Due to be announced today, the Government’s $17 billion stimulus package will include tax breaks and subsidies for businesses over the next four years, including a massive expansion of the Instant Asset Tax Write-off.
Acknowledging the impact of of COVID-19, which has now been officially declared a global pandemic by the World Health Organisation, Prime Minister Scott Morrison is expected to release the details of a $17 billion coronavirus stimulus package to ease the toll on the health of individuals and the Australian economy.
UPDATE: The Government has released details of its Economic Response to the Coronavirus here.
Key elements of the stimulus package:
As the beating heart of our economy, small businesses are both particularly vulnerable to the impact of COVID-19 and integral to Australia’s recovery from it.
For this reason, the Government is expected to target a range of initiatives to assist businesses with the aim of keeping at-risk workers employed.
Chief among these employees are apprentices and trainees, for whom the Government will offer up to $7000 per quarter to businesses that support them.
These subsidies are expected to reach around 117,000 junior workers and will total around $1.3 billion.
Beyond this, businesses with of turnover of less than $50 million will also receive a tax-free payment of between $2000 and $25,000 to ease predicted cash flow problems. This is likely to help keep the doors open for 700,000 small-to-medium businesses, keeping more than 7.5 million workers employed.
Potentially the biggest news for small-to-medium business owners is the expansion of the Instant Asset Tax Write-off, which will be raised from $30,000 to $150,000 and will now be available for businesses with a turnover of up to $500 million instead of $50 million, meaning much larger companies will now be able to access the concession.
The Instant Asset Tax Write-off is considered a critical stimulus initiative, as it is likely to trigger business-to-business spending on equipment and machinery.
MYOB chief executive Greg Ellis said the stimulus package is welcomed as a “strong response and decisive action” that will support Australian small businesses.
“Today’s announcement of sliding scale tax-free cash grants, wage subsidies for trainees and apprentices, accelerated depreciation deductions, and a significant boost to the Instant Asset Write-off scheme will go a long way toward helping small business owners manage their cash flow and retain their employees through this turbulent period,” said Ellis.
“Australia’s two million small businesses are the heartbeat of our economy, and after a very difficult start to the year due to the bushfire crisis, and now the impact of coronavirus, our priority is not only to help small business survive but also help them come out of this stronger.”
Despite announcing a return to surplus in last year’s Federal Budget, the Finance Minister has now conceded required stimulus will prevent it occurring.
“Obviously we already were under significant pressure given the impact on revenue from the economic impact of the coronavirus, so this is obviously not going to be a surplus year in 2019-20,” said Matthias Cormann, as reported by ABC News.
Rather than targeting structural change, the Government intends the stimulus to be temporary while providing immediate relief to businesses.
“Australia is not immune to the global coronavirus challenge but we have already taken steps to prepare for this looming international economic crisis,” said Prime Minister Scott Morrison.
“The economy needs temporary help right now to bounce back better so the livelihoods of all Australians are protected.”
The news of the stimulus arrives on the heels of an ATO announcement that a minority of wealthy Australians are “deliberately engaging in risky behaviour” that may be contributing to a tax gap of up to $770 million.
“This includes seeking to engage in artificial and non-commercial arrangements that are intentionally designed to avoid paying tax,” said ATO deputy commissioner Tim Dyce.
As a result, the ATO will be expanding its Tax Avoidance Taskforce by more than 100 additional staff to target the high-wealth private groups segment (who control net wealth of $50 million or more).
“We now have the resources to knock on the door of nearly every taxpayer in this population,” said Dyce.