COVID-19 STIMULUS PACKAGES

As at COB 5 June 2020

Jodie Knowlton

BDO Food & Agribusiness

Phone: 07 3237 5652

Email: Jodie.Knowlton@bdo.com.au

JOBKEEPER

EMPLOYER ELIGIBILITY

Basic Test: Decline in turnover of at least 30%

• 50% if turnover >$1b

• 15% if charity

Measured by reference to same month or quarter last year for actuals or projections, for example:

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Applicable Turnover Test Period Relevant Comparison Test Period

Actual GST turnover for the

month ending 31 March 2020, 30

April 2020, or 31 May 2020

Actual GST turnover for the month ended

• 31 March 2019, 30 April 2019 or

• 31 May 2019 (respectively)

Predicted GST turnover for a

selected month ending between

30 June 2020 – 30 September

2020

Actual GST turnover for same month

ending between 30 June 2019 - 30

September 2019

Projected GST turnover for the

quarter ending 30 June 2020 or

30 September 2020

Actual GST turnover for the same quarter

ended 30 June 2020 or 30 September

2020

Alternative Test:

Discretion to ATO where atypical performance (alternative tests):

• Drought or natural disaster affected

• Irregular payments (but not cyclical or regular sessional variances)

• Newly started

• Acquired in the year

• Substantial growth

Special rules for employment service entities

EMPLOYER ELIGIBILITY

Examples – drought declared:

Example 1. Grain growing business (Smith Family) is in an area that has been drought declared since 1 March 2014 . In one of its operating entities it:

Predicted April – June 2020 GST Turnover $200,000

Actual April – June 2019 GST Turnover $195,000

Actual April – June 2013 GST Turnover $375,000.

The business would not be an eligible employing entity under the original basic test (comparing 2019 to 2020).

It would be an eligible entity under the alternative test as the predicted GST Turnover from April – June 2020 has reduced by more than 30% compared to the Actual GST Turnover in April – June 2013.

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EMPLOYER ELIGIBILITY

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Key Points:

Turnover assessments can be made between March 2020 to Sept 2020 and business should apply at the point they meet the eligibility criteria

GST turnover in either the test period or comparison period is calculated using either the cash or accruals method, regardless of the usual GST method adopted in the BAS but the method used for turnover test period and comparison test period must be consistent

Forward pricing contracts and pool sales need to be considered when determining projected turnover (cash v accruals)

Farm Management Deposit withdrawals are not included in the GST turnover definition

ELIGIBLE EMPLOYEES

Employed at 1 March 2020 and remains employed

• Even if stood down or rehired

Full-time, part-time or casual

• aged over 18 years (or 16 - 17 years if financially independent and not a full

time student),

• a full time, part time or casual employee employed by the entity on a regular

and systematic basis for the previous 12 months

• may allow for related employers

Australian citizen, Australian permanent resident or NZ citizen

Where multiple employers, employee nominates their chosen employer

One in, all in

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PAYMENTS

$1,500 per eligible employee, per fortnight

Payment is taxable and subject to PAYG-Withholding

• ~$1,300 after tax

• Must be passed on in full (before tax)

Wages remain subject to Superannuation Guarantee, but ‘top up’ does not

Paid in arrears – have to pay the employees first

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ELIGIBLE BUSINESS PARTICIPANT

Business meets one of the employer eligibility tests

Active individual in a business who is not employed

One participant per entity

Payment of $1,500 / fortnight

Cannot be employed elsewhere

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If the entity is a… The individual must be…

Sole trader The entity

Partnership A partner in the partnership

Trust An adult beneficiary of the trust

Company A shareholder in or director of the company

ELIGIBLE BUSINESS PARTICIPANT

ExampleThe Smith family (Dad - John, Mum - Mary & 2 adult children (Brad & Vanessa) has the following operating entities which have all been classified as eligible businesses for job keeper:

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Entity Business Eligible business

participant

How

Company Grain Growing Business John Director

Trust Service Station Mary Adult beneficiary

Sole Trader Contract Spraying Business Brad Sole Trader

Partnership Owns land – passive lease to grain growing

business

Not Eligible as not in business

CASH BOOST FOR BUSINESS

CASH BOOST

“Cash Boost” for business

• Aggregated turnover <$50m

• Based on PAYG-W liability

• First Boost:

– Min $10,000

– Max $50,000

– Paid on lodgement of March BAS

– Additional amounts (if any) on lodgement of BASs for periods to 30 June 2020

• Second Boost:

