Prime Minister Announces Economic Stimulus Package
This morning, the Morrison Government announced a $17.6 billion economic stimulus package to support Australian businesses as we are dealing with the significant challenges posed by the spread of the coronavirus.
The package has four components:
- Household stimulus package
- Keeping Apprentices in jobs
- Supporting business investment
- Providing cash flow assistance to help businesses
The new measures will need to be introduced in the Parliament when it returns on 23 March 2020.
Coronavirus stimulus package includes $750 cash payments for Centrelink Recipients
More than six million Aussies will get cash payments of $750 as part of the government’s $17.6 billion coronavirus stimulus package.
Households receiving government benefits including pensioners and those getting Newstart, Carer’s Allowance and Family Tax Benefits will get the one-off payments from March 31.
It’s hoped the payments will inject cash into the economy if the money is spent and will help keep small and medium businesses running.
A total of 3.6 million pensioners will receive the one-off payment, as well as 1.1 million on Youth Allowance and Newstart; and 1.5 million other Australians including veterans and those on payments such as the Farm Household Allowance and Family Tax Benefit.
Keeping Apprentices in Jobs
Under the plan, the government will offer small businesses with fewer than 20 employees, up to $21,000 per apprentice ($7000 each quarter) in wage assistance, to retain existing apprentices and trainees. An employer will be able to apply for a subsidy of 50% of an apprentice or trainee’s wages paid between 1 Jan 2020 and 30 Sept 2020.
The subsidies are expected to reach around 117,000 apprentices and are worth about $1.3 billion.
Handouts and Tax Breaks for Businesses
There will be two measures to boost cashflow to small and medium sized employers.
The first is a payment of up to $25,000 to businesses that employ people and have a turnover of up to $50 million. It was announced the payment would be 50% of the amount payable on the March quarter BAS with a minimum payment of $2,000. It is not clear whether this is 50% of the total amount payable on the BAS or just the tax withheld from the wages component.
“The payment will be delivered automatically through the tax system so no new forms will be required, and these payments are tax free, so they’ll be delivered automatically and these payments are tax free,” Mr Frydenberg said.
It was announced that the payment would be made within 14 days but again it is not clear whether it would be 14 days from the lodgement of the BAS or 14 days after 28th April, being the lodgement date of the BAS.
The second is to extend the instant asset write off and offer accelerated depreciation rates.
According to the announcement the instant asset write-off threshold will also be raised from $30,000 to $150,000 and access expanded to businesses with an annual turnover of $500 million with effect from today. (remembering this is not legislated).
“Any such purchase from now until 30 June 2020, including a truck, a tractor, a shop fit-out, can be written off immediately.” Mr Frydenberg said.
There will also be a 50 per cent accelerated depreciation deduction over and above what businesses can already deduct in the first year and is available for 15 months to 30 June 2021.
We will be keeping a close eye on the introduction of the stimulus package when the Parliament returns on 23 March 2020.