Government Stimulus Package

Government Stimulus Package Presented by: Duncan Barber

The Package aims to Minimize the impact of Global Financial crisis on our Economy. • This presentation would cover the following Tax incentives, planning opportunities and eligibility criteria: • Small & General Business Tax Bonus • Pension Payment Concessions • PAYG Instalment Reductions • One Off Cash Bonus • Balance of Stimulus Package

Small & General Business Tax Bonus • Pension Payment Concessions • PAYG Instalment Reductions • One Off Cash Bonus • Balance of Stimulus Package

Small and General Business Tax Bonus • Investment Allowance • Extension of Bonus period - for all new contracts entered into from 18 Dec 08 to 31 Dec 09 – Purchase of new Equipment or expenditure to improve existing equipment • One off Deduction of 30 % (previously 10%) – provided asset installed & ready to use by 30 June 2010 • Deduction of 10% for assets purchased from 1 July 09 to 31 Dec 09 – Asset installed and ready to use by 31 Dec 2010 • Small business (up-to 2 million pa turnover) – Bonus on equipment costing more than $1000 • All other businesses, Bonus on equipment in excess of $10,000 • Bonus deduction is on top of the normal depreciation deductions allowable and deduction claimable in the year the asset is installed ready for use

Small and General Business Tax Bonus • Exclusions • Assets excluded from Bonus • Land • Trading stock • Software • Capital Works • Intangible assets • Assets subjected to pre-existing special deduction provisions • Cars are specially included as expenditure eligible for the bonus (limited to the luxury car depreciation limit)

Small and General Business Tax Bonus Exclusions For example: Purchase of car: 40,000 Contract Date: 20 December 08 Delivery Date: 1 February 09 Tax Deductions 2009201020112012 Investment Allowance 12,000Depreciation Prime Cost (12.5%) 2,083 5,000 5,000 5,000 Investment Allowance12,000 Depreciation Diminishing 4,1678,958 6,719 5,039 Value (25%)

Pension Payment Concessions • Reduction* of Mandatory Minimum Retirement Pensions ( by 50%) announced by the Federal Government • Reduction of pension drawing to NIL for retirees drawing a monthly pension since 1 July 08 for period 1 January 2009 to 30 June 2009. • Pensions will be re-instated in next financial year • * Proposal only

Pension Payment Concessions Assuming the proposal becomes law: Available Options • Do Nothing – Pensions will continue at their current rate • If pensions already drawn over half the “normal” minimum, request to stop pension • Reduce your pension payments to an amount lower than the mandatory minimum for remainder of the financial year • * Proposal only

PAYG Instalment Reduction • Tax concession to assist businesses – pay upto a 20% reduced PAYG instalment for Dec 08 quarter (due for lodgement on 3 March 09) • Eligibility criteria: • You pay PAYG instalments quarterly using the amount calculated by ATO • You are carrying business and have an annual turnover of less than $ 2 million • Receive income from a partnership or trust that is carrying on a business that has an annual turnover of less than $ 2 million

PAYG Instalment Reduction This reduction applies only to PAYG instalments • If you are eligible and have paid the full liability, AVAILABLE OPTIONS • Do nothing • Contact ATO to have the credit refunded or applied to your next liability This reduction is not a variation of your PAYG instalments.

One-Off Cash Bonus Stimulus package passed through both houses and waiting for royal assent • The FIVE key one-off cash payments • Tax Bonus Payment • Single Income Family Payment • Back to School Payment • Training & Learning Payment • Farmer’s Hardship Payment

One-Off Cash Bonus • Tax Bonus Payment • Lump sum payment of up to $900 to certain individuals who paid tax during the 2008 financial year. • Eligibility Requirement • Australian Resident • Tax liability on 2008 notice of assessment • Income under $80,000 sliding to $100,000 • Tax return must be lodged by 30 June 09 to receive this payment

One-Off Cash Bonus • Single Income Family Payment • A payment of $900 will be made to families who rely on one main income earner including single parent families. • Eligibility Requirement • Family eligible to receive FTB-B on 3 Feb 09 will receive the payment • Back to School Payment • A payment of $950 per school aged child (4-18 years) • Eligibility Requirement • Family entitled to receive FTB-A as at 3 Feb 09

One-Off Cash Bonus • Training and Learning Payment • A payment of $950 to eligible recipients to assist with Academic costs, split into 2 categories: • Payments to people eligible for youth allowance (student and apprentices), sickness allowance and special benefits, Austudy, Abstudy, VCES, MRCAETS and families entitled to FTA-A for each eligible full time student ages 21-24 years • Second category applies to recipients of the Education Entry Payment, who will receive an additional payment on top of the $208 they would have received • Farmer’s Hardship Payment – Farmers & Business operators dependent on agricultural income, eligible for any of the following on 3 Feb 09: • $950 will be paid by Centrelink from 24 March 09 to 6 April 09 • Exceptional circumstances relief payments for farmers • Interim income support for farmers • Exceptional circumstances relief payments for small business • Interim income support for small business • Farm help income support

Balance of Stimulus Package • Payments of up to $200,000 to every Australian School for maintenance and renewal of school • The construction of over 20,000 new dwellings for social and defence housings • The completion of maintenance to upgrade 2,500 vacant social houses • 350 additional projects in the Black Spot roads program • Installation of appx 200 new boom gates at high risk rail crossings • Funding of $650 million for local community infrastructure and maintenance on National Highways • Installation of ceiling insulation in 2.7 million homes, which is estimated to cut around $200 per year of energy bills for these houses • Increased non means tested rebated for households to install solar and heat pump hot water systems to replace electric storage hot water systems.

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Government Stimulus Package