The Australian Government has now put in place a series of measures to combat the economic impact we’re likely to see as a result of Coronavirus (COVID-19). It’s essentially a four-pronged approach totalling $17.6 billion to stimulate the economy we’re it’s needed most and protect jobs.
1. $2,000 - 25,000 payout for small to medium business
This is a grant payout to SMEs with employees (between 1 January and 30 June 2020) and a turnover of up to $50 million. It’s designed to help improve cashflow. For eligible businesses who pay income tax on behalf of employees, you’ll likely receive a payment equal to 50% of the tax paid on employee salaries (up to $25,000). These grants will be issued automatically based on Business Activity Statements (BAS) or PAYG Instalment Activity Statements from 28 April, so it’s a great time to get on top of your BAS and PAYG compliance.
2. Apprenticeship Wage Subsidy
This payout will also be equivalent to 50% of wages for apprentices in SMEs up to $21,000 per apprentice. And if it’s not possible to retain your apprentice the subsidy will be available to the new employer (even if it’s a large company).
3. Increase in Instant Asset Write-Off
The asset expenditure threshold has now been increased from $30,000 to $150,000 and is available to any business turning over less than $500 million (up from $50 million). This applies only until 30 June 2020 and will allow businesses to deduct 50% of an asset cost in the year it was purchased and apply the existing depreciation rules to the balance. This is a limited 15-month investment incentive that accelerates depreciation deductions and is designed to ensure ongoing investment and potentially move forward any planned spending by businesses.
4. One-Off Payments
Pensioners and Newstart recipients will be given a one-off payment of $750. This payment is most likely to be spent immediately and assist in boosting the overall economy.
In addition, the ATO will provide administrative relief on some tax obligations for those affected and this will be assessed on a case by case basis. A $1 billion fund has also been committed to support businesses who are most affected by Coronavirus such as travel, tourism and education.
On a smaller scale, we recommend that you look at contingency plans for your own business - addressing issues such as cash flow, operations and staffing. As always, Coast Accounting is available to talk through the tax implications of the Coronavirus Stimulus Package for your business and put in place strategies to maximise offsets and minimise impacts.
Please don’t hesitate to give Chris a call on 0413 328 419 with any questions you may have or to arrange an appointment.