The Australian Government's economic response to coronavirus

Enhancing the instant asset write-off

The government is increasing the instant asset write-off (IAWO) threshold from $30,000 to $150,000 and expanding access to include businesses with aggregated annual turnover of less than $500 million (up from $50 million).

Timing

This proposal applies from 12 March 2020 until 30 June 2020, for new or second-hand assets first used, or installed ready for use in this timeframe.

Enhancing the IAWO will require legislative changes before it can take effect.

Backing business incentive

The government is introducing a time limited 15-month investment incentive to support business investment and economic growth over the short-term, by accelerating depreciation deductions.

A deduction of 50% of the cost of an eligible asset on installation will apply, with existing depreciation rules applying to the balance of the asset’s cost.

Eligibility

Eligible businesses are businesses with aggregated turnover below $500 million.

Eligible assets are new assets that can be depreciated under Division 40 of the Income Tax Assessment Act 1997 (that is, plant, equipment and specified intangible assets, such as patents). This does not apply to second-hand Division 40 assets, or buildings and other capital works depreciable under Division 43.

Timing

This applies to assets acquired after announcement and first used or installed by 30 June 2021.

Boosting cash flow for employers

As announced on 22 March, the government is providing up to $100,000 to eligible small and medium sized businesses and not-for-profits (including charities) that employ people, with a minimum payment of $20,000. These payments will help business and not-for-profit cash flow so they can keep operating, pay their bills and retain staff.

Small and medium sized business entities with aggregated annual turnover under $50 million and that employ workers are eligible. Not-for-profit entities (NFPs), including charities, with aggregated annual turnover under $50 million and that employ workers will now also be eligible. This will support employment activities at a time where NFPs are facing increasing demand for services.

Under the enhanced scheme, employers will receive a payment equal to 100% of their salary and wages withheld (up from 50%), with a:

• minimum payment of $10,000

• maximum payment of $50,000.

An additional payment is also being introduced in the July – October 2020 period. Eligible entities will receive an additional payment equal to the total of all the Boosting Cash Flow for Employers payments they have received. This means that eligible entities will receive at least $20,000, up to a total of $100,000 under both payments. This additional payment continues cash flow support over a longer period:

• increasing confidence

• helping employers to retain staff

• helping entities to keep operating.

The cash flow boost provides a tax-free payment to employers. We will automatically calculate it.

Eligibility for Boosting Cash Flow for Employers payments

Small and medium sized business entities and NFPs with aggregated annual turnover under $50 million and that employ workers will be eligible. Eligibility will generally be based on prior year turnover.

We will deliver the payment as an automatic credit in the activity statement system from 28 April 2020 upon employers lodging eligible upcoming activity statements.

Eligible employers that withhold tax to the ATO on their employees’ salary and wages will receive a payment equal to 100% of the amount withheld, up to a maximum payment of $50,000.

Eligible employers that pay salary and wages will receive a minimum payment of $10,000, even if they are not required to withhold tax.

The payments will only be available to active eligible employers established before 12 March 2020. However, charities that are registered with the Australian Charities and Not-for-profits Commission will be eligible regardless of when they were registered, subject to meeting other eligibility requirements. This recognises that new charities may be established in response to COVID-19.

Eligibility for additional payment

To qualify for the additional payment, the entity must continue to be active.

Monthly activity statement lodgers

For monthly activity statement lodgers, the additional payments will be delivered as an automatic credit in the activity statement system. This will be equal to a quarter of their total initial Boosting Cash Flow for Employers payment following the lodgment of their June 2020, July 2020, August 2020 and September 2020 activity statements (up to a total of $50,000).

Quarterly activity statement lodgers

For quarterly activity statement lodgers the additional payments will be delivered as an automatic credit in the activity statement system. This will be equal to half of their total initial Boosting Cash Flow for Employers payment following the lodgment of their June 2020 and September 2020 activity statements (up to a total of $50,000).

Timing of Boosting Cash Flow for Employers payments

The Boosting Cash Flow for Employers payment will be applied to a limited number of activity statement lodgments. We will deliver the payment as a credit to the entity upon lodgment of their activity statements. If this places the entity in a refund position, we will deliver the refund within 14 days.

Quarterly lodgers will be eligible to receive the first payments for the quarters ending March 2020 and June 2020.

Monthly lodgers will be eligible to receive the first payments for the March 2020, April 2020, May 2020 and June 2020 lodgments. To provide a similar treatment to quarterly lodgers, the payment for monthly lodgers will be calculated at three times the rate (300%) in the March 2020 activity statement.

The minimum payment will be applied to the entities’ first lodgment.

Timing of additional payment

The additional payment will be applied to a limited number of activity statement lodgments. We will deliver the payment as a credit to the entity upon lodgment of their activity statements. If this places the entity in a refund position, we will deliver the refund within 14 days.

Quarterly lodgers will be eligible to receive the additional payment for the quarters ending June 2020 and September 2020. Each additional payment will be equal to half of their total initial Boosting Cash Flow for Employers payment (up to a total of $50,000).

Monthly lodgers will be eligible to receive the additional payment for the June 2020, July 2020, August 2020 and September 2020 lodgments. Each additional payment will be equal to a quarter of their total initial Boosting Cash Flow for Employers payment (up to a total of $50,000).

Temporary early release of superannuation

The government is allowing individuals affected by the coronavirus to access up to $10,000 of their superannuation in 2019–20 and a further $10,000 in 2020–21. Individuals will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.

From mid-April 2020, eligible individuals will be able to apply online through myGov to access up to $10,000 of their superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020 for approximately three months. The exact timing will depend on the passage of the relevant legislation.

Eligibility

To apply for early release, you must satisfy any one or more of the following requirements:

• You are unemployed.

• You are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance.

• On or after 1 January 2020, either

  • you were made redundant

  • your working hours were reduced by 20% or more

  • if you are a sole trader, your business was suspended or there was a reduction in your turnover of 20% or more.

  
  

How to apply

If you are eligible for this new ground of early release, you can apply directly to the ATO through the myGov website: my.gov.auExternal Link. You will need to certify that you meet the eligibility criteria.

After we have has processed your application, we will issue you with a determination. We will also provide a copy of this determination to your superannuation fund, which will advise them to release your superannuation payment. Your fund will then make the payment to you, without you needing to apply to them directly. However, to ensure you receive your payment as soon as possible, you should contact your fund to check that they have your correct details, including your current bank account details and proof of identity documents.

Separate arrangements will apply if you are a member of a self-managed superannuation fund (SMSF). Further guidance will be available on our website.

Timing

You will be able to apply for early release of your superannuation from mid-April 2020.

Temporarily reducing superannuation minimum drawdown rates

The government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50% for 2019–20 and 2020–21. This measure will benefit retirees holding these products by reducing the need to sell investment assets to fund minimum drawdown requirements.

The government is also reducing both the upper and lower social security deeming rates by a further 0.25 percentage points in addition to the 0.5 percentage point reduction to both rates announced on 12 March 2020.

More information

For more information on the Australian Government’s economic response to coronavirus, visit treasury.gov.au/coronavirusExternal Link.

Businesses can visit business.gov.auExternal Link to find out more about how the economic response complements the range of support available to small and medium businesses.