Cash Flow Assistance from the Government - Everything You Need to Know

Posted by Natalia Atapina on Mar 18, 2020 3:38:48 PM

In cash flow, tax planning, debt, success, strategy, industry update, Tax Law

Yesterday the Australian Government announced an economic response package totalling $17.6 billion to help protect the Australian economy from arising implications caused by Coronavirus epidemic. This package is subject to review by the Parliament in the final sitting week in March 2020.

The following is a summary of the economic stimilus package:

Aim

Description

When

Delivering support for business investment

Increasing the instant asset write-off

Lifting the threshold to $150,000 (from $30,000) and making more businesses eligible to use it

Immediately until 30 June 2020

Backing business investment

Offering businesses a time-limited incentive to invest, by accelerating depreciation deductions

Immediately until 30 June 2020

Cash flow assistance for businesses

Boosting cash flow for employers

Helping small and medium-sized businesses cover the costs of employee wages and salaries (5% of PAYG withheld with a minimum $2,000 payment and up to a cap of $25,000 over 6 months)

Covers amounts withheld between 1 January and 30 June 2020

Supporting apprentices and trainees

Wage assistance to help small businesses to keep their apprentices and trainees

1 January 2020 to 30 September 2020

Stimulus payments to households to support growth

Stimulus payments

One-off payment of $750 to social security, veteran and other income support recipients and eligible concession card holders to support confidence and domestic demand in the economy

From 31 March 2020

Assistance for severely affected regions

Support for Coronavirus-affected regions and communities

Financial support to help regions and communities most affected by the Coronavirus to recover

As soon as practicable


Detailed explanation of business assistance offered:

Increasing the Instant Asset Write-Off

The instant asset write-off threshold is to increase from $30,000 to $150,000 which can be accessed by businesses with a turnover of less than $500 million (up from $50 million) until 30 June 2020.

 Backing Business Investment

A time limited 15-month investment incentive to be introduced (through to 30 June 2021) to accelerate depreciation deductions. 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.

 Boosting Cash Flow for Employers

Businesses with employees with less than 20 employees and a turnover of less than $50 million are eligible for $25,000 cash flow boost.

If you’re reporting wages to the ATO on quarterly basis (quarterly BAS): you will receive a credit towards the PAYGW payable on wages for March and June quarters.

If you’re reporting wages to the ATO on monthly basis (monthly IAS): you will receive a credit towards the PAYGW payable on wages for March, April, May and June monthly. The payment for monthly lodgers will be calculated at three times the rate (150%) in the March 2020 activity statement.

Example for Quarterly BASs:

March quarterly BAS lodged
W1 Wages $10,000
W2 PAYG withholding $5,000
Amount payable: $2,500 and Government credits $2,500

June quarterly BAS lodged
W1 Wages: $100,000

W2 PAYG withholding $35,000
Amount Payable: $17,500 and Government credits $17,500

Supporting Apprentices and Trainees

Small businesses employing fewer than 20 full-time employees, who retain and apprentice or trainee, can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage paid during the 9 months from 1 January 2020 to September 2020. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).

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

Further information is available at:

Package Implementation

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.

If you require further information, please don’t hesitate to contact us on (07) 3174 5010 or email admin@tradiesaccountant.com