The government has just announced plans to stem the coronavirus impact and hopefully ensure the country does not go into a recession.
The stimulus package is worth $17billion and should give a much needed boost to the economy which is yet to see the worst.
Here’s what you need to know being a small business…
Cash flow assistance for businesses
The Government has announced a $6.7 billion boost to Cash Flow for Employers by up to $25,000 with a minimum payment of $2,000 for eligible small and medium-sized businesses.
The payment will provide cash flow support to businesses with a turnover of less than $50 million that employ staff, between 1 January 2020 and 30 June 2020.
The payment will be tax free.
This measure will benefit around 690,000 businesses employing around 7.8 million people.
Businesses will receive payments of 50 per cent of their Business Activity Statements or Instalment Activity Statement from 28 April with refunds to then be paid within 14 days.
A further $1.3 billion will be allocated to employers with apprentice and trainee employees.
Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for up to 9 months from 1 January 2020 to 30 September 2020.
Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.
Am I eligible for the government’s business cashflow support?
Do you employ an apprentice or a trainee? If yes, you may be eligible.
Did you pay wages to employees in the March 2020 quarter or month? If yes, you may be eligible.
Are you in a severely affected region?
$1 billion will be allocated to support those sectors, regions and communities that have been disproportionately affected by the economic impacts of the Coronavirus, including those heavily reliant on industries such as tourism, agriculture and education.
This will include the waiver of fees and charges for tourism businesses that operate in the Great Barrier Reef Marine Park and Commonwealth National Parks. It will also include additional assistance to help businesses identify alternative export markets or supply chains.
Targeted measures will also be developed to further promote domestic tourism. Further plans and measures to support recovery will be designed and delivered in partnership with the affected industries and communities.
Boost to instant asset write-off (Up until 30 June 2020)
Assets that cost less than $30,000 can currently be written-off in the year they are purchased, instead of being depreciated/expenses over a number of years.
But the new increase will now apply to much bigger businesses — with a turnover of up to $500 million — and for much bigger items worth up to $150,000. This will be eligible up to 30 June 2020.
As an example, if you purchase a single asset that cost $100,000 (ie. <$150k) you could expense the whole cost and enjoy the tax benefits of such a large expense that would normally be depreciated/expensed over a number of years.
Boost to depreciation (Up until 30 June 2021)
Businesses with a turnover of less than $500 million will be able to deduct an additional 50 per cent of the asset cost in the year of purchase.
Why is the government giving out cash?
The government has created a stimulus package to stimulate the economy.
The stimulus package has two primary goals.
One is to ensure businesses can continue employing their workers and ensure employment rates are maintained at a healthy level.
The other goal is to encourage spending, which is evident through a $750 cash handout.
People in Australia on government support including pensioners will be eligible to receive this tax-free cash handout.
These people do it the hardest and are most likely to spend the handout, in which a significant portion will go to small businesses.
What do I need to do?
If you need assistance, please reach out to our friendly accountants on 1300 180 630 or if you would like us to give you a call, Book in your 30 minute consultation for $50 to get the answers you need today.