Government is introducing a new stimulus package in midst of COVID-19 to prevent recession.

Proposed Stimulus Package – Here’s What We Know

COVID-19 Updates Government

Updated March 25th 2020

You’d have seen by now the governments proposed stimulus package, set to pump billions into the economy in an attempt to avoid a recession as businesses take a hit from the spread of COVID-19.

There are certainly positive opportunities for businesses to help them through this uncertain time, despite this we would still advise clients to wait until parliament passes the legislation before proceeding with a large capital purchase in anticipation of getting the accelerated depreciation rates.

If you missed it, here’s a breakdown;

Asset purchase write offs

  • Instant asset write off scheme – threshold increased from $30k to $150k. Turnover threshold for eligible businesses increased from $50m to $500m. The instant asset write-off scheme will operate from 12 March 2020 until 30 June 2020.
  • Faster depreciation – businesses with turnover less than $500m can claim a 50% first year deduction from 12 March 2020 until 30 June 2021 for new assets purchased. If a business is eligible to use the instant asset write off, they would use that in the first instance, otherwise they would use the accelerated depreciation rules if eligible.

Cash flow assistance for businesses

  • Businesses with turnovers up to $50 million and who have staff will be eligible for tax-free payments equal to 50 per cent of PAYG withheld from salaries and wages, with a minimum of $2,000 and a maximum of $25,000 over six months. Businesses that pay salary and wages but are not required to withhold tax will also receive $2,000. The ATO will deliver the payment as a credit to the business upon lodgement of their activity statements. Where this places the business in a refund position, the ATO will deliver the refund within 14 days.
  • Small business employers can apply for a wage subsidy of 50% of an apprentices or trainees wage for the period 1 January 2020 to 30 September 2020.
  • The Government is also offering administrative relief for certain tax obligations, including deferring tax payments up to four months. This is similar to relief provided following the bushfires for taxpayers affected by the coronavirus, on a case-by-case basis.

Individuals

  • One-off payment of $750 to social security, veteran and other income support recipients and eligible concession cardholders to support. Over 90% of payments will be made by mid-April 2020.

Support for regions and communities

  • Initial $1B allocation to support those regions and communities that have been disproportionately affected by the economic impacts of the coronavirus – including those heavily reliant on tourism, agriculture and education.  This will include the waiver of the Environmental Management Charge for tourism businesses that operate in the Great Barrier Reef Marine Park and the waiver of entry fees for Commonwealth National Parks. It will also include additional assistance to help businesses identify alternative export markets or supply chains.

It’s important to remember that these are yet to pass parliament and although Labor has announced they will support these measures, it’s best to wait until it’s signed sealed and delivered.

We will provide any updates as they happen and once approved, work to find ways to help your business maximise these opportunities and come through this turbulent period stronger.