How to make the most of the Government’s economic stimulus package
Coronavirus. COVID-19. Whatever you want to call it, it’s causing widespread panic and wreaking havoc on the global economy. In response, the Australian Government has developed an economic stimulus package to help get businesses and households through this challenging time. As a result, now is a good time for business owners to think about investing in business assets, growing your business and saving on tax!
What can I do with the business stimulus package?
The business stimulus packages have been released in various stages. Whether you run a small, medium or big business, there are a range of incentives coming your way:
Business investment support
As you may know, an existing instant asset write-off scheme for businesses exists (with a turnover of up to $50 million for assets up to $30,000), allowing businesses to claim a tax break on what they spend on these business-related assets.
This has now been increased to businesses with an aggregated annual turnover of $500 million and the $30,000 asset write-off has grown to $150,000, available until 30 June 2020.
We have helped our customers purchase a wide range of commercial assets from vehicles, tractors, fitouts to concrete mixers and many more. Whilst consulting your accountant for the appropriateness and applicability for your business, let us help you grow your business in these challenging times.
If you're wondering what on earth the instant asset write-off scheme is, here is a primer:
An instant asset write-off allows eligible businesses to claim immediate deductions (up to a limited amount) for new or second-hand plant and equipment asset purchases such as vehicles, tools and office equipment. The assets must first be used, or installed for use, in the income year you’re claiming for.
In addition, a 15 month investment incentive (up to 30 June 2021) will allow businesses with turnover up to $500 million to accelerate depreciation deductions, specifically an additional 50% of the asset cost in the year of purchase.
Cash flow / employment assistance for businesses
There will be almost 700,000 small to medium businesses (those with turnover up $50m) across Australia that will receive between $2,000 and $25,000 cash payments to help pay wages to existing staff and/or employing additional staff where required. This payment will be tax free, made as a payment up to 50% of their Business Activity Statement or Instalment Activity Statement from 28th April 2020 with refunds to then be paid within 14 days.
In addition, eligible employers of apprentices or trainees will be able to apply for a wage subsidy of up to 50% of the individuals wage for up to 9 months from 1st January 2020 to 30th September 2020.
If your turnover has reduced as a result of the coronavirus (measured at a 30% reduction for companies with turnover under $1B and 50% for companies with turnover over $1B), you may be eligible to access the Government's Jobkeeper payment program which will provide $1,500 per fortnight per eligible employee for a maximum of 6 months.
SME Guarantee Scheme
From early April 2020, the SME Gaurantee Scheme will provide lenders a guarantee (up to 50%) who lend to small to medium businesses, or specifically, businesses with turnover up to $50M who borrow from SME lenders (such as the ones we work with!) for new unsecured loans to be used for working capital. This will apply for loans up to $250,000, 3 years and provide an initial 6 month holiday.
There is a range of other support and assistance components the Government has announced which are summarised here.
Let us help you maximise the stimulus package for your business
With up to $150,000 in instant asset write-offs available as well as improved lending options by SME lenders, what better time to grow your business and help reduce how much tax you have to pay at the end of the financial year?
You might be looking for commercial equipment (say goodbye to having to hire every single time), maybe it’s time to expand your fleet of vehicle (check out these great commercial vehicle savings from our new car buying partners, Carconnect) or you're looking for cash flow funding solutions. Whatever you’re looking for, our team at Stratton Finance is here to help.
It's also worth noting that in many instances, you can get approved up to 90 days prior to purchase, giving you plenty of time to hunt around.
We’ve worked with thousands of Aussie businesses just like yours to take advantage of saving on tax and making the most of whatever economic stimulus package the Government is offering at the time.
* All information cited above is provided on a general basis and in the case you are considering the appropriateness of this information should consult your accountant.