Rising Tide Blog

Coronavirus business stimulus package

Posted by Braden Johnston

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In these uncertain times, Australian families and businesses are under financial pressure and unfortunately, there is no silver bullet.

However, we are excited to see some positive steps taken by the Australian government, in the form of the $17.6b stimulus package that has been announced.

For those of you who are unaware how the package will work, here’s a brief overview:

Business stimulus measures

Instant asset write off

The instant asset write off threshold has increased from $30,000 to $150,000 (for assets first used or installed ready to use from March 12 – June 30, 2020). Turnover for businesses claiming must be under $500m, however from July 1 2020, the amount reverts back to $1,000 for small businesses (less than $10 million dollars turnover).

Business investment 

Businesses with less than $500m turnover will be eligible for accelerated depreciation deductions, providing it was purchased after 12 March 2020 and first used or installed by June 30 2021.

PAYG rebate for business with employees

Businesses that employ workers with a turnover of less than $50 million, will receive a payment of 50% of the withheld PAYG, up to $25,000. This will be delivered as a credit in their June BAS.

Small businesses who employ apprentices 

Small businesses that employ trainees or apprentices will be eligible for a 50% wage subsidy to a maximum of $21,000 per eligible staff member, for wages paid between January 1 – September 30 2020.

Tax Relief measures (for businesses affected by COVID-19)

  • Deferring tax payments
  • Access to monthly GST reporting (to get access to cash quicker)
  • Allowing businesses to vary their PAYG March quarter instalments to zero
  • Remitting any tax interest or penalties from January 23 onwards
  • Ability to enter low interest payment plans with the ATO

Non – business related measures;

There have also been a number of non-business relief measures introduced. These include:

  • One off payment of $750 available to social security recipients
  • Government has set aside $1b for areas highly affected – tourism, agriculture & education

What do we think?

The measures taken are certainly positive, but it is important to remember that each businesses situation will determine the impact.

For businesses that are planning to purchase assets, the increase in the asset write-off threshold will be beneficial, although the benefit won’t be realized until tax returns are lodged with the ATO.

When dealing with the ATO around BAS and tax obligations, there will be a positive impact on cash flow due to the additional flexibility and the PAYG rebate that will be productive – although the payment may take some time to hit the bank account.

Overall the measures provide flexibility for business, and we recommend you take the opportunity to lock in a chat with Braden over the phone using this link to see how your business may benefit.

It seems like the only certainty is change at the moment, but the team at Rising Tide will do our best to help you, your families and businesses any way we can.