March 17 Update: COVID-19 government economic stimulus package

Last week the Federal Government announced a stimulus package in response to the economic effects of Covid-19 (Coronavirus). 

The aim of the package is to help businesses stay afloat and keep people employed. This means the measures focus on businesses that employ people. The government have also indicated that they are intending to announce further measures soon.

We don’t know many details yet as the legislation hasn’t been introduced to parliament which we expect will occur next week. Watch this space for updates.

Some key points of the package that we believe may be of particular interest to our business clients are listed below:

Increasing the instant asset write off

• Will increase the threshold for the instant write off from $30k to $150k
• Available to businesses with an aggregated turnover of less than $500m
• Applies from 12 March 2020 until 30 June 2020
• Applies to new or second-hand assets first used or ready to use during this period

Accelerated depreciation for other assets

• Applies to assets acquired from 12 March 2020 and first used or installed by 30 June 2021
• Businesses with turnover less than $500m will be able to deduct 50% in the first years
• No limit on the cost of the asset (unlike the $150k instant write off)
• Existing depreciation rules will apply to the balance
• Excludes second-hand assets and capital works

Easing cash flow for employers

• Tax-free payments of a maximum of $25k
• Available to businesses with an aggregated turnover of less than $50m who have employees
• Turnover will be determined by the ATO and based on the prior year
• Delivered as a credit in your activity statement from 28 April 2020 upon lodgement of March BAS
• Eligible businesses will receive a payment equal to 50% of withholding tax paid to the ATO up to $25k
• Will apply to the period 1 January 2020 to 30 June 2020
• Eligible businesses will receive a minimum $2k payment even if they aren’t required to withhold employee’s tax

Subsidies for businesses employing apprentices and trainees

• Businesses may be eligible to receive up to 50% of wages paid to apprentices and trainees (for the period 1 January 2020 to 30 September 2020)
• Maximum payment of $21k per apprentice or trainee ($7k per quarter)
• Small business employing fewer than 20 full-time employees
• Larger businesses can also access the subsidy if they employ an out-of-trade trainee/apprentice that had been training with a small business as at 1 March 2020
• To access the subsidy you need to register and be assessed by an Australian Apprenticeship Support Network (AASN) provider which you can from the beginning of April here https://www.australianapprenticeships.gov.au/

Tasmanian Government Measures

The Premier has announced today that the State Government will provide some assistance to some effected industries. Details are currently slim, and we will update you when we know more. So far Premier Gutwein has announced the following:

• $2m in primary health support for GPs and pharmacies
• $20m in interest-free loans to the hospitality, tourism, seafood and export sectors
• Some payroll tax relief for those sectors
• One-off payments to people forced to self-isolate

What the ATO is doing to help

The ATO has a number of measures in place to assist businesses impacted by COVID-19. At the moment it’s light on detail and we’ll keep an eye on things but includes:

• Deferral of payments of tax obligations for up to four months (includes income tax, FBT and excise, PAYGW & GST)
• Low interest payment plans
• Variation of PAYG income tax instalments to nil and refund on instalments paid in the September and December quarters
• Consideration of remission of interest & penalties applied since 23 January 2020
• Unfortunately, the ATO have no powers to vary the superannuation contribution due date or waive super guarantee charge where payments are late.

Please contact us if you need to arrange deferrals or variations

Below are some links to resources you may find useful

• Government overview of the stimulus package
• Detailed information on the business support initiatives, including information for employers
• TCCI have released COVID-19 Business Resources, including links and contact phone numbers for relevant government departments and information.
• More information for employers can be found at https://www.business.gov.au/Risk-management/Emergency-management/Coronavirus-information-and-support-for-business