COVID-19 Stimulus Initiatives

COVID-19 Implications Briefing

The economic impacts of the Coronavirus and health measures to prevent the spread of the virus will cause many otherwise profitable and viable businesses to experience financial distress. The Government has implemented temporary relief measures to mitigate the impacts of the financial distress. We provide a brief summary below of the measures implemented by the Government, with a focus of the assistance granted to employers and employees.

Initiatives to Assist Employers

Measures administrated by the ATO to assist employers:

Boosting Cash Flow for Employers measures ($25,000 tax-free wages)

How it works: Businesses with aggregated turnover below $500 million 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.

The payment will be delivered by the ATO as a credit in the activity statement system from 28 April 2020 when eligible businesses lodge activity statements. If this results 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 June 2020 and September 2020.

Instant Asset Write-off

How it works: New or second-hand assets and equipment will be eligible for an instant asset write-off of $150,000 for businesses with less than a $500 million turnover between 12 March 2020 until 31 December 2020.

From 1 January 2021, the threshold will revert to $1,000 for small businesses (annual turnover of less than $10 million).

Backing business incentive (Increased Depreciation Rates)

How it works: For the 2019–20 and 2020–21 income years, eligible businesses will be entitled to an accelerated depreciation rate for assets first held on or after 12 March 2020. The accelerated depreciation rate amounts to at least 50% of the asset cost, with existing depreciation rules applying to the balance of the asset’s cost. Businesses will be eligible if they have an aggregated turnover below $500 million. The applicable business assets are new assets governed by Division 40 of the Income Tax Assessment Act 1997.

Measures administrated by the OSR to assist employers:

Payroll Tax Deferral

How it works: On application, a business affected by the coronavirus who pays  $6.5 million or less in Australian taxable wages in a financial year, may be eligible for a refund of payroll tax for July and August 2020.

Measures administrated by the Banks to assist employers:

Coronavirus SME Guarantee Scheme’ measures

How it works: Under the scheme, the Government will guarantee 50% of new loans issued by eligible lenders to businesses with turnover less than $50 million. The scheme is to complement relief offered by Australian banks to support small businesses with their existing loans.

Initiatives to Assist Individuals/Employees

Measures administrated by the ATO to assist employees:

Early Access to super tax free for those in financial distress

How it works: The Government is allowing eligible individuals affected by the Coronavirus to access up to $10,000 in the FY 2020-21, with applications for such relief due to close at 11:59pm on 31 December 2020. This concession will be provided to eligible citizens and permanent residents, but not to temporary residents.

Measures administrated by Services Australia to assist employees:

Jobseeker Allowance – $550/fortnight increase and waiving of waiting period and Asset Test

How it works: Australian recipients of payments under the below listed schemes will automatically receive an extra $550 a fortnight on top of your normal payment rate up until 24 September 2020, and thereafter the extra rate will reduce to $250 a fortnight until 31 December 2020:

  • JobSeeker Payment
  • Youth Allowance for job seekers
  • Parenting Payment
  • Farm Household Allowance
  • Special Benefit.

Crisis Payment

How it works: Individuals experiencing severe financial hardship because of the Coronavirus and are eligible for income support payments like JobSeeker Payment or Youth Allowance for job seekers, may be entitled to a crisis payment, being a one off payment equal to a week’s pay based on the usual rate of the applicant’s existing income support payment.

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