On the day that the World Health Organisation (WHO) has declared the Coronavirus a global pandemic the Australian Federal Government has released a multi billion dollar stimulus package to help combat the Coronavirus from multiple angles.
The economic stimulus package is being put in place with the goals of keeping employees in jobs, encouraging and assisting business investment, providing cash that will stimulate the economy, and supporting sectors and communities that have been severely affected.
So who does the economic stimulus help?
There will be a once of payment to those most vulnerable and currently receiving Centerlink payments. These are designed to stimulate the economy and push money into the retail sector as people spend this money. However, the main focus for the economic stimulus has been business, with an emphasis on those businesses that are providing employment.
What does this mean for a Small Business owner?
1. Instant Asset Write Off massive increase
Currently small and medium sized business can instantly write off assets purchased for your business up to $30,000 (rather than depreciating them over several years). Until June 2020 this has been increased to $150,000. Additionally, the businesses that can access this concession has been increased from the previous cap of $50 million turnover to $500 million turnover.
This will cost the government $700 million dollars but hopefully will encourage businesses to make some larger investments into their business and purchase goods before June 30 giving the economy a boost. This starts immediately!
2. Accelerated Depreciation
Effective immediately businesses with a turnover of less than $500 million will be able to accelerate depreciation deductions, and be able to claim an additional 50% of the asset cost in the year of purchase (through to 30 June 2021). This will significantly bring forward tax depreciation deductions that are available to a business when purchasing fixed assets.
3. Cash Flow
Small businesses that employ others will receive a cash flow support payment. This will be for businesses with a turnover of less than $50 million, that employ staff between 1 January 2020 and 30 June 2020. This will be a tax free payment of between $2,000 and $25,000. Employers will receive 50% of the Business Activity Statements or Instalment Activity Statement from 28 April up to a maximum of $25,000. It is anticipated that these government grants will be paid automatically, and that these payments will be tax free. This will benefit 690,000 businesses.
$1.3 billion has been put aside to support small businesses and their 120,000 apprentices and trainees. Those eligible will be able to claim a wage subsidy of 50% of the apprentice or trainees wage for up to 9 months from 1 January 2020 to 30 September 2020.
While these measures may seem appealing to many businesses, the reality is that they will need this. All we can hope is that this will be enough to keep our economy afloat and small businesses being able to operate during these uncertain times.
COVID-19: How to motivate your team while working remotely?, published May 18, 2020
Expanding globally during COVID-19: Risky business or perfect timing?, published May 07, 2020
Cashflow is a lifeblood of your Business, especially during a pandemic such as Coronavirus, published April 22, 2020
Finding opportunities in a crisis and how to recover on the other side of COVID-19?, published April 20, 2020
COVID-19: What does 'Standing Down my team' mean to my Business?, published April 16, 2020
JobKeeper Payment: Eligibility Rules have been released! Who is Eligible?, published April 15, 2020
Working from home during Coronavirus: What expenses are Tax Deductible?, published April 9, 2020
COVID-19: EMDG extra funding of $49.8 million to help Exporters, published April 7, 2020
Startups and Scaleups: R&D Tax Incentive FY2019 deadline extended due to Coronavirus,published April 6, 2020
What is the difference between JobSeeker and JobKeeper? Do you know what you're eligible for?, published April 2, 2020
JobKeeper Allowance: New Government financial measure as a response to COVID-19, published Mar 31, 2020
Should you do Business Planning during CoVID-19?, published 27 Mar, 2020
A second CoVID-19 Stimulus for Businesses, published Mar 24, 2020
Financial relief for business experiencing difficulty due to CoVID-19 and State Government Support, published Mar 21, 2020
Have you noticed our #FridayExpertTips... here's one that relates to #CoVID-19: Productivity while working remotely
“Not having a well-equipped home office space when your employees begin remote working can cause a temporary decrease in productivity. If your employees don’t have a home office, make sure they do as much as they can to create an ad hoc, bespoke space exclusively for work.”
This information is accurate on the day it’s published and is subject to change as the situation around Coronavirus (COVID-19) evolves. Our conclusions may not be valid if there is any change in those facts, circumstances and assumptions. Accordingly, neither Azure Group Pty Ltd nor any member or employee of Azure Group, undertakes responsibility arising in any way whatsoever to any persons in respect of this alert or any error or omissions herein, arising through negligence or otherwise howsoever caused.