Federal Budget 2020-2021: Using the cash provided by Government stimulus
This year’s ‘stimulus’ budget includes a smorgasbord of income support, stimulus measures and tax cuts. The details on how to access them, how to qualify for them, and how they will be administered is only beginning to sharpen with the announcements in the Federal Budget.
The budget even introduces an option for organisations to receive a refund on tax they have already paid when submitting their tax returns in the coming end of financial year. While organisations’ immediate focus will be to access the cash, these stimulus measures and tax cuts will introduce a secondary challenge to most organisations who have not previously had to account for any significant forms of government assistance.
Post COVID-19, financial statements will have to clearly articulate how organisations used the cash generated by the various government stimulus measures and tax cuts to create jobs and improve shareholder value. Professional judgement and expertise will be required to develop the accounting policies and estimates to account for significant government assistance, tax cuts and resulting deferred tax implications.
Please watch out for more articles in Accounting News over the coming months dealing with the accounting implications of the 2020-21 Federal Budget ‘stimulus’ measures.
Aletta Boshoff and Kevin Frohbus are partners in BDO’s IFRS Advisory team. They provide technical accounting advice on all aspects of IFRS, including those resulting from the recent Federal Budget. Please contact them if you wish to discuss any items raised in this article.