Like all of us here at KLM, we are sure you are receiving a lot of information in relation to the Coronavirus or COVID-19. The purpose of this article is to outline how we are operating now and into the future and give some detail on government announced measures that may impact you and/or your business. Below are the three stimulus packages summary.
GOVERNMENT FIRST STIMULUS PACKAGE
There have been a raft of stimulus measures announced by both Federal & State Governments as well as ATO and other government agencies. These are being announced daily.
On 12 March 2020 the Government announced its economic response to the Coronavirus in the form of a $17.6 billion economic stimulus package. Detailed legislation will be introduced into Paliament in the week beginning 23 March 2020 for urgent consideration and passage. At this stage therefore these details are not final but are as announced.
$750 one-off payments
For those who are on social security, veteran and other income support recipients and eligible concession card holders on 12 March 2020, a $750 one-off payment will be made, with one payment per recipient if they qualify in multiple ways. This payment will be tax-free and will not count as income for Social Security, Farm Household Allowance and Veteran Payments. Payments are expected to start from 31 March 2020 and be finalised by mid-April.
Increase in instant asset write-off
From 12 March 2020, increase in the instant asset write-off threshold from $30,000 to $150,000, and increasing access to this for businesses with aggregated annual turnover of less than $500M (up from $50M) until 30 June 2020 (when the instant asset write-off threshold is to revert to $1,000).
For assets acquired and installed prior to 30 June 2021, businesses with turnover of less than $500M will be able to deduct 50% of the cost of an eligible asset on installation. The balance of the cost of the asset will be depreciated over the life of the asset per existing rules. This applies only to new assets that can be depreciated under Division 40 (i.e. not secondhand, and includes plant, equipment and specified intangible assets such as patents and software), and not other capital works depreciable under Division 43. This measure will apply to;
- Assets costing greater than $150k between 12 March 2020 and 30 June 2020; and
- Assets costing greater than $1k between 1 July 2020 and 30 June 2021
Cash flow assistance for employers
The Boosting Cash Flow for Employers will provide up to $25,000 cash for small and mediumsize businesses, with a minimum of $2,000 for eligible businesses. This cash amount is taxfree. Eligible businesses are those with aggregated annual turnover with <$50M that employ staff. The $50M turnover is based on prior year’s (2019 financial year) turnover.
- Eligible businesses that withhold tax on wages will receive a payment equal to 50% of the amount withheld, up to a maximum of $25,000.
- Eligible businesses that pay salary and wages will receive a minimum payment of $2,000, even if they are not required to withhold tax.
- The minimum payment will be applied to the business’ first eligible activity statement lodged.
- For quarterly lodgers, activity statements eligible for this credit is the March 2020 and June 2020 quarters. For monthly lodgers, activity statements eligible for this credit is March, April, May and June 2020 months. To provide a similar treatment to quarterly lodgers, the payment for monthly lodgers will be calculated at three times the rate (150%) in the March 2020 activity statement.
- The payment will be delivered by the ATO as a credit from the March 2020 activity statement upon lodgement due date of 28 April 2020. Where this puts the activity statement into credit, it will be refunded to the business within 14 days.
Wage subsidy for apprentice or trainee wages
Eligible employers can apply for a wage subsidy of 50% of their apprentice’s or trainee’s wages for up to 9 months from 1 January 2020 to 30 September 2020. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
To be eligible, the employer must be a small business employing fewer than 20 full-time employees (and who retain an apprentice or trainee). The apprentice or trainee must have been in training with a small business as at 1 March 2020.
Employer will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network (AASN) provider. Employers can register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020.
Assistance for severely affected regions
The Government has set out aside $1billion to support regions disproportionately affected by impact of the Coronavirus, including industries such as tourism, agriculture and education.
The ATO will provide administrative relief for certain tax obligations (similar to relief provided following the bushfires, see here) for taxpayers affected by the Coronavirus outbreak, on a case by case basis.
Further information with examples for business measures can be found at; https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Assistance_for_businesses.pdf
New business related announcements from the NSW State Government included;
Payroll Tax Measures – $450 million has been allocated to waive payroll tax for businesses with payrolls of up to $10 million for three months, meaning that these businesses would not have to pay payroll tax for the remainder of the financial year. The increase in the payroll tax threshold to $1 million, due to commence on 1 July 2021, will also be brought forward and will commence on 1 July 2020.
Other measures – $80 million has been allocated for the removal of fees and charges applicable to small businesses owners such as cafes and restaurants and those in trades.
There are likely to be more stimulus measures to come, we will keep you updated accordingly.
On 22 March 2020 the Government announced its second stimulus package to protect the Australian Economy from the impact of coronavirus. Legislation was passed on 23 March 2020 so these details are now final.
