Australian Government Stimulus Package – What does this mean for you?
The Federal Government have announced a stimulus package on the 12th March, 2020 which is designed to help stimulate the economy due to the impact of the coronavirus (COVID-19). We have broken this down to see how you may benefit from these proposed incentives.
Please note information is still to come regarding the finer details. The package will also need to be approved by the Federal Parliament which is scheduled to sit on the 23rd March, 2020 but the opposition Government have currently pledged to support any funding for the COVID-19 response.
Business Owners
Boosting Cash Flow for Employers
It will provide up to $25,000 back to business with a minimum payment of $2,000 for eligible businesses.
The payments will be tax free.
It applies to businesses with an aggregated annual turnover under $50 million that employ workers.
The payments will be delivered by the Australian Taxation Office (ATO) as a credit in the activity statement system from 28th April, 2020 upon lodgement of upcoming Activity Statements.
Eligible businesses that withhold tax to the ATO on their employees’ salary and wages will receive a payment equal to 50% of the amount withheld, up to a maximum payment of $25,000.
Eligible businesses that pay salary and wages will receive a minimum payment of $2,000 even if they are not required to withhold tax.
Quarterly Activity Statement lodgers will receive the payment for the quarters ended 31st March, 2020 and 30th June, 2020.
Monthly Activity Statement lodgers will receive the payment for the months ended 31st March 2020, 30th April, 2020, 31st May, 2020 and 30th June, 2020. The payment for monthly lodgers will be 150% of withholding tax for the month of March and 50% for the remaining months.
Supporting Apprentices and Trainees
The aim is for businesses to retain their apprentices and trainees by offering a wage subsidy of 50% of the apprentice’s or trainee’s wage paid during the 9 months from 1st January, 2020 to 30th September, 2020.
Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
This is available to small businesses employing fewer than 20 full-time employees who retain an apprentice or trainee.
The apprentice or trainee must have been in training with a small business as at 1st March, 2020.
Registrations for the subsidy will be available from early-April, 2020 and final claims for payment must be lodged by 31st December, 2020.
Further information is available at:
Increasing the Instant Asset Write-off (IAWO)
The Government is increasing the IAWO threshold from $30,000 to $150,000 for businesses with an aggregated turnover of less than $500 million until 30th June, 2020.
Eligible assets include new or second-hand assets first used or installed ready for use by 30th June, 2020.
Please note maximum threshold limits for depreciation and GST still apply for motor vehicles exceeding $57,581 GST exclusive.
There is no limit on the number of assets that can be purchased as every asset purchased under the threshold is an immediate write-off.
Please note the $150,000 IAWO may cause negative cashflow and tax implications in future financial years and if you are looking to exercise this incentive, we recommend you contact us in the first instance.
Backing Business Investment (BBI)
The Government is introducing a time limited 15-month investment incentive by accelerating depreciation deductions.
An additional tax deduction of 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the cost of the asset.
It applies to businesses with aggregated turnover below $500 million.
Eligible assets including new assets that can be depreciated under Division 40 of the Income Tax Assessment Act 1997 acquired after the announcement and first used or installed by 30th June, 2021.
Therefore, most eligible equipment will receive a tax deduction in the first year of between 65% to 80% depending on the normal depreciation rate of the asset.
It does not apply to second-hand Division 40 assets, or buildings and other capital works depreciable under Division 43. (Sorry for the tax jargon, if you are unsure if your asset would qualify please contact us).
Households
The Government will provide a one-off $750 payment to social security, veteran and other income support recipients and eligible concession card holders.
If a person receives multiple Government benefits, they will only receive one payment.
The payment will be exempt from taxation and will not count as income for Government purposes.
Eligible recipients must be residing in Australia and be receiving a Government benefit* or hold a concession card on 12th March, 2020.
Some of the benefit categories include Aged Pension, Disability Support Pension, Carer Payment, Parenting Payment, Austudy, Newstart Allowance, Youth Allowance, Family Tax Benefits, Pension Concession Card holders, Commonwealth Seniors Health Card holders, Farm Household Allowance and additional allowances and concession cards included on the list.
The payments will be made automatically from 31st March, 2020 and it is proposed over 90% of payments will be made by mid-April 2020.
* Please refer to Government websites or contact our office to see if the payments you receive qualify.
Coronavirus Affected Regions and Communities
The Government has set aside an initial $1 billion allocation to support regions and communities that have been disproportionately affected by the economic impacts of COVID-19 including industries such as tourism, agriculture and education.
More information is expected to be released from the Government regarding the distribution of these funds as soon as practical.
ATO Administration Relief
The ATO will provide administrative relief for certain tax obligations (similar to relief provided following the bushfires) for taxpayers affected by the COVID-19 outbreak, on a case-by-case basis.
All taxpayers affected can contact the ATO for assistance on 1800 806 218 or visit www.ato.gov.au for further information.
We are here to help
If you have any queries in regards to the above information and how this may impact you or your business or have other matters that you wish to discuss, please don’t hesitate to contact us so we can assist.
Obviously, there is a lot happening in the economy now with lots of uncertainty and it is a moving target daily.
It appears the Government are already in talks in relation to a 2nd stimulus package so we will provide any additional information as this becomes available.
Please stay safe during these times and ensure any decisions you are making that will have a large impact on your personal situation or business, you seek the required advice.