Stimulus Packages and the Ongoing COVID-19 Situation
Following the announcement on Friday that the federal government would be bringing in an extensive stimulus package to mitigate the economic impacts of Coronavirus (COVID-19), Western Australian Premier Mark McGowan has this morning laid out his own plans to bolster the WA economy. If you haven’t yet read our recent article on the federal stimulus, a brief summary of that is detailed below. The WA stimulus package of $607 million to support households and small businesses comes as further cases of COVID-19 in WA have been announced, with infection numbers increasing week to week. So, what’s been announced, and how might it impact you?
Federal Stimulus Package
In case you missed it, here are some highlights from the federal government’s stimulus package:
- Small businesses with 20 or fewer employees who employ apprentices or trainees will receive up to $7,000 per apprentice on a quarterly basis (backdated to 1 January 2020, maximum of $21,000 per employee, applicable for apprentices who’ve been with the business since 1 March 2020).
- Increase to the threshold of the Instant Asset Write-Off to include businesses with turnovers of up to $500m; and an increase to the asset cost threshold from $30,000 to $150,000.
- PAYG Withholding 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 $1bn fund for communities impacted by knock-on effects of Coronavirus.
- A $750 one-off, tax-free payment from March 31 for about 6.5 million people on pensions and welfare.
WA State Stimulus Package
A headlining inclusion in the state government’s stimulus package is a freeze on household fees and charges until at least 1 July 2021 in an attempt to prevent consumer costs from blowing out as the struggling economy begins to take its toll on individuals and businesses. This means that there will be no increases to the cost of electricity, water, motor vehicle charges, emergency services levy and public transport fares in this time period; and the Energy Assistance Payment will also be doubled with a view to supporting WA’s most vulnerable.
According to the McGowan government, an allocation of $402 million in the 2020-21 budget will go towards paying for this freeze.
Another $114 million in measures will be implemented to support the state’s small and medium businesses. This includes a one-off grant of $17,500 for payroll tax-paying businesses with a payroll between $1 million and $4 million. Also, small and medium sized businesses affected by COVID-19 can defer payment of their payroll tax obligations for 2019-20 until 21 July 2020. This deferral is available to employers who pay $7.5 million or less in taxable wages and have been directly or indirectly impacted by COVID-19, compared to normal operating conditions.
Premier McGowan had the following to say regarding the introduction of the stimulus package: “We are in uncharted territory, and there’s no doubt our economy is going to feel the effects of COVID-19. As a responsible government, we must respond, and we must provide certainty to both businesses and households. These measures will provide relief to WA families, seniors and small businesses to further support our economy to withstand the headwinds we face.”
McKinley Plowman’s Position
During this unusual and difficult time, the team at MP+ would like to remind clients that we are here for you, no matter what. Measures are being put in place to allow us to work remotely should we be prompted to do so, and our team remains contactable wherever they are working from. If our office is forced to shut down, rest assured you will be notified, and we will still be able to provide you with the same great service you’ve come to expect from us. This includes the ability to hold meetings via video conferencing software and over the phone. The uncertainty and volatility surrounding the current health and economic issues is something that affects us all, and we are all working hard to ensure that the impact to you, our valued clients, is minimised.
Should you have any pressing questions or concerns for your business or personal finance at this time, please do not hesitate to contact your client manager via email, or call the office on 08 9301 2200.
We hope that you, your family and friends are happy and healthy through this challenging time, and we look forward to supporting you through it as the situation develops.
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