We are here to help you and your business work through the many new challenges in the current environment.
Below is an update on the current Government Assistance and other concessions available to small/medium business and individuals.
We are in the process of customising advice for each of our business clients based on their individual circumstances
Government Tax Free PAYG Withholding Subsidy Increased
The Federal Government will provide credits or cash payments of up to $100,000, with minimum payments of $20,000 for eligible businesses. The payment will be delivered by the ATO as a credit upon the lodgement of the March 2020 Monthly or Quarterly and later activity statements. Businesses will get a credit of the PAYG withholding amount payable on employee wages up to the maximum $100,000. Quarterly lodgers will be eligible to receive the payment for the quarters ending March 2020, June 2020 and September 2020. Monthly lodgers will be eligible to receive the payment for the March 2020 to September 2020 lodgements.
To provide similar treatment to quarterly lodgers, the payments for monthly lodgers will be 300% of the PAYG withholding amount payable for the March 2020 activity statement. Businesses that are registered for PAYG withholding, even if they are not required to withhold tax, will receive a minimum payment of $20,000. The Government has said that they expect credits or refunds to be paid from 28 April 2020.
Apprentice and Trainees Support
The Federal Government will provide eligible employers a wage subsidy of 50% of the apprentice’s or trainee’s wages paid during the 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.
Tax Payment Relief
ATO support measures for businesses affected by COVID-19:
- Deferring by up to six months the payment date of amounts due through the business activity statement (including PAYG instalments), income tax assessments, fringe benefits tax assessments and excise
- Allow businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get quicker access to GST refunds they may be entitled to
- Allowing businesses to vary Pay As You Go (PAYG) instalment amounts to zero for the March 2020 quarter
- Consider remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities
- Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low interest payment plans
WA State Government Payroll Tax
- Payroll tax paying businesses with a payroll between $1 million and $4 million will receive a one-off grant of $17,500 expected to be paid in July 2020
- Small and medium sized businesses with a payroll of $7.5million or less that are affected by COVID-19 can now apply to defer payment of their 2019-20 payroll tax until 21 July 2020
- $1 million payroll tax threshold increase to be brought forward by six months to 1 July 2020
Small/Medium Business Government Guarantee Loans
The Government is to provide a guarantee of 50% of new unsecured loans made to eligible Small/Medium Businesses for the purposes of working capital for businesses with a turn over less than $50 million. The purpose of this is to make it more likely that banks and lenders will approve these loans.
The loans will have the following terms:
- Up to $250,000
- Up to 36 months with no payments for 6 months
- Unsecured – meaning no collateral required
Interest will only be charged on the drawn funds, meaning you only pay on the amount you use. You will still need to satisfy the particular lender’s borrowing criteria.
These loans are expected to be made available in April 2020.
Six Months Loan Repayment Deferral for Small/Medium Business Loans
The Australian Banking Association announced that its members would be offering payment deferrals of up to 6 months for all existing SME loans. Payments are typically added to the loan term, with accrued interest across the period being added to the remaining outstanding payments. The treatment, however, will differ from lender to lender.
Many non-bank lenders (some captive finance companies, other non-bank equipment finance companies) are doing their best to offer 3 month deferred payments
No Deferral of Super Guarantee Obligations
The ATO recommends you contact them if you are unable to make your quarterly super guarantee contributions payments by the due date. The ATO says that the law does not allow them to extend the due date to pay the super guarantee contributions for your employees. You will need to lodge a Superannuation guarantee charge (SGC) statement and pay the charge. If required, you can contact the ATO to discuss entering into a payment plan.
Other Federal Government Measures
The debt threshold at which creditors can put a company into insolvency has been increased from $2,000 to $20,000.
Businesses have six months to respond to winding up notices, up from 21 days.
The personal liability for directors trading while insolvent has been suspended for six months.
Instant Business Asset Write Off and Investment incentive
The depreciating asset instant asset write off has been increased from $30,000 to $150,000 until 30 June 2020.
A new investment incentive applies until 30 June 2021 to allow a deduction equal to 50% of the cost of a new eligible asset with existing depreciation rules applying to the balance of the asset’s cost. Where the business is using a general small business depreciation pool an amount equal to 57.5% (rather than 15%) of the cost of the asset can be deducted.
Income Support for Individuals
The new Coronavirus supplement
A new six-month ‘Coronavirus supplement’ of $550 per fortnight will be paid to individuals who are currently eligible for certain income support payments, including the:
- Jobseeker Payment;
- Youth Allowance; and
- Parenting Payment (Partnered and Single).
Expanding access (and eligibility) to certain income support payments
For the period that the Coronavirus supplement is paid, the Government will also expand access to certain income support payments (e.g., the Jobseeker Payment, the Youth Allowance Jobseeker and the Parenting Payment) for eligible individuals.
For example, a new category of Jobseeker Payment and Youth Allowance Jobseeker will become available for eligible individuals financially impacted by the Coronavirus.
According to the Government, this could include, for example, 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, as a result of the economic downturn due to the Coronavirus.
Additionally, asset testing for the JobSeeker Payment, the Youth Allowance Jobseeker and the Parenting Payment will be waived for the period of the Coronavirus supplement. Income testing will still apply to the person’s other payments, consistent with current arrangements.
Tax-free payments of $750 to eligible recipients
The Government will be providing two separate $750 tax-free payments (referred to as ‘economic support payments’) to social security, veteran and other income support recipients and to eligible concession card holders.
The first $750 payment will be available to individuals who are residing in Australia and are receiving an eligible Government payment, or are the holders of an eligible concession card, at any time from 12 March 2020 to 13 April 2020 (inclusive). This payment will be made automatically to eligible individuals from 31 March 2020.
The second $750 payment will be available to individuals who are residing in Australia and are receiving one of the eligible Government payments or are the holders of one of the eligible concession cards on 10 July 2020 (except f or those receiving an income support payment that qualifies them to receive the $550 fortnightly Coronavirus supplement). This payment will be made automatically to eligible individuals from 13 July 2020.
Early access to superannuation benefits
The Government will introduce a new compassionate ground of release that will allow individuals to access their superannuation entitlements where those benefits are required to assist them to deal with the adverse economic effects of the Coronavirus, but only where one or more of the following requirements are satisfied:
- The individual is unemployed.
- The individual is eligible to receive the Jobseeker Payment, Youth Allowance for jobseekers, Parenting Payment (which includes the single and partnered payments), Special Benefit or Farm Household Allowance.
- On or after 1 January 2020 either:
– the individual was made redundant; or
– the individual’s working hours were reduced by at least 20%; or
– if the individual is a sole trader – their business was suspended or there was a reduction in the business’s turnover of at least 20%.
Under this new compassionate ground of release, eligible individuals will be able to access (as a lump sum) up to $10,000 of their superannuation entitlements (tax free) before 1 July 2020, and a further $10,000 from 1 July 2020 (subject to a six-month time frame).
Eligible individuals who are looking to access their superannuation entitlements under the above new ground of release will be able to apply directly to the ATO through the myGov website (at www.my.gov.au) and certify that the relevant eligibility criteria is satisfied.
Reducing the minimum drawdown amounts for superannuation pensions
The Government will be temporarily reducing the superannuation minimum drawdown amounts for account-based pensions and similar products by 50% for the 2020 and 2021 income years.
In the meantime, Abbotts Chartered Accountants and our Wealth and Finance divisions are here and ready to provide you with practical and personal assistance to manage this unfolding emergency. Your continued support of us and our support of you are two certainties that we hope to be able to be assured of over the coming months.
If you have any queries please contact us for assistance.
The Partners and Staff at Abbotts