With the ongoing outbreak of the Coronavirus worldwide and notably the increase in cases across Australia, today the Federal Government released a $17.6 billion Coronavirus Stimulus Package to offset Coronavirus impact upon areas of the Australian Community.
The Coronavirus Stimulus Package sets out to ensure as much money as possible flows into the economy as quickly as possible, with $11bn of the package to be delivered by June.
The stimulus package targets different areas of the economy, with an emphasis on small to medium sized business and low-income earners. The Government has said that it may spend more ‘if more is needed’.
So how does this news impact you?
Household Stimulus Payments
Around 6.5 million lower income Australians will receive a one-off $750 payment aimed at boosting domestic demand in the economy.
The payment will be made to all pensioners and all recipients of Newstart allowance, disability support payments, carers allowance, youth allowance, veterans support, family tax benefit and health care card holders.
The payment will be tax-free and will not count as income for social security, farm household allowance and veteran payments.
The stimulus payment will begin to be rolled out from 31 March 2020. To be eligible you must be residing in Australia and receive one of the above-mentioned social security payments or hold an eligible concession card on 12 March 2020.
If you are an employee and not receiving any social security benefits, at present you will not receive the stimulus payment.
Small to Medium Sized Business
Cash Flow Assistance
Small and medium-sized businesses that have employees with a turnover under $50 million will have access to a tax-free payment of up to $25,000 to help boost cash flow.
These eligible businesses will receive a tax-free payment equal to 50 per cent of the tax on their employees’ salary and wages, up to a maximum of $25,000. The payment will be delivered as a credit in the businesses Australian Tax Office (ATO) Integrated Client Account upon lodgement of their Activity Statements. This concession will be done automatically in the system and no additional forms are required.
The cash flow assistance is for the period 1 January 2020 to 30 June 2020. Quarterly Business Activity Statements lodgers will be eligible to receive the payment for the quarters ending March 2020 and June 2020. Monthly lodgers will be eligible to receive the payment for the March 2020, April 2020, May 2020 and June 2020 lodgements including a catch up in the March 2020 quarter equal to three times the rate.
Businesses that are eligible i.e.; pay salary and wages and who are not required to withhold tax on employees’ wages will receive a once off payment of $2000. This will be applied as a credit to the businesses ATO Integrated Client Account upon the business’ first activity statement lodgement.
Apprentice Incentives
Under the plan, the government will offer small businesses up to $7000 each quarter from 1 January 2020 to 30 September 2020 for every apprentice in wage assistance. This measure has been put in place in order to retain existing apprentices and trainees.
An eligible employer has been defined as less than 20 employees and can register for the subsidy early April 2020. The apprentice or trainee must have been training with a small business as at 1 March 2020.
Instant Asset Write Off
Currently small businesses with a turnover of up to $50 million can instantly write off asset purchases costing less than $30,000. Under the plan business will be able to write off assets costing up to $150,000 until 30 June 2020. More business will also be eligible as the definition of a small businesses is expanded to include those with an annual turnover of up to $500 million. It’s expected to drive interest in the purchases of cars, utes and trucks, harvesters and trade equipment.
Sole Trader Business
The Coronavirus Stimulus Package does not directly extend to sole trader businesses.
For now, the government says those who don’t employ anyone will benefit indirectly from the money flowing to low-income earners that they expect will quickly enter the economy. They will also be able to access business investment incentives.
If you have any questions regarding the Coronavirus Stimulus Package please contact JHL Accounting.