment where the government safety net is not as wide.
JobKeeper ends 28 March 2021
JobKeeper Mark II operated from 27 September 2020 and, at the time of writing, is expected to finish on 28 March 2021.
The Mark II version saw some changes to what had initially been enacted:
the introduction of two tiers of payment rates;
the reduction in the amount of the JobKeeper payment; and
the requirement for businesses to reassess eligibility for the JobKeeper extension with reference to their actual (rather than estimated) turnover.
A further change was that employees hired as at 1 July 2020 were also eligible to receive JobKeeper.
Certain provisions in the Fair Work Act 2009 that were implemented in response to COVID-19 were, at the time of writing, also due to expire on 28 March 2021.
Coronavirus Supplement ends 31 March 2021
The Coronavirus Supplement was extended from 1 January 2021 to 31 March 2021 at reduced rate of $150 per fortnight (it had been paid at $250 from 25 September until 31 December 2020, down from the original $550).
Other social security related measures that, at the time of writing, will stop on 31 March include:
the temporary COVID-19 qualification rules for JobSeeker payment and youth allowance; and
the ability of the Minister to temporarily modify certain specified provisions of the social security law by disallowable legislative instrument.
HomeBuilder ends 31 March 2021
The HomeBuilder measures are also, at the time of writing, due to end on 31 March 2021.
For all new build contracts signed between 1 January 2021 and 31 March 2021:
eligible owner-occupier purchasers could receive a $15,000 tax-free amount; and
the property price caps for new builds in NSW and Victoria were set at $950,000 and $850,000 respectively, and $750,000 for the other states and territories.
In addition, the construction commencement deadline was extended from three months to six months for all eligible contracts signed on or after 4 June 2020.
Apprenticeship wage subsidies end 31 March and 30 September
Under the Supporting Apprentices and Trainees wage subsidy, eligible employers could apply for a wage subsidy of 50% of an eligible apprentice or trainee’s wages paid until 31 March 2021. In addition to the existing support for small businesses, medium-sized businesses may have been eligible for the subsidy, for wages paid from 1 July 2020 to 31 March 2021.
Under the Boosting Apprenticeship Commencements wage subsidy, any business or Group Training Organisation that engages an Australian Apprentice between 2 5 October 2020 and 30 September 2021 may be eligible for a subsidy of 50% of wages paid to a new or recommencing apprentice or trainee for a 12-month period from the date of commencement, to a maximum of $7,000 per quarter. There is no cap on the number of eligible trainees/apprentices.
Accelerated depreciation ends 30 June 2021
An accelerated rate of depreciation is currently available, under Subdiv 40-BA of the Income Tax (Transitional Provisions) Act 1997 (TPA), to businesses with aggregated annual turnover less than $500 million.
To be eligible for the accelerated depreciation, the depreciating asset must be:
new and not previously held by another entity (other than as trading stock or for the purposes of reasonable testing or trialling) – this excludes most second hand assets, and the exclusion extends to a licence for an excluded intangible second-hand asset the business starts to hold on or after 7.30 pm AEDT on 6 October 2020;
first held on or after 12 March 2020; and
first used or first installed ready for use for a taxable purpose on or after 12 March 2020 and before 1 July 2021.
Broadly, the accelerated depreciation allows eligible entities to claim 50% of the cost of an asset, in addition to the deduction under the existing depreciation rules. Entities that use the small business pooling provisions (aggregated turnover under $10 million) have a higher accelerated depreciation rate (57.5%).
Enhanced instant asset write-off ends 30 June 2021
A higher instant asset write-off threshold ($150,000) is available to businesses with annual aggregated turnover below $500 million that acquire a depreciating asset after 7.30 pm on 2 April 2019. The asset must be first used, or installed ready for use, between 12 March 2020 and 30 June 2021.
This measure is not to be confused with temporary full expensing, which ends on 30 June 2022 (see below).
JobMaker Hiring Credit eligibility ends 6 October 2021
Broadly, the JobMaker Hiring Credit is available to employers for each new job they create over a specified period for which they hire an eligible young person aged 16 to 35 years old.
Generally, the amount of the JobMaker Hiring Credit payment depends on the age of the eligible additional employee when they commence employment with the entity. An entity may receive up to $200 per week for each eligible additional employee aged 16 to 29 years and up to $100 per week for each eligible additional employee aged 30 to 35 years.
The JobMaker scheme commenced on 7 October 2020 and ends on 6 October 2022, but only applies to eligible individuals who commence employment between 7 October 2020 and 6 October 2021.
Temporary full expensing ends 30 June 2022
Temporary full expensing (under Subdiv 40-BB of the TPA) allows eligible businesses to deduct the full cost of eligible depreciating assets, as well as the full amount of the second element of cost.
A business qualifies for temporary full expensing if it has an annual aggregated turnover under $5 billion. More generous rules apply to small business entities with aggregated turnover under $10 million.
If temporary full expensing applies to work out the decline in value of a depreciating asset, no other method of working out that decline in value applies.
Temporary full expensing will cease to apply on 30 June 2022. Therefore, deductions for the decline in value of depreciating assets after that time will be worked out under the general uniform capital allowance (UCA) rules in Div 40 of the Income Tax Assessment Act 1997 (ITAA 1997).
Loss carry-back ends 30 June 2022
Corporate tax entities with an aggregated turnover of less than $5 billion can carry back a tax loss for the 2019–2020, 2020–2021 or 2021–2022 income years and apply it against tax paid in a previous income year – as far back as the 2018–2019 income year. In terms of the 2019–2020 income year, claims will be processed when income tax returns are lodged for 2020–2021 and 2021–2022. Entities wishing to claim the loss carry-back tax offset prior 1 July 2021 (eg early balancers) need to use a special claim form.
If you would like to know more please contact one of our accountants on 07 4639 1099 or come in and see us at 4 Bowen Street Toowoomba.