The Morrison Government has announced a significant stimulus package with the focus on keeping Australians in jobs and assisting small to medium businesses in Australia during these uncertain times.
Per the Prime Minister’s release yesterday, the package has four components:
1. Supporting business investment;
2. Providing cash flow assistance to help small and medium sized businesses to stay in viable and keep their employees in jobs;
3. Targeted support for the most severely affected sectors, regions and communities; and
4. Household stimulus payments that will benefit the wider economy.
Cash flow assistance for businesses
Up to 700,000 small to medium businesses to receive between $2,000 – $25,000 to help pay wages or hire extra staff:
• This payment will be tax free; and
• Business to receive payments of 50% of their withholding on wages and salaries declared on their business activity statements, payable as a credit to their activity statement account from 28 April 2020.
The instant asset write-off will be extended to include businesses with an aggregated annual turnover of less than $500 million (up from $50m) for depreciable assets worth less than $150,000 (up from $30,000) from 12 March 2020 until 30 June 2020.
15 month investment incentive until 30 June 2021 for businesses with a turnover less than $500 million. This entitles these businesses to accelerate their depreication deductions by allowing them to immediately deduct 50% of the asset cost in the year of purchase (subject to the asset being installed and ready to use). Existing depreciation rules to apply to the balance of the asset’s cost.
Support for small businesses to apply for a wage subsidy of 50% for apprentices and trainees from 1 January 2020 to 30 September 2020.
Household stimulus payments
One-off $750 stimulus payment to pensioners, social security, veteran and other income support recipients and eligible concession card holders.
• Payment will be treated as tax free and not count against social security, farm household allowance or veteran payments.
• Payments to be made from 31 March 2020 on a progressive basis.
Assistance for severely affected regions of Australia
$1 billion to support those sectors, regions and communities that have been disproportionately affected by the economic impacts of the Coronavirus. Further plans and measures will be developed and delivered in partnership between the Government and affected industries and communities.
ATO Administrative Relief
The Government is also offering administrative relief for certain tax obligations, including the deferral of tax payments for up to four months. These relief measures will be similar to the bushfire relief and considered on a case-by-case basis.
The above measures are subject to the passage of legislation; Parliament is sitting next on 23-26 March 2020. Early news reports suggest that the Labor Party is receptive and likely to support the Coalition’s proposed stimulus package.
WMS welcomes this proactive approach and are ready to assist you with queries about how the stimulus package may affect your business.
DISCLAIMER: This article is intended to provide a general summary only and should not be relied on as a substitute for professional advice.
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