New stimulus package supports business resilience and recovery during coronavirus (COVID-19) pandemic

Business investment support

There are two business investment measures included in the stimulus package which the Government has stated will assist Australian businesses and economic growth in the short term, and encourage a stronger economic recovery following the Coronavirus outbreak.

1. Instant asset write-off increased
   From 12 March 2020 until 30 June 2020, the instant asset write-off threshold will be increased from $30,000 to $150,000 and access to the instant asset write-off will be expanded to include businesses with an aggregate annual turnover of less than $500 million (increased from $50 million). Any assets purchased will need to be acquired and installed by 30 June 2020 to receive the benefit of the write-off.
2. Introduction of business investment incentive
   A 15-month investment incentive (available until 30 June 2021) will be introduced where businesses with a turnover of less than $500 million will be able to deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost. This short-term incentive aims to support business investment and economic growth, by accelerating depreciation deductions.

Business Cash flow assistance

There are two cash flow assistance measures included in the stimulus package which aim to assist businesses with cash flow management challenges and retaining employees.

1. Boosting cash flow for employers
   Eligible small and medium-sized businesses will be provided with a minimum tax-free payment of $2,000, up to $25,000, to support cash flow. To be eligible the business must have a turnover of less than $50 million and employ staff.  The tax-free payments will be provided as a credit to their activity statements from March to June 2020, equal to 50% of PAYG withheld up to the relevant threshold. 
2. Retaining apprentices and trainees
   From 1 January 2020 to 30 September 2020, eligible employers will be able to apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage. In the instance where a small business is not able to retain a particular apprentice, the subsidy will be available to the new employer that employs that particular apprentice.  Registration will open in April 2020.

Stimulus payments for households

Eligible social security, veteran and other income support recipients and eligible concession card holders will receive a one-off tax free $750 payment from the Government. Each eligible recipient will receive one payment and the payment will not count as income for Social Security, Farm Household Allowance and Veteran payments.

Assistance for severely affected regions and communities

The Government will be providing $1 billion to support the most significantly affected regions and communities of the Coronavirus outbreak through the following avenues:

Tourism, agriculture and education
Regions and communities who heavily rely on the tourism, agriculture and education industries will be provided with financial support including the waiver of fees and charges for tourism businesses that operate in the Great Barrier Reef Marine Park and the waiver of entry fees for Commonwealth National Parks. These measures will also include assistance to help businesses identify alternative export markets or supply chains to continue their business operations. The Government advises that targeted measures will also be developed to further promote domestic tourism.

Please note that these measures have been announced with effect from 12 March 2020.  We expect legislation to be introduced in the coming weeks with a hope to be passed by the end of March 2020.

ATO ADMINISTRATIVE CONCESSIONS

The ATO is offering support for people affected by the Coronavirus outbreak by providing administrative relief for some tax obligations, on a case-by-case basis. Options available may include:

• Deferring by up to four months the payment date of Business Activity Statements, Income Tax Assessments, Fringe Benefits Tax Assessments and excise;
• Allowing businesses to vary Pay As You Go Instalments to zero for March quarter and claiming refund of prior quarters; and
• Remittance of interest and penalties incurred from January 2020.

The ATO assistance is available on a case by case basis so you should speak with your Mazars advisor for advice in this regard.

In addition,  Cairns will see a temporary shop front being set up over the next few weeks with other locations in significantly affected regions being considered as well.

The ATO’s enhanced presence aims to provide easier access to relief.

Next Steps

At Mazars, we care about the wellbeing of our clients and have a strong reputation of helping our clients navigate tough economic times. For assistance considering your eligibility and support in preparing and lodging applications, please contact your usual Mazars advisor, or alternatively contact one of our tax specialists on:

Information Source: The Australian Government Treasury – Economic response to the Coronavirus and ATO Media Release, 12 March 2020.

Published: 13/03/2020

Please note that this publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice.

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