The Federal Government has yesterday (12 March 2020) announced an economic response to the Coronavirus targeting four key areas, being:

1. Support for business investment

Currently businesses with annual turnover of up to $50m can claim a deduction for the immediate write-off of assets purchased with a cost of less than $30,000.

Until June 2020, the asset cost threshold will be increased from $30,000 to $150,000.  Additionally, access to the write-off will be extended to businesses with turnover of up to $500m.

It is anticipated that the write-off cost threshold will revert to $1,000 from 1 July 2020 as had previously been scheduled.

In addition to the above measure, an investment incentive will be introduced that will apply to assets that exceed the write-off cost threshold.  The investment incentive will allow businesses with turnover of up to $500m to claim a 50% depreciation deduction for new assets purchased and first used/installed by 30 June 2021.  Normal depreciation rates will then apply to the remaining 50% of the asset’s cost.

This measure will only apply to new depreciable assets being plant, equipment & specified intangibles such as patents.  It will not be available for second hand assets or for items such as buildings and other capital works.

2. Cash flow assistance for employers

Businesses with annual turnover under $50m will receive cash flow support of up to $25,000 with the assistance to be delivered by the ATO as a credit in the activity statement system.  Under the package:

• Eligible businesses that withhold tax from their employees’ salary and wages will receive a payment equal to 50 per cent of the amount withheld, up to a maximum payment of $25,000; and
• Eligible businesses that pay salary and wages will receive a minimum payment of $2,000, even if they are not required to withhold tax.

The ATO will deliver the payment as a credit to the business upon lodgement of their activity statements. Where this credit places the business in a refund position, the ATO will pay that refund within 14 days.

Quarterly BAS lodgers will be eligible to receive the payment for the quarters ending 31 March 2020 and 30 June 2020.  Monthly lodgers will be eligible to receive the payment for the March, April, May and June 2020 lodgements.  To provide a similar treatment to quarterly lodgers, the payment for monthly lodgers will be calculated at three times the rate (150 per cent) in the March 2020 activity statement.

The Government has also announced a wage subsidy of 50% of apprentice’s/trainee’s wages paid during the 9 months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice/trainee, the subsidy will be available to a new employer.

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

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

Employers of any size and Group Training Organisations that re-engage an eligible out-of-trade apprentice or trainee will be eligible for the subsidy.

Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network (AASN) provider.  Employers will be able to register for the subsidy from early-April 2020.

3. Stimulus payments to households

There will be a one-off $750 payment to social security, veteran and other income support recipients and eligible concession card holders.

To receive the payment, a person must be residing in Australia and be receiving one of the following payments or hold one of the following concession cards on 12 March 2020:

• Age Pension
• Disability Support Pension
• Carer Payment
• Parenting Payment
• Wife Pension
• Widow B Pension
• ABSTUDY (Living Allowance)
• Austudy
• Bereavement Allowance
• Newstart Allowance
• Youth Allowance
• Partner Allowance
• Sickness Allowance
• Special Benefit
• Widow Allowance
• Family Tax Benefit, including Double Orphan Pension
• Carer Allowance
• Pensioner Concession Card holders
• Commonwealth Seniors Health Card holders
• Veteran Service Pension; Veteran Income Support Supplement; Veteran Compensation payments, including lump sum payments; War Widow(er) Pension; and Veteran Payment;
• Veteran Gold Card holders
• Farm Household Allowance

The one-off payment will be paid automatically from 31 March 2020 by Services Australia or the Department of Veterans’ Affairs. It is anticipated that over 90% of payments will be made by mid-April 2020.

4. Assistance to affected regions

The Government will allocate $1 billion to support those regions and communities that have been disproportionately affected by the economic impacts of the Coronavirus, including those heavily reliant on tourism, agriculture and education.

The $1 billion will be provided through existing or newly established Government programs.  This will include the waiver of the Environmental Management Charge for tourism businesses that operate in the Great Barrier Reef Marine Park and the waiver of entry fees for Commonwealth National Parks.

It will also include additional assistance to help businesses identify alternative export markets or supply chains. Targeted measures will also be developed to further promote domestic tourism.

The Minister for Trade, Tourism and Investment will work with affected industries and communities to develop recovery plans and measures, with the $1 billion to be available for distribution through existing or new mechanisms as soon as practicable

Additionally, the ATO will provide administrative relief for certain tax obligations (similar to relief provided following the bushfires) for taxpayers affected by the Coronavirus outbreak, on a case-by-case basis.

The Government has advised that it will move quickly to implement the economic response package.  It is intended that 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.

As always, we recommend proceeding with caution until the Bills to implement the package become law.  The finer details for each measure can have significant impacts upon eligibility and the benefits received.

There is also the very real possibility that the Government will need to negotiate with the opposition and minor parties to get the package through Parliament resulting in changes to the measures announced.

We will keep you informed as further details emerge.  In the meantime,  please contact us at [email protected] or 1300 328 855 if you need assistance or would like to know how the economic response package is likely to affect you.

Sky Accountants Ballarat

Phone: 1300 328 855

Office Address: 902 Howitt Street, Wendouree, Victoria 3355, Australia

Postal Address: PO Box 2234, Bakery Hill, Victoria 3354

Sky Accountants Gisborne & Macedon Ranges

Phone: 03 97444522

Office Address: 45 Hamilton Street, Gisborne, Victoria 3437, Australia

Postal Address: PO Box 270 Gisborne Victoria 3437