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Employers benefit

New stimulus package benefits farmers’ cashflow and tax return

EMPLOYERS are benefiting with a significant increase to the business cashflow boost scheme announced as part of the $17.6 billion stimulus package on March 12, in an effort to soften the economic blow of the coronavirus (COVID-19).

Initially the program was set to deliver benefits of between $2000 and $25,000 to all businesses with employees, however as of April 28, the program has been significantly increased to a minimum benefit of $20,000 and a maximum of $100,000.

In practice, this means all businesses (including farms) employing staff in the January to March quarter of this year will be eligible for a minimum of $20,000, paid as credits through the activity statement system.

For those who have withheld less than $5000 in tax from staff wages for the January to March quarter, the minimum cash boost will apply.

This is $10,000 in credits for the quarter, then $5000 for each of the April to June and July to September quarters, to total $20,000 in benefit.

The benefit received for those that have withheld more than $5000 increases on a scale, with those who have withheld $25,000 or above in tax from wages receiving the full $100,000 benefit.

Example – refund of cash flow boost

WHEN Sarah lodges her activity statement for the month of March 2020 she owes PAYG withholding of $15,008; GST of $9704; and she also owes $4500 from her February 2020 activity statement.

Sarah’s initial cash flow boost for the March activity statement is $45,024.

This is used to pay the March activity statement liabilities of $24,712 ($15,008 + $9704).

She will be left with a remaining cash flow boost of $20,312.

To support Sarah’s business during this period, the cash flow boost of $20,312 will not be used to pay her outstanding liability of $4500 from the February activity statement.

Instead it will be paid to Sarah as a refund.

Other stimulus benefits for farmers

A SUMMARY of some of the other inclusions in the stimulus package which may benefit farmers are as follows.

Seven-hundred-million dollars 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 June 30, 2020.

For example, assets that may be able to be immediately written off are a concrete tank for a builder, a tractor for a farming business, and a truck for a delivery business.

A $3.2 billion package will back business investment by providing a time limited 15-month investment incentive (through to June 30, 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.

Small businesses will be supported by $1.3 billion 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 nine months from January 1, 2020 to September 30, 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.

For those on Farm Household Allowance (FHA) or other family benefits, the first stimulus package also provided for a one off $750 payment.

Subsequent increases to the Newstart Allowance rate of $550 per fortnight also apply to FHA payments.

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