A $17.6 billion stimulus package has been announced for businesses and households to deal with challenges posed by the spread of the coronavirus.
The package aims to keep Australian small and medium sized businesses afloat during potential economic hardships.
It is made up of four parts, which includes supporting business investment, providing cash flow assistance to small and medium sized businesses, targeted support for severely affected sectors, regions and communities and household stimulus payments to benefit the entire economy.
The Federal Government will spend $700 million to increase the instant asset write off threshold from $30,000 to $150,000 and expand access to include businesses with an aggregated annual turnover of less than $500 million, compared with the previous cap of $50 million, until 30 June 2020. Assets could include a concrete tank for a builder or a truck for a delivery business.
Master Builders Australia CEO Denita Wawn says builders and tradies around the country will respond favourably to the boost in instant tax-write off threshold.
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“There are more than 380,000 small building businesses and tradies in our industry, more than any other sector of the economy, that will benefit from the Government’s strong focus on backing small businesses,” Wawn said.
“Incentives to invest in business assets are also well targeted to our industry. There is no doubt builders and tradies will be encouraged to invest in new plant and equipment.
“However, if there is a major contraction in building activity then the benefit of these measures will be blunted. The Government must take a strong leadership role in ensuring that construction of government projects currently underway continue and that projects scheduled to commence are not delayed or withdrawn,” she said.
Master Builders Australia has also called for the Federal Government to bring forward expenditure on existing projects.
“Accelerating construction of current projects and bringing forward construction of shovel ready projects, big and small, would provide an immediate strong impetus for building firms to take up tax write off and investment incentive measures,” Wawn said.
In addition, $6.7 billion will be spent to boost cash flow for employers by up to $25,000 with a minimum payment of $2000 for eligible small and medium sized businesses. This payment will be tax free and aims to benefit around 690,000 businesses employing around 7.8 million people.
Small businesses that support the jobs of apprentices and trainees will also be eligible to apply for a wage subsidy of 50 per cent of the apprentice’s or trainees wages for up to nine months from 1 January 2020 to 30 September 2020, due to a $1.3 billion investment.
Prime Minister Scott Morrison said as part of the plan up to 6.5 million individuals and 3.5 million businesses would be directly supported by the package.
“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.
“Australia is not immune to the global coronavirus challenge but we have already taken steps to prepare for this looming international economic crisis.
“Our targeted stimulus package will focus on keeping Australians in jobs and keeping businesses in business so we can bounce back strongly.”
Treasurer Josh Frydenberg said Australia is approaching the economic challenge from the Coronavirus from a position of strength with IMF and the OECD both forecasting Australia to grow faster than comparable countries including the UK, Canada, Japan, Germany and France.
“Our plan keeps businesses operating, supports jobs and provides a stimulus to households,” Frydenberg said.
“The Government has worked hard over the last six and a half years to return the budget to balance so we have the flexibility to respond to the serious economic challenges posed by the Coronavirus.
“Given Australia’s strong economic and fiscal position, the international credit rating agency Standard and Poor’s indicated that temporary stimulus would be “unlikely to strain Australia’s creditworthiness.”