The federal government has announced that it will provide the Australian economy with a $17.6 billion stimulus package, including measures to support business investment and the provision of cash flow assistance for small and medium sized businesses, in response to the impact of the coronavirus health crisis.
In announcing the stimulus package, Prime Minister Scott Morrison said that 3.5 million businesses would be directly supported by the package.
“[The] support package responds to the economic challenges presented by this pandemic in a timely, proportionate and targeted way,” Morrison said.
“Our plan will back Australian households with a stimulus payment to boost growth, bolster domestic confidence and consumption, reduce cash flow pressures for businesses and support new investments to lift productivity.
“Our targeted stimulus package will focus on keeping Australians in jobs and keeping businesses in business so we can bounce back strongly. The economy needs temporary help right now to bounce back better so the livelihoods of all Australians are protected.”
To support business investment the package provides the following measures:
- $700 million to increase the instant asset write off threshold from $30,000 to $150,000 and expand access to include businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.
- $3.2 billion to back business investment by providing a time limited 15 month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating depreciation deductions. Businesses with a turnover of less than $500 million will be able to deduct an additional 50 per cent of the asset cost in the year of purchase.
To assist with business cash flow the government will provide the following measures:
- $6.7 billion to boost cash flow for employers by up to $25,000 with a minimum payment of $2,000 for eligible small and medium-sized businesses. The payment will provide cash flow support to businesses with a turnover of less than $50 million that employ staff, between 1 January 2020 and 30 June 2020. The payment will be tax free and businesses will receive payments of 50 per cent of their Business Activity Statements or Instalment Activity Statement from 28 April with refunds to then be paid within 14 days.
- $1.3 billion to support small businesses to support the jobs of around 120,000 apprentices and trainees. Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for up to 9 months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.
Treasurer Josh Frydenberg said the stimulus package would keep businesses operating and support jobs.
“[The stimulus package] will provide the support businesses need to stay in business and keep Australians in a job,” Frydenberg said.
“By acting decisively this package will put Australia in the strongest possible position to deal with the economic challenges we face and to make sure our economy bounces back even stronger.”