stimulus package in detail
GOVERNMENT STIMULUS PACKAGES – OUR TAX PLANNING MEETING WITH YOU THIS YEAR WILL BE VITAL!
The Australian Government has just released a $17.6 billion economic stimulus package. The package has been marketed as a measure to protect the economy by maintaining confidence, supporting investment and keeping people in their jobs.
The key tax and stimulus measures include:
- From Thursday 12 March 2020, the instant asset write-off threshold has been increased from $30,000 (for businesses with an aggregated turnover of less than $50 million) to $150,000 (for businesses with an aggregated turnover of less than $500 million) until 30 June 2020.
- A time-limited 15-month investment incentive (through to 30 June 2021) which will operate to accelerate certain depreciation deductions. This measure will also be available to businesses with a turnover of less than $500 million, which will be able to immediately deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost. As announced, this measure is proposed to only apply to new depreciating assets first used, or installed ready for use, by 30 June 2021.
We recommend caution. This accelerates a tax deduction that you would have received over time with depreciation claims. You will not get cash back and you will spend cash you may need. If you have cash reserves and this fits in with your business plans – great, go for it. If you are making an investment in order to get an instant asset write-off thinking the government is about to write you out a big refund cheque for everything you spent and more, you might like to think again or talk with us further.
- Tax-free payments of up to $25,000 for eligible small and medium businesses (i.e., with a turnover of less than $50 million that employ staff) based on their PAYG withholding obligations. This is not a cash payment, but it is a credit equal to 50% of the PAYG amounts withheld from salary and wages paid to employees.
Businesses that lodge activity statements on a quarterly basis will be eligible to receive the credit for the quarters ending March 2020 and June 2020. Business that lodge on a monthly basis will be eligible for the credit for the March 2020, April 2020, May 2020 and June 2020 lodgements.
If a business pays salary and wages to employees but is not required to withhold any tax, then a minimum payment of $2,000 will still be made. The minimum $2,000 payment will be applied to the first activity statement lodgement.
- Wage subsidies to support the retention of apprentices and trainees – Employers with less than 20 full-time employees may be entitled to apply for Government funded wage subsidies amounting to 50% of an apprentice’s or trainee’s wage for up to nine months from 1 January 2020 to 30 September 2020. The maximum subsidy for each apprentice/trainee is $21,000.
When we have our 2020 Tax Planning discussions with you, we will assist you with opportunities to restructure how you pay yourself to that you can receive the maximum cashflow assistance amounts from the Government.
In addition to Federal stimulus is a package from the WA government to support households and small businesses.
Payroll tax support
- Small businesses with a payroll of $1 million to $4 million per year will receive a one-off grant of $17,500.
- The increase in the payroll tax threshold up to $1 million will be brought forward to 1 July 2020
- Businesses impacted can defer payroll tax payments until 21 July 2020
- All government charges would have increased by inflation on 1 July 2020. This won’t happen. A freeze will apply to entire ‘household basket’, including electricity, water, motor vehicle charges, emergency services levy and public transport fares
- Energy Assistance Payment (EAP) doubled to support vulnerable Western Australians, including pensioners
Contact us TODAY if you would like to meet with us earlier to ensure you receive your maximum cashflow assistance from the Government.