Federal Government Economic Support Measures
The Australian Government has announced a series of economic support measures to address COVID-19. The following information provides a brief overview of the key measures that may assist residential building business, manufacturers and suppliers.
Members should refer to the latest information available from the Federal Government’s coronavirus information and support for business website or Treasury.
Package #1 Business support
The first package of measures was announced on 12 March 2020 with $17.6 billion committed. The package focused on keeping Australians in jobs and helping small and medium sized businesses to stay in business.
The package has four parts:
- Supporting business investment
- Providing cash flow assistance to help small and medium sized business to stay in business and keep their employees in jobs
- Targeted support for the most severely affected sectors, regions and communities
- Household stimulus payments that will benefit the wider economy
Measure #1: Increasing the Instant Asset Write-off
- for investments up to $150,000 (a 5-fold increase) made before 30 June 2020
- for businesses with a turnover of less than $500 million (a ten-fold increase).
The instant asset write-off has been around since 2008, with the amount of that can be written off immediately gradually increased over the past 12 years, to $30,000.
There is a short window of opportunity to take advantage of the instant asset writeoff, as it will expire on 30 June 2020. This is the same timing as the existing arrangement is set to expire. After 30 June 2020, the arrangement will revert to an instant asset write-off for purchases under $1,000, with all other purchases deducted under normal depreciation schedules, which depend on the normal operating life of the asset. For more information click here
Measure #2: Accelerated depreciation deductions
This will provide businesses with a 50% depreciation deduction in the year of installation for eligible assets purchased up to 30 June 2021, with existing depreciation rules applying to the balance of the asset’s cost.
Measure #3 Cash flow assistance for business ($6.7 billion):
Businesses with a turnover of less than $50 million, that withhold tax on employees salary and wages will receive a payment equal to 50 per cent of the amount withheld, up to a maximum of $25,000.
The ‘Credit’ is paid on lodgement of the BAS, which will be 28 April (for both Qtly and Mtly returns) and 28 July 2020 for the June Qtly returns. For those lodging monthly returns the payment will be calculated at 150% of the March 2020 BAS.
There is a minimum payment for businesses that pay salary and wages of $2,000. For example, if you employ staff but none of them meet the tax free threshold of $18,000 per year there is no withholding tax, then you would be eligible for the $2k.
Measure #4 Supporting apprentices and trainees ($1.3 billion):
Wage subsidies of up to 50% of an apprentice’s and trainee’s wage for up to 9 months from 1 Jan to 30 Sept 2020, up to a maximum of $21,000 per apprentice/trainee. Where an employer is not able to retain an apprentice, the subsidy will be available to the new employer of the apprentice.
The grants will help business with cashflow over the next three months, to ensure they are viable and well positioned to ramp back up to their full production/capability once the CoViD19 crisis has passed.
The wage subsidies will be provided through the National Apprentice Employment Network. The subsidy is available to small businesses employing fewer than 20 full-time employees who retain an apprentice or trainee. The apprentice or trainee must have been in training as at 1 March 2020. Employers of any size and Group Training Organisations that re-engage an eligible out-of-trade apprentice or trainee will be eligible for the subsidy.
Package #2 Support for individuals and SMEs
The second package of measures was announced on 22 March, with the Australian Government committing $66.1 billion. This package focused on supporting sole traders and self-employed Australians who have had their income reduced as a result of COVID-19, along with support for small and medium enterprises to manage business cashflow.
Measure #1 Income support for households including casuals, sole-traders, retirees and those on income support ($14.1 billion)
Over the next six months, the Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight. This will be paid to both existing and new recipients of JobSeeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
Under the temporary arrangements a range of JobSeeker Payment eligibility criteria has been relaxed including waiving the assets test, liquid assets waiting period, seasonal work preclusion period and newly arrived residents’ waiting period.
The Government has also temporarily relaxed the partner income test on the JobSeeker Payment. From 30 March 2020, it will be temporarily increased over the next 6 months to $3,068 per fortnight.This will ensure that an eligible person can receive the JobSeeker Payment and associated Coronavirus Supplement providing their partner earns less than $3,068 per fortnight, around $79,762 per annum.
The personal income test for individuals on JobSeeker Payment will still apply.
Measure #2 Early release of superannuation ($1.2 billion)
The Government will allow individuals in financial stress as a result of the Coronavirus to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21.
Eligible individuals, including sole traders who have seen their hours of work or income fall 20% or more as a result of COVID-19, will be able to apply online through myGov for access of up to $10,000 of their superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020 for another three months. The withdrawals will be tax free.
Measure #3 Boosting Cash Flow for Employers ($31.9 billion)
The Government is providing up to $100,000 to eligible small and medium sized businesses, and not for-profits (including charities) that employ people, with a minimum payment of $20,000. These payments will help businesses’ and not-for-profits’ cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff.
Under the enhanced scheme from the first package, employers will receive a payment equal to 100 per cent of their salary and wages withheld (up from 50 per cent), with the maximum payment being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000. The payment will be available from 28 April 2020.
By linking the payments to business to staff wage tax withholdings, the Government’s intention is that businesses will be incentivised to hold on to more of their workers.
The payments are tax free, there will be no new forms and payments will flow automatically through the ATO.
This measure will benefit around 690,000 businesses employing around 7.8 million people, and around 30,000 NFPs (including charities).
Small and medium business entities with aggregated annual turnover under $50 million and that employ workers are eligible. NFPs entities, including charities, with aggregated annual turnover under $50 million and that employ workers will now also be eligible. This will support employment at a time where NFPs are facing increasing demand for services.
An additional payment is also being made from 28 July 2020. Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments received.
Measure #4 Coronavirus SME Guarantee Scheme
The Government will establish the Coronavirus SME Guarantee Scheme which will support small and medium enterprises (SMEs) to get access to working capital to help them get them through the impact of the coronavirus.
Under the Scheme, the Government will guarantee 50 per cent of new loans issued by eligible lenders to SMEs.
The Government’s support will enhance lenders’ willingness and ability to provide credit to SMEs with the Scheme able to support $40 billion of lending to SMEs.
The Scheme will complement the announcement the Government has made to cut red-tape to allow SMEs to get access to credit faster. It also complements announcements made by Australian banks to support small businesses with their existing loans.
Measure #5 Providing 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 package also includes temporary relief for directors from any personal liability for trading while insolvent. The Corporations Act 2001 will be amended to provide temporary and targeted relief for companies to deal with unforeseen events that arise as a result of the Coronavirus.
Package #3 Job Keeper Wage Subsidy
The third economic support measure was announced on 30 March 2020, with the Australian Government committing $130 billion towards the “Job Keeper” Wage Subsidy.
The Job Keeper wage subsidy scheme will provide a flat $1500 a fortnight for workers with employers that have suffered a downturn of at least 30 to 50 per cent due to the coronavirus pandemic.
The subsidy will be available to cover wages between 1 March 2020 and 1 September 2020. The money will be directed to the employer to then paid the employee.
Employees that were engaged on 1 March will be eligible including full time and part time employees, sole trades and casuals with 12 months service.
Businesses can register from 30 March 2020 via the Australian Tax Office and payments will begin to flow from 1 May on a monthly basis.
A business will qualify for the subsidy if their turnover will have to has fallen at least 30 per cent, or for businesses with turnover of more than $1 billion at least 50 per cent.
More information on the Job Keeper scheme is available here.
HIA has also prepared an FAQs on the scheme.
Economic stimulus measures