The Government has announced a $17.6 billion stimulus package (and an additional $31.9m billion announced 22nd  to support the economy through the impact of the coronavirus.  But how does it affect you, if at all?  Here’s the short of it:

Cashflow boost

  • Available for employers with aggregated turnover of $50m (note: we aren’t sure how the aggregation will be applied, but is based on FY19 turnover)
  • Equal to 100% of the tax witheld on wages reported at W2 on your activity statement
  • Applicable to March, April and May (for monthly) and March/June quarters (for quarterly)
  • For monthly payers, it will be 3 x your March W2 witholding amount, provided it  doesn’t exceed $50,000.
  • Will come off the activity statement debt
  • Maxes out at $50,000.
  • If you employ but don’t need to withold (ie report wages at W1 but nothing at W2), you may be eligible for minimum payment of $10,000.

Additional Cashflow boost

  • For employers who have qualified for the cashflow boost above, you will then get another credit equal to the cashflow boost you received earlier.  If you are an eligible employer it will be between the minimum $10,000 and maximum $50,000.
  • For monthly employers, you will get 1/4 of the cashflow boost delivered in the June, July, August and September activity statements.
  • For quarterly employers you will be 1/2 the cashflow boost delivered in the June and September activity statements.

Apprentices

  • Available for employers with less than 20 full time staff, not just apprentices
  • 50% of apprentice wages will be refunded, up to a maximum of $7,000 per quarter
  • Applies for March, June and September quarters.
  • We are unsure at this moment how to claim that amount

Tax-free bonuses & income support for individuals

  • $750 one-off payment
  • $550 per fortnight supplement
  • Eligible for people receiving certain Centrelink payments (Jobseeker, Partner Allowance Widow Allowance, Sickness Allowance Wife Pension, Youth Allowance, Parenting Payment, Farm Household Allowance)
  • Expanded access to the Jobseeker payments for workers who have been stood down or lost employment, sole trader, casual employees and the self-employed.
  • Reduced waiting periods and lower asset means testing
  • Faster claim process via Services Australia.
  • Will be handled automatically via Centrelink

Superannuation changes

  • Reduced minimum pension draw downs for account based pensions by 50%.
  • Ability to access $10,000 before the 30th June under hardship provisions and another $10,000 after the 30th June.

Business support

  • Range of administrative measures including the remission of interest after the 12/3/20, deferred payments, ability to revise PAYG Instalments to nil etc.
  • Will be handled on a case-by-case basis and only available to businesses experiencing financial difficulty as a result of COVID-19 via an ATO request.

Financially distressed businesses

  • For the next six months, the Government announced that directors will be relieved of their personal liability for trading whilst insolvent.
  • Also over that time, the threshold for which a creditor can issue a statutory demand increases from $2,000 to $20,000, and the threshold for which a creditor can issue a bankruptcy notice from $5,000 to $20,000.
  • Increasing the time a company has to respond to either a statutory demand or bankruptcy notice from 21 days to 6 months, delaying the possibility of a Court making winding-up orders or bankruptcy orders.

Banking and finance

  • Providing a government guarantee of 50% of eligible unsecured loans taken out by small to medium lenders (up to $50m turnover) to help access cashflow funding.  Limited to $250k loans up to three years with initial six month repayment holiday.
  • RBA rate cut of 0.25 percent.

Rent and landlords

  • The federal government has so far not mandated any particular rent ‘relief’ measures, however there is now a six-month moratorium on evictions for residential and commercial tenancies where the tenant is unable to make their commitments due to financial distress.  Further clarification is anticipated, however the message so far has been for tenants and landlords to ‘work it out’ together

Depreciation changes

  • Instant asset write-off
    • Applies to business with aggregate turnover of up to $500m.
    • On assets purchased and installed ready for use between 12/3/20 and 30/6/20
    • Eligible for assets costing up to $150k (up from $30k).
    • Will require you to adopt small business pooling, which may not suit all clients.
    • Does not work as a cash handout, but a reduction in your taxable income earlier than under previous rules, so effectively a timing measure.
  • Accelerated depreciation
    • Applies to businesses with aggregate turnover of up to $500m.
    • On assets purchased and installed ready for use between 12/3/20 and 30/6/21
    • For those who do not adopt small business pooling (ie separate to those in the previous point)
    • Eligible for assets costing up to $150k
    • Claim 50% depreciation at the time of purchase, the remainder is claimed over it’s effective life.
    • Again – does not work as a cash handout, but a reduction in your taxable income earlier than under previous rules, so effectively a timing measure.

If you have any questions please contact our office.  For a longer version, please click the following link – The Stimulus Package.