In an effort to combat the economic effects of the global coronavirus pandemic, the government has released a $17.6bn stimulus package which is expected to provide direct support for up to 6.5m individuals and 3.5m businesses.
The package includes business investment initiatives, cash flow assistance payments to SMEs, household stimulus payments, support for impacted sectors, regions and communities, as well as tax administration relief.
Below, we provide a summary of the package.
1. Increasing the Instant Asset Write-Off
The instant asset write-off threshold to be increased from $30,000 to $150,000 and expanded to include access for businesses with aggregated annual turnover of less than $500m (up from $50m) until 30 June 2020.
2. Delivering Support for Business Investment
A time limited 15-month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating depreciation deductions. Businesses with a turnover of less than $500 million will be able to deduct 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.
3. Boosting Cash Flow for Employers
A cash payment to employers of between $2,000 to $25,000. The payment will provide cash flow support to businesses with a turnover of less than $50m that employ staff, between 1 January 2020 and 30 June 2020. The payment will be tax free.
The ATO will deliver the payment as a credit to the business upon lodgement of their activity statements. Where this places the business in a refund position, the ATO will deliver the refund within 14 days.
Eligible businesses that withhold tax to the ATO on their employees’ salary and wages will receive a payment equal to 50 per cent 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.
Employers will be eligible to receive the payment from the March 2020 lodgement onwards.
4. Supporting Apprentices and Trainees
The Government is supporting small business to retain their apprentices and trainees. Eligible employers can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage for up to 9 months from 1 January 2020 to 30 September 2020.
Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
The subsidy will be 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 1 March 2020.
Employers can register for the subsidy from early-April 2020. Final claims for payment must be lodged by 31 December 2020.
5. Stimulus payments to households to support growth
A one-off $750 stimulus payment will be made to pensioners, social security, veteran and other income support recipients and eligible concession card holders. Payments will be made from 31 March 2020 on a progressive basis, with over 90% of payments expected to be made by mid-April. The payment will be tax free and not count as income for Social Security, Farm Household Allowance and Veteran payments.
The social security system also has a number of existing features to assist people who are unable to support themselves in the context of Coronavirus. At present people who are aged 22 or over and under Age Pension age, who are unable to attend work because they have been diagnosed with the Coronavirus or who are in isolation may be eligible for Sick Allowance if they do not have employer leave entitlements and they meet general income and asset tests. From 20 March 2020 the Sick Allowance will close and be replaced by the JobSeeker Payment. JobSeeker Payment will better accommodate individual circumstances, including assisting people who are sick or bereaved.
Young people under the age of 22 who are unable to attend work because they have been diagnosed with the Coronavirus or who are in isolation may qualify for Youth Allowance if they do not have any employer leave entitlements, such as sick leave, and they meet general eligibility requirements in respect of residency and income and assets tests.
6. Australian Taxation Office Administrative Relief
Specific Australian Taxation Office (ATO) measures to assist businesses with cashflow include deferral of payments (by up to four months), allowing to opt to monthly GST reporting to get access to GST refunds, revision of PAYG tax instalments, remission of interest and penalties incurred on or after 23 January 2020 and low interest payment plans. The ATO has stated that employers will still need to meet their ongoing super guarantee obligations for their employees (as they do not have the ability to defer payments).
Need more information?
For more information on the Australian Government’s Economic Response to Coronavirus visit treasury.gov.au/coronavirus or feel free to contact our office.