We are currently helping our clients work through the various support measures that are coming into place to assist with the effects of COVID-19, including:
Federal Government Stimulus Measures
- From Thursday 12 March 2020, the instant asset write-off threshold has been increased from $30,000 (for businesses with an aggregated turnover of less than $50 million) to $150,000 (for businesses with an aggregated turnover of less than $500 million) until 30 June 2020.
- A time-limited 15-month investment incentive (through to 30 June 2021) which will operate to accelerate certain depreciation deductions. This measure will also be available to businesses with a turnover of less than $500 million, which will be able to immediately deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost. As announced, this measure is proposed to only apply to new depreciating assets first used, or installed ready for use, by 30 June 2021.
Cashflow Assistance – Enhanced
- Tax-free payments of up to $50,000 for eligible small and medium businesses (i.e., with a turnover of less than $50 million that employ staff) and not-for-profits based on their PAYG withholding obligations. This is not a cash payment, but it is a credit equal to 100% of the PAYG amounts withheld from salary and wages paid to employees, up to the cap. Where this places the entity in a refund position, the ATO will deliver the refund within 14 days.Businesses that lodge activity statements on a quarterly basis will be eligible to receive the credit for the quarters ending March 2020 and June 2020. Businesses that lodge on a monthly basis will be eligible for the credit for the March 2020, April 2020, May 2020 and June 2020 lodgements.
If a business pays salary and wages to employees but is not required to withhold any tax, then a minimum payment of $10,000 will still be made. The minimum $10,000 payment will be applied to the first activity statement lodgement.
An additional payment is also being introduced in the July – October 2020 period. Eligible entities will receive an additional payment equal to the total of all Cashflow Assistance Employer payments they have received. This means that eligible entities will receive at least $20,000 up to a total of $100,000 under both payments.
- Wage subsidies to support the retention of apprentices and trainees – Employers with less than 20 full-time employees may be entitled to apply for government-funded wage subsidies amounting to 50% of an apprentice’s or trainee’s wage for up to nine months from 1 January 2020 to 30 September 2020. The maximum subsidy for each apprentice/trainee is $21,000.
Supporting the Flow of Credit
- Support for immediate cash flow needs for SME’s – Under the Coronavirus SME Guarantee Scheme, the Government will provide a guarantee of 50 per cent to SME lenders to support new short-term unsecured loans to SMEs. The Scheme will guarantee up to $40 billion of new lending. This will provide businesses with funding to meet cash flow needs, by further enhancing lenders’ willingness and ability to provide credit. This will assist otherwise viable businesses across the economy who are facing significant challenges due to disrupted cash flow to meet existing obligations.
- Lenders are also deferring loan repayments for 6 months on these loans in addition to existing business and equipment loans.
- Two tax-free payments of $750 to social security, veteran and other income support recipients and eligible concession cardholders. It is estimated that around half of those who will benefit will be pensioners. These payments will commence automatically from 31 March 2020 and a second payment will be made from 13 July 2020.
- Income Support for Individuals – Over the next six months, the Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight. This will be paid to both existing and new recipients of JobSeeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
- Temporary early release of Superannuation – The government is allowing individuals affected by the Coronavirus to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21. Individuals will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.To apply for early release, you must satisfy any one or more of the following requirements:
- you are unemployed; or
- you are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or
- on or after 1 January 2020: you were made redundant, or your working hours were reduced by 20 per cent or more, or if you are a sole trader — your business was suspended or there was a reduction in your turnover of 20 per cent or more.
- Temporarily Reducing Superannuation Minimum – The Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50 per cent for 2019-20 and 2020-21. This measure will benefit retirees holding these products by reducing the need to sell investment assets to fund minimum drawdown requirements.
- Reducing Social Security Deeming Rates – On 12 March, the Government announced a 0.5 percentage point reduction in both the upper and lower social security deeming rates. The Government will now reduce these rates by another 0.25 percentage points.
As of 1 May 2020, the upper deeming rate will be 2.25 per cent and the lower deeming rate will be 0.25 per cent. The reductions reflect the low-interest-rate environment and its impact on the income from savings. The change will benefit around 900,000 income support recipients, including around 565,000 Age Pensioners who will, on average receive around $105 more of the Age Pension in the first full year the reduced rates apply.
ATO Support Measures
- Individuals and businesses can request a deferral of some payments (by up to 4 months) and vary instalments.
- Businesses (under $20 million turnover) can elect to report and pay their GST monthly instead of quarterly to accelerate access to GST refunds, but only from 1 April 2020, and must remain monthly for 12 months.
- Quarterly payers can vary their PAYG instalments for the March 2020 quarter and claim a refund of instalments paid for the Sep and Dec 2019 quarters.
