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Economic Stimulus Package - CovID19

Last night, 12th March, Scott Morisson announced a $17.6 billion investment package to support the economy as we brace for the impact of the CovID19. These announcements are expected to be legislated in the next parliamentary sitting, being the 23rd of March.

In a nutshell, what we know so far is;

Cash flow assistance for businesses up to $25,000

  • For business with turnover < $50M that employ staff

  • A credit equal to 50% of the PAYG Withholding amounts, on lodgement of the activity statement. Capped at $25,000 per business.

  • For monthly lodgers - credit will apply to the March, April, and May lodgements.

  • For quarterly lodgers - credit will apply to the March and June quarters. N.B disappointingly, this effectively means monthly lodgers are at a disadvantage, as they will not recieve a credit for the PAYGW in respect of January & February wages.

  • This is NOT a cash payment. If the credit put the business in a refund position, the excess will be refunded to you by the ATO within 14days. It is unclear weather credit will automatically be applied to any existing debt first, however we expect this will likely be the case. This too is disappointing as won't provide the "intended" stimulus but instead a reduction in the term of an existing payment plan.

  • Businesses that do not pay PAYGW but do employ staff will receive a minimum $2000 credit.

  • Credits will be tax-free income

Increase and extension of the instant asset write-off

  • For business with aggregated turnover < $500M

  • Instant write-off of assets costing < $150,000 (ex-GST), purchased & installed ready for use between 12 March - 30 June 2020

  • No change to the rules applying before 12 March - i.e assets purchased before 12 March will be an instant write off if they cost < $30K (ex-GST) and only to business with aggregated turnover < $50M.

  • N.B continues to apply only to depreciable assets - excludes some assets such as "capital works" i.e fixtures

Accelerated depreciation

  • For business with aggregated turnover < $500M

  • For NEW depreciable assets purchased & installed ready for use between 12 March - 30 June 2021

  • Does not apply to second-hand assets or capital works expenditure.

  • Applies to depreciable assets, 0 not eligible for the instant asset write-off i.e assets > $150K.

  • Depreciation equal to 50% of the assets cost in the year of purchase IN ADDITION TO the normal depreciation calculation.

  • Effectively results in more deductions early on... thus reduced tax in 2020 and 2021 (assuming you have tax to pay).

Wage subsidy of up to 50% of an apprentice or trainee's wage

  • Applies to apprentices or trainees that were in training with the business as at 1 March 2020 (or those that re-engage an eligible out-of-trade apprentice or trainee).

  • Employers can apply for a wage subsidy of 505 of the apprentice/trainee's wages for up to 9 months from 1 January - 30 September 2020

  • Expected that employers will be able to register for the subsidy from early April 2020

Targeted support for severely affected sectors and regions

  • $1BN committed to support those expected to be most affected. Tourism, agriculture and education are specifically mentioned.

  • Initial measures include;

  • Wavier of charges for business that operate in the Great Barrier Reef Marine Park and Commonweatlth National Parks

  • Assistance to help business identify alternative markets or supply chains

  • Measures to promote domestic tourism

  • Deferring of tax obligations including payments for up to 4 months

Tax-free $750 payment to social welfare recipients

  • A one-off, $750 cash payment to pensioners, social security, veteran and other income support recipients and eligible concession card holders.

  • Payments from 31 March 2020 on a progressive basis, 90% expected to be paid by mid-April.

  • One payment per eligible person, even if they qualify in multiple ways.

Casual employees can access Newstart 'sickness payment'

  • The normal waiting period for this payment will be wavied

  • For those casual employees required to self-isolate or who contract CovID19

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