Coronavirus Stimulus Package 2020 ... and what you may be eligible for.

Unless you’ve been on a silent retreat with Jay Leto, you would be well aware of the Coronavirus and the devastating impact it’s having on the world right now.  And with the imminent threat of things worsening before getting better, life as we know it has changed for good.  Including in impact to our economy as a whole and our individual pockets.

During economic crisis such as these, it’s traditionally the role of the government to ascertain measures by way of a stimulus package, where the government makes the decision to spend extra money to give the economy the financial boost it needs.

But the thing about any stimulus package is that it carries a huge cost and risk of future years debt, but if not committed at the right time, the Government runs a potentially greater risk of entering into the recession it fights so hard to prevent.

As such, our Government has activated the Coronavirus stimulus package for 2020, and whilst no move by the Government comes without controversy, it needs to be noted that often such packages aim to combat difficult times like the ones we find ourselves in now.  So, lets park judgement for now, and trust that given the circumstances, our Government are committed to getting this right.  Even if it takes a few stages.

So what is the Stimulus Package on offer.

 1.    HOUSEHOLD : A one-off $750 direct cash hand payment

 Paid to qualifying individuals, based on lower income levels and benefit qualifications, with the intent on it being redirected back into spending on goods and services to boost the activity in the economy, and hopefully sustain some sort of boost.

We have been advised that this payment will be exempt from tax and will be paid in addition to any regular payments you receive and will be paid automatically from March 31st, 2020, but not considered part of any allowance received for taxation purposes.

2.    HOUSEHOLD : Provide access to a Major Personal Crisis exemption

We’ve been advised that a Major Personal Crisis exemption for current income support recipients will be available if you can’t meet any obligations due to isolation or illness, without providing a medical certificate.

3.    HOUSEHOLD : Sickness Allowance

In the event you are 22 and over, but not of age pension qualification age, you may be eligible for a sickness allowance if you have been diagnosed with the Coronavirus, and may not have access to payments such as sick leave due to your working arrangements.

And if you fall under the age of 22 and are unable to work / attend school due to the Coronavirus or are in isolation can contact Services Australia to discuss your situation and find a viable solution to suit.

 4.    BUSINESS : Investment incentive

If your company has an annual turnover of no more than $500 million, the instant asset write off (where you can deduct this value of any asset purchased in your tax return) threshold has been increased to $150,000 for investments made during this period and until 30th June 2020.

5.    BUSINESS : Apprentice & trainee wages

This package has elected to cover 50% of the salaries of all apprentice & trainees (for eligible businesses), for the wage period January 1 2020, to September 30th, 2020.  These payments are again tax free, and are designed to support the payment of these wage groups and maintain workforce sustainability.

6.    BUSINESS : PAYG withholding relief

If you are an employer and your turnover is under $50 million, and you pay PAYG on behalf of your employees, there is a tax-free payment of $2,000 to no more than $25,000 that will automatically be refunded to you based on the submission and volume of PAYG reported as paid on your March 2020 quarterly/monthly BAS/IAS statements.

The package will refund 50% of the total PAYG reported up to $25,000.  Designed to assist with cashflow, there is no mention of this being deferred and therefore will not be required to be repaid at a later stage.

The refund will be paid automatically 14 days from the 28th April when your statements are due.

7.    BUSINESS : Deferred payments of tax

In consultation with your accountant, you may be eligible to defer up to 4 months of tax payments as submitted through your BAS.  Bear in mind this a deferral and not an elimination to pay … and important not when forecasting your cashflow.

 8.    BUSINESS : Adjusting your GST reporting cycle to monthly

As suggested, you may be eligible to request your quarterly GST reporting cycle be changed to monthly, so as to manage cashflow better and improve the rate at which you will receive a GST refund (if one is owed to you)

9.    BUSINESS : Zero PAYG Instalments

If you currently pay your PAYG through instalments on your BAS statement submission, you may be eligible to vary this instalment figure to zero for the April return (on the March quarter/month), and in addition request a refund for the amounts paid on the September 2019 and December 2019 quarters.

As in any situation, I would highly recommend that you consult with your tax accountant to ensure that you are making the most of what is on offer to you during this time.  Whilst it may not satisfy all your needs right now, it may make the load on others a little less heavy to bear.

Remember, the measures taken in this stimulus package are only temporary and are developed in line with the challenges we are currently faced with.  Meaning, they are subject to change at any time.

Please stay well, check in with your obligations and that which is on offer to you to ensure that you and your business have a sustainable plan in place during these very uncertain times.

And reach out … we’re all in this together.