COVID-19 Information

Coronavirus – Economic response from the Australian Government Proposed Economic response from the Australian Government (Stimulus Package)

The Government’s economic response addresses the economic impacts of the Coronavirus outbreak. It is intended to support confidence, employment and business continuity. It is designed to support business investment, help small businesses manage short-term cash flow challenges, provide targeted support to individuals and assistance to the most severely affected communities and regions.

The government has proposed a $17.6 billion package representing fiscal support in the national interest to guard against more severe economic impacts of the Coronavirus outbreak.

Summary of the Economic Response (Proposal – not legislated yet):

1. Delivering support for business investment

a) Increasing the instant asset write-off

From 12 March 2020, the Government is increasing the instant asset write-off threshold from $30,000 to $150,000 and expanding access to include businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.

b) Backing business investment

The Government is introducing a time limited 15-month investment incentive (12 March 2020 through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating depreciation deductions for assets greater than $150,000. Businesses with a turnover of less than $500 million will be able to deduct 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.

2. Cash flow assistance for businesses

a) Boosting cash flow for employers

The Boosting Cash Flow for Employers measure will provide up to $25,000 back to businesses with a turnover of less than $50 million, with a minimum payment of $2,000 for eligible businesses. This will be calculated at 50 percent of PAYG Withheld.

The payment will provide cash flow support to businesses with a turnover of less than $50 million that employ staff. The payment will be tax free. This assistance covers amounts withheld between 1 January 2020 through to 30 June 2020. The payment will be delivered by the Australian Taxation Office (ATO) as a credit in the March activity statement upon businesses lodging eligible upcoming activity statements. 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 lodgment.

Businesses that pay salary and wages, but are not required to withhold tax, will also receive the minimum payment of $2,000.

b) Supporting apprentices and trainees

The Government is supporting small business to retain their apprentices and trainees. Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for up to 9 months from 1 January 2020 to 30 September 2020. The subsidy is up to a maximum of $21,000 and will be available to businesses employing fewer than 20 full-time employees. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice. Employers can register for the subsidy from early-April 2020. Final claims for payment must be lodged by 31 December 2020.

3. Stimulus payments to households to support growth

From 31 March 2020 the Government will provide a one-off $750 payment to social security, veteran and other income support recipients and eligible concession card holders. Around half of those that will benefit are pensioners. There will be one payment per eligible recipient. For example, if a person qualifies for the one-off payment in multiple ways, they will only receive one payment. The payment will be tax free and will not count as income for Social Security, Farm Household Allowance and Veteran payments.

4. Assistance for severely affected regions

This measure provides $1 billion to support regions most significantly affected by the Coronavirus outbreak.

The Government has set aside $1 billion to support those regions and communities that have been disproportionately affected by the economic impacts of the Coronavirus, including those heavily reliant on industries such as tourism, agriculture and education. This will include 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. It will also include additional assistance to help businesses identify alternative export markets or supply chains. Targeted measures will also be developed to further promote domestic tourism. The Australian Tax Office (ATO) is also providing administrative relief for some tax obligations for people affected by the Coronavirus outbreak, on a case-by-case basis.

Support measures to assist those affected by the Coronavirus

The ATO has also announced a series of administrative concessions for taxpayers impacted by the coronavirus (COVID-19), including the deferral of some tax payments, quicker access to GST refunds, and options to enter low-interest payment plans for existing or future tax debts.

In summary, the measures to assist businesses impacted by COVID-19 include:

• deferring by up to four months the payment of tax amounts due through the BAS (including PAYG instalments), income tax assessments, FBT assessments and excise;
• allowing businesses on a quarterly reporting cycle to opt into monthly GST reporting to get quicker access to any GST refunds;
• The Department of Education, Skills and Employment website at: www.dese.gov.au.
• Australian Apprenticeships website at: www.australianapprenticeships.gov.au.

• allowing businesses to vary PAYG instalment amounts to zero for the March 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 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. Importantly, assistance measures for taxpayers impacted by COVID-19 will not be implemented automatically by the ATO (unlike the relief measures for the 2019-20 bushfires). Therefore, anyone impacted by COVID-19 is required to contact the ATO Emergency Support Infoline (Tel: 1800 806 218) when they are ready to request assistance. Once a taxpayer contacts the ATO, a support plan will be tailored for the taxpayer. The ATO will consider ways to enhance its presence in significantly affected regions, making it easier for people to apply for relief. The ATO is considering temporary shop fronts and face-to-face options. The Economic response is a proposed measure and yet to be passed in parliament. The Government has advised it will move quickly to implement this package. A package of Bills will be introduced into Parliament in the final Autumn sitting week in March 2020 for Parliament’s urgent consideration and passage. Following passage of the Bills through Parliament, the Government will then move to immediately make, and register, any supporting instruments.

For more information on the Australian Government’s Economic Response to Coronavirus visit treasury.gov.au/coronavirus or contact your accountant at Hazeal Newman and Associates.