On 22nd March the government announed a second round of measures to assist businesses and employees across Australia as the coronavirus affects all businesses in Australia.
We've summarised the announcements below to make it easier for you to udnerstand what applies for you. We will keep this page updated from now on as new measures are announced.
What kind of support is being offered?
The Australian Federal government measures for business are;
Full details including assistance to welfare recipients can be found here;
The Australian Taxation Office has released their measures. They are;
- Up to 6 month deferral on payments
Convert to Monthly BAS
PAYGW instalments (income tax) can be varied to Nil
Remit penalties and interest imposed since 23 Jan 2020
Low interest payment plans
The State Governments has released their measures. They are;
- Western Australia - Payroll Tax concessions
VIC - Payroll Tax concessions
QLD - Payroll Tax concessions + interest free state government loans
NSW - Payroll Tax concessions
TAS - Payroll tax concessions + interest free state government loans
The Lending & Banking have also released their measures. They are;
Cashflow assistance to employers
This measure provides cash back to employers; from a minimum of $20,000 to a maximum of $100,000
For those businesses with employee you will receive a rebate equal to 100% of your PAYG Withholding from 1st Jan to 30 June 2020 up to a maximum of $50,000.
If you employ someone and you don't have to withhold tax on wages, you will still receive $10,000
For employers reporting monthly (IAS) to ensure they don't miss out, 300% of their monthly March PAYG withheld will be refunded, and then 100% of their April, May & June activity statement amounts until you reach the $50,000 limit.
On top of this an extention has also been applied from 1st July to 31st October. This mans you will receive the same rebate again as you received between January-June. This is an additoinal $10,000 up to $50,000 depending on what you were eligible for previously.
- The payment will be tax free.
- It will be automatically applied to the business' integrated client account (ICA) and offset any GST liabilities that may be reported. There's no need to "register" for this
- Must employ workers
- If this results in the overall ICA being in a credit state, the ATO will refund this electronically to the business bank account in 10 working days.
- Eligible businesses will receive the minimum $10,000 payment even if they're not required to withhold tax.
It's important to note the dates of these payments. The payments of minimum $20,000 to $100,000 won't all be in the March & June BAS, but rather will be paid between March and September.
This is a great incentive to lodge your BAS and IAS on time. If you need assistance with this, contact us to help bring your lodgements up to date.
EG: If your business withholds an average of $4,000 PAYGW from employees each month.
- March - 300% of $4,000 = $12,000 credit
- April - 100% of $4,000 = $4,000 credit
- May - 100% of $4,000 = $4,000 credit
- June - 100% of $4,000 = $4,000 credit
- TOTAL = $24,000 credit/refund from the ATO for the first part
- In Jul-Sep, another $24,000 based on the first part of the year, for a total of $48,000 credit/refund
We expect the provisions will include prohibition of fraud or constructed arrangements.
Supporting Apprentices and Trainees
In assisting apprentices and trainees, the government is supporting employers by offering a 50% wage subsidy on wages paid for the 9 months; January 2020 to September 2020.
This will be capped at $21,000 or $7,000 per Quarter per eligible apprentice.
- The apprentice or trainee must have been in training with a small business as at 1 Mar 2020
- Eligible to businesses employing fewer than 20 full-time employees who retain an apprentice or trainee
- Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network (AASN) provider
- It's important to note that if you employ a new apprentice that was displaced from another employer you will be eligible for the rebate.
- Employers can register for the subsidy from early April 2020, and final claims for payment must be lodged by 31 Dec 2020
If you employ an apprentice or trainee, reach out to us for assistance and we'll work with you to ensure you're properly registered and able to claim this reimbursement.
Increasing the Instant Asset Write-off
To help with business investment, the instant asset write-off scheme will raise the asset threshold from $30,000 to $150,000 and will also expand to include businesses with a turnover less than $500 million (previously $50 million).
- Threshold applies on a per asset basis - businesses can immediately write-off multiple assets
- Applies from the announcement (12 March 2020) until 30 Jun 2020, for new or second hand assets first used or installed ready for use in this timeframe
These are not cash back incentives. As per our previous advice on the instant asset write-off scheme, please consider carefully your business cashflow position in relation to purchasing an asset. The write-off scheme does NOT mean you will receive a tax refund, instead it means your business taxable position will be reduced by 100% of the asset value purchased this financial year instead of multiple years. Please contact your accountant or ourselves to discuss the cashflow implications.
Backing Business Investment
This measure introduces a time limited 15 month investment incentive by offering an accelerated depreciation deduction.
- A deduction of 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the assets cost.
- Eligible to businesses with an aggregated turnover below $500 million
- Eligible assets are new assets that can be depreciated under Division 40 of the Income Tax Assessment Act 1997, acquired after the announcement (12 March 2020) and first used or installed by 30 Jun 2020.
- Does not apply to second hand Division 40 assets, or buildings and other capital works depreciable under Division 43.
We strongly recommend you speak with your Tax Agent prior to purchasing any assets to seek specific advice to your business to ensure the asset being purchased is eligible.
Sole trader & Contractors
The government is helping sole-traders and contractors through the JobSeeker program.
