Responding to the extremely challenging economic environment, the Government today (12 March 2020) released a stimulus package which is designed to boost spending and investment across the economy.
The stimulus package measures include:
Increasing the instant asset write-off for businesses
In last year’s federal budget, the Government increased the instant asset write-off threshold to $30,000 and made it available to any business with turnover of less than $50 million.
Effective from today, the Government has announced it will increase the instant asset write-off threshold to $150,000 with the write-off being available to any business with turnover of less than $500 million.
The new measure (which will apply to the purchase of new or second-hand assets) will allow businesses to invest in many types of business-related assets and obtain an immediate tax deduction for their expenditure.
The new measure will apply up until 30 June 2020.
Increasing tax depreciation deductions for new investment assets made by business
For assets not eligible for the above treatment, the Government has announced that for purchases of new assets made by businesses with annual turnover of less than $500 million before 30 June 2021, the business will be eligible to claim an immediate tax deduction for 50% of the purchase price of the asset with the existing depreciation rules applying to the balance of the value of the asset.
Cash assistance to businesses
The Government has announced that it will provide a minimum cash grant of $2,000 and a maximum cash grant of $25,000 to eligible businesses.
Businesses with turnover of less than $50 million and which employ staff will be eligible for the assistance which will automatically be issued via a credit to the taxpayer’s activity statement account from 28 April 2020.
Businesses that remit PAYG withholding for employees will receive a maximum payment of 50% of the withheld amount for the March 2020 quarter and June 2020 quarter (but capped at $25,000). Businesses with employees but that do not remit PAYG withholding will still be eligible to receive assistance of $2,000.
Supporting apprentices and trainees
The Government has pledged to provide wage subsidies to small businesses of up to $21,000 to fund 50% of the wage of the apprentice or trainee for a period of up to 9 months between 1 January 2020 and 30 September 2020. The measure will apply to small businesses that employ less than 20 full-time employees.
Household stimulus payments
The government will make a one-off payment of $750 to social security, veteran and other income support recipients and concession cardholders. It is expected the payment will be made to approximately 6 million Australians.
Assistance for regions severely impacted by Coronavirus
The Government has announced that it has set aside $1 billion to support regions and communities that have been disproportionately impacted by Coronavirus in areas such as tourism, education and agriculture.
At this point in time, there is not a lot of specific details regarding the announcements with the detail only becoming known in the coming days when draft legislation is released.
If you have any further questions regarding the above, please do not hesitate to contact your client service partner at Banks Group.