Australian Government's Stimulus Package

The government has released today it's much anticipated stimulus package for Australia in response to COVID-19 and the slowdown in the economy. Here is a summary of the announced measures:

• PAYG Withholding Reduction - Businesses will have 50% of their PAYG Withholding obligation paid by the Government via the Tax Office. The payment from the Government is limited to $25,000 in total, and to businesses with a turnover of less than $50m. For example, if the March BAS has PAYG Withholding of $5,000, you will only need to pay $2,500. GST and other obligations on Activity Statements are unaffected. This will apply to Activity Statements for the months of March, April, May and June 2020, and limited to $25,000 in total reductions.

• Wages Payment - Businesses that do not pay PAYG Withholding, but still pay wages, will receive a payment of $2,000. We suspect this will also be via the Tax Office and Activity Statements.

• Instant Asset Write-off Increase - From 12 March 2020, the Instant Asset Write-off is being increased to $150,000 (up from $30,000) for businesses with turnover up to $500m (previously $50m). This implies that the funds are available in the first place to purchase the asset. The increase is only available to 30 June 2020 at this stage.

• Investment Incentive - From 12 March 2020, the Investment Incentive will make a return – an additional tax deduction of 50% of the cost of a new asset, in the year of purchase. For example, if you purchase an asset worth $80,000, you will receive a tax deduction of $120,000 ($80,000 instant asset write-off plus $40,000 in investment incentive deduction). This incentive is available to 30 June 2021.

• Wages for Apprentices - for businesses that employ less than 20 people the Government will cover 50% of apprentices wages from 1 January 2020 to 30 September 2020. More details will come on how to apply for this subsidy.

• Cash Payments - Pensioners, social security and other income support recipients will receive a cash bonus payment of $750 each. Although details are scarce, we believe this will be pensioners who qualify and receive a pension from Centrelink.

• Deeming rates - for pensioners will drop by 0.5%. This means if you were previously deemed as earning too much to qualify for the pension or Health Care Card, you may now qualify. We can assist you in assessing your eligibility for this.

• Waiving of Fees - specifically for business in tourism, agriculture and education. This includes Great Barrier Reef Marine Park fees, although we believe these to be quite minimal.

• Government Assistance - Additional assistance to help businesses identify alternative export markets or supply chains, and measures to promote domestic tourism.

• Lodgement and Payment Extensions - Administrative relief for certain tax obligations, and auto deferral of up to 4 months. We will work out who qualifies when they release further details.