Australia’s $17B Stimulus Package: Are You Eligible?

The core focus of the new package is primarily aimed at both low-income households and small to medium enterprises in Australia as a temporary stimulus solution. With the aim of boosting economic growth, increasing consumer confidence and consumption, and minimizing cash flow issues for Australian businesses, the stimulus is designed to function as a strong response to potential economic disruption.

With over $11 billion of the total $17 billion package set to hit the Australian market by June, businesses are set to be amongst the first to receive a helping hand. The package — apart from a $4.76 billion household stimulus effort — consists of several core components aimed squarely at Australian businesses, the most interesting of which is a SMEE cash injection of up to $25,000 per business.

Here’s how the various components of the stimulus package break down:

As part of the stimulus package, Small and medium-sized Australian businesses are set to receive up to $25,000 from the Australian Taxation Office via the Boosting Cash Flow for Employers measure. This payment is designed to provide cash flow support to businesses that may be affected by the coronavirus pandemic.

In order to qualify for the Boosting Cash Flow for Employers measure, businesses must:
• Turnover less than $50 million annually
• Have employed staff between January 1 2020 and June 30 2020
• Not operate as a sole trader — the package is designed to ensure that businesses are able to retain and pay employees.

Eligibility for the Boosting Cash Flow for Employers measure is determined based on prior year turnover. Payments will be delivered by the ATO as a credit in the activity statement system from 28 April 2020, with refunds payable within 14 days. Importantly, the payment will be tax free.

Eligible businesses that pay salary and wages are set to receive a minimum payment of $2,000, regardless of whether they are required to withhold tax to the ATO. Businesses that do withhold tax will receive up to 50 percent of the total amount withheld, with a maximum payment of $25,000.

The Boosting Cash Flow for Employers measure is expected to be made available to 690,000 Australian businesses and cost the Australian Government $6.7 billion.

Instant asset write-off (IAWO) allows eligible Australian businesses to immediately write off the cost of assets that meet a specific threshold limit, such as tools, equipment, office furniture, or motor vehicles, and claim a tax deduction for the business portion of the purchase cost.

As part of the stimulus package, the Australian Government has increased the threshold for instant asset write-offs from $30,000 to $150,000, which will remain in effect until June 30 2020. The new threshold applies to any new or second-hand assets that are first used or installed in this time period.

In addition to increasing the Instant Asset Write Off threshold, the Australian Government is expanding the eligibility requirements that must be met in order to qualify for the IAWO. Previously available only to businesses that turn over less than $50 million annually, the IAWO is now available to businesses that turn over up to $500 million.

The stimulus package also includes a time-limited 15-month investment incentive that will accelerate depreciation deductions. From March 12 2020 to June 30 2021, businesses with an aggregated turnover of less than $500 million will benefit from an additional 50 percent depreciation of any eligible asset.

Both asset purchases greater than $150,000 before June 30 2020 and any asset purchases in excess of $30,000 between 12 March 2020 to 30 June 2021 are subject to the changes in depreciation deductions, allowing businesses to push forward tax deductions, as opposed to distributing deductions over a longer period as per standard depreciation deduction rules.

Lastly, the stimulus package will provide eligible Australian businesses that employ apprentices or trainees with a wage subsidy of up to 50 percent. The wage subsidy is applicable to wages paid from January 1 through September 30 2020.

Employers will be reimbursed up to $21,000 for eligible apprentice or trainee wages, with support delivered by the National Apprentice Employment Network. Eligibility requirements for the apprentice and trainee wage subsidy include:
• Businesses must employ fewer than 20 full-time employees and retain a trainee or apprentice
• The eligibility of employees is subject to assessment by Australian Apprenticeship Support Network providers

The overall purpose of the business-specific elements of the stimulus package is to ensure that Australian employees are able to maintain employment by providing support to Australian businesses. The package allows Australian businesses to maintain positive cash flow, and provides incentives to increase business consumption.

By accelerating planned spending, the coronavirus stimulus package is designed to help minimize the risk of economic depression and ensure that all Australians are able to work through coronavirus-induced economic pressure.