UPDATED – The Economic Stimulus Package and Your Business

Posted on 23rd March, 2020 in News

The Government has announced a second major update to the economic stimulus package. Here is an overview of what the enhanced initiatives mean for your business.

SME Guarantee Scheme

The Government will guarantee 50% of new unsecured loans made to SMEs for the purposes of working capital for businesses with a turn over less than $50 million.  

The purpose of this is to make it more likely that banks and lenders will approve these loans.  

The loans will have the following terms:  

  • Up to $250,000 Up to 36 months with no payments for 6 months
  • Unsecured – meaning no collateral required
  • Interest will only be charged on the drawn funds, meaning you only pay on the amount you use.  

These loans will be made available in April 2020.

Increased cash flow boost for businesses
The Government will provide between $20,000 and $100,000 to eligible SMEs.

These payments should be used to pay staff, electricity, rent and other bills.  
There will be two payments, the First Payment and the Additional Payment.  

First Payment

Eligible employers that withhold tax to the ATO on their employees’ salary and wages will receive a payment equal to 100% of the amount withheld, up to $50,000.  

All eligible employers that pay salary and wages will receive a minimum payment of $10,000 even if they are not required to withhold tax.  

Payments will be made through the activity statement system by the ATO from 28 April 2020 at monthly or quarterly intervals based on the lodging frequency.  

Additional Payment

For entities that continue to be active, there will be an additional payment equal to a quarter of the First Payment following lodgements in June, July, August and September of 2020 up to $50,000.  

Payments will be made through the activity statement system by the ATO from July 2020.  

No further update has been issued to the following initiatives:

$150,000 Instant Asset Write Off

Eligible assets will be able to be written off for this financial year meaning that you will pay less in tax.

Any new or used vehicles or equipment with a purchase price of up to $150,000 (excluding GST) purchased and installed between 12 March and 30 June 2020 will be eligible.

There is no limit to the number of assets purchased that can be written off under this program. 

You can purchase multiple assets which total more than $150,000 so long as each individual asset is less than $150,000.

Be aware that the write off is up to $150,000 or $149,999.99.

Businesses with an aggregated annual turnover of less than $500 million will be eligible until 30 June 2020.

This is a short term opportunity offered by the Government.

From 1 July 2020, this offer will no longer be available and the instant asset write off will return to the normal amount of only $1,000 for businesses with a turnover of less than $10 million.

Here is an example of the Instant Asset Write Off for an asset under $150,000:

Here is an example of the Instant Asset Write Off for multiple assets all under $150,000 each:

New Equipment Eligible for the 50% Instant Depreciation

Eligible assets purchased and installed from 12 March 2020 and 30 June 2021 will be eligible for a 50% instant depreciation.

Businesses with an aggregated annual turnover of less than $500 million will be eligible until 30 June 2021.

New assets only.

This incentive is available for 15 months.

Here is an example of the 50% depreciation:

Is the government really giving businesses $25,000?

No businesses will not receive $25,000 cash.

Instead, the ATO will credit eligible businesses’ activity statement, starting 28 April 2020.

Businesses with an aggregated annual turnover under $50 million will be eligible.

There is a minimum payment of $2,000 and a maximum of $25,000 over six months depending on when you lodge your activity statements.

This payment will be tax free.

How will the Government subsidise my apprentice’s wages?

Businesses of any size that employ less than 20 full-time staff and have at least one apprentice or trainee are eligible for a subsidy of apprentices’ wages of up to 50 percent during the 9 months from 1 January 2020 to 30 September 2020.

Up to a maximum of $21,000 will be reimbursed to employers over the next three quarters.

Employers can register for the subsidy from early-April 2020. Final claims for payment must be lodged by 31 December 2020.

For more detailed information visit: https://treasury.gov.au/coronavirus

If you have delayed purchasing equipment now is the time to take advantage of the Government’s $150,000 Instant Asset Write Off and 50% Instant Depreciation initiatives.

If you need pre-approved finance for your next purchase call us on 1300 000 657 or email: info@mkpgroup.com.au