Stimulus Package #1
In response to the coronavirus pandemic, the federal government has announced a $17.6bn economic stimulus package, equivalent to 0.9% of GDP. The aim is to provide the funds to the economy as quickly as possible with $11bn of the package to be released by June 2020.
Households - Low Income Earners including Pensioners
The government will provide a one-off $750 payment (to be paid from 31 March this year, one payment per eligible recipient). This payment will help to support confidence and domestic demand in the economy. The payment will be exempt for tax purposes.
To be eligible, you must be residing in Australia and receiving one of the following payments or hold one of the following concession cards on 12 March 2020:
Age Pension
Disability Support Pension
Carer Payment
Parenting Payment
Wife Pension
Widow B Pension
ABSTUDY (Living Allowance)
Austudy
Bereavement Allowance
Newstart Allowance
Youth Allowance
Partner Allowance
Sickness Allowance
Special Benefit
Widow Allowance
Family Tax Benefit (including double orphan pension)
Carer Allowance
Pensioner Concession Card holders
Commonwealth Seniors Health Card holders
Veteran Service Pension; Veteran Income Support Supplement, Veteran Compensation payments including lump sum payments; War Widow(er) Pension; and Veteran Payment
Veteran Gold Card holders
Farm Household Allowance
Small and Medium-Sized Businesses
$2,000 to $25,000 will be provided to cover the costs of employee wages and salaries, paid by the ATO based on tax withheld. Your business should be registered for PAYG tax withholding and up-todate in lodgments. Eligible businesses that pay salary and wages will receive a minimum payment of $2,000 even if they are not required to withhold tax. These payments will be benchmarked to 50% of the amount withheld on employees’ salary and wages, up to a maximum payment of $25,000.
Quarterly BAS lodgers will be eligible to receive the payments for the quarters ending March 2020 and June 2020.
Monthly BAS lodgers will be eligible to receive the payment for the March 2020, April 2020, May 2020 and June 2020 lodgements.
About 690,000 businesses employing around 7.8 million people are expected to be eligible for this payment.
Apprentices
The government is focusing on funding employers with the aim of keeping people in jobs.
$1.2bn will be made available as a wage subsidy of 50% of the apprentice’s or trainee’s wage for up to nine months from 1 January 2020 to 30 September 2020. If a small business is not able to retain an apprentice, the subsidy will be made available to a new employer that employs that particular apprentice (whether it is a large business or a registered training organisation).
Sole Traders
Unfortunately – no stimulus will be provided to sole traders. The government says those who do not employee anyone will benefit indirectly from the money flowing to low-income earners. You will still be able to access the business investment incentives.
Business Investment Incentives
The government wants businesses to keep spending on assets and equipment for their business. The idea is to bring planned spending earlier to the economy to help boost activity and hopefully keep people in work and keep away from a recession.
$3.9bn in incentives will help to encourage businesses to spend. These include accelerating depreciation deductions as well as increasing the instant asset write-off from $30,000 to $150,000 (inclusive of GST-if you are registered for GST). Originally this was planned to be reduced to $1,000 from 1 July 2020. (This is a great incentive to take advantage of. But do it with the intention of building your business and not just unnecessarily purchasing things to take advantage of the tax benefit).
In the words billionaire investor and business man Warren Buffet “Be fearful when others are greedy and greedy when others are fearful.” Of course, this should be taken into account in a business sense.
Other Matters Affecting Our Economy
In addition to the effects of the pandemic of coronavirus in the world, there are many other factors affecting the Australia economy (and world economy).
Governments around the world are trying to stave away from recession by offering their own versions of a stimulus package. We are still waiting on the Trump administration’s proposed economic stimulus which is looking to surpass the 2009 Obama stimulus legislation during the Global Financial Crisis and add close to another $1 trillion in U.S federal debt.
Saudia Arabia and Russia intensify their oil price war. This means our local petrol prices go down but the continued price war can significantly affect the global economy.
African Swine Fever (ASF) has driven up prices of our pork and other meats from the end of last year. The prices of beef, poultry and sheep meat may still be set to rise over this year has there is a global pork shortage. Exports to China are also surging off the back of the ASF pandemic which has devastated China’s pig production and affected the pig supply all around Asia, including the Philippines, Indonesia, Cambodia and Vietnam. This affects our supply of meat in Australia. The relief from bushfires and increased rainfall in the last month have been helpful but some of our Australian farms will continue to struggle with this other threat. We are lucky that there are no signs of ASF in Australia and the Australian government announced in December 2019 that $66.6 million will be used to fund increased biosecurity measures.
In other news, there are hundreds of billions of locusts swarming through parts of East Africa and South Asia threatening crops and livelihoods. We don’t know yet how this will affect Australia but I think we are all still very lucky to live in a country like Australia.
Words From Your Tax Agent
As a fellow human being, we should be looking out for each other and trying not to spread fear in others. We should help to educate others with reference to facts. Try and enjoy life and be vigilant with washing hands, keeping sanitisers/alcohol solutions with you, being careful not to touch too many things in public, keeping a safe distance from others and not touching each other with handshakes, kisses on the cheeks, etc. We can still show love with a pat on the back, a bow (or curtsy, if you like) and ofcourse friendly words or affectionate greetings. Especially look out for the elderly, the young ones and those who are susceptible to getting sick. Please be considerate of others in stocking up on food and tissues. I think toilet paper symbolises control. When people hear about coronavirus, they are afraid of losing control. And I think toilet paper feels like a way to maintain control over hygiene and cleanliness. It’s also a non-perishable item but I don’t think it will be disappearing any time soon!