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PKF Australia

Accountants and Business Advisers

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Australian Government Stimulus Package Passed by Parliament

The Australian Government Stimulus Package has been passed by Parliament and the incentives it provides are now accessible by eligible organisations and individuals.

The package provides for three main arms of support:

  • Support for individuals and households
  • Support for businesses and
  • Support for the flow of credit.

If more detail is required on the areas of support or more detail on the below measures the Australian Treasury website contains useful information which can be found at https://treasury.gov.au/.

At PKF, our team of specialist accountants will help you understand what benefits and incentives you can access to help you through these unprecedented times.

Some specific incentives are:

BUSINESSES – (AGGREGATED TURNOVER OF LESS THAN $500 MILLION)

  • Instant Asset Write-off – the instant asset write-off threshold for asset purchases has been increased from $30,000 to $150,000 from 12 March 2020 until 30 June 2020.
    • Assets acquired must have a cost less than $150,000
    • At this stage cars that are subject to the depreciation cost limit do not benefit from the $150,000 limit uplift (but this may change)
  • Accelerated Depreciation – a 50% immediate deduction for the costs of eligible new assets upon installation, with existing depreciation rules applying to the balance of the asset’s cost, until 30 June 2021.
    • The instant asset write-off takes precedence over this measure where it applies 
       

EMPLOYERS – SMALL AND MEDIUM SIZED BUSINESSES (AGGREGATED TURNOVER OF LESS THAN $50 MILLION, AND NOT-FOR-PROFITS (INCLUDING CHARITIES)

  • Tax-free payment
    • Equal to 100% of tax withheld on salary and wages up to $100,000 (minimum payment $20,000).
    • The ‘payment’ is up to a maximum of $100,000 and is not a guaranteed $100,000
    • The turnover test is based on the turnover for the 2019 financial year
    • It is for businesses that employ to help keep people in a job
    • It is payable in two stages (March to June and then July to October 2020 Activity statements) – with the maximum limit of $50,000 and minimum limit of $10,000 applying to each stage
    • Employers will need to be registered as employers and form part of the PAYGW system and still need to withhold tax from employee remuneration - even if that is a nil withholding required for a period – and they needed to be established and registered as of 12 March 2020
    • On lodgement of the activity statements, a credit will be generated equal to the greater of 100% of the tax reported as being withheld from employee wages or the minimum benefit amount
    • The timing of the relief depends on whether monthly or quarterly activity statements are lodged - with some timing benefits for monthly lodgers that allow for early credits for expected withholding in later months
    • So rather than being an actual payment received for withholding above the minimum $10,000 benefit, the measure will allow businesses that qualify to not pay over the tax withheld from employee wages – so in effect the cash remains in the business each time wages are paid and amounts are withheld
    • The employees will still receive a credit for the tax withheld against their tax obligations
    • This will be automatically calculated by the Australian Taxation Office with no requirement to apply. The BAS/IAS just needs to be lodged. So, employers need to remain active to claim the maximum entitlements. A refund BAS will be paid within 14 days of lodgement.
  • Loans – the government is providing a 50% guarantee on new short-term unsecured loans of up to $250,000 to SMEs (must have an aggregated annual turnover of less than $50 million).
    • The loans will be for up to 3 years with an initial 6 month repayment holiday and are unsecured
    • There will still be lender credit assessment processes that apply
    • The loans will commence in April 2020 and be available for loans made by participating lenders until 30 September 2020

TEMPORARY RELIEF FOR FINANCIALLY DISTRESSED BUSINESSES

  • The Government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive.
    • The minimum demand threshold for statutory demands for payment has been increased from $2,000 to $20,000
    • The timeframe for a company to respond has been increased form 21 days to 6 months
    • These changed thresholds will apply for 6 months only
  • The package also includes temporary relief for directors from any personal liability for trading while insolvent, and providing temporary flexibility in the Corporations Act 2001 to provide temporary and targeted relief from provisions of the Act to deal with unforeseen events that arise as a result of the Coronavirus health crisis.
  • The ATO will tailor solutions for owners or directors of business that are currently struggling due to the Coronavirus, including temporary reduction of payments or deferrals, or withholding enforcement actions including Director Penalty Notices and wind-ups.

EMPLOYERS OF APPRENTICES AND TRAINEES WITH LESS THAN 20 FULL-TIME EMPLOYEES

  • Tax-free payment – For the period 1 January 2020 to 30 September 2020, eligible employers can claim a wage subsidy of 50% of an apprentice or trainee’s wages to a maximum of $21,000 per apprentice or trainee for the defined period ($7,000 per quarter).
  • Employers must register and be assessed with registration starting in April 2020 and final claims must be lodged by 31 December 2020

SUPERANNUATION

  • Early withdrawal – Tax free payment of up to $10,000 per year for FY19/20 and FY20/21, available to those that are unemployed, eligible for job seeker and other specified payments, have been made redundant after 1 January 2020 or had working hours reduced by more than 20% after 1 January 2020, sole traders whose businesses are suspended or there is a reduction in turnover of more than 20%.
  • Applications are made through mygov.
  • Greater flexibility for retirees – there will be a reduction in the minimum drawdown requirements for account-based pensions and similar products by 50% for FY19/20 and FY20/21.

INDIVIDUALS

  • Tax-free payment – Two $750 payments to social security, veteran and other income support recipients and eligible concession card holders. The first payments will commence automatically from 31 March 2020 and the second payment from 13 July 2020.
  • Tax free payment – $550 per fortnight additional payment for some income support recipients in addition to the current rate of payment of $550 per fortnight so the total payment will be $1,100 per fortnight.

The changes and incentives for business are evolving at a pace faster than we have seen before. The PKF team are nimble and flexible, we are here for each and every one of our clients, new and old. Our team continues to work hard to ensure we are providing you with the best service across all our divisions.


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