Summary
Federal initiatives:
- Eligible employers with a turnover of up to $50 million that employ workers will be eligible for tax-free payments up to $100,000
- Apprentice wages subsidies up to $21,000 per apprentice
- SME loan guarantee scheme to provide access to unsecured loans for SMEs and relief from responsible lending obligations on lenders
- Accelerated and additional tax deductions in the form of increased instant asset write-off and 50% investment incentive
- Temporary relief in relation to director liability and other insolvency aspects for financially distressed businesses
- $750 stimulus payments now and in July to welfare recipients
- Reduced pension deeming rates
- $550 per fortnight Coronavirus supplement payment to certain welfare recipients, employees who are stood down and sole traders, self-employed and casual workers meet income tests
- Reduced waiting times for applications for Jobseeker, Youth Allowance and Parenting payments
- Access to up to $20,000 of superannuation tax free to recipients of the coronavirus supplement or where income has reduced by 20% or more since 1 January 2020
- Minimum superannuation pension withdrawals reduced by 50% for the 2020 and 2021 financial years
State Government initiatives
- Payroll tax refunds and relief for employers with payrolls less than $3m per annum
- State government assistance for businesses in the form of hardship payments, small grants and tailored assistance
- State Government assistance to help workers who have lost their jobs find new opportunities
Commonwealth Assistance
Cash Flow Assistance for Employers
In the latest package, cash flow assistance for employers been significantly enhanced from the first round of measures. It now specifically includes not-for-profit organisations. The amounts have increased and the period extended. This assistance is available to all organisations with turnover up to $50 million. It only applies to active employers prior to 12 March 2020 but not-for-profits are excluded from this in recognition that some may be established to specifically deal with the Coronavirus fallout. The details are now as follows:
Cash payments up to $100,000
Eligible employers with a turnover of up to $50 million that employ workers will be eligible for tax-free payments up to $100,000. It will be delivered in two tranches.
- The first tranche of payments will be 100% of the amount withheld from
employees’ salary and wages during March, April, May and June 2020 up to a
maximum of $50,000.
- This will be paid from late April to July.
- Businesses that pay salary and wages but do not have to withhold tax will receive a payment of $10,000.
- The second payment tranche will, in total, be the same amount as the first payment, but will be delivered in equal instalments in the June – September activity statements.
This will result in a minimum credit delivered under this scheme of $20,000 and a maximum credit of $100,000. The payments will be delivered as a credit in the activity statement system by the Australian Taxation Office (ATO) and where this results in a refund, the ATO will deliver this within 14 days.
Example 1:
An employer withholds $5,000 per month from employees. The payments (as a credit against the IAS or BAS) are as follows:
- If the employer remits PAYG quarterly
- March: 3 x $5,000 = $15,000
- June: $15,000
- Total for 1st tranche – $30,000
- The 2nd tranche payments will also total $30,000 and $15,000 will be applied against the June and September BASs
- If the employer remits PAYG monthly
- March: 3 x $5,000 = $15,000
- April: $5,000
- May: $5,000
- June: $5,000
- Total for 1st tranche – $30,000
- The 2nd tranche payments will also total $30,000 and $7,500 will be applied to the June BAS, July and August IAS and September BAS
Example 2:
An employer with less than $10,000 PAYG to be reported in the March to June period, will be entitled to the minimum payments which will be paid as follows:
- March activity statement credit $10,000
- June and September activity statement credits of $5,000 each
Apprentice and Trainee Support
Businesses employing fewer than 20 full-time employees who have engaged an apprentice or trainee prior to 1 March 2020 will be eligible for a wage subsidy of 50% of the apprentice’s or trainee’s wage over the 9 month period between 1 January 2020 – 30 September 2020. This will be capped at a maximum amount of $21,000 per apprentice ($7,000 a quarter). Registrations will open in early April 2020 and final claims must be lodged by 31 December 2020.
Support for Cash Flow Needs for SMEs
SME Loan Guarantee Scheme
Starting in early April, the Government will provide a guarantee of 50% to SME lenders for new unsecured loans to be used for working capital. This will apply to businesses with a turnover of less than $50 million.
The maximum loan size will be $250,000 per borrower and the loans will be for up to 3 years with a six month repayment holiday. No assets will have to be provided as security for the loan.
Lenders are encouraged to provide facilities to SMEs that only have to be drawn if needed by the SME.
The scheme is worth up to $20 billion to guarantee support for up to $40 billion of loans.
Exemption from the responsible lending obligations
Lenders providing credit to existing small business customers will be relieved of the responsible lending obligations. The aim is to increase the speed at which businesses can access credit.
Business Investment
This remains the same as what was announced in the first round of measures. We have repeated them here for clarity:
Instant Asset Write Off
Currently, businesses with a turnover of up to $50 million can claim tax
deductions in full for assets costing less than $30,000 (GST exclusive) instead
of having to claim the cost over a number of years.
