All the Details on the $17.6b Stimulus Package to Stave Off Recession

 In Industry Information
Last Thursday, the Prime Minister announced the details of a $17.6b stimulus package to support businesses to weather disruption caused by COVID-19. The measures are worth approximately 1.2% of GDP and include measures to fast-track investment, cash payments for small and medium businesses to save jobs and subsidies to help keep apprentices employed.
The Treasurer, Josh Frydenberg said the vast majority of the stimulus will be spent by the end of June and will inject $22b into the domestic economy. The package will not extend beyond 30 June 2021 in the hopes the budget will bounce back.

SUPPORT FOR BUSINESS INVESTMENT

Increasing the instant asset write-off

  • Threshold increased from $30,000 to $150,000
  • Applies to businesses with aggregated turnover of less than $500 million
  • Applies to 30 June 2020
  • The $150,000 threshold applies on a per asset basis so eligible businesses can immediately write-off multiple assets
  • Applies for new or second-hand assets first used or installed ready for use by 30 June 2020.

Investment incentive

  • 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 · Applies to businesses with aggregated turnover below $500 million
  • Eligible assets are 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 (NOTE: This measure does not apply to second-hand Division 40 assets or capital works subject to Division 43)

Cashflow assistance for businesses with employees

  • Will provide a tax-free payment up to $25,000, with a minimum payment of $2,000 for eligible businesses · Eligible businesses are those SME’s with aggregated annual turnover under $50 million (generally the prior year turnover)
    • The payment will be delivered by the ATO as a credit in the activity statement from 28 April 2020 o Eligible businesses that withhold tax on their employees’ salary and wages will receive a payment equal to 50 per cent of the amount withheld, up to a maximum payment of $25,000
    • Eligible businesses that pay salary and wages will receive a minimum payment of $2,000 even where they are not required to withhold.
    • Quarterly lodgers will be eligible to receive the payment for the quarters ending March 2020 and June 2020
    • Monthly lodgers will be eligible to receive the payment for the March 2020, April 2020, May 2020 and June 2020 lodgements

Supporting apprentices and trainees

  • Eligible employers can apply for 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( and this subsidy will be available to a new employer where the business is unable to retain an apprentice)
  • Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee (i.e. $7,000 per quarter)
  • Eligible small businesses are those employing fewer 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)
  • Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network provider.

Stimulus payments to households

  • The Government will provide a one-off $750 payment (with one payment per recipient)
  • The payment will be tax-exempt and will not count as income or Social Security, Farm Household Allowance and Veteran Payments
  • Eligible recipients are those residing in Australia and be receiving a payment specified by the Government (such as the Age Pension, Carer Payment, Newstart Allowance, etc) or hold a concession card on 12 March 2020
  • The one-off payment will be paid automatically from 31 March 2020 by Services Australia or Veterans’ Affairs.

ATO’s assistance options

In light of the Government’s stimulus package, the ATO will implement a series of administrative measures to assist Australians experiencing financial difficulty as a result of the Coronavirus. It will be up to businesses and individuals impacted by the Coronavirus to contact the ATO for assistance. There are a number of options available to assist impacted businesses including:
  • Deferring by up to 4 months the payment date of amounts due through the business activity statement (including PAYG instalments), income tax assessments, FBT assessments and excise
  • Allow business on a quarterly reporting cycle to opt into monthly GST reporting in order to get quicker access to GST refunds that they me be entitled to
  • Allowing businesses to vary PAYG instalment amounts to zero for the April 2020 quarter. Businesses that vary PAYG instalments to zero can also claim a refund of any instalments made for the September 2019 and December 2019 quarters.
  • Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities.
  • Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low interest payment plans.
If you would like more details on any of the above, please reach out to your Wilson Accounting contact to find out what these measures mean for you.
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