In response to the Coronavirus crisis, the Federal Government has outlined new measures in a stimulus package worth nearly $18 billion. SMEs, pensioners and selected sectors such as tourism will be the biggest beneficiaries in an effort to boost the economy and save jobs. Below is a summary of the measures outlined in the plan.
1. SUPPORT FOR BUSINESS INVESTMENT
The following measures are designed to assist Australian businesses and economic growth in the short term:
INCREASING THE INSTANT ASSET WRITE-OFF
- Threshold increased from $30,000 to $150,000
- Applies to businesses with aggregated turnover of less than $500 million (up from $50 million)
- Applies from the announcement to 30 June 2020
- The $150,000 threshold applies on a per asset basis so eligible businesses can immediately write-off multiple assets
- Applies for new or second-hand assets first used or installed ready for use by 30 June 2020.
- A deduction of 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost
- Applies to businesses with aggregated turnover below $500 million
- Eligible assets are new assets that can be depreciated under Division 40 of the ITAA97 (i.e. plant, equipment and specified intangible assets) acquired after the announcement and first used or installed by 30 June 2021 (NOTE: This measure does not apply to second-hand Division 40 assets or capital works subject to Division 43).
2. CASHFLOW ASSISTANCE FOR BUSINESS
TAX-FREE PAYMENTS UP TO $25,000 FOR EMPLOYERS
- Tax-free cash flow support between $2,000 and $25,000 will be available to eligible businesses with a turnover of less than $50 million that employ staff between 1 January 2020 and 30 June 2020.
- This is not a direct cash payment but a credit equal to 50% of the PAYG amounts withheld from salary and wages paid to employees. The employer will need to lodge an activity statement to trigger the entitlement. If the credit puts the business in a refund position the excess amount will be refunded by the ATO within 14 days.
- If a business pays salary and wages to employees but is not required to withhold any tax then a minimum payment of $2,000 will still be made.
- Businesses that lodge activity statements on a quarterly basis will be eligible to receive the credit for the quarters ending March 2020 and June 2020. Business that lodge on a monthly basis will be eligible for the credit for the March 2020, April 2020, May 2020 and June 2020 lodgments. The minimum $2,000 payment will be applied to the first lodgement.
- Eligibility for the measure will be based on prior year turnover. We will have to wait for the legislation to be released to get more details on how this will be implemented.
SUPPORTING APPRENTICES AND TRAINEES
- Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage paid during the 9 months from 1 January 2020 to 30 September 2020 (and this subsidy will be available to a new employer where the business is unable to retain an apprentice)
- Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee (i.e. $7,000 per quarter)
- Eligible small businesses are those employing fewer than 20 full-time employees who retain an apprentice or trainee (with the apprentice or trainee being in training with a small business as at 1 March 2020)
- Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network provider.
3. ASSISTANCE FOR SEVERELY AFFECTED REGIONS
Funds will be available to assist during the next few months and over the year ahead to ensure these communities are well placed to recover:
SUPPORT FOR CORONAVIRUS-AFFECTED REGIONS AND COMMUNITIES
- An initial $1 billion allocation to support regions and communities disproportionately affected by the economic impacts of the Coronavirus (e.g. tourism, agriculture, education) that will be provided through existing or newly established Government programs
- The Minister for Trade, Tourism and Investment will work with affected industries and communities to develop recovery plans and measures.
ATO ADMINISTRATIVE RELIEF
- The ATO will provide administrative relief for certain tax obligations for taxpayers affected by the Coronavirus outbreak, on a case-by-case basis
4. STIMULUS PAYMENTS TO HOUSEHOLDS TO SUPPORT GROWTH
This measure will assist around 6.5 million lower income Australians, which will support confidence and domestic demand in the economy.
- The Government will provide a one-off $750 payment to social security, veteran and other income support recipients and eligible concession card holders. Around half of those that will benefit are pensioners.
- There will be one payment per eligible recipient. For example, if a person qualifies for the one-off payment in multiple ways, they will only receive one payment.
- The payment will be tax free and will not count as income for Social Security, Farm Household Allowance and Veteran payments.
Please contact us if you need to discuss this further.