The Government has announced a $17.6 billion economic plan to keep Australians in jobs, keep businesses in business and support households and the economy as the world deals with the significant challenges posed by the spread of the Coronavirus.
But what does this mean for you? We have summarised below and included some FAQ down below.
Delivering support for business investment
Increase to the instant asset write off to $150,000 The instant asset write-off threshold will be raised from $30,000 to $150,000 until 30 June, 2020, and access expanded to businesses with an annual turnover of $500 million. Relevant purchases made between now and June 30, 2020 (eg a new truck or tractor) can be written off immediately.
Accelerated Depreciation There will also be a 50 per cent accelerated depreciation deduction over and above what businesses can already deduct in the first year and is available for 15 months to June 30, 2021 as an investment incentive.
Cash flow assistance for businesses
50% PAYG reduction - $2,000 up to $25,000
A payment of up to $25,000 (with a minimum payment of $2000) will be given to businesses that currently employ people (1 January, 2020 – 30 June, 2020) and have a turnover of up to $50 million. Businesses will receive a reduction of 50 per cent of the PAYG Withholding reported on their BAS or IAS from 28 April.
At this stage, there will be no direct action required by our clients who will be eligible to access this measure - it will be dealt with automatically upon lodgement of activity statements. Where the application of the measure places the activity statement account in credit, the ATO will trigger a refund within 14 days.
Apprentice/Trainee 50% Wage Subsidy
A 50 per cent wage subsidy for apprentices or trainee wages for up to nine 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. If the business employs less than 20 people $7000 each quarter in wage subsidies may be available.
Registration will be available from early April. If this applies to you please reach out for assistance.
Stimulus payments to households to support growth 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.
Frequently Asked Questions
I am a sole trader but don't employ anyone, how do I benefit? You will have access to the instant asset write off and accelerated depreciation. Unfortunately, there is no benefit under the PAYG 50% reduction. The focus of this stimulus package is keeping Australian's employed, there may be opportunity to restructure and then pay wages but until the legislation has been finalised this would need to be carefully considered.
Does the 50% PAYG reduction apply to directors and spouse wages? It is unclear without the relevant legislation to advise. The announcement at this stage hasn't notified any exclusions, however we are following closely to see how to best manage this situation.
Can I increase my PAYG tax to take advantage of the full $25,000 No, it is illegal to manually adjust tax withheld and with the introduction of single touch payroll this information is reported to the ATO.
I want to buy a new vehicle do I get to access the $150,000 instant asset write off? Contact us to discuss. Special rules may apply including the Luxury Car Limit and whether you use the vehicle privately.
When will legislation be passed? Legislation will be introduced into Parliament later this month to give effect to these measures and provide more insight to any exclusions.
Will there be further stimulus packages? This is difficult to say and likely to depend on how effective this roll out is. The Rudd government in response to the global financial crisis (GFC) rolled out an initial $10 billion, and a further $42 billion three months later. Frequently Asked Questions
Need further advice? If you want further insights into the impact of the Coronavirus Stimulus Package on your business, contact our office.