Updated: Mar 23, 2020
Australian Government Stimulus
In response to the COVID-19 pandemic, the federal government has announced a total of $66 billion in its stimulus package to support businesses and boost the economy.
The stimulus package will be introduced to Parliament at the next sitting (week commencing Monday, 23 March).
We expect the stimulus legislation will be passed, but implementation as announced is not certain. There may be additional detail not currently provided in the announcement for eligibility.
The government has stated that they “will move quickly” with implementation, with expected dates for the support to be available in early April, if all goes ahead.
The measures that are being proposed include:
Any business with an annual turnover of less than $500 million will be entitled to:
Instant Asset Write-off– will be increased from $30,000 to $150,000 from 12 March 2020 until June 2020.
Asset investments – a 50% instant deduction for the costs eligible (new) assets upon installation with existing depreciation rules applying to the balance of the asset cost until 30 June 2021.
Any business with an annual turnover of less than $50 million, that employs staff will be entitled to:
Tax-free payment: a minimum of $20,000, up to a maximum $100,000, tax-free payment that is equal to 100% of PAYG withheld from salaries and wages over six months, with payments now split to a maximum of $50,000 to 30 June 2020 and $50,000 to 31 October 2020. For worked examples see the treasury release at: https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Cash_flow_assistance_for_businesses_0.pdf
A business that employs apprentices or trainees will be entitled to (they must have less than 20 full-time employees):
Tax-free payment: a wage subsidy of 50% (up to a maximum of $21,000 per trainee/apprentice) of the apprentice or trainee’s wage for up to nine months from 1 January 2020 to 30 September 2020.
Government guaranteed loans:
A $40billion loan facility administered by the banks is to be setup to provide loans of up to $250,000, which are interest free for the first 6 months. Eligibility and borrowing criteria will apply so it is hard to provide more information on who will benefit at this stage.
Early access to superannuation:
For those who experience unemployment, in receipt of unemployment benefits, made redundant, or a sole trader with a significant reduction in turnover (<20%) there is the ability to access $10,000 in superannuation tax free to 30 June 2020 and a further $10,000 from 1 July 2020 (total $20,000).
Reduction in minimum pension amounts:
The Government is temporarily reducing superannuation minimum drawdown (pension) requirements by 50% for the 2019-20 and 2020-21 income years.
We are endeavouring to reach all our clients prior to the lodgement of March 2020 BAS and IAS returns.
We would envisage many people and businesses will be in a position to vary down PAYG instalments due to decreased economic activity (businesses) or a significant reduction in Employee Share Scheme (ESS) discounts on share vests, and investment earnings (individuals).
Most of our business clients will also be eligible for the PAYG Withholding offset which will be delivered through the March to June activity statements. We will contact each business within the week to discuss.
Lower income Australians will be entitled to:
One-off payment: a one-off tax-free payment of $750 to social security, veteran and other income support recipients and eligible concession cardholders.
Regions affected by COVID-19 will be entitled to:
Initial $1 billion allocation: in 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.
New South Wales Government Stimulus
The NSW State Government has also announced measures to combat the economic impact of the pandemic namely:
$700 million extra funding for NSW Health. This will assist in doubling ICU capacity, preparing for additional COVID-19 testing, purchasing additional ventilators and medical equipment, establishing acute respiratory clinics and bringing forward elective surgeries to private hospitals.
Business support and jobs
$450 million for the waiver of payroll tax for businesses with payrolls of up to $10 million for three months (the rest of 2019-20). This means these businesses will save a quarter of their annual payroll tax bill in 2019-20
$56 million to bring forward the next round of payroll tax cuts by raising the threshold limit to $1 million in 2020-21
$80 million to waive a range of fees and charges for small businesses including bars, cafes, restaurants and tradies
$250 million to employ additional cleaners of public infrastructure such as transport assets, schools and other public buildings
more than $250 million to bring forward maintenance on public assets including social housing and crown land fencing
$500 million to bring forward capital works and maintenance.
The waiver of payroll tax for businesses with payroll up to $10 million will be available to the majority of clients. Again we will contact clients who self-lodge within the current week, or for payroll clients we will apply these changes and notify you accordingly.
Whilst the short term economic impact will be not insignificant, like all things there will be an upside to the short term downside. But above all stay healthy!