INSIGHT

$17.6b stimulus package to stave off recession announced today

Today the Prime Minister announced the details of a $17.6b stimulus package to support businesses to weather disruption caused by COVID-19.

The measures are worth approximately 1.2% of GDP and include measures to fast-track investment, cash payments for small and medium businesses to save jobs and subsidies to help keep apprentices employed.

The Treasurer, Josh Frydenberg has said the vast majority of the stimulus will be spent by the end of June and will inject $22b into the domestic economy. The package will not extend beyond 30 June 2021 in the hopes the budget will bounce back.

Please reach out to your local partner to find out what these measures mean for you.

Highlights

Delivering support for business investment

  • $700m to expand the instant asset write off scheme – threshold increased from $30k to $150k. Turnover threshold increased from $50m to $500m. The instant asset write-off scheme will operate from today until 1 July 2020.
  • Introduction of a time-limited 15-month investment incentive to support business investment and economic growth over the short-term, by accelerating depreciation deductions.

Many new businesses now qualify for the instant asset write-off. Please contact your local Tax Partner to discuss threshold and grouping of assets. We can also help you understand how March BAS’s may be affected.

Learn more from Treasury

Cash flow assistance for businesses

  • Businesses with turnovers up to $50 million will be eligible for tax-free payments equal to 50 per cent of PAYG withheld from salaries and wages, with a minimum of $2,000 and a maximum of $25,000 over six months. Businesses that pay salary and wages but are not required to withhold tax will also receive $2,000. This measure is expected to benefit 690,000 businesses employing 7.8 million people with a cost of $6.7b.
  • The ATO will deliver the payment as a credit to the business upon lodgment of their activity statements. Where this places the business in a refund position, the ATO will deliver the refund within 14 days.
  • $7000 each quarter in wage subsidies for employers of less than 20 people to save the jobs of 120,000 apprentices. Subsidies will be backdated to 1 January 2020 and will run until 1 September 2020.
  • The Australian Tax 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.

Learn more from Treasury

Workforce

  • $7000 each quarter in wage subsidies for employers of less than 20 people to save the jobs of 120,000 apprentices. Subsidies will be backdated to 1 January 2020 and will run until 1 September 2020.
  • Waiting times for a government sickness allowance will be waived for casual workers forced into self-isolation.

Individuals

  • One-off payment of $750 to social security, veteran and other income support recipients and eligible concession cardholders to support. Over 90% of payments will be made by mid-April 2020.
  • Deeming rates for pensioners cut by 50 basis points in response to the most recent decision of the Reserve Bank of Australia.

Learn more from Treasury

Support for regions and communities

  • Initial $1b allocation to support those regions and communities that have been disproportionately affected by the economic impacts of the coronavirus - including those heavily reliant on tourism, agriculture and education.
  • This will include the waiver of the Environmental Management Charge for tourism businesses that operate in the Great Barrier Reef Marine Park and the waiver of entry fees for Commonwealth National Parks. It will also include additional assistance to help businesses identify alternative export markets or supply chains.

Learn more from Treasury

Health stimulus package of $2.4b

We reported on the highlights of the health stimulus package yesterday, with $100m set aside to fund a new Medicare telehealth service which will be available from Friday, 13 March. There is also $500m to co-fund the increased demand in public hospitals and the public health systems. You can read all the details here.

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