Coronavirus Stimulus Package – What This Means to You

With Novel Coronavirus causing disruption throughout the world economy at the moment, the Federal Government has recently announced further stimulus funding for the Australian Economy.  You will find below information relating to the most recent stimulus package announced on the 22nd March 2020 and what it means to you!

We know that there is a lot of information to digest so we complied for you, this simple, easy to read outline to assist.  We are here to help you and or your business gain clarity on what exactly you may be eligible for and how to go about accessing assistance!

Cash Flow Assistance for Employers

The latest stimulus package increases the previous wage subsidy to small business from the $25,000 to a maximum of $100,000 over the prescribed periods mentioned by Treasury.  The payment is open to businesses with a turnover less than $50M and also for not-for-profit charities who have employees.

How does it work?

Under the enhanced scheme, employers will receive a payment equal to 100 per cent of their PAYGW (up from 50 per cent), with the maximum payment being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000.

An additional payment is also being introduced in the July – October 2020 period. Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments they have received. This means that eligible entities will receive at least $20,000 up to a total of $100,000 under both payments.

This tax-free amount will be paid automatically by the Australian Taxation Office based on the business’s monthly or quarterly business activity statements.

Eligible businesses that pay salary and wages will receive a minimum payment of $10,000, even if they are not required to withhold tax.

Apprentices and Trainee Assistance

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 paid during the 9 months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer.

Employers can register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020.

How does it work?

Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).

The subsidy will be available to small businesses employing fewer than 20 full-time employees who retain an apprentice or trainee. The apprentice or trainee must have been in training with a small business as at 1 March 2020.

You will be required to have an eligibility assessment undertaken by an Australian Apprenticeship Support Network (AASN) provider.

Instant Asset Write Off and Accelerated Depreciation

Instant Asset Write Off

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

How does it work?

The higher IAWO threshold provides cash flow benefits for businesses that will be able to immediately deduct purchases of eligible assets each costing less than $150,000. The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets.

This proposal applies from announcement until 30 June 2020, for new or second-hand assets first used or installed ready for use in this time-frame.

Accelerated Depreciation

The Government is introducing a time limited 15 month investment incentive to support business investment and economic growth over the short-term, by accelerating depreciation deductions.

How does it work?

A deduction of 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 for businesses with aggregated turnover below $500 million.

Aside from the turnover requirements mentioned above, the only other qualifying factor is that it is considered an eligible asset, i.e. new assets that can be depreciated under Division 40 of the Income Tax Assessment Act 1997 (i.e. plant, equipment and specified intangible assets, such as patents) acquired after announcement and first used or installed by 30 June 2021.

Accessing Superannuation

While superannuation helps people save for retirement, the Government recognises that for those significantly financially affected by the Coronavirus, accessing some of their superannuation today may outweigh the benefits of maintaining those savings until retirement.

Eligible individuals will be able to apply online through myGov to access up to $10,000 of their superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020 for approximately three months (exact timing will depend on the passage of the relevant legislation).

How does it work?

To apply for early release you must satisfy any one or more of the following requirements:

  • You are unemployed; or
  • You are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or
  • On or after 1 January 2020:
    • You were made redundant; or
    • Your working hours were reduced by 20 per cent or more;
    • Or if you are a sole trader — your business was suspended or there was a reduction in your turnover of 20 per cent or more.

Business Loan Guarantees

The Coronavirus SME Guarantee Scheme will provide support for these businesses. Under the Scheme, the Government will provide a guarantee of 50 per cent to SME lenders for new unsecured loans to be used for working capital.

SMEs with a turnover of up to $50 million will be eligible to receive these loans.  The Government will provide eligible lenders with a guarantee for loans with the following terms:

  •  Maximum total size of loans of $250,000 per borrower.
  •  The loans will be up to three years, with an initial six month repayment holiday.
  •  The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.

Loans will be subject to lenders’ credit assessment processes with the expectation that lenders will look through the cycle to sensibly take into account the uncertainty of the current economic conditions.

Stimulus Payments to Households

With people losing their jobs across the country and lower income Australians already experiencing issues, Treasury has issued to different support payments for people in these categories.  The Income Support Payment and Income Support For Individuals.

Income Support Payment

The Government is providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders. Around half of those that benefit are pensioners. These payments will support households to manage the economic impact of the Coronavirus.

  • The first payment (announced on 12 March 2020) will be available to people who are eligible payment recipients and concession card holders at any time from 12 March 2020 to 13 April 2020 inclusive.
  • The second payment will be available to people who are eligible payment recipients and concession card holders on 10 July 2020.

A person can be eligible to receive both a first and second support payment. However, they can only receive one $750 payment in each round of payments, even if they qualify in each round of the payments in multiple ways.  The payment will be exempt from taxation

Income Support For Individuals

The Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight. This supplement will be paid to both existing and new recipients of the eligible payment categories. These changes will apply for the next six months

Eligibility

The eligibility requirements to access Income Support For Individuals has recently been expanded and it would be best to discuss your personal circumstances to ensure that you are able to access everything possible at this time!

We hope that the information above has helped in some way to navigate through these difficult times!
However to further assist yourself, your business or anyone else you know that may benefit from any of the above we are offering a free 15-Min Consultation to run through in more detail the above stimulus and how to access!

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