Taking advantage of the economic

TAKING ADVANTAGE OF THE ECONOMIC STIMULUS PACKAGE

The Australian federal government announced an initial stimulus package on 12 March 2020, in response to the challenges the COVID-19 global pandemic is presenting for businesses.

The stimulus package focuses on keeping Australians in jobs and keeping businesses in business so the nation can bounce back.

Australia has over three million small and medium businesses. Prime Minister Scott Morrison said the government was acting in order to cushion the blow from the coronavirus for businesses.

“We want to help businesses keep going as best they can and for as long as they can, or to pause instead of winding up their business. We want to ensure that when this crisis has passed Australian businesses can bounce back,” the Prime Minister said.

“We know this will be temporary. That’s why all our actions are geared towards building a bridge, keeping more people in work, enhancing the safety net for those that aren’t and keeping businesses alive so they can get to the other side and stand up their workforce as quickly as possible.”

WHAT DOES IT MEAN FOR SUPPLY CHAINS AND LOGISTICS?

For business, the package includes increasing the instant asset write-off 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) until 30 June 2020.

For transport operators the introduction of a time limited 15-month investment incentive until 30 June 2021 is aimed at supporting business investment and economic growth over the short term, by accelerating depreciation deductions.

Cash flow assistance will be provided for up to 70,000 businesses challenged by the economic impacts of the coronavirus and to help with employee retention.

According to the Australian Logistics Council (ALC) the range of economic stimulus measures announced by the Prime Minister must be matched by other practical actions from governments at all levels to ensure supply chains remain resilient.

“Many aspects of the Federal Government’s stimulus package today will be welcomed in the logistics sector, in particular the extension of the instant asset writeoff which can be used by businesses to modernise equipment and vehicles, delivering a range of safety and productivity benefits,” said ALC CEO Kirk Coningham.

“However, economic stimulus measures need to be matched by a commitment to additional practical actions in order to meet some of the supply chain challenges that the COIVD-19 situation is presenting.”

WHAT FINANCIAL SUPPORT IS AVAILABLE?

The federal government will invest $6.7bn to boost tax-free cash flow for employers. The payment will provide cash flow support to businesses with a turnover of less than $50m that employ staff from the beginning of this year to June.

Up to $25,000 is available to help pay wages or for investment to protect against a downturn in activity.

Businesses with turnover less than $500m will be able to access a 15 month investment incentive by accelerating depreciation deductions. These businesses are also eligible for an expanded instant asset write-off for asset investments of up to $150,000.

Similar to the relief provided foll owing the bushfires, the Australian Taxation Office (ATO) will provide administrative relief for certain tax obligations on a case-by-case basis.

If you’re a quarterly pay as you go (PAYG) instalments payer you can vary your PAYG instalments on your activity statement for the March 2020 quarter. Wisbey noted that thresholds here limit the amount of available assistance,

The 50 per cent allowance on PAYG capped at $25,000 limits the target pool and those companies still need to pay net wages and super.

From March 12, businesses with a turnover of less than $500m will be able to deduct 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset cost.

A time-limited 15 month investment incentive to support business investment and economic growth over the short term, by accelerating depreciation deductions.

WHAT ABOUT ACCESS TO THE NEW INSTANT ASSET WRITE-OFF THRESHOLD OF $150,000?

This is available to businesses with an annual turnover of less than $500 million. As a manufacturer in Australia, you can now access up to $150,000 in instant asset write-offs (IAWO) and instant depreciation on assets over $150,000. This can include manufacturing machines. It applies to eligible assets acquired after announcement and first used or

MHD explains how the supply chain and logistics industry can leverage the government’s recent stimulus package to enable new business opportunities.

installed by 30 June 2021.

The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets. Expanding the threshold will mean an additional 5,300 businesses who employ around 1.9 million Australians will be able to access the IAWO for the first time. This proposal applies from announcement until 30 June 2020, for new or second-hand assets first used or installed ready for use in this timeframe.

This measure is estimated to have a cost of $3.2 billion over the forward estimates. It will support business investment and is estimated to lower taxes paid by Australian businesses by $6.7 billion over the next two years.

AR OUND THE NATION

“These extraordinary times demand extraordinary measures,” Scott Morrison said. In late March, state governments announced its own packages in an effort to support Australian businesses during this unprecedented time.

NEW SOUTH WALES

$1bn funding package to boost employment

“We want to help businesses keep going as best they can and for as long as they can, or to pause instead of winding up their business. We want to ensure that when this crisis has passed Australian businesses can bounce back. ”

in Services NSW and defer payroll taxes and other levies.

VICTORIA

$1.7bn economic survival package including $500m to support workers to transition to new jobs and a $500m business support fund for the hardest-hit sectors, including retail.

QUEENSLAND

$4bn package including rebates and waivers amounting to five months of payroll tax for businesses.

WESTERN AUSTRALIA

$1bn package including extra assistance for small businesses’ energy bills.

SOUTH AUSTRALIA

$350m package to bring forward infrastructure spending and start new projects in road maintenance and $300m for businesses and industries.

TASMANIA

$565m package including $150m to purchase essential equipment and supplies, and provide additional staff to combat Covid-19. ■

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