COVID-19 Federal And State Stimulus Package Breakdowns
Brought to you by the team at Asset Financial Accounting.
In the light of the Federal & State Government stimulus packages, here is a brief summary of what the measures are.
Please note the information provided here, is sourced from various Government agencies & will have different effects on each business – we would suggest that you speak to either ourselves or your financial advisor for individual information on how your business may be impacted:
Federal stimulus package:
The Federal Government’s intention with this economic stimulus package is twofold – firstly to assist eligible businesses manage cash flow issues as well as retain employees through the current coronavirus situation. The second aspect is intended to ensure that the continued development of a skilled workforce is not adversely impacted.
- Cash flow: Temporary cashflow relief in the form of an offset against a lodged Business Activity Statement, with any excess paid to the business, by the ATO, within 14 days.
- Eligible businesses: This incentive is aimed at small and medium sized businesses that both employ staff and have aggregated turnover of less than $50m ( based on the prior year’s turnover)
- Incentive value: The minimum payment in this scheme is $2,000, with the maximum capped at $25,000. The incentive will be calculated at 50% of the PAYG withheld on employees renumeration, depending on the reporting cycle of the employer, different payment periods will apply. In the case of employers who report quarterly (payroll information is included on their business activity statements (BAS) – the eligible period for calculating the value of the credit will run from January 2020 to June 2020 (quarters 3 & 4). In the cases where the organisation reports on a monthly basis ( instalment activity statement), the credit will be calculated at 150% the value of the PAYG reported in the March IAS. Eligible organisations that pay salaries and wages, are entitled to the minimum payment of $2,000 even if the organisation is not required to withhold PAYG.
- Minimum payment: The minimum payment of $2,000 will be applied to the business’s first lodgement after March 2020.
- Tax free: These incentive payments are tax free – the value received will not be taxed in the business’s annual tax return.
Instant asset write off: Assets of $30,000 to $150,000, purchased between 12 March 2020 & 30 June 2020, may qualify for the immediate tax write off concession. This proposal would apply to new and second assets first installed and ready for use by 30 June 2020.
- Word of caution: The saving here is the value of the tax otherwise payable, calculated on the value of the asset – the tax payer will not receive the value of the asset back as part of their tax return! Speak to us about your future cashflow before investing in new assets. The debt usually remains long after the tax relief is received!
- Accelerated depreciation: This is another proposal applicable to assets purchased between 12 March and 30 June 2021 – it is more complex than the instant assert write off as above, applicable to various assets over $150,000 in value and will not be discussed in this forum. Please address any queries to our offices directly.
- Apprentices and trainees: Eligible employers may apply for a subsidy equal to 50% of the value paid to an apprentice or trainee wages paid during the period 1 January to 30 September 2020. These incentives are capped at a maximum value of $7,000 per eligible trainee or apprentice, per quarter. That is a maximum of $21,000 per eligible trainee or apprentice.
- Eligible businesses: This incentive is limited to small businesses, employing less than 20 staff, of which there are apprentices and or trainees, who had been engaged in training on or before 1 March 2020. Employers will have access to this subsidy after successful assessment undertaken by an Australian Apprentice Support Network (AASN) provider. It is important to note that this not an automatic entitlement.
- Timing: Employers can register for the subsidy “from early April 2020” – no definitive date has been provided, with final claims to be lodged no later than 31 December 2020.
- Further information: Please see the Department of Education, Skills and Employment website: www.dese.gov.au or the Australian Apprentices website: www.australianapprenticeships.gov.au
- Direct payments to individuals: This payment of $750 is directed only at those on social security, veterans and other support recipients and eligible concession card holders resident in Australia.
- Other provisions: The ATO have announced that it will implement a range of administrative measures to assist businesses impacted by the COVID -19 Virus. Please contact our offices if you would like further information.
WA State Government economic response relief
The State Government initiatives are far narrower in terms of the businesses that will benefit from their measures, whilst the family budget will have a reprieve from the annual tariff increases.
- Business measures: The primary focus here is on businesses that pay payroll tax to the Office of State Revenue. The current threshold for registering and reporting payroll tax is $950,000. This threshold will increase to $1m per annum with effect from 1 July 2020. Businesses impacted by COVID -19 may apply to defer their payroll tax payments to 21 July 2020.
- Individuals and households: Current rates for “household fees and charges”, such as electricity and water charges, motor vehicle charges , public transport fares and emergency services levies will be “frozen” until at least 1 July 2021. So whilst no immediate or tangible relief for homeowners, they will at least not be any worse off.
Please do not hesitate to contact our offices if you have any queries regarding this communication.
Disclaimer: Whilst care has been taken to ensure this information is correct and accurate, Asset Financial Accounting accepts no responsibility for any errors or misinterpretation of the information provided.