The $17.6 bn Stimulus Package: What You Need to Know
by Knowledge Shop Editor, on 13/03/20 10:55
The Government has announced a $17.6 billion stimulus package to support the economy as we brace for the impact of the coronavirus.
The yet to be legislated four part package focuses on business investment, sustaining employers, and driving cash into the economy.
Knowledge Shop Members - download the Stimulus Package update for your clients (and your website) from the member only website.
Parliament sits on 23 March. The Prime Minister has stated, "we have no plans to change the parliamentary sitting schedule."
Here’s what we know so far:
1. Business investment
- Increase and extension of the instant asset write-off: From 12 March 2020, the instant asset write-off threshold will increase from $30,000 to $150,000, and access to the write-off will be expanded to include businesses with aggregated annual turnover of less than $500 million until 30 June 2020.
- Accelerated depreciation deductions: In addition to the increased instant asset write-off rules, accelerated depreciation deductions will apply from 12 March 2020 until 30 June 2021. This will bring forward deductions that would otherwise be claimed in later years. Businesses with a turnover of less than $500 million will be able to deduct 50% of the cost of the asset in the year of purchase. They can also claim a further deduction in that year by applying the normal depreciation rules to the balance of the asset’s cost.This incentive will only be available in relation to new assets that are acquired after 12 March 2020 and are first used or installed ready for use by 30 June 2021. It will not apply to second-hand assets or buildings and other capital works expenditure.
2. Cash flow assistance for small and medium sized business
- Tax-free payments up to $25,000 for employers: Tax-free cash flow support between $2,000 and $25,000 will be available to eligible businesses with a turnover of less than $50 million that employ staff between 1 January 2020 and 30 June 2020. This is not a direct cash payment but a credit equal to 50% of the PAYG amounts withheld from salary and wages paid to employees. The employer will need to lodge an activity statement to trigger the entitlement. If the credit puts the business in a refund position the excess amount will be refunded by the ATO within 14 days. If a business pays salary and wages to employees but is not required to withhold any tax then a minimum payment of $2,000 will still be made.
- Wage subsidy of up to 50% of an apprentice or trainee wage: 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. The payments are accessible to businesses with less than 20 employees. Employers will receive up to $21,000 per apprentice ($7,000 per quarter). It is expected that employers will be able to register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020.
3. Targeted support for severely affected sectors, regions and communities
- $1 billion has been committed to support sectors, regions and communities disproportionately affected by the economic impact of the coronavirus. Tourism, agriculture and education are specifically mentioned.
4. Household stimulus payments to drive cash into the economy
- Tax-free $750 payment to social welfare recipients: A one-off, $750 cash 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, 90% are expected to be made by mid-April.
While not part of the stimulus package, the Prime Minister has stated that casual employees required to self-isolate or who contract the coronavirus will be eligible for a sickness payment (jobseeker payment) through Newstart. The normal waiting period for this payment will be waived.