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Coronavirus – How this Stimulus Package will help you.

As a director of My Accounting Advantage (MAA), I would like to bring the new Government Coronavirus stimulus package to your attention. This stimulus package is designed to offer tax relief to businesses and individuals, in an attempt to stimulate the economy and to help business owners with their employment commitments.

The package offers cash flow assistance by providing tax-free cashback of up to $25,000 for each business, wage subsidy for employers with apprentices and trainees, and increased instant asset write-off for businesses up to $150,000, and low income earners a one-off payment of $750.  We hope that this stimulus package will offer clients the necessary cash assistance to keep their business running during this uncertain economic condition.

I would like to encourage all clients to review their insurance policies both business and individual (i.e. key person insurance, business interruption insurance, income protection insurance, etc.). Ensure you have coverage in the event of the coronavirus affecting you and causing disruption resulting in loss of income.

Government Coronavirus Stimulus Package

The Australian government has now announced a suite of measures aims at stimulating the economy due to the potential economic impact of the coronavirus.

This stimulus package will see the government inject $17.6 billion into the economy to maintain confidence, supporting investment and keeping people in jobs.

The Government is targeting the following four key areas below, click on each toggle to get the full summary and a link to the official government documents.

Boosting cash flow for employers

    • Eligibility: Businesses with aggregated annual turnover under $50 million.
    • provide up to $25,000 back to business, with a minimum payment of $2,000 for eligible businesses.
    • The payment will be tax free.
    • The payment will be delivered by the Australian Taxation Office (ATO) as a credit in the activity statement system from 28 April 2020.
    • Eligible businesses that withhold tax to the ATO on their employees’ salary and wages will receive a payment equal to 50 per cent of the amount withheld, up to a maximum payment of $25,000.
    • Eligible businesses that pay salary and wages will receive a minimum payment of $2,000, even if they are not required to withhold tax.

Timing:

Quarterly 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 lodgments. To provide a similar treatment to quarterly lodgers, the payment for monthly lodgers will be calculated at three times the rate (150 per cent) in the March 2020 activity statement. 

The minimum payment will be applied to the business’ first lodgement. 

Supporting small business to retain their apprentices and trainees

    • Eligible employers can apply for a wage subsidy of 50% of wages paid from 1 January 2020 to 30 September 2020.
    • Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee (Up to $7,000 per quarter).
    • Eligibility: small businesses employing fewer than 20 full-time employees who retain an apprentice or trainee. The apprentice or trainee must have been in training with a small business as at 1 March 2020.
    • Employers of any size and Group Training Organisations that re-engage an eligible out-of-trade apprentice or trainee will be eligible for the subsidy.

Timing:

    • Employers can register for the subsidy from April 2020. Final claims for payment must be lodged by 31 December 2020.
    • Applicable to wages paid from 1 January 2020.
    • For further information on how to apply for the subsidy, including information on eligibility, contact an Australian Apprenticeship Support Network (AASN) provider.

Here is the link to the Government Document:      Cash flow assistance for businesses

Enhancing the instant asset write-off (IAWO)

    • Lifting the threshold from $30,000 to $150,000 (Excl GST).
    • Eligible period: from 13 March 2020 to 30 June 2020.
    • The threshold applies on per asset basis, so eligible businesses can immediately write-off multiple assets.
    • This proposal applies to new or second hand assets first used or installed ready for use during this period.
    • IAWO is due to revert to $1,000 from 1 July 2020.

15-month investment incentive by accelerating depreciation deductions

    • Benefit – deduction of 50% of total cost of an eligible asset upon installation, plus 30% depreciation for the remaining balance.
    • Eligible assets – New assets that is acquired after 13 March 2020 and first used or installed by 30 June 2021.

Here is the link to the government PDF: Delivering support for business investment

Financial assistance to lower income Australians

    • One-off payments of $750 will be paid to eligible recipients.
    • The payment will be exempt from taxation and will not count as income for Social Security, Farm Household Allowance and Veteran payments

Eligibility:

To be eligible, you must be residing in Australia and be receiving one of the following payments or hold one of the following concession cards on 12 March 2020:

    • Age Pension 
    • Disability Support
    • Pension Carer Payment
    • Parenting Payment 
    • Wife Pension 
    • Widow B Pension 
    • ABSTUDY (Living Allowance) 
    • Austudy 
    • Bereavement Allowance 
    • Newstart Allowance 
    • Youth Allowance 
    • Partner Allowance 
    • Sickness Allowance 
    • Special Benefit 
    • Widow Allowance 
    • Family Tax Benefit, including Double Orphan Pension 
    • Carer Allowance 
    • Pensioner Concession Card holders 
    • Commonwealth Seniors Health Card holders 
    • Veteran Service Pension; Veteran Income Support Supplement; Veteran Compensation payments, including lump sum payments; War Widow(er) Pension; and Veteran Payment. 
    • Veteran Gold Card holders 
    • Farm Household Allowance 

Timing:

    • The one-off payment will be paid automatically from 31 March 2020 by Services Australia or the Department of Veterans’ Affairs. Over 90 per cent of payments will be made by mid-April 2020.
    • Subject to the passage of legislation.

Here is the link to the Government Document:   Stimulus payments to households to support growth

The Government has set aside an initial $1 billion allocation to support those regions and communities that have been affected by the economic impacts of the Coronavirus, including those heavily reliant on industries such as tourism, agriculture and education.

    • Eligibility: The Minister for Trade, Tourism and Investment will work with affected industries and communities to develop recovery plans and measures.
    • Timing: The $1 billion will be available for distribution through existing or new mechanisms as soon as practicable.

ATO Administration Relief

    • The Australian Taxation Office (ATO) will provide administrative relief for certain tax obligations (similar to relief provided following the bushfires) for taxpayers affected by the Coronavirus outbreak, on a case-by-case basis.
    • Administrative relief will include extension of ATO lodgement and payment obligations.

Here is the link to the Government document:  Assistance for severely affected regions

I hope you find the summary useful and informative, and our team at MAA are here to help you through this challenging time of uncertainty.

Please feel free to contact us if you require more information or assistance.

Best regards, Prathana Harris

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