We would like to take this time to write to you all in this very difficult time for both our country and the world.
The impact of the COVID-19 pandemic is yet to be fully understood both from a medical standpoint and an economical one. We do however know what the government is willing to offer us in the form of fiscal stimulus and this is the area that we intend to help as many of our clients as possible.
This email will briefly highlight some of the main benefits that you will be able to access to help your families and businesses survive this difficult period. The government has also not ruled out providing more stimulus if it is deemed necessary.
As of 24th of March 2020;
Small-Medium Business measures
For small to medium sized businesses (up to $50 million turnover) the government has passed the following measures:
The government is providing up to a maximum $100,000 and a minimum of $20,000 to businesses and Not-for profit charities that employ people.
Under this scheme, employers will receive a payment equal to 100% of the PAYG tax withheld on wages in the March 2020 and June 2020 BAS'. The minimum payment in this quarter will be $10,000 with the maximum capped at $50,000. Businesses will then receive 50% of the amount withheld in the March and June quarters in their June 2020 and September 2020 BAS’ as a credit. The minimum $20,000 credit will be applied to businesses that have paid salaries but not witheld PAYG.
For example, if a business reports GST Payable of $20,000 in the March quarter with $0 PAYG withheld, totalling a $20,000 BAS Payable, this amount will be reduced by $10,000 giving a BAS Payable of $10,000.
The June and September BAS’ will therefore be reduced by $5,000 each. These payments are only available to active employers established prior to the 12 March 2020.
Eligible employers can apply for a wage subsidy of 50% of the apprentices or trainees wages paid during 1st January 2020 to 30th September 2020. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice.
The subsidy will be available to small businesses employing fewer than 20 full-time employees who retain an apprentice or trainee. The apprentice must have been in training with a small business as at 1 March 2020.
Instant Asset write-off increased to $150,000
The government has increased the instant asset write off threshold from $30,000 to $150,000 until the 30 June 2020. This means businesses will be immediately able to deduct purchases for eligible assets each costing less than $150,000. Previously such assets needed to be depreciated over a number of years.
Temporary higher thresholds for demands from creditors
The threshold for a creditor to issue a statutory demand has been increased from $2,000 to $20,000 for the next six months. Often a common reason that a business would enter liquidation, the time for this response has also increased from 21 days to 6 months.
Temporary relief from directors personal liability for trading while insolvent
Directors are personally liable if a company trades while insolvent. To make sure companies continue to trade during the coronavirus health crisis, directors will be temporarily relieved of their duty to prevent insolvent trading with respect to any debts incurred in the ordinary course of company’s business. This too will apply for 6 months.
The ATO will halt payment plans for businesses that are affected for up to 6 months. They will also allow PAYG Tax instalments to be varied to NIL for the March 2020 quarter as well as offer refunds for PAYG Tax instalments paid in the September and December quarter.
The ATO will need to be contacted in order to implement this measure, so if this affects your business please let us know to speak with them directly.
Coronavirus Small Business Guarantee Scheme
The government will provide a guarantee of 50% to SME lenders for new unsecured loans to be used for working capital. SME’s with a turnover of less than $50 million will be eligible to receive these loans. The maximum size of the loans to provided by the banks will be $250,000 per borrower.
The loans will be up to 3 years, with an initial 6 month repayment holiday and will be in the form of unsecured finance, meaning the borrowers will not have to provide an asset as security for the loan.
Individuals and Households
Jobseeker payment (as well as Partner allowance, widow allowance, sickness allowance and wife pension
Youth allowance jobseeker
Special benefit recipients
Jobseeker and youth allowance jobseeker criteria will now include permanent employees who are stood down or lose their employment, sole traders, the selfemployed, casual workers, and contract workers who meet the income tests as a result of the economic downturn. This could also include a person who is required to care for someone who is affected by the coronavirus.
People will need to declare that they are not accessing annual or sick leave, or income protection insurance at the same time as receiving jobseeker payments under these arrangements.
To claim these payments new applicants who do not already deal with Services Australia will need to set up their myGov account, call to verify their identity, and get a link to their Centrelink online account.
Applicants will need to make an initial declaration about their identity, residency status, income and that they have been made redundant or had their hours reduced significantly.
Sole Traders will need to make a declaration that their business has been suspended or had turnover reduced significantly.
Those receiving jobseeker payments have an obligation to actively look for work or build their skills, but the government is making sure this can be done flexibly and safely. Sole traders will need to continue to develop or sustain their business.
The supplement and expanded access for payments will commence from 27 April 2020. The total maximum fortnightly payment will equal $1,162.00 and is completed through Services Australia.
The government is providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders.
The first payment will be available at any time from 12 March 2020 to 13 April 2020.
The second payment will be available on 10 July 2020.
The payments will be exempt from taxation.
Eligibility for payments:
You must receive one of the following and be residing in Australia at any time from 12 March 2020 to 13 April 2020:
Disability support pension
Widow B Pension
Family Tax Benefit
Pensioner Concession Card holders
Commonwealth seniors health card Holders
Veteran Service Pension, Veteran income support supplement, Veteran Compensation payments, including lump sum payments, War Widower Pension, and Veteran payment
DVA PCC holders, DVA Education Scheme recipients, Disability Pensioners at the temporary special rate, DVA Income support pensioners
Veteran Gold Card Holders
Farm Household Allowance
For more information go to treasury.gov.au/coronavirus
Eligible individuals will be able to apply online through myGov to access up to $10,000 of their superannuation before the 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020 for approximately 3 months.
You are unemployed; or
You are eligible to receive a jobseeker payment, youth allowance for jobseekers, parenting payment, 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 and your business was suspended or there was a reduction in your turnover of 20 per cent or more.
The payments will be tax free.
You can apply directly to the ATO through the myGov website www.my.gov.au
The government is helping retirees by temporarily reducing superannuation minimum drawdown requirements by 50 per cent for 2019-20 and 2020-21.
Please feel free to contact any of our accountants if you would like to discuss any of these measures further.
MP Tax and Business Solutions