Exploring the Government’s COVID-19 Stimulus Package
Are you concerned about the effect Coronavirus (COVID-19) might have on your business? The Federal Government has announced plans to release a stimulus package, to the tune of tens of billions of dollars, with a view to reduce the impact on businesses and the broader economy. Small businesses with apprentices, and businesses who have, or are looking to purchase major assets, are likely to feel the most immediate effects of this package, as the Morrison government looks at “keeping Australians in jobs, keeping businesses in business… and ensuring the Australian economy bounces back stronger on the other side”. Let’s have a look at some important inclusions in this stimulus package.
Small Business Apprentices
Across Australia, there are currently around 120,00 apprentices working in various industries. As part of the COVID-19 stimulus package, small businesses with 20 or fewer employees who employ apprentices will receive up to $7,000 per apprentice on a quarterly basis, backdated from the start of this year, running through to the end of September 2020. The cap on this payment is $21,000 per apprentice, assuming their employment ran through the entire three-quarter period from the start of January to the end of September; and the apprentice must have been working with the business as at March 1. This is designed to help these employees pay their apprentices’ wages in this difficult time, as a measure to minimise the number of apprentices and trainees that are let go due to business downturn. The total cost of this part of the package is estimated at $1.3bn over two years.
Instant Asset Write-Off
You may remember our article in May 2019 outlining the changes to the Instant Asset Write-Off. As of April 2019, businesses with a turnover of less than $50m p.a. could purchase an eligible business asset up to the value of $30,000 and claim an immediate deduction for it (in the same financial year the asset was purchased). In order to encourage business owners to further invest in their own equipment, and stimulate the economy by getting them to spend money, the government has increased the threshold to include businesses with up to $500m p.a. turnover; and the asset cost threshold from $30,000 to $150,000. Not only does this vastly increase the number of businesses that can take advantage of the instant asset write-off, but it also gives these businesses a great chance to purchase a business asset that they may have otherwise been putting off, as it will come with a very generous tax break should they choose to take advantage.
Other Stimulus Package Items
A quick rundown of some of the other items included in the Coronavirus stimulus package are as follows:
- Payroll tax: Businesses that pay income tax on behalf of employees are eligible for a payment equal to 50% of tax withheld on employees’ salary, up to $25,000 (tax-free). This applies to businesses turning over up to $50 million a year, that employ staff from 1 January to 30 June 2020.
- a $1 billion fund for communities impacted by knock-on effects of Coronavirus;
- sickness payment waiting period waived for casual workers if they need to self-isolate;
- a $750 one-off, tax-free payment from March 31 for about 6.5 million people on pensions and welfare.
As the Coronavirus pandemic spreads, and the economy continues to feel the pressure, businesses and individuals alike will need to ensure that they are not only doing what they can to keep themselves physically healthy, but also financially healthy. If you’re concerned about the impact COVID-19 may have on your investments, our previous article may help to alleviate some worries. If you’d like some more information on how the government’s Coronavirus stimulus package can best benefit your business, get in touch with the team at McKinley Plowman today on 08 9301 2200 or visit www.mckinleyplowman.com.au.
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