Coronavirus or COVID-19 has officially been declared a global pandemic and in reaction, the Australian government has announced a A$17.6 billion stimulus package which will assist tradies to ensure the survival of their small businesses. With fears Australia could fall into recession as the knock-on effects of the pandemic are felt, the Australian government hopes that this stimulus package will be enough to sustain small business through this difficult time.
So what will this mean for your trade business? There are three major announcements which will apply to tradies that you need to know about.
“OUR TARGETED STIMULUS PACKAGE WILL FOCUS ON KEEPING AUSTRALIANS IN JOBS AND KEEPING BUSINESSES IN BUSINESS SO WE CAN BOUNCE BACK STRONGLY.”
APPRENTICE WAGE SUBSIDIES
Does your trade business have less than 20 employees? Are any of these apprentices or trainees?
- The Australian government will subsidise apprentice wages for trade businesses with less than 20 employees.
- You will be entitled to up to $21,000 for each apprentice employed by your business with payment spread across nine months.
- Payments will be backdated to 1st January 2020 and run until 30th September 2020
- For existing apprentices employed within your business.
Don’t have an apprentice or run a company with 20+ employees?
You can also access this scheme by hiring an apprentice who has become unemployed since 1st March 2020.
“WE WANT TO ENSURE THAT AS WE GO THROUGH THESE DIFFICULT MONTHS AND QUARTERS AHEAD, THAT YOUNG PEOPLE AND APPRENTICES WILL BE ABLE TO CONTINUE IN THOSE APPRENTICESHIPS AS WE GO THROUGH THIS VERY DIFFICULT PERIOD.”
INSTANT ASSET WRITE OFF
From March 12, 2020 the instant asset write off scheme will be boosted temporarily to encourage spending on vehicles, machinery, tools and equipment
- Instant tax reductions available on purchases up to $150,000
- No limit – multiple assets can be purchased under this scheme and each will be eligible for the write-off
- Available to businesses with an annual turnover of up to $500 million
- Assets can be NEW or USED
- The scheme ends on June 30, 2020
An additional depreciation write off scheme is in place aiming to encourage business investment.
- Available for asset purchases valued over $150,000
- Businesses can deduct an additional 50 per cent of the asset cost in the year of purchase
- Only applies to NEW assets (Not USED)
- No limit – multiple assets can be purchased under this scheme and each will be eligible for the depreciation
- Available to businesses with an annual turnover under $500 million
- This scheme will run for 15 months, ending 30 June 2021
CASH FLOW PAYMENTS
Small and medium businesses turning over up to $50 million per year will also be eligible for cash grants of up to $25,000 starting in March to ease the financial strain and help boost cash flow.
- Available for businesses with turnover under $50 million per year
- Businesses that withhold tax on their employees’ salary and wages will receive a payment equal to 50 per cent of the amount withheld, up to a maximum payment of $25,000.
- All businesses that pay salary and wages will receive a minimum payment of $2,000, even if they are not required to withhold tax.
- Accessed through the lodgement of your business activity statements (BAS)
- Payment will be delivered by the ATO as a credit on your activity statement from 28th April 2020 within 14 days of lodgement.
- The scheme ends on June 30, 2020
- If you are a taxpayer affected by the COVID-19 coronavirus pandemic, you may be able to access administrative relief for certain tax obligations through the ATO.
- Income support may be available to people who can’t go to work because they have been diagnosed with coronavirus or are in isolation if they do not have any employer leave entitlements.
To request assistance, contact the ATO on 1800 806 218
HOW TO ACCESS THE STIMULUS PACKAGE
Some elements of the stimulus will be automatically applied but we recommend you get in touch with your accountant or bookkeeper asap to ensure you maximise the stimulus package for your trade business.
If you don’t have a bookkeeper or accountant you can discuss this with, let us know and we’ll connect with you with one of our awesome partners.
Coronavirus Health Information Line 1800 020 080 – Call this line if you are seeking information on coronavirus (COVID-19). The line operates 24 hours a day, seven days a week.
Australian Government – Economic Response to Coronavirus
Australian Government – Support for Businesses in Australia