On 12 March 2020 the Federal Government announced a $17.6 billion economic stimulus package to support the Australian economy and households while dealing with the significant challenges posed by the spread of the coronavirus, COVID-19. The Australian Taxation Office has also announced help for affected businesses as has the NSW Government this morning.
The Federal Government announced package has four parts:
1. Support for business investment:
- increase the instant asset, tax deductible write off threshold from $30,000 to $150,000 for eligible assets purchased from 12 March 2020 until 30 June 2020 by businesses with aggregated annual turnover of less than $500 million. Eligible assets include both new and second-hand assets.
- provide an investment incentive for eligible assets purchased from 12 March 2020 to 30 June 2021 by accelerating depreciation tax deductions on eligible asset purchases. Businesses with a turnover of less than $500 million will be able to deduct 50 per cent of the cost of the asset in the year that it is purchased providing it is installed ready for use by 30 June 2021 and the usual depreciation provisions will apply to the other 50 per cent. Eligible assets must be new and do not include buildings or building works or improvements.
2. Cash flow assistance for businesses:
- businesses with a turnover of less than $50 million that employ staff between 1 January 2020 and 30 June 2020, will be able to receive a tax free payment from between $2,000 to $25,000. It will be received by businesses as credit in either their Business Activity Statements (BAS) or Instalment Activity Statement (IAS) lodged from 21 April 2020. The credit will be equal to 50 per cent of the PAYG withheld as shown in each BAS or IAS up to a maximum credit of $25,000. Even if employers do not have any PAYG withheld they can still receive $2,000.
- eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for up to 9 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 that apprentice.
3. Stimulus payments to households:
- a one-off $750 stimulus payment will be made to pensioners, social security, veteran and other income support recipients and eligible concession card holders.
4. Assistance for severely-affected regions:
- $1 billion to support those sectors, 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. More detail around this will be released in conjunction with affected industries and communities.
To implement the stimulus plan, a package of Bills will be introduced into Parliament in the final Autumn sitting week in March 2020 for Parliament’s urgent consideration and passage.
The Federal Government has also announced that further stimulus packages may be released.