Yesterday the Government announced a $17.6 billion stimulus package will be released including cash handouts, wage subsidies and tax incentives. Our Business and Tax Team have reviewed the stimulus package documents and aim to bring you some clarity on what this means for you.
With limited time available in which the package applies, it is essential to immediately work through strategies with your adviser to ensure the maximum benefit is received.
In addition to understanding what the stimulus package means to you and your business, engaging in a scenario planning process with your advisor will help guide your business’s survival plan.
- Stimulus Payment for Employers
- Small and medium size businesses that pay wages to staff and withhold tax.
- The business must have an annual turnover of less than $50 million.
- A cash payment between $2,000 and $25,000 is available.
- Employers who withhold $50,000 or more in PAYG Withholding are entitled to the full $25,000 cash payment.
- This amount reduces by 50 cents for every dollar less than $50,000 in PAYG Withholding.
- If you are an employer who pays wages under the reporting thresholds for PAYG Withholding, you are still eligible for a cash payment of $2,000.
- This cash payment will be paid on Business Activity Statements or Instalment Activity Statements (on your integrated client account).
- The payment is tax free income for the business.
- Stimulus Payments for Apprentices & Trainees
- Businesses employing fewer than 20 full-time employees, who also employ an apprentice or trainee.
- The apprentice or trainee must have been in training with the business as at 1 March 2020.
- A subsidy of 50% of the apprentice’s or trainee’s wages paid in the 9 months from 1 January 2020 to 30 September 2020 will be reimbursed to employers.
- This subsidy is capped at a maximum of $21,000 per eligible apprentice or trainee.
- Employers are required to pass an eligibility assessment by an AASN, and can then apply for the subsidy from April (date to be confirmed) until 31 December 2020.
- Supporting Business Investment
- Businesses with an annual turnover of less than $500 million.
- Instant Asset Write Off:
- The threshold for claiming an immediate write-off tax deduction for business assets acquired has been temporarily uplifted to $150,000 (previously $30,000).
- Applies to assets acquired up to 30th June 2020.
- There is no cap on the total value of assets written-off.
- Business Investment Stimulus
- Accelerate the depreciation on eligible new assets by firstly receiving an immediate 50% tax deduction on the purchase or installation of the asset, with existing depreciation rules to be applied to the remaining 50% of the asset value.
- Applies to assets acquired up to 30 June 2021 (15 months).
- Stimulus Payment for Low-Income Australians
- Income support recipients including pension, social security, veteran, carer, and disability support.
- Lodged a claim for one of the eligible payments or concession cards by 12 March 2020, and the claim is subsequently granted.
- A one-off payment of $750 will be paid automatically by Services Australia or the Department of Veterans’ Affairs.
- The payment is tax exempt.
- Payments will commence from 31 March 2020, with the expectation that 90% of payments will be made by mid-April.
- Additionally, there are several existing features to assist people who are unable to support themselves in the context of COVID-19. You are encouraged to investigate your individual circumstances further.
There is an additional measure released to support regions and communities most affected from COVID19. Further details are being released on this package and we will follow this up with you next week.
What are the next steps?
We encourage you to reach out to your adviser and develop an action plan immediately as it could assist in receiving some immediate cashflow. Elements to consider are your current position, eligibility on the various stimulus package measures and how the rules apply to you.
Contact your Morrows Adviser to work through opportunities and concerns.