The government announced yesterday a package of temporary measures to support the economy.   These are in 4 parts and are aimed mostly at small to medium sized businesses.   Some measures are immediate and some retrospective to 1 January 2020 (they do require legislation, which means they could be held up or amended in Parliament, the next sitting is 23 March).

Business Investment Support

-   Instant Asset Write-off threshold increase from $30,000 to $150,000.

This applies to depreciable assets acquired from 12 March to 30 June 2020 , for all businesses.   The asset can be new or second hand and the equipment could be financed, and the item must be installed ready for use by 30 June.   The threshold says less than $150,000 net of GST credit (eg., $149,999, not exactly $150,000).

-   Accelerated Depreciation deduction

If not applying the Instant Asset write-off, perhaps there is a tax loss for the year, depreciation deductions from 12 March 2020 and before 30 June 2021 will be allowed for 50% of the assets cost in the year of purchase, in addition to the normal amount of depreciation.   This means that the cost will be deducted over a shorter period than usual.   This will not apply to second hand assets or buildings and other capital works expenditure

Cashflow Assistance

-   Boost to Employer Cashflow

Businesses who employ staff between 1 January and 30 June 2020 will receive one or more payments totalling between $2,000 and $25,000, and is tax free.   The payments will be 50% of the tax withholding on the March and June quarterly BAS's.   For those lodging monthly it applies to the March to June BAS (March to be multiplied by 3, then take 50% - which adjusts for January and February).   This continues each BAS until the $25,000 limit is reached.

For example, if the March PAYG Withholding is $19,000, the business only pays $5,000 and a credit is subsequently given for the difference.   If the credit would create a refund for the BAS, refunds will be made after 28 April 2020 (due date for lodgement of the March BAS).

TIP :   If you don't presently pay salaries for principals and want to receive the $25,000 benefit, pay some PAYG Withholding for principals in March through to June, and get 50% of it back as a tax-free windfall.

-   Apprentices and Trainees

Where fewer than 20 staff are employed, the business can apply for a wage subsidy of 50% of the apprentice's wage for those is training at 1 March 2020, for up to nine months from 1 January to 30 September 2020.   This benefit is limited to $21,000 per apprentice, or $7,000 per quarter.

Stimulus Payments to Households

A one-off payment of $750 commencing on 31 March to pensioners, and social security recipients.   this is tax free and won't count for means-tested benefits.

Affected Business Sectors

Sectors and regions hit harder by the coronavirus, such as tourism, agriculture and education will receive special support.   This includes a waiver of certain fees if located in National Parks, assistance to locate alternative markets or suppliers, and measures to promote domestic tourism.   There will also be administrative relief for some tax, including deferral of tax payments for up to four months.   This will be provided on a case-by-case basis and businesses will need to apply.   These details should be available shortly.

These are the measures announced and legislation is needed, but likely that should be passed on 23 March, although it is possible some amendments could be made.

Nothing needs to be done to claim the Instant Write-Off for asset purchase after 12 March and before 30 June, except to ensure the item is installed ready for use before 30 June.   For the Tax Credit, businesses should lodge BAS or IAS sooner rather than later, and the tax credit will be processed on the BAS or IAS (for Principals, the salary and tax need to be planned to get the best outcome).   For the support for certain industries, details should be available soon.