Tax & Accounting Blog

Coronavirus: Govt announces $17.6bn stimulus package

Accounting, Blog, Tax March 13, 2020

Coronavirus: Govt announces $17.6bn stimulus package; cash payments for business; instant asset write-off increased to $150k; $750 for pensioners

The Government announced on Thursday 12th March 2020 a $17.6 billion economic stimulus package in response to the coronavirus (COVID-19). This temporary package, which is expected to provide direct support for up to 6.5 million individuals and 3.5 million business, includes 4 key parts:

1. Business investment initiatives – instant asset write-off extended and increased to $150k

The instant asset write-off threshold will be increased from $30,000 to $150,000 and expanded to include access for businesses with aggregated annual turnover of less than $500m (up from $50m) until 30 June 2020. For example, assets that may be able to be immediately written off would include a concrete tank for a builder, a tractor for a farming business, and a truck for a delivery business.

A time-limited 15-month investment incentive (through to 30 June 2021) will also be provided to support business investment by accelerating depreciation deductions. Businesses with a turnover of less than $500m will be able to deduct an additional 50% of the asset cost in the year of purchase.

DATE OF EFFECT: These measures start today [Thur 12.3.2020] and are expected to support over 3.5m businesses (over 99% of businesses) employing more than 9.7m employees.

2. Cash flow assistance payments for SMEs

Eligible small and medium-sized businesses (SMEs) will receive a Boost Cash Flow for Employers of up to $25,000 (with a minimum payment of $2,000). The payment will provide cash flow support to businesses with a turnover of less than $50m that employ staff, between 1 January 2020 and 30 June 2020. The payment will be tax free. This measure will benefit around 690,000 businesses employing around 7.8m people. Businesses will receive payments of 50% of their BAS or IAS from 28 April 2020 with refunds to then be paid within 14 days.

Small businesses will also receive a total of $1.3bn to support the jobs of 120,000 apprentices and trainees. Eligible employers can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage for up to 9 months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.

3. Household stimulus payment of $750 for pensioners

A one-off $750 stimulus payment will be made to pensioners, social security, veteran and other income support recipients and eligible concession card holders. Payments will be from 31 March 2020 on a progressive basis, with over 90% of payments expected to be made by mid-April. The payment will be tax free and not count as income for Social Security, Farm Household Allowance and Veteran payments. There will be 1 payment per eligible recipient. If a person qualifies for the one off payment in multiple ways, they will only receive 1 payment.

4. Support for impacted sectors, regions and communities

Support of $1bn will be provided for sectors, regions and communities that have been disproportionately impacted 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.

Tax admin relief – deferred tax payments for 4 months

Administrative relief will be provided for certain tax obligations, including deferring tax payments up to 4 months. This is similar to relief provided following the bushfires for taxpayers affected by the coronavirus, on a case-by-case basis.

The ATO will also set up a temporary shop front in Cairns within the next few weeks with dedicated staff specialising in assisting small business. 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.