The Australian federal government has announced the first stage of its coronavirus stimulus package, designed to keep the economy healthy and stave off the worst effects of a possible recession.
The current package is worth $17.6 Billion, with small businesses one of the largest beneficiaries.
“Our plan will back Australian households with a stimulus payment to boost growth, bolster domestic confidence and consumption, reduce cash flow pressures for businesses and support new investments to lift productivity” – Scott Morrison
This means you, your family and business may be up for some juicy incentives and cash payments.
What has been announced so far and who will benefit?
- Welfare recipients: an extra $750 per person
- Small businesses with apprentices: up to $21,000 to keep apprentices in work
- Small to medium-sized businesses: between $2,000 and $25,000 to help with cashflow
- Businesses generally: the instant asset write-off threshold raised to $150,000 and an extra depreciation discount
- Affected businesses: access to a new $1 billion fund
Instant asset write-off increased substantially
Remember the instant asset write off extension from last year? We wrote about the benefits of extending this scheme at the time, but now we’re talking about a much bigger incentive. This one is now aimed at the small to large business community (not small to medium as before) and is quite attractive.
The current threshold of $30,000 has now been boosted to a whopping $15,000.
The turnover cap (which was $50 million a year) has also ballooned to include business’ turning over up to $500 million.
What is it again?
Basically, if you have bought a core piece of depreciating equipment or another work related asset, you can save on your tax bill with a nice offset.
You must be able to prove, however, that the piece of equipment is central to your business and its operation.
For example, this can include:
- Vans, trucks and vehicles
- Tools and trade equipment
- Computers and IT equipment
- Plant machinery
- Coffee machines and kitchen equipment
Boosting Cash Flow payouts
There will also be measures that may well assist you financially as a small business – the coronavirus support package will see businesses receive cash payments and tax relief to get them spending.
“Boosting Cash Flow for Employers measure will provide up to $25,000 back to small and medium-sized businesses, with a minimum payment of $2,000 for eligible businesses” – The Guardian
That is quite significant for all small businesses out there.
In fact, nearly 700,000 small to medium businesses will be in line to receive cash payments of between $2,000 and $25,000 to help pay wages or hire extra staff.
The measure is the largest part of the package and is estimated to cost $6.7 billion.
Details are forthcoming on exactly how this will be rolled out.
Keeping 120 000 apprentices in work
Another key element to the package that may affect you is the incentive to keep apprentices employed.
While details remain unclear, we know we are looking at $1.3 billion in support payments to keep 120,000 Australian apprentices employed and their employers afloat.
“The package will include up to $21,000 per small business apprentice to help employers keep these people in work. The businesses will receive $7,000 per quarter, backdated from the start of the year, until the end of September” – ABC News
This is an obvious incentive to keep apprentices employed and, of course, subsidised by cash to ensure the business has enough capital for wages through any slow period that may occur.
Welfare cash payments
This may or may not affect you, but certain individuals on various forms of welfare will also be receiving a one off $750 direct cash payment. Those who will be receiving that cash are often those whose livelihoods would be affected the hardest by weak economic conditions.
The government expects this cash to flow back into the economy through increased spending.
“It’s not for us to tell those Australians how to spend their money.
But what we do know from experience is that they will spend that money, and that money will encourage economic activity.” – Josh Frydenberg
Those six million Australian welfare recipients receiving payments include:
- Pensioners (largest beneficiary)
- Young people
- Job seekers