The Australian federal government has announced a $189b economic stimulus package in response to Covid-19, which includes a number of support measures for small to medium businesses. State and territory governments have also announced stimulus packages.
What follows is a summary of the main support initiatives that will flow the way of architecture practices over coming months.
Federal cashflow boost
Eligibility
- You are eligible for this support if your practice has an annual turnover of under $50m and employs workers.
Support
- You will receive refunds equal to 200% of the tax you withhold for employees for the third and fourth quarters of the 2020 financial year.
- The minimum support is $20,000.
- The maximum support is $100,000.
Timing
- If you lodge your activity statements quarterly, you will receive the support in 3 instalments: 25% in April; 50% in July; 25% in October.
- If you lodge your activity statements monthly, you will receive the support in 7 instalments: 25% in April; 8.3% in May; 8.3% in June; 20.8% in July; 12.5% in August; 12.5% in September; 12.5% in October.
- Don’t ask my why these numbers are so complicated, that’s the ATO for you.
Logistics
- You don’t need to do anything. Payments are tax free, automatically calculated by the ATO, require no new forms and are deposited automatically into your bank account.
Case studies
- If you are a sole practitioner without employees, you will not receive any support.
- If you employ one person casually and pay her below the tax-free threshold, you will receive total support of $20,000.
- If you employ a few people and report $5,000 of PAYG withholding for them each month, you will receive total support of $60,000.
- If you employee a lot of people and report $20,000 of PAYG withholding for them each month, your total support will be capped at the $100,000 maximum.
I’ve not encountered clear direction on this, but even if you’re a sole practitioner without employees you should still be able to withhold tax on your own behalf and receive this support package. Get in touch with your accountant to find out more. And for more detail direct from the government, head here.
Federal instant asset write-off
Eligibility
- You are eligible for this support if your business has an annual turnover of under $500m (if you’re not eligible for this support, what on earth are you doing reading this blog?).
Support
- You can purchase assets up to $150,000 in value and write them off at your next business activity statement.
- This figure has been increased from the previous instant asset write-off cap of $30,000.
Case study
- You purchase a new Tesla Model S with Bioweapon Defence for $135,095 + GST, to allow you to drive to site meetings with zero tailpipe emissions and impenetrable protection from airborne viruses. Previously, you would have depreciated the car over its effective lifespan of 8 years earning you a tax refund in this financial year of $9,288. Now, you are able to write off the full value of the car this year, earning you a tax refund of $37,151.
For more detail direct from the government, head here.
States and territories
The states and territories are offering a mixed bag of support initiatives. Those more likely to affect architecture practices are focussed on payroll tax, though this tax is only relevant for businesses with sizeable annual payroll bills approaching the $1m mark. Other initiatives include infrastructure spending on government building, which might present opportunities for architects to bid on work, and other smaller rebates and deferrals.
Australian Capital Territory
- $2,622 credit towards commercial rates bills.
- $750 rebate against electricity bills.
- Deferral of payroll tax for 12 months.
- Six month waiver of payroll tax (for some industries).
- $20m fund for simple infrastructure works on public buildings.
- Read more here.
New South Wales
- Three month waiver of payroll tax.
- Increase of payroll tax threshold to $1,000,000.
- $250m fund to bring forward maintenance on public assets including social housing and crown land fencing.
- $500 million to bring forward capital works and maintenance.
- Read more here.
Northern Territory
- Business improvement grant for improvement works to offices, worth up to $20,000.
- A freeze on government fees, charges and electricity prices.
- Read more here.
Queensland
- Deferral of payroll tax until August.
- Access to a $250,000 loan to retain staff, interest free for the first twelve month.
- Read more here.
South Australia
- $350m fund for shovel-ready construction projects like hospital improvements.
- Read more here.
Tasmania
- Four month waiver of payroll tax.
- $50m fund for maintenance works on public buildings.
- Read more here.
Victoria
- Payroll tax refunds for the first three quarters of the 2020 financial year.
- Deferral of payroll tax for the first quarter of the 2021 financial year.
- Rent relief for commercial tenants of government buildings.
- Deferral of land tax payments.
- Payment of all government supplier invoices within five business days.
- Read more here.
Western Australia
- One off payment of $17,500 for businesses that pay payroll tax.
- Deferral of payroll tax until July.
- Increase of payroll tax threshold to $1,000,000.
- Read more here.
Other support
In addition to the above, there are a bunch of other federal, state and territory support initiatives that you might be able to access and are worthwhile checking out:
- Boost payments for low income households and pensioners.
- Early release of superannuation.
- Government guarantees for business loans.
- Improved access to lines of business credit.
- Greater protections against bankruptcy.
Further reading
And finally, there are a number of further resources you can examine to inform yourself about the full scope of the support initiatives on offer:
- Department of Treasury
- Australian Tax Office (or see dedicated pages for the cashflow boost, instant asset write-off and early release of superannuation)
- Association of Consulting Architects
- ABC summary article
I wish you all the best in your efforts to survive what are sure to be difficult months ahead, and hope we see each other on the other side of Covid-19 with all of our practices alive and well. A collection of Panfilo articles related to Covid-19 can be accessed here.
Image:
- Ultrastructure of the Covid-19 virus; sourced from New Scientist.