In addition to the regular $550/fortnight JobSeeker payment, they will be eligible for a special short term Coronavirus supplement to be paid at an additional rate of $550/fortnight, for a total of $1,100/fortnight.
- Soletraders whose income has dropped 20%
- Uplon loss of job - Waiver of the asset test and no waiting period
Accessible through Centrelink.
This is also something that clients can advise to their employees if they need to let them go through this downturn.
ATO Support Measure
Following the federal governments announcement, the ATO released a statement in support of business as well. Full details can be found here; but in summary;
- Deferral of payment dates for SIX MONTHS activity statements, income tax assessments, FBT assessments and excise
- Option to change from quarterly to monthly reporting to access GST refunds faster
- Option to vary PAYGI to nil for the March quarter BAS and claim a refund for any instalments made for Sep and Dec 2019 quarters
- Remission of interest and penalties incurred on or after 23 Jan 2020
- Availability to enter into low interest payment plans.
State Government concessions
WA
- Payroll tax threshold increased to $1 million brought forward from 1st Jan 2021 to 1st July 2020
- Apply for payment deferral if affected by Corona Virus until 21 July 2020
- One off $17,500 grant available to employers with wages between $1 million and up to $4 million
This will be paid by cheque so need to ensure that postal address details are correct
VIC
- No payroll tax for employers up to $3 million in wages
- Must continue to lodge returns but no need to make payments
- State Revenue Office will directly contact eligible business in relation to reimbursements for tax already paid
Expect an email from them, no need to apply
QLD
- Deferral of ldogement date to 3rd August. Still have to pay, just not until August
- QLD Gov to offer $500M in loans to eligible businesses to retain employees and maintain operations. Loans up to $250,000 and first 12 months interest free
Expressions of interest here
NSW
- Payroll tax reduced by 25% if grouped Australian wages less than $10M
- For monthly payers, payroll tax waived for March, April & May 2020
- Still need to record those wages in the annual reconcilaition, but will receive a 25% reduction in the total amount due
TAS
- Payroll tax waiver for businesses in hospitality, tourism and seafood industries for the last four months of the 2020 financial year
- Other business with payroll to $5M can apply for waiver, but eligibility based on how significantly the virus has affected business
- TAS Gov to offer $20M in interest-free loans to small businesses in the hospitality, tourism, seafood and export sectors. Businesses with turnover less than $5M will be eligible. Loans are for 3 years
Lending & Banking
Unsecured Loans
The government is encouraging banks to lend to small business by guaranteeing 50% of loans issued to small businesses. These loans are short term unsecured loans (up to 3 years) , which means we should see some new products being provided by lenders over the coming weeks. They can only be for a maximum of $250,000 with a 6 month repayment holiday.
On top of this some of the banks have announced support and reductions for small businesses :
CBA
- Deferring repayments on a variety of business loan and overdraft products, for 6-months.
- Reducing commercial interest rates by 0.25
- Waiving merchant terminal fees for impacted customers with CBA payment terminals, for 90 days.
- Waiving early redraw fees on business term deposit accounts (including Farm Management Deposit accounts).
- Waiving establishment fees and excess interest on Temporary Excess products.
- Deferring repayments on vehicle and equipment finance loans, and providing tailored restructuring options that meet individual customer needs.
How to apply? - More info here
ANZ
- Suspending interest repayments
- Deferral of business loan repayments for up to 6 months, assessed on a case-by-case basis
- Providing early access to term deposits without incurring break fees
- Providing access to additional credit subject to approval
How to apply? - More info here
NAB
- Deferral of business loan repayments for up to 6 months, assessed on a case-by-case basis
- Extension of a business loan term by a period of up to three months, where individual circumstances warrant
- Support to restructure existing business loans, including equipment finance
- Business credit card deferred repayments.
How to apply? - More info here
Westpac
- Continuing it's hardship assistance program
- Deferral of business loan repayments for up to 6 months, assessed on a case-by-case basis
How to apply? - More info here
Bendigo Bank
- Home Loan and Business Loan customers can apply for relief on loans for up to three months
- Waiver of fees for the restructuring or consolidation of loans
- Credit card customers can apply for an emergency credit card limit increase
- Discounted interest rates on new personal loans taken out by existing Bendigo Bank customers
- Waiver of interest rate reduction for early withdrawals on term deposits prior to maturity
- Deferral of payments and extensions for Equipment Finance on a case by case basis
How to apply? - More info here
Other bank announcements
- BOQ - https://www.boq.com.au/help-and-support/coronavirus
- Bankwest - https://www.bankwest.com.au/help/coronavirus-support
- St George - https://www.stgeorge.com.au/about/sustainability-and-community/disaster-relief/covid-19
- Macquarie - https://www.macquarie.com/au/personal/coronavirus/
Eye on Books and Your Business Continuity
Please take care of yourselves and your loved ones. I know that we're going to get through this together.
Social distancing and other community strategies to slow the spread of COVID-19 has already impacted many businesses in a major way, and is (hopefully) a once in a lifetime occurance.
At Eye on Books we remain committed to ensuring your business continues through these difficult times. If you have any questions in relation to these stimulus measures, need help with cashflow or staff standown provisions, or just need a sympathetic supportive ear, we're here to help you.