GOVERNMENT SECOND STIMULUS PACKAGE
Coronavirus Stimulus – What Can I Get
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 (formerly Newstart Allowance), Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit as well as including sole traders, self-employed, casuals and in a final amendment students.
Payments to support households
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 made from 31 March 2020 and the second payment will be made from 13 July 2020. Around half of those that benefit are pensioners. This payment will help to support confidence and domestic demand in the economy. To be eligible for the second payment, you must be residing in Australia and be receiving one of the payments or holding one of the concession cards that were eligible for the first payment, except for those who are receiving an income support payment that is eligible to receive the Coronavirus supplement.
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 draw down rates
The Government is temporarily reducing superannuation minimum draw down 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 draw down 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.
Cash flow assistance for employers
The Boosting Cash Flow for Employers previously announced has been enhanced. The Government is providing up to $100,000 to eligible small and medium sized businesses, and not for-profits (NFPs) that employ people, with a minimum payment of $20,000. These payments will help businesses and NFPs with their cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff.
This measure will benefit around 690,000 businesses employing around 7.8 million people, and around 30,000 NFPs (including charities).
Small and medium-sized business entities with aggregated annual turnover under $50 million and that employ workers are eligible. NFPs, including charities, with aggregated annual turnover under $50 million and that employ workers will now also be eligible. This will support employment at a time where NFPs are facing increasing demand for services.
Under the enhanced scheme, employers will receive a payment equal to 100 per cent of their salary and wages withheld (up from 50 per cent), with the maximum payment being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000.
An additional payment is also being introduced in the July – October 2020 period (in addition to the March – June 2020 period payments). Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers 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.
Temporary relief for financially distressed businesses
The Government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive. The package also includes temporary relief for directors from any personal liability for trading while insolvent, and providing temporary flexibility in the Corporations Act 2001 to provide temporary and targeted relief from provisions of the Act to deal with unforeseen events that arise as a result of the Coronavirus health crisis.
The ATO will tailor solutions for owners or directors of business that are currently struggling due to the Coronavirus, including temporary reduction of payments or deferrals, or withholding enforcement actions including Director Penalty Notices and wind-ups.
Support for immediate cash flow needs for SMEs
The Coronavirus SME Guarantee Scheme will provide support for these businesses. Under the Scheme, the Government will provide a guarantee of 50 per cent to SME lenders for new unsecured loans to be used for working capital. This will enhance these lenders’ willingness and ability to provide credit, which will result in SMEs being able to access additional funding to help support them through the upcoming months.
The Government will provide eligible lenders with a guarantee for loans with the following terms:
- Maximum total size of loans of $250,000 per borrower.
- The loans will be up to three years, with an initial six month repayment holiday.
- The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.
Loans will be subject to lenders’ credit assessment processes with the expectation that lenders will look through the cycle to sensibly take into account the uncertainty of the current economic conditions.
The Scheme will commence by early April 2020 and be available for new loans made by participating lenders until 30 September 2020.
GOVERNMENT THIRD STIMULUS PACKAGE
Coronavirus Stimulus Jobkeeper Payments
On 30 March 2020 the Government announced its third stimulus package to protect the Australian Economy from the impact of coronavirus. Legislation still needs to be drafted and enacted through Parliament, therefore it could still be amended. We will keep you updated with the progress.
JOBKEEPER – Wage Subsidy Scheme
- $1,500 per fortnight payment per employee (alternative to Jobseeker/social security payments);
- Effective date as of today, 30th March 2020
- Payments will be made to businesses, to pass on to their employees, including employees that have been stood down since 1 March 2020
- Businesses that have a turnover that is reduced by 30% or more, compared to a relative period in the prior year (at least one month) are eligible to receive the subsidy
- Available to employees that were employed and registered with a business under Single Touch Payroll as of 1 March 2020
- Payable for Full Time, Part Time and Casual Staff that have been employed > 12 months are all eligible.
- No pro-rata – flat payment per employee
- Not-for-profit entities (including charities) and self-employed individuals (businesses without employees) that meet the turnover tests that apply for businesses are eligible to apply for JobKeeper Payments.
- Payments will flow via the ATO to small business, starting in May, and backdated to today
At present you cannot apply but you can register your interest with the ATO here
Employers fact sheet here
Employees fact sheet here
We are constantly assessing the rapidly changing situation but at this stage our doors, phone & email remain open. We have a COVID-19 workplace policy around travel, health and hygiene that is reviewed daily. We are currently still meeting with clients face to face but respecting social distancing and hygiene requirements but request that these be kept to essential meetings only, postponed or alternatives organised. As a business with a large reliance on technology, we already have in place levels of flexible work arrangements and off-site accessibility. This means we have alternate arrangements in place for attending to client matters including phone calls, Skype meetings or e-mail. This is a rapidly changing environment, but we are here to help and guide clients & businesses through what are very uncertain times. Please contact us if you need help or advice on (02) 4908 0400 or here.