As you’re likely aware, the Federal Government has announced a $17.6 billion Coronavirus stimulus package in an effort to prevent the economy sliding into a recession.
The main benefactors of the package are small to medium sized businesses, as the Government aims to support employers and save jobs.
At a high-level, the package has four parts:
- Supporting business investment;
- Providing cash flow assistance to help small and medium sized business to stay in business and keep their employees in jobs;
- Targeted support for the most severely affected sectors, regions and communities; and
- Household stimulus payments that will benefit the wider economy
Providing cash flow assistance to help small and medium sized business to stay in business and keep their employees in jobs
Aimed at boosting cashflow for employers and supporting apprentices and trainees, the package provides:
Up to a $25,000 payout for small-to-medium businesses with employees
- Payout will be issued automatically to eligible businesses based on business activity statements or instalment activity statements from 28 April 2020.
- Eligible businesses are those with turnover of up to $50 million, that employ staff between 1 January 2020 and 30 June 2020.
- A $2,000 minimum payment will be made to all eligible businesses with the maximum $25,000 accessible to companies that pay income tax on behalf of employees (relief of 50% of employees’ salary withholding, capped at $25,000).
With regard to supporting apprentices and trainees, the government will enable eligible small businesses to access subsidies and reimbursements:
- A wage subsidy of 50 per cent of the apprentice’s or trainee’s wage paid during the 9 months from 1 January 2020 to 30 September 2020
- A reimbursement of up to $7,000 per quarter (total of $21,000) per eligible apprentice or trainee.
- Eligible businesses are classified as those with less than 20 full-time employees who retain an apprentice or trainee (with the apprentice or trainee being in training with a small business as at 1 March 2020).
- Package available to businesses once an eligibility assessment by an Australian Apprenticeship Support Network provider has been completed.
Support for business investment
Designed to encourage business to continue with investments they had planned, the Government is:
- Increasing the instant asset write-off threshold from $30,000 to $150,000 on a per asset basis so eligible businesses can immediately write-off multiple asset purchases.
- Eligible businesses are those with an aggregated turnover of less than $500 million (increased from a $50 million turnover to support larger businesses).
- Available for businesses to access from now on new or second-hand assets first used or installed ready for use by 30 June 2020.
To incentivise additional investment by businesses, the package includes:
- A deduction of 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.
- Eligible businesses are those with aggregated turnover below $500 million.
- Is available for investment in new assets that can be depreciated under Division 40 of the ITAA97 (i.e. plant, equipment and specified intangible assets) acquired after today’s announcement and first used or installed by 30 June 2021.
- Exclusions apply to second-hand Division 40 assets or capital works subject to Division 43.
Targeted support for the most severely affected sectors, regions and communities
To support sectors and communities affected by the Coronavirus, such as tourism, agriculture and education, $1 billion has been allocated as initial assistance. This will take the form of ATO administrative relief on a case-by-case basis for certain tax obligations for taxpayers affected by the Coronavirus outbreak.
Stimulus payments to households
The Government will provide a one-off, tax-exempt $750 payment per person for eligible recipients, specifically aimed at 6.5 million lower-income Australians, including pensioners and social, security and veteran income support recipients.
- The one-off payment will be paid automatically from 31 March 2020 by Services Australia or Veterans’ Affairs.
- Eligible recipients are those residing in Australia who currently receive Government payments such as the Age Pension, Carer Payment and Newstart Allowance or hold a concession card on 12 March 2020.