The government’s economic stimulus package – How it applies to me
The federal government has released its economic response to support and protect the economy, business and jobs. The response targets four key areas:
- Delivering support for business investment
- Cash flow assistance for employers
- Stimulus payments to households to support growth
- Assistance for severely affected regions
We have summarised below the government’s stimulus package and included links to the treasury fact sheets for further details.
Delivering support for business investment
To encourage business to keep investing during this difficult time, the federal government have provided businesses with the following tax incentives:
Increase to the instant asset write-off
Lifting the threshold to $150,000 (from $30,000) and expanding access to businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020. The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets.
Accelerated depreciation deductions
Businesses with an aggregated turnover below $500 million are eligible to claim a deduction of 50% of the cost of an asset, with existing depreciation applying to the balance of the asset’s cost. The accelerated depreciation incentive is available on certain assets purchased and ready for use by 30 June 2021.
This incentive will be utilized where assets purchased before 1 July 2020 exceed $150,000 or for assets purchased and ready for use after 30 June 2020 but before 1 July 2021.
For more information, including examples, please refer to Treasury’s fact sheet: Delivering support for business investment
Cash flow assistance for employers
The crisis will almost certainly challenge business cash flow and the federal government will provide the following assistance:
Cash flow boost from the ATO
Businesses with aggregated annual turnover under $50 million will receive a cash flow boost equal to 50% of PAYG withheld for businesses that withhold tax, with a minimum of $2,000 and a maximum of $25,000 over six months. Businesses that pay salary and wages but are not required to withhold tax will also receive the minimum payment of $2,000. This will be a tax-free payment.
The payment will be made via a credit to business instalment activity statements lodged with the ATO from March 2020 lodgments onwards. To assist clients, we will be doing this calculation as part of all activity statements we prepare. If you self-prepare, please do not hesitate to contact us for any assistance.
Apprentices and trainees
The federal government is providing businesses who employ and continue to employ apprentices and trainees a wage subsidy of 50% of the apprentice’s or trainee’s wage for nine months. The subsidy of up to a maximum of $21,000, will be available to businesses employing fewer than 20 full-time employees who retain an apprentice or trainee, or, where a small business is not able to retain an apprentice, the subsidy will be available to a new employer.
Employers will need to register for the subsidy, with final claims for payment being lodged before 31 December 2020.
For more information, including examples, please refer to Treasury’s fact sheet: Cash flow assistance for employers
Stimulus payments to households to support growth
The federal government will make one-off payments of $750 to the following social security, veteran and other income support recipients and eligible concession card holders:
• Age Pension
• Disability Support Pension
• Carer Payment
• Parenting Payment
• Wife Pension
• Widow B Pension
• ABSTUDY (Living Allowance)
• Bereavement Allowance
• Newstart Allowance
• Youth Allowance
• Partner Allowance
• Sickness Allowance
• Special Benefit
• Widow Allowance
• Family Tax Benefit, including Double Orphan Pension
• Carer Allowance
• Pensioner Concession Card holders
• Commonwealth Seniors Health Card holders
• Veteran Service Pension; Veteran Income Support Supplement; Veteran Compensation payments, including lump sum payments; War Widow(er) Pension; and Veteran Payment.
• Veteran Gold Card holders
• Farm Household Allowance
Payments will commence from 31 March 2020 via Services Australia or the Department of Veterans’ Affairs.
For more information, including examples, please refer to Treasury’s fact sheet: Stimulus payments to households to support growth
Assistance for severely affected regions
The federal government has set aside an initial $1 billion allocation 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.
The $1 billion will be available for distribution through existing or newly established mechanisms as soon as practicable.
The Australian Tax Office (ATO) will also provide administrative relief for certain tax obligations (similar to relief provided following the bushfires) for taxpayers affected by the Coronavirus outbreak, on a case by case basis.
The ATO will look at ways to enhance its presence in significantly affected regions to make it easier for people to apply for relief.
For more information, including examples, please refer to Treasury’s fact sheet: Assistance for severely affected regions
The coming months will be challenging for all of us and we wish our clients, referral partners and community the best of health. If you have any questions or need any assistance with any of the above, please do not hesitate to contact your Altitude Adviser.