The asset threshold is proposed to be increased to include assets costing up to
$150,000 for businesses with a turnover of up to $500 million, if they are
first used or installed ready for use between the date of the announcement and
30 June 2020.
The instant asset write off threshold is due to revert to $1,000 for businesses
with a turnover of less than $10 million from 1 July 2020.
Investment Incentive
This is a time limited 15 month investment incentive for the purchase of new assets that are not eligible for the instant asset write off. This will apply to assets greater than $150,000 until 30 June 2020 and to assets greater than $1,000 from 1 July 2020. It will run until 30 June 2021 and businesses with a turnover of under $500 million will be eligible.
The incentive is a deduction of 50% of the cost with existing depreciation rules applying to the balance. There is no cost threshold for the assets in this incentive.
Temporary Relief for Financially Distressed Businesses
These are new measures that have been introduced in this package for the next 6 months:
- Temporary increase in thresholds – these measures will increase the thresholds from $2,000 to $20,000 at which creditors can initiate insolvency or bankruptcy and increase the time to respond from 21 days to 6 months.
- Director liability – this measure will provide temporary relief for directors for any personal liability for trading while insolvent – this is only in respect to debts incurred in the ordinary course of the company’s business
- There will also be some additional flexibility introduced in relation to provisions of the Corporations Act 2001 to assist in dealing with unforeseen events arising from the current crisis.
Assistance for individuals and households
Stimulus payment
More than 6 million welfare recipients, including pensioners, carers, veterans,
families, young people and jobseekers will now get one tax free cash payment of
$750 from 31 March 2020 and a second payment of $750 from 13 July 2020 and both
will be paid automatically.
The Treasury website has the complete list of those eligible (including a handy table with clear guidance on what is in and out).
Deeming rates
The deeming rates for pensioners will be cut by a further 0.25% in response to
the latest interest rate cut by the Reserve Bank of Australia. This should
increase the fortnightly pension payments for pensioners affected by the income
test.
Income Support
A new, time-limited Coronavirus supplement will be introduced at rate of $550
per fortnight on top of the normal fortnightly payments to eligible recipients.
It will be paid to existing and new recipients of the eligible payment
categories and will apply for the next 6 months.
The eligible recipients are those eligible for the Jobseeker Payment, Youth Allowance Jobseeker, Parenting Payment (Partnered and Single), Farm Household Allowance and Special Benefit recipients.
Income Support
Eligibility to the income support payments listed above is to be expanded and
will be available for permanent employees who are stood down or lose their
employment, sole traders, the self-employed, casual workers and contract workers
who meet the income tests.
Asset testing for Jobseeker Payment, Youth Allowance Jobseeker and Parenting payment will be waived for the period of the Coronavirus supplement. The waiting times will also be reduced and the application processes will be made easier.
Early release of super
Eligible individuals will be able to apply online through myGov to access up to
$10,000 of their superannuation before 1 July 2020 and a further $10,000 from 1
July for approximately 3 months. The withdrawals will be tax free and will not
impact Centrelink entitlements.
This is available for those eligible for the Coronavirus supplement and people whose working hours or income has been affected by at least 20% since 1 January 2020
Minimum Drawdown requirements
The minimum pension amounts that must be drawn from superannuation pension
accounts will be temporarily reduced by 50% for the years ended 30 June 2020
and 2021.
Waiting times for a government payment for eligible casual workers forced into self-isolation will be waived.
State Government Assistance
Some of the State Governments have also responded to the crisis by announcing a series of measures to assist businesses. We have focused on the Victorian measures here but please contact us to discuss the state measures relevant to you.
The Victorian Government announced a $1.7 billion package includes:
Payroll tax refunds and relief – Businesses with a payroll of less than $3 million will receive payroll tax refunds from this Friday for all payroll tax paid for the first 3 quarters of the 2019/2020 financial year. The final quarter payroll tax liability will be waived. The same businesses will be able to defer payroll tax in the September 2021 quarter until 1 January 2021.
Business Support Fund – $500 million will be put into hardship payments, small grants and tailored support as part of a Business Support Fund and will be targeted at the hardest hit sectors, including hospitality, tourism, accommodation, arts and entertainment, and retail. The Government will work with the Victorian Chamber, Australian Hotels Association and AI Group to administer the fund which is intended to help businesses that may not be eligible for payroll tax refunds, to survive.
Liquor licensing fees – The Government will support the hospitality sector by waiving liquor licensing fees for 2020 for affected venues and small businesses.
Working for Victoria Fund – The Government will establish a $500 million Working for Victoria Fund in consultation with the Victorian Council of Social Services and Victorian Trades Hall Council. The fund will help workers who have lost their jobs find new opportunities, including work cleaning public infrastructure or delivering food.
