Search
  • Michael Santalab

The Australian Government's Economic Response to Coronavirus


On 12 March 2020, the government announced a package of measures to help the economy withstand and recover from the economic impact of corona virus. The following measures will be administered by the ATO.


The government intends to introduce legislation in late March 2020 to implement its Economic Response to Corona virus.


INDIVIDUALS


Here’s what, when and how you might receive assistance.


$750 cash payment About 6.5 million people receiving Centrelink payments, family tax benefits or holding a concession card will get a one-off cash handout of $750 per eligible recipient that will start landing in bank accounts from March 31.The hope is that people will splash the cash, rather than stash it. The recipients have been chosen carefully, as they have done just that in the past.


Income for quarantined casuals Casual workers who contract COVID-19, or have to self-isolate, will not have to wait for Centrelink sickness payments to commence, beyond processing time of about five days.


The criticism is the payments are lower than most casual workers make (the assets test applies, too).Calls to take this opportunity to increase the base rate of the Newstart allowance, which is woefully inadequate and could have provided an immediate injection into the economy, were ignored. However, Centrelink says Newstart recipients isolated at home on the advice of a medical professional or government authority would be given an exemption to meeting obligations. They would not be required to provide a medical certificate or look for work.


Lower deeming rates We are told this change has to do with recent Reserve Bank of Australia interest-rate cuts, rather than the stimulus, but it is welcome in any case.


A cut to deeming rates means pensioners will be able to earn more investment income before it begins to affect their benefits. The government claims the deeming rate reduction of 50 basis points will benefit 900,000 people by an average of $219 a year.


Bulk-billed tele and video GP consults This move comes as part of a separate healthcare package. It will hopefully stop lack of income from being an impediment to getting tested or treated for corona virus.


BUSINESS

Enhancing the instant asset write-off

The government is increasing the instant asset write-off (IAWO) threshold from $30,000 to $150,000 and expanding access to include businesses with aggregated annual turnover of less than $500 million (up from $50 million).


Timing

This proposal applies from 12 March 2020 until 30 June 2020, for new or second-hand assets first used, or installed ready for use in this time frame.


Enhancing the Instant Asset Write Off will require legislative changes before it can take effect.


Backing business incentive

The government is introducing a time limited 15-month investment incentive to support business investment and economic growth over the short-term, by accelerating depreciation deductions.


A deduction of 50% of the cost of an eligible asset on installation will apply, with existing depreciation rules applying to the balance of the asset’s cost.


Eligibility

Eligible businesses – businesses with aggregated turnover below $500 million.

Eligible assets – new assets that can be depreciated under Division 40 of the Income Tax Assessment Act 1997 (that is, plant, equipment and specified intangible assets, such as patents). Does not apply to second-hand Division 40 assets, or buildings and other capital works depreciable under Division 43.


Timing

Assets acquired after announcement and first used or installed by 30 June 2021.


Boosting Cash Flow for Employers

The Boosting Cash Flow for Employers measure will provide up to $25,000 back to business, with a minimum payment of $2,000 for eligible businesses. The payment will provide temporary cash flow support to small and medium businesses that employ staff during the economic downturn associated with corona virus. The payment will be tax free.


Eligibility

Small and medium business entities with aggregated annual turnover under $50 million and that employ workers will be eligible. Eligibility will generally be based on prior year turnover.

The payment will be delivered by the ATO as a credit in the activity statement system from 28 April 2020 when eligible businesses lodge (see below) upcoming activity statements.

Eligible businesses that withhold tax to the ATO on their employees’ salary and wages will receive a payment equal to 50% of the amount withheld, up to a maximum payment of $25,000.


Eligible businesses that pay salary and wages will receive a minimum payment of $2,000, even if they are not required to withhold tax.


This measure will benefit around 690,000 businesses employing around 7.8 million people.


Timing

The Boosting Cash Flow will be applied for a limited number of activity statement lodgements. The ATO will deliver the payment as a credit to the business upon lodgement of their activity statements. Where this places the business in a refund position, the ATO will deliver the refund within 14 days.


Quarterly lodgers will be eligible to receive the payment for the quarters ending March 2020 and June 2020.


Monthly lodgers will be eligible to receive the payment for the lodgement months of March 2020, April 2020, May 2020 and June 2020. To provide a similar treatment to quarterly lodgers, the payment will be calculated at three times the rate (150%) in the March 2020 activity statement.


The minimum payment will be applied to the business’ first lodgement.



0 views

BLOG

© 2019 SANTALAB

KEEP IN TOUCH

  • Facebook - Black Circle
  • LinkedIn - Black Circle
  • Instagram - Black Circle

The licensing statement Credit Representative Number 504214 is authorised under Australian Credit License

Number 384704. Your full financial situation will need to be reviewed prior to acceptance of any offer or product