COVID-19 Government Stimulus Measures (April 2020 Client Alert)

In recent times the Government has introduced the following stimulus measures.

Business initiatives

1. The instant asset write-off threshold has increased to $150,000. This applies between 12 March 2020 and 30 June 2020.

2. For most new depreciating assets first used after 11 March 2020 and before 1 July 2021 which don’t qualify for the above instant asset write-off, accelerated depreciation is available. A small business entity can deduct 57.5% rather than 15% in the first year. For other entities the accelerated depreciation in the first year is 50% of the cost AND the usual depreciation on 50% of the cost.

3. Employers have access to a Cash Flow Boost related to PAYG Withholding Tax. From 28 April 2020 eligible employers will have access to between $10,000 and $50,000 of the Cash Flow Boost. Then from July 2020 a further $10,000 and $50,000 of Cash Flow Boost will be accessible to eligible employers. For more information read our blog “Second Announcement of Government Assistance”.

4. A wage subsidy of 50% of an apprentice’s or trainee’s wage from 1 January to 30 September 2020 is available to eligible employers.

5. The Government is establishing a Business Loan Guarantee Scheme to support small business' access to business finance. The government will guarantee 50% of new loans issued by eligible lenders. We are working alongside finance brokers to help clients and so please contact us if you require assistance.

Superannuation measures

1. The minimum pension drawdown rates have reduced by 50% for the current 2019-20 financial year AND also apply to the upcoming 2020-21 financial year.

2. Up to $10,000 in 2019-20 financial year and another $10,000 in 2020-21 financial year can be taken out from superannuation tax-free for people experiencing financial distress due to COVID-19.

Personal measures

1. A $750 stimulus payment is being paid to pensioners, social security, veteran and other income support recipients and eligible concession card holders. Payments are being made from 31 March 2020 on a progressive basis, with over 90% of payments expected to be made by mid-April. This payment is tax-free and does not count as income for social security, farm household allowance and veteran payments.

2. A second $750 stimulus payment will be made from 13 July 2020 to pensioners, social security, veteran and other income support recipients and eligible concession card holders.

3. A new temporary “Coronavirus Supplement” of $550 per fortnight has been implemented for people receiving certain income support payments. Eligible recipients will receive the full amount of $550 on top of their payment each fortnight, effectively doubling the current payment amount. The supplement will be paid for the next six months to existing and new recipients of the various Centrelink payments including the JobSeeker Payment (formerly called Newstart Allowance), Youth Allowance Payment for job seekers, Parenting Payment, Farm Household Allowance and Special Benefit Payments.

To read other April 2020 Client Alerts, click here.