How can the Australian government stimulus package help your business?
With the recent shutdown of gyms and health clubs in Australia due to the coronavirus (COVID-19) pandemic, it’s never been a tougher time to be a gym or health club owner.
In Australia, the federal government has recently introduced a series of economic stimulus packages to help businesses lessen the impact of the coronavirus (COVID-19) crisis.
There are three main components to the Economic Stimulus Package, which are business investment measures to help Australian businesses both in the short term and to encourage a quicker recovery long term.
Three major parts of the stimulus package are:
- Increasing the Instant Asset Write-Off (IAWO)
- Backing Business Investment (BBI)
- Boosting cash flow for employers
Instant asset write-off
Increasing the instant asset write-off (IAWO) will provide “cash flow benefits for businesses that will be able to immediately deduct purchases of eligible assets each costing less than $150,000.”
This operates on a per-asset basis so businesses can automatically write off multiple assets (e.g. pieces of equipment). This includes new or used assets.
The changes to IAWO apply immediately until the end of the financial year (30 June, 2020).
Backing business investment
The backing business investment (BBI) is a federal government investment incentive designed to accelerate depreciation deductions in the short-term.
For businesses with less than $500 million turnover, the features of the incentive include a “deduction of 50 per cent of the cost of an eligible asset on installation” as well as an expansion of the deductible eligible assets.
According to the Treasury, new assets can be “depreciated under Division 40 of the Income Tax Assessment Act 1997…acquired after announcement and first used or installed by 30 June 2021.”
This means that new assets costing more than $150,000 get a 50 per cent instant depreciation write-off.
The BBI applies to assets “acquired after announcement and first used or installed by 30 June 2021.”
Boosting cash flow for employers
In addition, the government has also announced an enhanced cash flow relief program for employers, providing up to $100,000 to eligible small and medium sized businesses with employees, with a minimum payment of $20,000.
Businesses with an annual turnover of less than $50 million who employ people are eligible.
According to the Treasury, employers will “receive a payment equal to 100 per cent of their salary and wages withheld (up from 50 per cent), with the maximum payment being increased from $25,000 to $50,000.”
There will also be an additional payment introduced between July and October 2020.
Full details of this scheme can be found at this link.
It’s tough for businesses right now but measures like these are designed to cushion the impact. For more information on the Economic Stimulus Package, visit the Treasury’s website.