2020 Tax Planning for the Covid-19 Stimulus Measures
1) Instant asset write-off:- In the very first Stimulus announcement, the Federal Government significantly extended the instant asset write-off to all business entities under $500m aggregated turnover (previously $50m) and increased the amount able to be claimed to up to $150,000 (previously $30,000).
– Applies to assets purchased and ready for use between 12 March 2020 – 31 December 2020. The extension to December is still be be legislated.
– Applies to both new and second-hand depreciating assets.- Car write-offs are still subject to the luxury car limit ($57,581).
If you are planning on purchasing depreciating assets in the near future, it may be beneficial to do so before 30 June 2020 to obtain the write-off in the 2019/20 financial year.
2) Stimulus payments received (tax treatment): in the last few months of 2019/20, you may be receiving various Stimulus payments – e.g; JobKeeper, Cashflow Boosts, Government Grants, etc.
Cashflow Boosts are specifically exempt from income tax, however JobKeeper payments and most Government Grants will be assessable.
3) Assess to early withdrawal of Superannuation: You will not need to pay tax on amounts released under COVID-19 early release of super and will not need to include these amounts in your tax return. However, amounts released under other compassionate grounds must be included
Assessable payments should be taken into consideration when planning your tax instalments for and overall 2019/20 tax liability position.