Economic Stimulus Package

 

13 March 2020 

The Federal Government has announced a stimulus package of $17.6 billion to support the economy. The package is designed to boost the economy with a combination of cash payments to individuals who qualify for government benefits and benefits to business.

These measures were announced yesterday and therefore they have no supporting legislation which means the below could be subject to change and clarification.  However the Opposition have announced
they will support these measures.

From the current information available we advise the following:

Business incentives

Cash payments to small and medium business

  • Employers with turnover less than $50 million that employ staff will receive a tax-free, cash incentive of between $2,000 and $25,000

  • The cash payment is based upon 50% of the tax withheld on their employees’ salary and wages between 1 January 2020 and 30 June 2020 up to a maximum 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

  • The payments will be based on Business Activity Statements or Instalment Activity Statements lodged from 28 April with the refunds paid within 14 days with no action required on employers behalf

Instant asset write off

  • Threshold for assets which can be written off immediately has been raised from $30,000 to $150,000

  • Eligibility for the write off has increased from businesses with turnover up to $50 million to businesses with turnover up to $500 million

  • This will be available for assets purchased from 12 March 2020 until 30 June 2020

  • These assets must be installed ready for use before 30 June 2020 so you will need to act quickly especially where assets have a delivery lead time

Investment incentive – accelerated depreciation

  • Businesses will have access to a 15 month investment incentive through accelerated depreciation deductions

  • Businesses with turnover less than $500 million will be able to deduct an additional 50% of the cost of the asset in the year it’s purchased excluding those assets eligible for the instant asset write off

  • This will be available until 30 June 2021

Payments for apprentices

  • Eligible businesses will receive a wage subsidy of up to $7,000 per quarter to retain existing apprentices and trainees for 9 months (from 1 January 2020 – 30 September 2020)

  • Businesses will be eligible where they have fewer than 20 full time workers

  • Businesses can register from 2 April 2020 for this scheme

Tax payment relief for businesses affected by COVID-19

Businesses impacted by COVID-19 will be supported by the ATO on a case by case basis with options including:

  • Deferral of Business Activity Statement payments by up to four months

  • Allow businesses to lodge BAS’s on a monthly cycle to gain access to GST credits

  • Remission of interest and penalties incurred after 23 January 2020

  • Working with affected businesses to help them pay tax liabilities by allowing them to enter into low interest payment plans

Individual incentives

  • $750 cash payments to those who qualify for government benefits including Family Tax Benefits, the Aged Pension, Newstart Allowance and the Carer’s Allowance

  • Payments should start from 31 March 2020

The Government is hoping that the above incentives will be enough to keep the Australian economy going through this difficult time.

Should you have any questions in relation to the above please do not hesitate to contact us.