Economic stimulus package: key points for your business
The government has announced package of temporary measures worth $66.1 billion to support the Australian economy in the wake of the impact of the coronavirus. The measures mostly target small and medium-sized businesses, and come in four parts.
1. Supporting business investment
Instant asset write-off threshold increase to $150,000
For depreciable assets acquired from today until 30 June 2020, the instant asset write-off threshold will increase from $30,000 to $150,000. Further, it will be available for businesses with group-wide annual turnover below $500 million (up from $50 million). This allows a full deduction for the cost to acquire the asset (new or second-hand), rather than deducting over a number of years, where the asset’s cost is less than the threshold. The threshold is net of any GST credit. For example, a machine costing $165,000, including $15,000 of GST for which you are entitled to a GST credit, netting to $150,000 will not qualify – the net-of-GST-credit cost must be less than $150,000.
Accelerated depreciation deduction
For depreciable assets acquired from today until 30 June 2021, depreciation deductions will be accelerated for businesses with group-wide annual turnover below $500 million. An additional deduction will be allowed of 50% of the asset’s cost in the year of purchase (in addition to the normal amount of depreciation deduction). This is merely a bringing forward of deducting half the asset’s cost, resulting in the asset’s cost being deducted over a shorter period than normal. Presumably, this applies to assets that are not subject to the above instant asset write-off (ie, it applies to assets costing $150,000+ until 30 June 2020, and $1,000+ for 1 July 2020 to 30 June 2021).
2. Cashflow assistance for business
Boost to cashflow for employers
Employers registered with Australian taxation office for PAYG withholding as of 12 March 2020 with group-wide annual business turnover below $50 million will receive one or more payments totalling to between $20,000 (minimum) and $100,000 (maximum). It’s for businesses who employee staff between 1 January and 30 June 2020, and is tax free.
- The payment will be delivered by the ATO as an automatic credit in the activity statement system from 28 April 2020 upon employers lodging eligible upcoming activity statements.
- Eligible employers that withhold tax to the ATO on their employees’ salary and wages will receive a payment equal to 100 per cent of the amount withheld, up to a maximum payment of $50,000.
- Eligible employers that pay salary and wages will receive a minimum payment of $10,000, even if they are not required to withhold tax.
- The payments will only be available to active eligible employers established prior to 12 March 2020. However, charities which are registered with the Australian Charities and Not-for-profits Commission will be eligible regardless of when they were registered, subject to meeting other eligibility requirements. This recognises that new charities may be established in response to the Coronavirus pandemic.
Eligibility – Additional payment
To qualify for the additional payment, the entity must continue to be active.
For monthly activity statement lodgers, the additional payments will be delivered as an automatic credit in the activity statement system.
This will be equal to a quarter of their total initial Boosting Cash Flow for Employers payment following the lodgment of their June 2020, July 2020, August 2020 and September 2020 activity statements (up to a total of $50,000).
For quarterly activity statement lodgers the additional payments will be delivered as an automatic credit in the activity statement system. This will be equal to half of their total initial Boosting Cash Flow for Employers payment following the lodgment of their June 2020 and September 2020 activity statements (up to a total of $50,000).
Apprentices and trainees
Eligible employers employing fewer than 20 employees can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage for up to nine months from 1 January to 30 September 2020. Limited to $21,000 ($7,000 per quarter).