In response to the coronavirus pandemic, the federal government has announced a $17.6 billion economic stimulus package. The package has been put forward to ensure as much money as possible is put back in to the economy as quickly as possible, with $11 billion of the package to be rolled out by June 2020.
Boosting Cash Flow For Employers
PAYG withheld 50% reduction
Eligible businesses will receive a payment equal to 50 percent of taxes withheld from employees’ salary and wages up to $25,000.
The incoming payment will be shown as a credit on your activity statement from 28 April 2020. If this places your business in the position to receive a refund, the ATO will deliver the refund within 14 days.
If you would like to find out more information regarding the cash flow boost, such as if you lodge your activity statements monthly and what makes your business eligible then please click here to download the fact sheet for businesses.
Apprentices & Trainees
Small business eligible employers are able to apply for a 50% wage subsidy of their apprentices or trainee's (in training as at 1st March 2020) wage for up to nine months from 1st January 2020 to 30th September 2020 (up to $21,000 per apprentice or trainee). Employers are able to register for the subsidy towards the start of April 2020 with final claims for payment due by the 31st December 2020.
Anyone impacted by COVID-19 can contact the ATO to request assistance on its Emergency Support info-line 1800 806 218.
Business Investment: Tax Incentives
The government is allocating $3.9 billion in incentives to encourage businesses to spend.
Increased instant asset write-off
This includes increasing the instant asset write-off, by lifting the threshold to $150,000 (from $30,000) – and making more businesses eligible to use it. The increase will only be available from 12 March to 30 June 2020 for new or second-hand assets first used or installed ready for use by 30 June 2020.
Investment incentive
It will also introduce a time-limited 15-month incentive (to finish on 30 June 2021) to invest, by accelerating depreciation deductions. Businesses with aggregated annual turnover of less than $500 million per annum will be able to deduct 50 per cent of the cost of an eligible asset upon installation, provided it was purchased after 12 March 2020 and first used or installed by 30 June 2021. There is no value threshold on the asset for this 50% investment incentive.
If you would like to know more information regarding what makes your business eligible for the above incentive. Please click here to download the business investment fact sheet.
Supporting Growth In Households
Around 6.5 million lower-income Australians will receive a one-off $750 payment aimed at boosting domestic demand in the economy, costing the budget $4.76 billion.
The payment will be made to all social security, veteran and other income support recipients and eligible concession cardholders. This includes those on Newstart, those who have commonwealth seniors health cards, and families receiving family tax benefits. Around half of those that will benefit are pensioners. You will only receive one payment of $750, regardless of if you receive more than one social security payment.
If you would like to know more information, like if you are eligible, the payment date, etc. please click here to download the household fact sheet.
ATO Assistance
The Australian Taxation Office (ATO) announced a series of administrative concessions to assist businesses impacted by COVID-19, which include:
deferring by up to 4 months the payment of tax amounts due through the BAS (including PAYG instalments), income tax assessments, FBT assessments and excise by affected businesses;
allowing affected businesses on a quarterly reporting cycle to opt into monthly GST reporting to get quicker access to any GST refunds;
allowing affected businesses to vary PAYG instalment amounts to zero for the March 2020 quarter. Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters;
remitting any interest and penalties, incurred by affected businesses on or after 23 January 2020, that have been applied to tax liabilities; and
allowing affected businesses to enter into low-interest payment plans for their existing and ongoing tax liabilities.
The ATO assistance is not automatic, taxpayers must first contact the ATO to request assistance, and if eligible, the ATO will ‘tailor the assistance package for the relevant taxpayer.
Our Comment
The legislation still needs to be passed for these measures. Parliament resumes on 23rd March 2020 and it is expected that all measures discussed above will be passed urgently. Once legislation has been passed we will no more regarding the finer details on each measure.
If you wish to discuss the stimulus package further, please don't hesitate to book a meeting with one of our accountants by clicking here.
The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.