This week we have been receiving many calls from clients asking about the newly announced $17.6 billion Government stimulus package handed down from the Morrison Government.
The stimulus package is aimed at businesses and those on welfare and pensioners in a bid to stimulate the economy and keep Australians in jobs. The main components of the stimulus package include a cash boost for small to medium businesses, an increase and extension on the instant asset write-off threshold and tax-free payments to eligible Australians on welfare on pension payments.
Let’s look at each sector in more detail.
The $17.6 Billion Government Stimulus Package Breakdown
Tax-Free Payments up to $25,000
Cost: $6.7 billion
Who is the payment for: Businesses with turnover of less than $50 million that employ staff. These businesses will receive tax-free cash payments up to value of $25,000. Payments are based on 50% of business PAYG holdings from employees salaries and wages up to a maximum of $25,000. The aim is to incentivise business to keep employees on staff during this turbulent time.
How it will be paid: The payments will be allocated as a credit in business activity statements from April 2020. For those who lodge their BAS on a quarterly basis, payments will be allocated for March and June 2020 quarters. Those who lodge monthly will receive payments from March 2020 – June 2020. March will be paid at 150% to account for the entire March quarter.
Instant Asset Write-off & Investment Incentive
Cost: $700 million + $3.2 billion
Who is the payment for: Effective as of 12th March 2020, the instant asset write-off will increase from $30,000 to $150,000. The eligibility has also been lifted from those businesses with an aggregated turnover of less than $50 million to those less than $150 million. The extension is in place until 30th June 2020.
The aim is to encourage business investment in uncertain times to stimulate the economy in the hope businesses will buy more substantial assets. Additionally, businesses with under $500 million turnover can deduct an extra 50% of the asset purchase price that year in a newly introduced time-limited 15-month investment incentive, valid until June 2021.
Apprentice & Trainee Wage Subsidy
Cost: $1.3 billion
Who is the payment for: Eligible employers with less than 20 full-time employees. These businesses can apply for up to 50% government-funded wage subsidy to keep their trainees and apprentices on staff. The time period includes those employed between 1st January 2020 to 30 September 2020 up to a total of $21,000 per trainee/apprentice. Businesses can apply for the subsidy from early April 2020.
Cost: $1 billion
Who is the payment for: Those communities that have been hit hard by the virus. Those reliant on tourism, agriculture and education will benefit from an assistance fund of $1 billion. Activities may include waivers of fees and charges to National Parks, assistance to identify additional export markets and supply chains and targeted efforts to boost domestic tourism.
The ATO has also announced it will approach taxpayer’s affairs in a more flexible way over the coming months. This will include deferral of BAS payments, PAYG payments, income tax assessments and FBT payments.
$750 Tax-Free Payment
Cost: $4.8 billion
Who is the payment for: Approximately 6.5 million Australians will receive a $750 cash payment. This includes those who receive income support such as the Family Tax Benefit, Newstart, social security and the pension. Payments will be made by the middle of April in an attempt to boost June quarter spending.
If you would like to discuss how the stimulus package or are concerned about how the current events will affect your business, please give our team a call.