The Australian Government yesterday announced a $17.6 billion economic response to address the Coronavirus outbreak. Although the potential economic implications of COVID-19 remain considerably uncertain, the package seeks to mitigate the economic shock, ‘likely to be significant’, as the virus continues to move through the Australian community. Alongside the existing $2.4 billion health response plan for the prevention and treatment of the virus, the fiscal response will provide additional household income and business support in an attempt to maintain and support confidence, employment and business continuity.
The stimulus will help drive business investment, provide cash flow assistance for businesses and one-off payments for households, and dedicate additional resources for severely affected regions. The Government will introduce a package of Bills into parliament this month to give effect to these measures, with $11 billion of the $17.6 billion package to be paid by the end of June – keep on reading to see how these may benefit you.
How might this benefit me?
- Support for business investment
As of yesterday, the Government increased the instant asset write-off threshold to $150,000 from $30,000, and expanded access to include businesses with aggregated annual turnover of less than $500 million, until 30 June 2020.
Further, through to 30 June 2021, businesses with a turnover of less than $500 million may deduct 50% of the cost of an eligible asset on installation. Existing depreciation rules apply to the balance of the asset’s cost.
- Cash flow assistance for businesses
Up to $25,000 will be provided tax-free for cash flow support to small and medium-sized businesses with turnover under $50 million that employ staff between January 1 and June 30 2020. The Boosting Cash Flow for Employers measure, which will benefit nearly 700,000 businesses, promises a minimum payment of $2,000 for eligible businesses to help pay wages, invest, hire extra staff or prepare for the downturn.
Eligible small businesses can apply for a wage subsidy of 50% of their apprentice’s or trainee’s wages, capped at $7,000 each quarter, for up to 9 months from 1 January 2020 to 30 September 2020. The measure encourages small businesses to retain their apprentices and trainees, and where they are unable to do so, the subsidy will be available to a new employer.
- Stimulus payments to households to support growth
From 31 March 2021, the Government will begin to provide one-off tax-free payments of $750 to approximately 6.5 million lower income Australians to support confidence and domestic demand. Around half of those that will benefit are pensioners, along with social security, veteran and other income support recipients and eligible concession card holders.
- Assistance for severely affected regions
Finally, the government will provide $1 billion to support severely affected regions and communities, including those reliant on industries such as tourism, agriculture and education. This will include assistance to help businesses identify alternative export markets or supply chains, the waiver of fees and charges for tourism businesses that operate in the Great Barrier Reef Marine Park and entry fees for Commonwealth National Parks, as well as targeted measures to further promote domestic tourism.
The Australian Tax Office (ATO) is also providing administrative relief for some tax obligations for people affected by the Coronavirus, on a case-by-case basis. A temporary ATO shop front in Cairns will be set up in the next few weeks with dedicated staff specialising in assisting small business. It will also consider ways to strengthen its presence in other significantly affected regions, including potential further temporary shop fronts and face-to-face options.
Will there be further stimulus?
Prime Minister Scott Morrison left open the possibility that the package could be expanded in the May budget if necessary. Indeed, during the last financial crisis, the Rudd Government announced a $10 billion emergency stimulus package in August 2008, followed by $42 billion in February 2009.
Want to know more?
Contact our team at MSI Taylor, we would be happy discuss your eligibility and how the economic response may directly assist your business and operations.