In an effort for Australia to withstand the economic impact of the Coronavirus, The Australian Federal Government has introduced a stimulus package which will benefit Australian businesses. The stimulus package for businesses is made up of two main components. These two components are Delivering support for business investment and Cash flow assistance for businesses.
Delivering support for business investment
The Delivering support for business investment component consists of changes to the amount businesses are able to claim for the instant asset write-off as well as accelerating depreciation deductions. These two measures in place in the plan are designed to aid Australian businesses and economic growth in the short term, and bolster economic recovery following the Coronavirus Outbreak.
- Increasing the instant asset write-off
The government has decided to adjust the instant asset write-off threshold from what was previously at an amount of $30,000 to $150,000. This new scheme is also now accessible to businesses with an aggregated annual turnover of less than $500 million (up from the previous amount of $50 million).
Editor’s note: The write-off is available for depreciating assets acquired by or before 30 June 2020.
- Backing business investment
The Backing business investment scheme allows businesses to accelerate depreciation deductions. Businesses with a turnover of less than $500 million will be allowed to deduct 50 per cent of the cost of an eligible asset on installation. This scheme however, is a time limited 15 month investment incentive available through to 30 June 2021.
Cash flow assistance for businesses.
The cash flow assistance for businesses component is specifically designed to support businesses to manage cash flow issues originating from the economic impacts of the Coronavirus while helping businesses retain their employees. This component consists of a direct cash payment to eligible businesses as well as a wage subsidy for a portion of the trainee’s or apprentice’s wage within a given period. The objective of this scheme is that it will provide support tailored for small and medium enterprises and improve business confidence.
- Boosting cash flow for employers
The boosting cash flow for employers measure will provide small and medium-sized businesses up to $25,000 in payments with a minimum payment of $2,000 for eligible businesses. Businesses with a turnover of less than $50 million that employ staff are eligible to receive this payment. This payment will also be tax free.
The Australian government has claimed that this measure will benefit roughly 690,000 businesses employing around 7.8 million people.
- Supporting apprentices and trainees
The government is supporting small businesses to retain their apprentices and trainees. Eligible employers will be able to apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for a maximum of 9 months from 1 January 2020 to 30 September 2020. Should a small business be unable to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.
The Australia government expects this measure to support up to 70,000 small businesses, employing roughly 117,000 apprentices.
Source: Australian Government, The Treasury, 13 March, 2020, 12.00am
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.