Yesterday, the Government announced the details of its economic stimulus program designed to try and stave off a recession.
In summary, new car Dealers should benefit from the expansion of the instant asset write-off, with the revised threshold now capturing many more vehicles and the number of eligible businesses increasing substantially. At this stage the expanded scheme is only due to run until 1 July 2020.
Other measures such as cash grants and wage subsidies for small and medium-sized businesses will only be available for a limited number of our members due to unfavourable turnover and employee number thresholds. We are urging the Government to extend these measures to all businesses.
This is the Government’s initial response with further stimulus possible, included in the Federal Budget in May. State Governments will also come under pressure to announce measures and the AADA will be writing to State Premiers and Chief Ministers in the coming weeks to suggest payroll tax relief for businesses and stamp duty relief for consumers.
The AADA welcomed the instant asset write-off expansion in a media release yesterday, but made the point that consumer-targeted stimulus for the auto sector should be considered. We also stated that the instant asset write-off should be extended beyond 30 June 2020 and that many of our members will be missing out on other aspects of this stimulus package, which is unfortunate given the downturn in the industry.
The AADA will join with other automotive associations in writing to the Treasurer and will also be calling on state governments to deliver their own stimulus measures.
Further details from the Government’s announcement:
- Delivering support for business investment
- Increasing the instant asset write-off – From today, the Government is 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.
- Backing business investment – The Government is introducing a time limited 15 months investment incentive (through to 30 June 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 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.
- Cash flow assistance for businesses
- Boosting cash flow for employers – The Boosting Cash Flow for Employers measure will provide up to $25,000 back to small and medium-sized businesses, with a minimum payment of $2,000 for eligible businesses. The payment will provide cash flow support to businesses with a turnover of less than $50 million that employ staff. The payment will be tax free.
- Supporting apprentices and trainees – The Government is supporting small business to retain their 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 9 months from 1 January 2020 to 30 September 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.
Dealers who require further information are advised to contact their financial advisors or accountants to determine the benefits to customers, their Dealership and to better understand the qualification thresholds.