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KDA NEWS UPDATE - Government Stimulus Package

KDA NEWS UPDATE - Government Stimulus Package

On the 12th March 2020, the Australian Government announced an Economic Stimulus Package in response to the Coronavirus (COVID-19) pandemic and resulting impact on businesses and individuals in Australia.

Although details are not finalized, with the Government suggesting an additional Economic Stimulus Package to be announced later. We have summarised the key measures and the anticipated impact on small businesses below.

For any questions relating to how this affects your business, we encourage you to contact KDA via phone (08 9248 9991) or email admin@kdaaccountants.com.au.

1. Instant Asset Write-Off

Who is eligible?
Businesses with less than $500 million revenue are eligible to benefit.

What is the benefit?
Any business-related asset purchase (motor vehicle, office furniture, equipment etc.) up to the value of $150,000 is an immediate tax deduction. There is no limit to the number of assets you can purchase, as long as the assets purchased are less than the threshold of $150,000.

Additional measure
A 15-Month investment incentive, through to 30 June 2021 by accelerating depreciation deductions. Businesses will be able to deduct 50% of the cost of an eligible asset on installation date with existing depreciation rules applying to the balance of the asset's cost.

When does this apply?
This will apply to assets purchased between 12 March 2020 to 30 June 2020. You will receive the benefit when your FY2020 (1 July 2019 to 30 June 2020) tax returns are lodged.

The instant asset write-off was previously only available to businesses with less than $50 million revenue and was raised to $30,000 from $25,000 on the 2 April 2019.

2. Tax-Free Payments for Employers

Who is eligible?
Businesses with less than $50 million revenue and employ staff are eligible.

What is the benefit?
The government will give employers the equivalent of 50% of PAYG withholding tax for employees (up to a maximum of $25,000). Even if your business pays salaries or wages and are not required to withhold tax from their employees, you will still receive a minimum payment of $2,000. The payment/credit received is tax-free and will not be included assessable income to your business. 

When does this apply?
Applies to any BAS or IAS period between 1 January 2020 to 30 June 2020. The benefit will apply directly to your ATO Activity Statement Account after a BAS or IAS is lodged. Essentially, your businesses PAYG withholding bill will be cut in half for each IAS and BAS until the benefit reaches $25,000.

3. Apprentices and Trainee Support for Employers

Who is eligible?
Businesses who employ apprentices and trainees and have less than 20 full-time employees in total.

What is the benefit?
Businesses who are eligible can apply for a 50% wages subsidy of the apprentice’s or trainee’s wage paid. The maximum subsidy per apprentice or trainee is $21,000.

When does this apply?
This applies to wages paid to apprentices or trainees from 1 January 2020 to 30 September 2020. Employers will need to register for the subsidy from early April 2020 with final claims due 31 December 2020. An eligibility assessment will be conducted by an Australian Apprenticeship Support Network provider.

4. ATO Administrative Relief

Who is eligible?
Businesses and individuals affected by the COVID 19 (Coronavirus) outbreak. Although details are limited at this stage, the ATO will likely base their decisions on a case-by-case basis.

It is likely that certain tax obligations will be placed on hold and extensions granted if required for those who are affected by the outbreak.

5. Stimulus Payment to Pensioners and Welfare Recipients

Who is eligible?
Households and individuals who currently receive assistance payments from the government, such as, Newstart, Disability Support, Pension and Family Tax Benefits. A one-off payment of $750 will be given to those who currently receive government assistance. Payments are likely to be made by mid-April although this may change.

Western Australia Stimulus Package (16 March 2020)

Additionally, as of 16 March 2020, the Western Australian state government has announced a state Economic Stimulus Package.

1. Freeze on Household Fees and Charges until 1 July 2021

Household fees and charges include utilities such as electricity and water. These bills will not have to be paid and can be deferred until 1 July 2021. However, it is important to understand that this freeze on bills is only a deferral and will still have to be paid in the future.

2. Energy Assistance Payments

Vulnerable Australians, including pensioners will also receive double the current Energy Assistance Payment (EAP) up to $600, previously $300.

3. One-off Grant for Small Business

Small to medium businesses with a payroll between $1 million and $4 million will receive a one-off grant of $17,500. The Payroll Tax threshold will also increase to $1 million. The lifting of the threshold was schedule for 1 January 2021, but has been brought forward 6 months and will apply as of 1 July 2020.

4. Defer Payroll Tax Payments until 21 July 2020

Small businesses with a payroll less than $7.5 million can apply to defer their payroll tax payments to 21 July 2020.

5. Paid COVID-19 leave for Public Sector Workers

Workers in the Western Australian public sector will benefit from the introduction of 20 Days Paid COVID-19 leave. The paid leave is also extended to casual workers.

For any questions or for more information about the economy and government stimulus packages, email us at admin@kdaaccountants.com.au.