The Prime Minister Scott Morrison recently announced a $17.6 billion Coronavirus stimulus package for businesses and individuals. There are four elements to the stimulus package, of which all clients should be aware:
- Low income earners to receive $750 cash
A one-off payment of $750 will be paid to all social security, veteran and other income support recipients and eligible concession card holders. This payment is tax-free and will not count as income for social security, household allowances and veteran payments. A full list of eligible recipients is provided via the following link:
The one-off payment will occur automatically from 31 March 2020 by Services Australia or the Department of Veterans’ Affairs.
- Cash flow assistance for businesses
Supportive measures introduced to assist Australian businesses to manage cash flow challenges and retain employees include:
- Tax-free cash flow boost for employers
Small and medium-sized businesses with a turnover of less than $50 million will receive up to $25,000 to help cover the costs of employee wages and salaries equal to 50% of the PAYG withheld. The minimum payment is $2,000 with a maximum of $25,000 and will be available for businesses who lodge business activity statements for the March and June quarters.
Eligible businesses that withhold tax on employee salary and wages will automatically receive the payment. This payment will be delivered by the ATO as a credit in the activity statement system from 28 April 2020 once businesses lodge their relevant activity statements. Eligible businesses that pay salary and wages but are not required to withhold tax will also receive the minimum payment of $2,000. For additional information regarding the timing of these payments please use the following link:
- Apprentice wage subsidy
Small businesses with fewer than 20 full-time workers will receive 50% of an apprentice or trainee’s wage for up to nine months from 1 January 2020 to 30 September 2020. For each apprentice or trainee, the Government will provide up to a maximum of $7,000 in wage assistance per quarter. Where a small business is unable to retain the apprentice or trainee, the subsidy will be available to a new employer to re-engage an eligible apprentice or trainee. It is proposed that employers will be able to register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020.
- Boosted instant asset write-off and accelerated depreciation
Businesses with an aggregated annual turnover of less than $500 million are eligible for an expanded instant asset write-off for asset investments of up to $150,000 (up from $30,000). The threshold applies on a per asset basis, so businesses can immediately write-off multiple assets. The announcement applies to new or second-hand assets first used or installed ready for use from now until 30 June 2020. The instant asset write-off is due to revert to $1,000 for small businesses (businesses with a turnover less than $10 million) from 1 July 2020.
Businesses with turnover less than $500 million will also be able to access a 15-month investment incentive by accelerating depreciation deductions. These eligible businesses will be able to deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost. Additional information regarding the criteria for an eligible asset can be found at:
- Assistance for severely affected regions
The Government has also announced a $1 billion fund to support regions and communities most significantly affected by the Coronavirus outbreak. Those industries disproportionally affected will include such industries as tourism, agriculture and education.
The ATO will provide administrative relief for certain tax obligations (similar to relief provided following the bushfires) for taxpayers affected by the virus outbreak, on a case-by-case basis. Additional information for those regions severely affected by the outbreak can be found via the following link:
Additional Income Support
In addition to the stimulus package announced, people who are unable to attend work because they have been diagnosed with the Coronavirus or who are in isolation, may qualify for income support if they do not have any employer leave entitlements. Additional information can be found on the Australian Government Services Australia webpage at https://www.servicesaustralia.gov.au/. Our accountants are available to guide you through the process of accessing support should you need assistance.
Additional resources for employers which we have found helpful are available via the following links: