The Government's Coronavirus economic response and stimulus package

The Government has announced its economic response to the Coronavirus in the form of a $17.6 billion economic stimulus package.

The package has been marketed as a measure to protect the economy by maintaining confidence, supporting investment and keeping people in their jobs.

It is expected that an appropriate package of Bills (which will provide further detail in relation to the proposed measures) will be introduced into Parliament in the final sitting week in March 2020 (i.e., presumably from 23 March 2020) for urgent consideration and passage. 

Read the full article here to find out the key tax measures that have been proposed. 

What are the key measures?

• The instant asset tax write-off threshold will be raised from $30,000 to $150,000. This applies from now until 30 June 2020 and has been expanded to include businesses with an annual turnover of up to $500 million (up from the current $50 million).
• A 50% accelerated depreciation deduction for asset purchases until 30 June 2021, available for businesses with less than $500 million turnover. 
• A tax-free payment of up to $25,000 for businesses with a turnover under $50 million. For those businesses that pay income tax on employee's salary and wages (either quarterly or monthly) they will receive a payment via their BAS or IAS, from 28 April 2020, equal to 50% of the amount withheld, up to a maximum of $25,000 The refunds will be paid within 14 days. Businesses that pay salary and wages but are not required to withhold tax will receive a minimum of $2,000.
• A 50% wage subsidy for apprentices will deliver payments up to $21,000 per small business to help keep apprentices employed.
• An instant cash payment of $750 for pensioners, holders of the Commonwealth seniors card and recipients of Newstart, carer’s allowance, youth allowance, veterans support, disability support and family tax benefits. These payments will be rolled out from 31 March 2020.
• Administrative relief from the ATO - The ATO will implement a series of administrative measures to assist Australians experiencing financial difficulty as a result of the COVID-19 outbreak. Options available to assist impacted business include:
  • Deferring by up to four months the payment date of amounts due through the business activity statement (BAS, including PAYG instalments), income tax assessments, FBT assessments and excise.
  • Allowing businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get quicker access to GST refunds they may be entitled to.
  • Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities.
  • Allowing businesses to vary Pay As You Go (PAYG) instalment amounts to zero for the April 2020 quarter. Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters.
  • Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low interest payment plans. 

It is paramount that you take immediate action to develop an emergency contingency plan to mitigate business disruption and financial loss for both immediate and future threats. It is important to identify all potential risks you may be exposed to during such a time and develop a robust plan to ensure business continuity throughout.

Businesses are urged to take into consideration the likelihood of occurrence, the degree of impact and develop suitable responses to address these concerns and assist in minimising the effects. Review of your organisation’s policies is critical in order to establish a framework to deal with a crisis and assist in implementing an effective plan.

It is vital that the company maintains clear lines of communication with clients, employees, suppliers, financiers, the ATO and all other key stakeholders concerning the situation. It’s also essential to communicate any changes to organisational policies, have a solid contingency plan in place to manage changes to staff working arrangements and clearly inform employees of their responsibilities during such a time.

In moments of crisis, it is important to remain agile by actively monitoring, assessing and adjusting the response to the situation. This can seem overwhelming but there are options and help is available.

A cash flow forecast will assist in determining the financial outlook of your business and help to recognise where shortfalls may occur, assisting to identify a path forward. Seek repayment options with suppliers if necessary and ensure commitment to meeting the terms negotiated to avoid further hardship.

We are available to discuss your concerns and the impacts for your business. Please contact the team at The Money Edge to plan ahead! 

The Money Edge | Bundaberg

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