How will Australian businesses benefit from the Federal Government’s $17.6 billion stimulus package?

There are four elements to the Government’s stimulus package.*

One off $750 payment.

The first one, around 6.5 million lower-income Australians to receive a one-off $750 payment, that is meant to be spent to keep the economy going. The payment will be made from March 31, but with about half of those benefiting being typically frugal pensioners it may not be the right target audience. The Grattan Institute says: “Many pensioners are net savers so there is a risk that a lot of the money doesn’t make it back into the economy.”

Up to $25,000 for SMBs.

The second incentive provides up to $25,000 to SMBs to cover the costs of employee wages and salaries. It is available between 1 January 2020 and 30 June 2020 to companies with a turnover below $50 million that employ workers. These eligible businesses will receive a payment equal to 50% of their PAYG withheld, delivered as a credit in their BAS from March to June 2020, with a minimum $2,000 payment and up to a cap of $25,000.

This measure will cost $6.7 billion over four years and will happen automatically based on the business activity statements. About 690,000 businesses employing around 7.8 million people are expected to be eligible.

Sole traders will not get anything although they are able to access business investment incentives.

There is good news if you are employing or intend to employ apprentices. $1.2 billion will be made available as a wage subsidy of 50% of an apprentice’s or trainee’s wage for up to nine months from 1 January 2020 to 30 September 2020 up to $21,000 per apprentice. Businesses can register for the subsidy from early April with final claims for payment due by 31 December.

The government estimates that up to 70,000 small businesses will access the incentive to support around 117,000 apprentices.

Asset write-offs.

The third incentive is the allocation of $3.9 billion to encourage businesses to spend. For new or second-hand assets first used or installed ready for use from 12 March until 30 June 2020, the instant asset write-off threshold will be increased from $30,000 to $150,000 for businesses with aggregated annual turnover of less than $500 million (up from the current $50 million threshold).

The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets. The threshold will revert to $1,000 for small businesses (turnover less than $10 million) from 1 July 2020, however businesses not entitled to the instant asset write off from 1 July 2020 may be entitled to the 50% investment incentive.

The investment measures are expected to support more than 3.5 million businesses (over 99% of businesses) employing more than 9.7 million employees.

Regional support fund.

The fourth incentive is a $1 billion fund to support regions most significantly affected by the Corona virus outbreak. It says that those ‘disproportionately affected’ include those heavily reliant on industries such as tourism, agriculture and education.

And the ATO also made changes …

In addition to the above, on 12 March, the ATO announced a series of concessions to assist businesses. These were:

  • deferring by up to 4 months the payment of tax amounts due through the BAS (including PAYG instalments), income tax assessments, FBT assessments and excise by affected businesses;
  • allowing affected businesses on a quarterly reporting cycle to opt into monthly GST reporting to get quicker access to any GST refunds;
  • allowing affected businesses to vary PAYG instalment amounts to zero for the April 2020 quarter. Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters;
  • remitting any interest and penalties, incurred by affected businesses on or after 23 January 2020, that have been applied to tax liabilities; and
  • allowing affected businesses to enter into low-interest payment plans for their existing and ongoing tax liabilities.

The ATO assistance is not automatic, taxpayers must first contact the ATO to request assistance, and if eligible, the ATO will ‘tailor the assistance package’ for the relevant taxpayer.

*This material is for reference only and is not designed to be, nor should it be regarded as, professional advice.