On 22 March the Government announced a second set of economic responses which, combined with previous actions, total $189 billion across the forward estimates. This is the latest update of support to households and businesses aimed at absorbing significant economic consequences of the Coronavirus.

Further to our correspondence on 16.03.2020, the following is an update of the announcements (some of which we previous wrote about) as a result of COVID-19:

Asset Purchases

Increases to the Instant Asset Write-Off

The instant asset write-off threshold has been increased from $30,000 to $150,000 for all businesses with an aggregate turnover of less than $500 million (previously $50 million). This applies to new and second hand assets purchased from the 12th March to 30 June 2020.

Accelerated Depreciation Deductions

For businesses with a turnover of less than $500 million, that purchase a new asset, will receive an incentive accelerating depreciation deduction of 50 per cent of the asset cost in the year of purchase. This applies to new assets purchased (and not second hand) from the 12th March until 30 June 2021 (but excludes instant asset write-offs as per above).

Please discuss with us any planned new asset purchase, as the level of deduction now allowed could disadvantage your position in other ways and to ensure that this applies to the particular asset you are acquiring.

Tax Free Payment to Employers

Small and medium-sized business entities with aggregated annual turnover under $50 million and that employ workers are eligible. Not-for-profit entities including charities, will now also be eligible.

Under the enhanced scheme, 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. This portion will be delivered through the March to June activity statements.

An additional payment is also being delivered in the June to September activity statements. Eligible entities will receive an additional payment equal to the total of all of the boosting cash flow for employers payments they have received. This means that eligible entities will receive at least $20,000 and up to a total of $100,000 under both payments.

Please contact us to help us explain how this relates to your individual business circumstance.

Supporting Businesses with Apprentices & Trainees

A wage subsidy of up to $21,000 per eligible apprentice or trainee is available for employers of fewer than 20 employees for the 9 months from 1 January 2020 to 30 September 2020. The subsidy is calculated on 50 per cent of the eligible apprentice or trainees wage and paid quarterly (a maximum of $7,000 per quarter). You will need to have an eligibility assessment undertaken by an AASN provider, which notably excludes any apprenticeships if the business has already accessed a Australian Apprentice Wage Subsidy (AAWS).

Supporting Individuals and Households

This assistance includes:

  • Income support for individuals – 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 Payments, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
  • Payments to support households – The Government is providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders. The first payment will be made from 31 March 2020 and the second payment will be made from 13 July 2020. The second payment will not be made to those eligible for the Coronavirus supplement.
  • Temporarily reducing superannuation minimum drawdown rates – The Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50 per cent for 2019-20 and 2020-21. This measure will benefit retirees holding these products by reducing the need to sell investment assets to fund minimum drawdown requirements.
  • Temporary early release of superannuation – The Government is allowing individuals affected by the Coronavirus to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21. Individuals will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.

To be eligible, you must meet one of the following conditions:

  • you’re unemployed
  • you’re eligible to receive Jobseeker Payment, Youth Allowance (jobseekers), Parenting Payment, Special Benefit or Farm Household Allowance
  • on or after 1 January 2020, you were made redundant, your hours of work reduced by at least 20%, or if you’re a sole trader, your business was suspended or your turnover reduced by at least 20%.

It is expected that claims can be made from mid-April

  • Reducing social security deeming rates – On 12 March, the Government announced a 0.5 percentage point reduction in both the upper and lower social security deeming rates. The Government will now reduce these rates by another 0.25 percentage points. As of 1 May 2020, the upper deeming rate will be 2.25 per cent and the lower deeming rate will be 0.25 per cent.

Supporting the Flow of Credit

Businesses with turnover of up to $50m will be eligible to apply to the banks for up to $250,000 of borrowings with the following features:

  • 50% government guaranteed, meaning that the bank is more likely to lend at competitive interest rates
  • Maximum 3 years, with no repayments for 6 months
  • The borrower will not need to provide any security to the bank

Loans under this scheme are expected to be available to businesses from early April 2020.

If you have any questions or would like to discuss any of these topics further, we urge you to make an appointment. We understand the growing health concerns of COVID-19, so to ensure we can support our clients and protect the health of our staff at the same time, our first preference will be a phone call or video appointment, however face-to-face meetings are still possible in the right circumstances.

– James Davis & Kanista Arokianathan

Posted 24.03.2020

Updated 07.04.2020

This article is compiled as a helpful guide for your private information and is subject to copyright. We suggest that you do not act solely on the basis of material contained in this article because items are of general nature only and may be liable to misinterpretation in particular circumstances. We recommend that our advice be sought before acting on any of these crucial areas.

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