On 12 March 2020, the Federal Government announced a $17.6 billion economic plan to keep Australians in jobs, keep businesses in business and support households and the Australian economy as the world deals with the significant challenges posed by the spread of the coronavirus. The proposed changes will be introduced into Parliament in the final sitting week in March 2020 for urgent consideration and passage.
The Key Measures include:
- Supporting business investment
- Providing cash flow assistance to help a small and medium-sized business to stay in business and keep their employees in jobs
- Targeted support for the most severely affected sectors, regions and communities
- Household stimulus payments that will benefit the wider economy
Delivering support for business investment
In order to support businesses, it is proposed to increase the instant asset write-off the threshold from $30,000 to $150,000 and expand access to include businesses with an aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.
Another suggestion is a time-limited 15-month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating depreciation deductions. Businesses with a turnover of less than $500 million will be able to deduct an additional 50% of the asset cost in the year of purchase.
Cash flow assistance for businesses
Good news for small and medium-sized businesses, as they will receive payments for up to $25,000 with a minimum payment of $2,000 for eligible small and medium-sized businesses. The payment will provide cash flow support to businesses with a turnover of less than $50 million that employ staff, between 1 January 2020 and 30 June 2020. The payment will be tax-free. Businesses will receive payments of 50% of their Business Activity Statements or Instalment Activity Statement from 28 April with refunds to then be paid within 14 days.
However, the Boosting Cash Flow will be applied for a limited number of activity statement lodgements. The ATO will deliver the payment as a credit to the business upon the lodgement of their activity statements. When the business is in a refund position, the ATO will deliver the refund within 14 days.
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 lodgement months of March 2020, April 2020, May 2020 and June 2020. To provide similar treatment to quarterly lodgers, the payment will be calculated at three times the rate (150%) in the March 2020 activity statement. The minimum payment will be applied to the business’ first lodgement.
Small businesses can apply for a wage subsidy of 50% of an apprentice’s or trainee’s wage for up to 9 months from 1 January 2020 to 30 September 2020. Where small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.
Stimulus payments to households to support growth
The Federal Government announced a tax-free stimulus payment of $750 to pensioners, social security, veteran and other income support recipients and eligible concession cardholders. Around half of those that will benefit are pensioners. The payment will be tax-free and will not count as income for Social Security, Farm Household Allowance and Veteran payments. There will be one payment per eligible recipient. If a person qualifies for the one-off payment in multiple ways, they will only receive one payment.
Payments will be from 31 March 2020 on a progressive basis, with over 90% of payments expected to be made by mid-April.
Assistance for severely affected regions
The Government is committed to spending $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. This will include the waiver of fees and charges for tourism businesses that operate in the Great Barrier Reef Marine Park and Commonwealth National Parks. It will also include additional assistance to help businesses identify alternative export markets or supply chains. Targeted measures will also be developed to further promote domestic tourism. Further plans and measures to support recovery will be designed and delivered in partnership with the affected industries and communities.
Moreover, for the industries hit by the coronavirus, the Government is also offering administrative relief for certain tax obligations, including deferring tax payments up to four months. The ATO will set up a temporary shopfront in Cairns within the next few weeks with dedicated staff specialising in assisting small businesses. In addition, the ATO will consider ways to enhance its presence in other significantly affected regions to make it easier for people to apply for relief, including considering further temporary shop fronts and face-to-face options.
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