- Businesses can request remittance of interest and penalties applied to tax liabilities incurred after 23 January 2020.
- Businesses can request a low-interest payment plan.
- Employers still need to meet their Super Guarantee (SG) obligations. The ATO has no discretion under the Super Guarantee Charge (SGC) rules to vary the due date or waive the SGC where contributions are late/unpaid.
Business Loans up to $250,000 Supported by the Government
There’s been a lot of press about $250,000 loans for business, so how do they work:
- Who lends the money? Loans will be provided by banks, not the government.
- How much can you borrow? Up to $250,000. We are seeing business owners get access to funds quicker when borrowing < $100,000. However, you can apply for more if you need more.
- What are the eligibility requirements? Be in business with a turnover of less than $50 million.
- Do you need to put up security? No. The loans are to be unsecured, i.e. no bricks and mortar security required. The government is helping behind the scenes by guaranteeing 50% to the bank to make it easier for the latter to lend to businesses.
- What term are the loans? 3-year terms, no repayments for the first 6 months.
- What interest rate? Talk to your individual bank, however, we can see NAB is offering 4.5%.
- What can you use the money for? Loans are to be used for meeting operational expenses, working capital. It’s not to be used to purchase assets or re-finance other debts.
- Make contact with your existing bank manager to understand how your business may be eligible.
- Work with your accountant to ensure ATO lodgements are up to date and ensure you have some cash flow projections. Like any other finance application, the better prepared you are as the borrower, the better placed you’ll be to get the funding you desire.
If you are considering taking out a loan, but are unsure what you need to do to secure one, and how you will repay this in the future, please contact us today so we can assist with some scenario planning.
Want to know more about what the major banks are offering?
State Government Stimulus Measures
New South Wales State Government
Payroll tax relief package
- For businesses with payrolls of up to $10 million:
- 3 months waiver of payroll tax (the rest of 2019-20). This means these businesses will save a quarter of their annual payroll tax bill in 2019-20.
- An additional 3-month deferral of payroll tax.
- For businesses with payrolls over $10 million:
- 3 months deferral of payroll tax.
- The bring forward of the next round of payroll tax cuts by raising the threshold limit to $1 million in 2020-21.
$10,000 Grants for Small Businesses
- Small businesses across NSW struggling to cope with the COVID-19 shutdown will receive grants of up to $10,000. To be eligible, businesses will need to:
- Have between 1-19 employees and a turnover of more than $75,000;
- A payroll below the NSW Government 2019-20 payroll tax threshold of $900,000;
- Have an Australian Business Number as of 1 March 2020, be based in NSW and employ staff as at 1 March 2020;
- Be highly impacted by the Public Health (COVID-19 Restrictions on Gathering and Movement) Order 2020 issued on 30 March 2020;
- Use the funding for unavoidable business costs such as utilities, overheads, legal costs and financial advice;
- Provide appropriate documentation upon application.
- Applications for a small business grant of up to $10,000 will be available through Service NSW within a fortnight and remain open until 1 June 2020.
Queensland State Government
Payroll tax relief package
- If you are an employer who pays $6.5 million or less in Australian taxable wages, you may receive:
- Refund of your payroll tax for 2 months.
- Payroll tax holiday (no payroll tax to be paid) for 3 months.
COVID-19 jobs support loans
- You may be eligible for a loan to retain employees and maintain your operations. The $500 million concessional loan facility will include low-interest loans of up to $250,000 for carry on finance with an initial 12-month interest-free period for businesses to retain staff.
Western Australia State Government
Payroll tax relief package
- Provides a one-off grant of $17,500 to payroll tax-paying businesses with a payroll between $1m–$4m.
- Brings forward the $1m payroll tax threshold by 6 months to 1 July 2020.
- Allows affected small and medium-sized businesses to defer payment of their 2019–20 payroll tax until 21 July 2020.
Tasmanian State Government
Payroll tax relief package
- Payroll tax liabilities will be waived for hospitality, tourism and seafood industry businesses for the last four months of 2019-20.
- Other businesses with payrolls of up to $5 million will be able to apply, based on the impact of the virus, to have their payroll tax waived for April.
Interest-Free Business Loans for Small Business
- $20 million in interest-free loans to small businesses in the hospitality, tourism, seafood production, and exports sectors. The loans will be available to businesses with a turnover of less than $5 million to purchase equipment or restructuring business operations and will be interest-free, for three years.
Victorian State Government
Payroll tax relief package
- Businesses with a payroll of less than $3 million will receive full tax payroll tax refunds of the 2019-20 financial year.
- $500 million consisting of small grants and tailored support with more details to come.
We are continuing to update this page as announcements are made.
Please contact us to discuss how these initiatives can support you and your business.