It is a scary and anxious time for business and employees alike.

Here is the latest information to support small business with government stimulus… These have still not been legislated and we will advise when that occurs and provide you with specific actions to take at that time.

 

Both the most recent and prior info is below.

 

UPDATED BENEFITS

  • If you’re employing staff, then 100% of the tax withheld for staff wages from the March and June 2020 quarters (where you report quarterly) will be made available as a credit or refund once the BAS is lodged – no additional forms or applications will be required.  Where you report monthly it’s the 4 months from March – June 2020 months that are applicable with additional concessions available in the month of March to effectively reimburse the period from 1 Jan 2020 onward.

This will result in a minimum ATO credit of $10,000 on lodging the March 2020 BAS, (even if no tax has been withheld, providing the business is paying wages) and is capped at a maximum of $50,000 or the amount of the tax withheld for the March and June 2020 BAS (whichever is the lesser).  The amount will either be offset against any ATO obligations or refunded within 14 days of lodgement of the March BAS for the first payment, and within 14 days of lodgement of the June 2020 BAS.

An additional benefit of $10,000 at a minimum will be credited from July 2020 (even if no tax has been withheld, providing the business is paying wages) and will be capped an amount equal to the payment made in the March & June 2020 quarters (the total credit available for the next 4 quarters being a minimum of $20K and max of $100K).

This payment is tax free to the employer.

 

  • Loans of up to $250,000, over 3 year terms with no repayments for 6 months will be provided by banks.  They will be made available by application to the bank, and based on prior business figures despite current uncertainty of income.  No security in the way of property is required for the loan (i.e. no asset backing), and should the loan not be drawn down, or only drawn down in part, interest will only apply to the extent of the amount utilised.

 

  • A temporary increase of 6 months will apply to the amount on which creditors can issue a statutory demand on a company from $2,000 to $20,000 for non payment of obligations, and an increase in the time a company has to respond from 21 days to 6 months has been enacted. Directors also are provided with temporary relief from personal liability for trading while insolvent for 6 months, assisting to provide security from personal obligations that could otherwise apply – but that does mean its more important than ever to stay on top of debtors for businesses providing credit

 

  • For any employee who loses their employment, or sole traders, casual workers or contractors that meet the income tests as a result of the downturn in their income (being adjusted taxable income under $1,075 per fortnight), or those who are required to care for someone affected by Corona virus, they can now apply for the Corona virus supplement of $550 per fortnight for the next 6 months.  In addition, there is now no waiting period to access jobseeker payments, and no asset test, which can result in further benefits of around $510 per fortnight (a total of around $1,060 per fortnight).  Be aware that if you’re in receipt of annual leave, or sick leave or long service leave payments, you are not eligible for payment of the job seeker or corona virus supplement at the same time.

 

  • From mid April 2020 early access to Super without penalty, without tax consequence, and without impacting Centrelink, will be available to individuals.  To access that, an application through MyGov is required, and must show that either your income or hours of work have dropped by 20% or more, your sole trader business was suspended, or you were made redundant or have become unemployed or are eligible for job seeker, youth allowance, or parenting payment.   Access to this concession allows a payment of up to $10,000 in the 2020 financial year prior to 30 June 2020, and a further payment of up to $10,000 past 1 July 2020.

 

  • 2 x payments of $750 will be made to households in receipt of any social security (i.e. jobseeker, family tax benefit, austudy, parenting payment or Centrelink age pension)– one on 31 March for anyone eligible between 12 March – 13 April, and another on 13 July for anyone eligible on 10 July.

 

  • Reductions to the minimum pension drawdowns required from superannuation in both 2020 and 2021, for those in pension phase mean that the amounts needing to be taken from super have halved (from a minimum of 4% down to 2% and changing according to age as noted in the table below:-

 

Age Default minimum drawdown rates (%) Reduced rates by 50 per cent for the 2019-20 and 2020-21 income years (%)
Under 65 4 2
65-74 5 2.5
75-79 6 3
80-84 7 3.5
85-89 9 4.5
90-94 11 5.5
95 or more 14 7

 

 

 

As previously noted – concessions already announced include:-

 

  • Waiving NSW Payroll tax for the next three months for all businesses with payrolls of up to $10 million, and QLD has deferred payroll tax returns and due dates to 3 August 2020. This applies to business with in excess of $1m (previously $900K) and less than $10m in wage payments and saves 5.45% on wages above the previous $900k limit.

 

  • If you have BAS or income tax payments due to the ATO, The ATO have provided a general concession to defer those payments for up to 4 months – by arrangement through calling 1800 806 218 – the ATO will also agree to low or no interest loans currently.

 

  • Apprentices – $7,000 (or 50% of their wage – whichever is the lesser amount) per apprentice per quarter incentive released to enable apprentices to remain employed. This will be backdated from 1 Jan 2020 and payable through to Sept 2020.  An application form is required to access this requiring that the apprentice was employed by you (or another employer as an apprentice) prior to 1 March 2020.  This form will be available from early April 2020.

 

  • An ability to Vary Pay As You Go (PAYG) installment amounts to zero for the March 2020 quarter, and claim a refund for any installments you’ve already made for the prior 2 quarters (September 2019 and December 2019).

 

  • Automatic remission of interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities

 

  • Instant asset write off increased from $30k to $150K for each item installed and ready for use from 13 March 2020 up until 30 June 2020 – what that means is if you buy equipment, or vehicles, they will reduce your taxable income immediately in the current year rather than having to depreciate it over a number of years) – the effect being to reduce current year income tax obligations. **Important note… Cars still only attract a maximum of $57,581 as a tax deduction (with any extra not allowed as tax deductible), but all other equipment up to $150,000 can be claimed immediately.    Also for assets over $150K which are installed and ready for use after 13 March 2020 and before 30 June 2021, accelerated depreciation is available.  Any purchases over $150K will be able to claimed at 57.5% of the cost of the asset in the year of purchase.

 

  • Should you benefit from opting into monthly GST reporting in order to get quicker access to GST refunds you will be able to do so.

 

  • For Cafes, restaurants and bars and those in trades will get a variety of fees and charges waived by the State government

 

 

In addition to the items for business above, there are further incentives being proposed including:-

  • $750 one-off payments for those on family tax benefits Australians on Newstart or Pension payments – payment due on 31 March 2020

 

As we receive further details and confirmation of the proposals and further announcements we’ll keep you informed and of course of if you have any questions, don’t hesitate to contact the office.

 

Here is more info from ATO

https://www.ato.gov.au/General/New-legislation/The-Australian-Government-s-Economic-Response-to-Coronavirus/

And centrelink info

https://www.dss.gov.au/about-the-department/coronavirus-covid-19-information-and-support

 

Hope that guides you somewhat.

Business tax advice