On 12 March 2020, the Australian Government announced[1] a $17.6 billion economic stimulus package to support individuals, businesses and households affected by the rapidly spreading COVID-19, which was today declared a pandemic by the World Health Organization.
The package announced by the Australian Government is focused on providing support with:
1. Supporting business investment (effective from 12 March 2020)
2. Cash flow assistance for businesses
3. Household stimulus package (effective from 31 March 2020)
4. Targeted support for most severely affected regions
Let’s take a look in more detail at these areas of focus and some of the measures that will be implemented with the economic stimulus package.
1. Supporting business investment
Taking effect from 12 March 2020:
- $700 million for changes to instant asset write-off by:
- Increasing the instant asset write-off threshold from $30,000 to $150,000
- Expanding the write-off to businesses with an annual turnover of less than $500 million (currently the threshold is only $50 million) up to 30 June 2020
- $3.2 billion investment incentive to all businesses:
- Provide a 15-month investment incentive (i.e. through to 30 June 2021) to accelerate depreciation deductions by providing an immediate deduction of 50% of the cost of the asset in the year of purchase (the balance to be depreciated using existing rules) for businesses with a turnover of less than $500 million
2. Cash flow assistance for businesses
- $6.7 billion to boost cash flow of businesses with annual turnover of less than $50 million that employ staff between 1 January 2020 and 30 June 2020. Benefits include:
- Receiving a credit of 50% of the tax withheld in their activity statement from 28 April with refunds to be paid within 14 days
- The credit is capped at a total of $25,000, but a there is a guaranteed minimum refund of $2,000.
- $1.3 billion to small business employers of apprentices and trainees. Benefits include:
- Wage subsidy of 50% of the apprentice’s or trainee’s wage for up to nine months from 1 January 2020 to 30 September 2020, for those employees in training as at 1 March 2020
- Subsidy is capped at $21,000 per employee and is only available to small employers who employ fewer than 20 full-time employees
3. Household stimulus package
Effective from 31 March 2020:
- $4.8 billion to provide a one-off $750 tax-free stimulus payment to certain taxpayers (e.g. pensioners, social security and other income support recipients and eligible concession card holders)
4. Targeted support for most severely affected regions
- $1 billion to support regions or sectors (e.g. tourism, agriculture and education) most severely affected by the COVID-19 pandemic.
As with the Government’s drought relief package, there is also administrative relief for certain tax obligations – including deferring tax payments up to four months.
If you require more information or would like some support accessing any of the support measures announced, please contact the Crowe Tax Advisory team. We will keep you updated on any new developments as they come to hand.
[1] Prime Minister of Australia, Economic stimulus package, Media Release, 12 March 2020