Less than 14 days after releasing the first Economic Stimulus Package, Federal Parliament has approved an additional $66 billion targeting households, employers and businesses alike, including not-for-profit organisations.
These measures include:
1. Cash Payments – Increasing the minimums ranging from $20,000 – $100,000 to eligible businesses,
2. Instant Asset Write Off – Expanding on eligible businesses in accessing the Instant Asset Write Off (IAWO), which has increased from $30,000 to $150,000 for business assets that meet the criteria.
3. Deductions – Maintaining the commitment to encouraging business investment by accelerating business deductions.
4. Super drawdown – Temporarily reducing superannuation minimum drawdown rates.
Other incentives included in the package target households, apprentices and trainees and business banking.
A relief for businesses, including medical practices and practice owners
As part of the package, the ATO will distribute cash payments to eligible businesses that employ staff. The payments will range from a minimum of $20,000 to a maximum of $100,000 to commence from 28th April 2020 and 28th July 2020. The payments will be tax free.
As the payments will be linked to the business employees’ tax withholdings as reported in their respective business activity statements and may be staggered between April 2020 and October 2020, businesses should obtain advice and assistance with regards to cash flow planning and budgeting.
Supporting Business Investment
The Government has increased the eligibility criteria for businesses able to access the $150,000 instant asset write off (IAWO), which now includes businesses with turnovers of up to $500M. It is important to consider that the IAWO applies to eligible businesses that acquire assets:
- Between 12 March 2020 and 30 June 2020.
- Applies to new and 2nd hand assets first used or installed ready for use within the above timeframe.
The measures are aimed to support business investment and will provide income tax relief for the financial year ended 30 June 2020.
“We will expect an increase in asset financing related inquiries for businesses that wish to utilise a combination of low-cost debt and tax-based incentives to acquire business assets,” says Ryan Manson, INFUSION360’s Senior Finance Broker.
The IAWO is in addition to the accelerated depreciation deductions announced in the first stimulus package, which will allow businesses to claim an additional 50% deduction for eligible assets. The accelerated deductions incentives will run through to 30 June 2021.
Superannuation Drawdown Rates
In light of the current corrects in the financial markets, a key measure that will impact many of our clients, including Self-Managed Superannuation Funds (SMSF), is the temporary reduction of minimum drawdown requirements for account-based pensions by 50% for the financial years ended 30 June 2020 and 2021.
“This will allow many of our clients to not be put in a position to dispose assets in their super, thereby crystallising recent losses, just to meet drawdown thresholds,”comments Abraham Aguilan, INFUSION360’s Director & Senior Financial Adviser.
He continues, “Whilst only temporary, they will assist clients in preserving wealth for retirement in the long term.”
Business Continuity Planning
It is important to consider the future outlook of your business holistically, which goes beyond the Stimulus Package, including Government quarantine measures and strategies that can be identified to ensure long-term sustainability. We encourage clients who have nominated for a dedicated INFUSION360’s Business Advisor to get in touch and review their current situation.
For more information on how the Economic Stimulus Package applies to you or your business, do not hesitate to contact Anthony Hanna at firstname.lastname@example.org or 0403 942 562.
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