The Government is acting decisively for businesses to address the significant economic consequences of the Coronavirus. The spread of the Coronavirus worldwide has expanded and is speculated to be more extensive. Both the international and domestic Governments have announced stricter mitigation measures to slow down the spread of the virus, which are resulting in significant economic impacts.
On 22 March, the Government announced a second set of Stimulus package which, combined with the previous actions, total $189 billion across the forward estimates, representing 9.7 percent of annual GDP.
Aim of these economic reforms is to help small businesses manage cash flow challenges and retain employees. Which includes cash flow support to businesses and providing temporary relief for financially distressed businesses.
- Providing cash flow support for employers
- Temporary relief for financially distressed businesses
- Increasing the instant asset write-off
- Backing business investment
- Supporting apprentices and trainees
In this article, we will take a deeper look at Specific to the business community, its components include:
- Change in the instant asset write-off (IAWO) from $30,000 to $150,000.
- The access is expanded to businesses with total turnover up to $500 Million until 30 June 2020.
- $3.2 billion by giving a time-limited 15-month incentive through to 30 June 2021 by speeding depreciation deductions.
- Businesses with turnover up to $500 million will now be able to deduct 50 percent of the asset cost in the year they are purchased.
“This is a comprehensive, well-thought-through, a well-targeted plan, which is designed to support the Australian economy and jobs and businesses through the difficult months ahead,” Prime Minister Scott Morrison said.
Let’s look at a simple example:
Consider a scenario, where one purchases some equipment before 30 June 2020 for $50,000 and write off the entire cost immediately while paying tax on $50,000, the equipment worth $50,000 eventually cost just $35,000.
What does this mean for businesses?
There are several ways in which Australian companies can make use of these incentives:
Companies across the globe have made work from home mandatory. Remote working is allowing businesses to keep running while encouraging employees to follow the guideline of social distancing.
The IT channel in Australia is efficient enough to help businesses transition from traditional working to remote working.
This includes all the technologies that help employees working from homes comfortably including laptops, monitors, keyboards, docking stations, remote collaboration and software that facilitate video conferencing along with better communication.
The need of secured devices
The Corona pandemic has increased the dependency of companies on technology services companies along with accelerating the demand for technologies that were already being used by companies.
Soon after the end of support (EoS) for Windows 7 was announced by Microsoft, the stimulus landed in. With the announcement comes the end of operating system security updates. However, Australian businesses still use thousands of Windows 7 devices.
There is a need to refresh the technology with the latest and secure devices.
Modern technologies are an integral part of any small or large company. Businesses survive but thrive with modern technology.
An effective digital business strategy is a bonus for companies to streamline their processes, customer and employee interaction along with delivering excellent customer service every time.
The stimulus comes with an investment opportunity in digital transformation.
This could include anything from a new infrastructure purchase to technology upgrades for modernization.
Talent attraction and retention
According to the studies, the latest technologies are the choice of millennials. This also becomes an incentive to attract, retain and train the best talents. In Australia, it is, however, becoming difficult to find, hire and retain potential people.
A cutting-edge technology environment with advanced technology like conversational AI and programmatic advertising will help the Australian businesses operate smoothly. Such a working environment will also foster the professional development of employees.
Security, backup and disaster recovery
A pandemic like Corona Virus increases the importance of business continuity.
Australia’s stimulus package presents huge opportunities for businesses to improve their technological environment. This can be achieved by making investments in areas including security, disaster recovery and security systems that otherwise not have been considered.
Data breaches are a new big challenge and every company is required to protect its data. A security audit conducted by external auditors may be helpful in such a scenario. The results obtained can be used for system up-gradation and ensuring that the right measures are at the right place.
The financial benefit
Businesses can move strategically by leveraging the tax advantage and preparing for the future. Supporting businesses during a crisis of Corona pandemic with stimulus packages are great support for businesses in terms of improving their cash flows and enhancing the readiness and capabilities to recover.
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