– Same amount as first boost paid equally in June, July, August, September

• Must have had some sort of lodgement between 1 July 2018 and 12 March 2020 re 2019 year showing business income or consideration for a supply

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SMALL WITHHOLDER

Example:

• March BAS PAYG-W = $6,000

• June BAS PAYG-W = $5,000

First Boost = $11,000, payable:

• $10,000 on lodgement of March BAS

• $1,000 on lodgement of June BAS

Second Boost = $11,000, payable

• $5,500 in July & October

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MEDIUM OR LARGE WITHHOLDER

Example:

• March BAS PAYG-W = $11,000

• April IAS PAYG-W = $7,000

• May IAS PAYG-W = $7,000

• June BAS PAYG-W = $7,000

First Boost = $50,000, payable:

• $33,000 on lodgement of March BAS

• $7,000 on lodgement of April IAS

• $7,000 on lodgement of May IAS

• $3,000 on lodgement of June BAS

Second Boost = $50,000, payable:

• $12,500 in July, August, September & October

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Total $50k

DEPRECIATION MEASURES

INSTANT ASSET WRITE-OFF (ALL BUSINESSES)

New and second-hand assets first used or installed ready for use

• Threshold applies on a per asset basis

• Applies to assets classified as plant & equipment (Div 40),

• Does not apply to capital improvements (except those used in primary production)

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Dates Aggregated Annual

Turnover

Immediate Deduction

Threshold

2 April 2019 – 11 March 2020 Less $50M $30,000

12 March 2020 – 31 December

2020 (COVID-19 measure)

Less $500M $150,000

1 January 2021 onwards Less $10M $1,000

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COVID-19: ASSETS - ACCELERATED DEPRECIATION

Backing business investment incentive (all businesses)

Accelerated depreciation deductions are available for businesses with an aggregated

annual turnover of less than $500 million

No asset value threshold

Applies to assets classified as plant & equipment (Div 40)

They apply to new assets only upon installation, provided it was acquired after 12

March 2020, and first used or installed by 30 June 2021

A 50% deduction upon installation, existing depreciation rules continue to apply to

the remaining balance

Does not apply to software development pools or capital works

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COVID-19: ASSETS - ACCELERATED DEPRECIATION

Key points

Claims for luxury or part private use cars is limited to $57,581 for the 2019-2020

income tax year

Asset financing arrangements need to be considered when determining eligibility

for these incentives

These measures do not impact existing accelerated depreciation eligibility of

fencing, fodder storage and water assets

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Example

A grain producer has aggregated turnover of $2m acquires a new tractor (effective life of 12 years)

costing $145,000

1Depreciation = $145,000 × (91 ÷ 365) × (1 ÷ 12 x 200%)

2Depreciation = ($145,000 - $72,500) × (181 ÷ 365) × (1 ÷ 12 x 200%)

Date acquired Method 2020 FY tax

deduction

2021 FY tax deduction

Acquired and first used 1 March 2020 (prior 12

March 2020)

Existing depreciation

(200% DV)

$6,0251 $23,161

Acquired and first used 1 April 2020 (after 12

March 2020 but before 31 December 2020)

Accelerated immediate

asset write-off

$145,000 Nil (all claimed 2020)

Acquired and first used 1 January, 2021 (after

31 December 2020, but before 30 June 2021)

Backing business

investment incentive

Nil Immediate 50% $72,500 +

$5,9922 = Total $78,492

COVID-19: ASSETS - ACCELERATED DEPRECIATION

OTHER FEDERAL MEASURES

OTHER MEASURES

Superannuation:

• Early access to superannuation:

– $10,000 before 30 June and $10,000 after

• Account-based pension: minimum superannuation drawdown requirements have been halved

R & D – lodgment with Aus Industries for activity within 30 June 2019 FY is extended to 30 September 2020 (from 30 April 2020)

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ATO HELP

ATO deferrals of payment for 6

months

• Income tax, FBT and excise

• GST disappeared

• PAYG-Withholding

Variation of PAYG-Instalments

(including refunds)

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STATES & TERRITORIES

STATES & TERRITORIES

Many different measures

• Payroll tax

• Land tax rebates

• Grants & loans

• Fees & charges

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Jodie Knowlton

Associate Director

BDO Food & Agribusiness

Phone: 07 3237 5652

Email: Jodie.Knowlton@bdo.com.au

CONTACT DETAILS