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

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 $1000All 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

LandTrading stockSoftwareCapital WorksIntangible assetsAssets 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

For example:

Purchase of car: 40,000Contract Date: 20 December 08Delivery Date: 1 February 09

Tax Deductions 2009 2010 2011 2012Investment Allowance 12,000Depreciation Prime Cost (12.5%) 2,083 5,000 5,000 5,000

Investment Allowance 12,000 Depreciation Diminishing 4,167 8,958 6,719 5,039 Value (25%)

Small and General Business Tax BonusExclusions

• Small & General Business Tax Bonus

• Pension Payment Concessions

• PAYG Instalment Reductions• One Off Cash Bonus• Balance of Stimulus Package

•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

•Reduction* of Mandatory Minimum Retirement Pensions ( by 50%) announced by the Federal Government

• 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

Pension Payment Concessions

Assuming the proposal becomes law:

Available Options

• Small & General Business Tax Bonus• Pension Payment Concessions

• PAYG Instalment Reductions

• One Off Cash Bonus• Balance of Stimulus Package

•Eligibility criteria:

You pay PAYG instalments quarterly using the amount calculated by ATOYou are carrying business and have an annual turnover of less than $ 2 millionReceive 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

•Tax concession to assist businesses – pay upto a 20% reduced PAYG instalment for Dec 08 quarter (due for lodgement on 3 March 09)

• 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

PAYG Instalment Reduction

This reduction applies only to PAYG instalments

This reduction is not a variation of your PAYG instalments.

• Small & General Business Tax Bonus• Pension Payment Concessions• PAYG Instalment Reductions

• One Off Cash Bonus

• Balance of Stimulus Package

Tax Bonus Payment

Single Income Family Payment

Back to School Payment

Training & Learning Payment

Farmer’s Hardship Payment

One-Off Cash Bonus

•The FIVE key one-off cash payments

Stimulus package passed through both houses and waiting for royal assent

•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 farmersInterim income support for farmersExceptional circumstances relief payments for small businessInterim income support for small businessFarm help income support

One-Off Cash Bonus

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

• 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.

Balance of Stimulus Package

Any queries