By now, you’ve probably heard the news, either from the radio, the paper, social media or just the good old grapevine, that the Australian Government has today (12 March 2020) issued its Stimulus Package to support Australian Businesses and Australians as a whole. You can find the official media release here, but for those of you who just want a summary, here it is…
The package has 4 prongs:
- An extension to the small business instant write off, taking it from $30,000 to $150,000. This is designed to encourage those businesses that might have shelved plans to invest in equipment due to the current uncertainty around the Coronavirus (as well as the after effects from bushfires, floods and drought), to go ahead and invest. This extension is time limited to purchases from 12 March 2020 to 30 June 2020.
- An increase in the depreciation deduction of an additional 50% of the purchase cost. This acceleration of depreciation is time limited from 12 March 2020 for 15 months up to 30 June 2021.
The instant write-off is a deduction, not a refund. This means it reduces your taxable income, and may even mean that you don’t have to pay any tax for this year.
- A tax free payment of $2,000 to $25,000 towards the cost of employees for the period 1 January 2020 to 30 June 2020. The amounts paid will be linked to your Business Activity or Instalment Activity Statements lodged. Payments will be made after 28 April 2020.
- Wage subsidies up to 50% for Apprentices and Trainees wages for the period 1 January 2020 to 30 September 2020.
- One off tax free payment of $750 to Pensioners, Veterans, Social Security and other Income Support recipients and eligible concession card holders. Payments will be made from 31 March 2020 and most payments are expected to made by the end of April 2020.
4. Severely Affected Areas
- Support to those areas economically affected by the impact of the Coronavirus, including waivers of fees and charges, and direct support to promote tourism to those areas. The government will be working with local governments & businesses needing this support.
- In addition, the Government has offered extensions for certain tax obligations, including the deferment of payments, for up to four months. It will be on a case-by-case basis, similar to those extensions granted to those affected by the recent bushfires.
If you’re a business owner, it’s important to consider the long-term cash flow needs of the business before jumping in and making those big purchases.
There may also be a lot of sales talk around leasing and mortgage opportunities to fund your purchase but make sure that your business can sustain the repayments long after the Government’s package has expired.
If you’re not sure how you can best make use of these stimulus measures, call the OBB Team on 02 9907 2733 or come in and see us in beautiful Port Macquarie (and stimulate our local economy!) to discuss what it will mean for you and your business.
OBB Accountants….Making your business count!