Stimulus Package: Fighting the Economic Effects of COVID-19

As the global situation worsens, the Australian government has announced a $17.6 billion stimulus package to support businesses and boost the economy.

Although the measures should start immediately, approval of legislation is still required. It is expected the Government will move to implement the stimulus package through legislation to Federal Parliament in the final sitting week in March.

An overview of the measures announced are as follows:

Instant Asset Write off (until 30 June 2020)

The instant asset write off threshold is increased from $30,000 to $150,000 and taxpayers with an aggregated turnover of less than $500m (currently <$50m) will be eligible to access the immediate write off.

The threshold applies on a per asset basis, so eligible businesses can immediately write off multiple assets.

This proposal applies from announcement (12 March 2020) until 30 June 2020 for new or second-hand assets first used or installed ready for use in this timeframe.

Accelerated depreciation deductions (until 30 June 2021):

Aimed at supporting business investment and economic growth over the short term, taxpayers with an aggregated turnover of less than $500m will be able to deduct an additional 50% of the asset cost in the year of purchase.

Eligible assets include new assets acquired after announcement and first used or installed by 30 June 2021 (for example, plant, equipment, motor vehicle and specified intangible assets). This measure does not apply to second-hand assets, buildings and other capital works.

Cash flow boost (covers amounts withheld between 1 January 2020 – 30 June 2020):

Eligible Small & Medium-sized business with a turnover of less than $50m that employ staff between 1 January 2020 and 30 June 2020 will receive between $2,000 to $25,000.

This cash flow boost will be tax free.

This cash flow boost is expected to be administered via existing ATO processes where eligible business will receive a credit equivalent to 50 per cent of either PAYG tax withheld via the Business Activity Statements or Instalment Activity statement from 28 April 2020. The ATO will deliver the refund within 14 days.

Once-off $750 stimulus payment to households (from March 2020)

The $750 stimulus payment will be made to pensioners, social security, veteran and other income support recipients and eligible concession card holders. There will be one payment per eligible recipient.

This stimulus payment will be tax free and will not be considered as income for Social Security, Farm Household Allowance and Veteran payments.

Supporting small businesses with apprentices and trainees (maximum of $21,000 per eligible apprentice or trainee)

Eligible employers with less than twenty full time employees can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for up to nine 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 the apprentice.

Assistance for severely affected regions

Fees and charges will be waived for tourism businesses that operate in the Great Barrier Reef Marine Park and Commonwealth National Parks. Additional assistance will be developed and delivered in partnership with affected industries and communities.

ATO Administrative Relief

The Australian Tax Office (ATO) will provide administrative relief for certain tax obligations (similar to relief provided following the bushfires) for taxpayers impacted by the outbreak. Note this relief will be determined on a case-by-case basis.

 

If you have any questions or concerns about how this will affect you, please reach out to the team at Accumulus.

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