The $17.6 billion stimulus package aimed at protecting the economy, keeping people in jobs and supporting businesses and households focuses on four key areas:
- Support for business investment
- Cash flow assistance for employers
- Stimulus payments to households to support growth
- Assistance for severely affected regions
As always, there will be certain eligibility requirements so please reach out if you would like to understand whether your business qualifies for the support. Further, the measures need to become law through the introduction of legislation.
In the meantime, we have outlined below the key details of each of the measures based on announcements from the Government.
Support for Business Investment
Instant Asset Write-off
The instant asset write-off threshold will be lifted to $150,000 (up from $30,000) for businesses with aggregated annual turnover of less than $500 million (up from the current $50 million) until 30 June 2020. The threshold applies on per asset basis, so eligible businesses can immediately write-off multiple assets. It will be available in respect of both new and second-hand assets first used or installed ready for use by 30 June 2020.
For example, a company with a 27.5% corporate tax rate which purchases an asset worth $100,000 before 30 June 2020, can claim a deduction for the whole asset purchase, rather than depreciating it over its useful life. A $100,000 deduction will provide the corporate with a tax saving of $27,500 when they lodge their 2020 tax return. Under current rules, the instant asset threshold reverts to $1,000 from 1 July 2020.
Businesses have also been given a 15 month investment incentive by accelerating depreciation deductions for the purchase of certain new depreciable assets. 50% of the asset’s cost can be claimed in the year of purchase, with existing tax depreciation rules applying to the balance of the asset’s cost.
The investment allowance will be available to businesses with aggregated turnover below $500 million. It will apply to assets first used or installed by 30 June 2021. Note however, this concession will not apply to second-hand assets or capital works.
For those entities with a turnover below $500 million, this will apply to assets:
- costing more than $150,000 that are purchased between now and 30 June 2020; or
- costing more than $1,000 that are purchased between 1 July 2020 and 30 June 2021.
Cash flow assistance for employers
Boost to Employers
Businesses with aggregated annual turnover under $50 million will receive tax free payments to cover the costs of employee wages and salaries:
- The payment will be equal to 50% of PAYG withheld for businesses that withhold tax, with a minimum of $2,000 and up to a maximum of $25,000 over six months.
- For those businesses that pay salary and wages but are not required to withhold tax will also receive the minimum payment of $2,000.
The payment will be made by the ATO and will appear as a credit on activity statements lodged from April 2020 onwards:
- Quarterly lodgers can access the credit in their March 2020 and June 2020 quarterly activity statements.
- Monthly lodgers can access the credit in their March 2020 through to June 2020 monthly activity statements.
Support to Businesses taking on Apprentices
A wage subsidy of 50% of the apprentice’s or trainee’s wage for nine months will be available for businesses that employ fewer than 20 full-time employees who retain an apprentice or trainee. The subsidy will be up to a maximum of $21,000 per eligible apprentice/trainee and payable up to $7,000 per quarter. The subsidy will be available for wages paid during the nine months starting from 1 January 2020 to 30 September 2020.
Employers will need to apply for the subsidy as an eligibility assessment will need to be undertaken by an Australian Apprenticeship Support Network provider.
Stimulus payments to households to support growth
One-off tax free payments of $750 will be paid to around 6.5 million lower-income Australians, including pensioners, other social security and veteran income support recipients and eligible concession card holders.
These payments will commence from 31 March 2020.
The aim of these payments is to support confidence and demand in the Australian economy.
Assistance for severely affected regions
The Government has set aside an initial $1 billion to support those regions and communities that have been disproportionately affected by the economic impacts of the Coronavirus, including those heavily reliant on industries such as tourism, agriculture and education.
For example, there will be a waiver of the Environmental Management Charge for tourism businesses that operate in the Great Barrier Reef Marine Park and the waiver of entry fees to Commonwealth National Parks.
The $1 billion will be available for distribution through existing or newly established mechanisms as soon as practicable.
The ATO will also provide administrative relief for certain tax obligations for taxpayers affected by the Coronavirus outbreak, on a case by case basis. The ATO will also look at ways to enhance its presence in significantly affected regions to make it easier for people to apply for relief.
For a more detailed discussion of these measures, please refer to the Treasury : https://treasury.gov.au/coronavirus
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