The Coronavirus Stimulus Package.
The Government’s decisive action to introduce a stimulus package to combat the economic effects of the coronavirus is important for our local buisnesses to understand.
The government’s $17.6bn stimulus package will directly benefit welfare recipients, small and medium businesses and tourism and other virus-hit businesses to help stave off a coronavirus recession.
The Government’s economic response targets four key areas which we have summarised for you below (including links to the treasury fact sheets for each area):
- Cashflow assistance for employers
- Delivering support for business investment
- Stimulus payments to households to support growth
- Assistance for severely affected regions
Cashflow Assistance for Employers
Access up to $25,000 in cash benefits that will be offset against your PAYGW obligations from your March and June quarterly BAS payments (or March, April, May, June 2020 BAS’ if you lodge monthly).
Eligible businesses that withhold tax to the ATO on their employees’ salary and wages will receive a payment equal to 50 percent of the amount withheld, up to a maximum payment of $25,000.
Effectively, in order to receive the full $25,000 benefit, you will have to withhold at least $50,000 of PAYGW (not gross earnings) in the March and June 2020 quarterly BAS (or equivalent monthly BAS’).
Enhancing the Instant Asset Write Off
Lifting the threshold to $150,000 (from $30,000) and expanding access to businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.
The threshold applies on per asset basis, so eligible businesses can immediately write-off multiple assets.
This new threshold ONLY applies from today until 30 June 2020, for new or second-hand assets first used or installed ready for use in this timeframe.
Stimulus Payments to Households to Support Growth
One-off payments of $750 will be paid to around 6.5 million lower-income Australians, including pensioners, other social security and veteran income support recipients and eligible concession card holders. This is to help them through this uncertain time and support economic activity.
To be eligible, you must be residing in Australia and be receiving certain benefit payments or hold one certain concession cards on 12 March 2020. Full details in the below link.
Assistance for Severely Affected Regions
$1bn to be spent via initiatives such as the waiver of the Environmental Management Charge for tourism businesses that operate in the Great Barrier Reef Marine Park and the waiver of entry fees for 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.
The Australian Tax Office (ATO) will provide administrative relief for certain tax obligations (similar to relief provided following the bushfires) for taxpayers affected by the Coronavirus outbreak, on a case-by-case basis.
The ATO will 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
The federal government is again discussing ways it can “beef up” the original coronavirus stimulus package, with a second round of spending, so we will keep you posted.
Finally, please know that no matter what, we are here to support you. Dramatic events prompt us to look critically at our situation and take care of our affairs which we may have neglected. Your industry, market, regulatory environment and other factors will influence what you need to do. Change in demand for your products, unpredictable supply chains, altered working conditions and reduced access to debt may impact you. We are seeing businesses that are dramatically affected and those which are unaffected. Some businesses are finding opportunities and will be strengthened through these events.
Please contact us if you would like to discuss these government incentives, or if you would like help to identify the risks and opportunities, and make a plan to strengthen your business.