It’s been a horrendous few months for many retailers. With some retailers now starting to open again after a long period of closure, thoughts are beginning to turn towards how to stay afloat over the new few months of economic turmoil. Key to staying afloat will be taking advantage of all the tax breaks available, which I have summarised here.
Take advantage of the instant asset write-off
The instant asset write-off threshold has been increased from $30,000 (for businesses with an aggregated turnover of less than $50 million) to $150,000 (for businesses with an aggregated turnover of less than $500 million), from 12 March 2020 until 30 June 2020.
Whilst now isn’t the ideal time to make large capital purchases for many retailers, if your business needs to invest in new capital equipment and has the cash flow (or the borrowing capacity) to finance it, now is certainly the time because generous tax breaks like this will probably never recur (the instant asset write-off threshold drops back to $1,000 on 1 July 2020).
Amongst the items you could look at claiming are the following:
- Cash registers and other POS devices
- Store fittings and fixtures
- Computers, laptops and tablets
- In store security systems
- Delivery vans and utes
Cash flow boost
If your business is eligible for the cash flow boost, you may already have received the first credit from the ATO.
As a reminder, this is a tax-free credit or payment of up to $50,000 for eligible small and medium businesses (with a turnover of less than $50 million that employ staff), based on their PAYG withholding obligations. It takes the form of a credit equal to 100% of the PAYG amounts withheld from salary and wages paid to employees.
The minimum payment for eligible businesses is $10,000.
You don’t have to apply for this; if your business is eligible, the ATO will make the credit automatically. If you think your business is eligible but you haven’t yet received anything, speak to your tax adviser who can check your eligibility and, if necessary, pursue your case with the ATO.
Every business that receives the first cash flow boost will also receive an additional payment equal to this amount from July to October 2020. This makes the total amount available under this scheme $100,000 (and a minimum of $20,000).
As businesses come out of hibernation in the coming months, this extra injection of funds from the government in the early months of the new financial year will be crucial to many retail businesses
If your business has not yet applied for JobKeeper, it’s not too late to do so.
JobKeeper is the wage subsidy scheme to provide payments of $1,500 per fortnight to millions of Australians. Affected employers can claim a taxable fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum period of 6 months which must then be passed on to employees.
Sole traders and some other entities (such as partnerships, trusts or companies) can also take part in the scheme
One $1,500 JobKeeper payment per fortnight is available for one eligible business participant, eg:
- A sole trader
- An individual partner or partnership
- A director or individual shareholder of a company
- An adult beneficiary of a trust
To be eligible, your business must have experienced a 30% fall in turnover.
The ATO has extended the time to enrol for the initial JobKeeper periods, from 30 April to 31 May. If employers enrol by 31 May they will still be able to claim for the fortnights in April and May, provided they meet all the eligibility requirements for each of those fortnights. This includes having paid employees by the appropriate date for each fortnight.
Even if your business has not yet experienced a fall of 30% but is expected to do so in later months, JobKeeper is still available – you simply become eligible in the month in which the turnover target is met, which could be May or June, or any month before the scheme expires in September.
Once you meet the 30% loss of turnover target, you remain in the scheme until it ends. If your business picks up in future months, your increased turnover won’t invalidate your JobKeeper payments.