The COVID-19 pandemic is impacting Australians health and back pocket. The Government have taken some bold steps to provide incentives like income supplements and tax breaks to keep the economy going.
We thought we’d share our responses to questions our clients (both small businesses and individuals) here in Melbourne, have been asking. Please note this is not financial advice – talk to your accountant or contact us to understand what can be applied to your own circumstance.
How will Government announcements impact me/my business?
Announcements have been coming thick and fast (and may have changed since this article was published). There are different incentives depending on individual circumstance. Some businesses are very limited as to what they can access, and some others can access a few of them.
What are the COVID-19 Government incentives and how can I access them?
Here’s a list of incentives we’re walking our clients through and some information about who they apply to and what they include:
Boosting Cash Flow for Employers
- Apply to business and Not for Profits with turnover less than $50m and employed staff prior to 12 March 2020.
- Boost is equal to 100% of the PAYG Withheld from Salary and Wages up to a maximum of $50,000 (applies from March to June 2020 Activity Statements).
- The second boost will be introduced for the period from July to September 2020.
- Payment is delivered as an automatic credit in the Activity Statement starting from the March Activity Statement.
- A minimum of $10,000 will be applied to the entities first lodgement.
- If you’re in a credit position, the ATO will issue the refund in 14 days.
- Payments are tax free.
Payroll Tax Refunds – Victoria (each state is different)
- If your payroll is below $3m, and you paid Payroll Tax this financial year, the SRO will refund the payroll tax already paid.
- In addition, no payroll tax is payable for the remainder of this financial year.
- You must continue to lodge your monthly Payroll Tax Returns.
- You’re able to defer payroll tax for the first 3 months of 2021 Financial year up to 1 January 2021.
- Eligible for employers whose turnover decreased by more than 30% for a comparable period (not really defined but loosely advised as 12 months ago but can be argued last quarter is comparable).
- Paid to employers for employees that were employed (part time or full time) at 1 March 2020 (and continue to be employed).
- Payment of $1,500 (pre-tax) per employee per fortnight from 30 March 2020 to 30 September 2020 to supplement the employees wage.
- Employer must notify the employee that they’re being paid JobKeeper.
- Payments begin 1 May but will be backdated to 30 March 2020.
- Go to ATO to register your interest
Bank Care Package
- The Australian Banking Association (ABA) announced a relief package that includes a deferral of principal and interest repayments for all term loans and retail loans for six months for small business customers with less than $3 million in total debt owed to credit providers.
- At the end of the deferral period, businesses will not be required to pay the deferred interest in a lump sum. Either the term of the loan will be extended, or the level of loan repayments will be increased. The package applies to all ABA member banks who agree to participate. You can also check with any funders outside of the (ABA) whether they will offer the package.
Coronavirus SME Guarantee Scheme
- This Scheme is designed to provide working capital support to SME’s (businesses with turnover of less than $50 million) to get through the impact of the coronavirus.
- Under the Scheme, the Federal government will guarantee 50% of new SME unsecured loans issued by eligible lenders up to the value of $250,000. This effectively represents a guarantee of $125,000.
- The Scheme commenced in April 2020 and loans will be made available by participating lenders until 30 September 2020. The loans will be made under a term of 3 years with an initial 6 month repayment holiday. No assets will be required as security for these loans.
Instant Asset Write Offs and Accelerated Depreciation (not a fan of this but it’s an option)
- Applies to assets purchased after the 12th March 2020.
- Assets costing less than $150,000 can now be written off until 30 June 2020.
Superannuation & Social Security for Individuals and Sole Traders
- If you’ve become unemployed, eligible for Jobseeker, Youth Allowance, Parenting Payment or have been made redundant on or after 1 January 2020 or had your work hours reduced by more than 20%, the Government will allow individuals in financial stress to access up to $10,000 of their superannuation in the 2020 financial year and a further $10,000 in the 2021 financial year.
- If you’re eligible, you can apply through the myGov website to access funds before 1 July 2020 for the first $10,000 and have three months after this date to access more.
Land Tax Deferral
- If you’re due to pay 2020 land tax that have at least one non-residential property and total taxable landholdings below $1 million, you have the option of deferring the 2020 land tax payment until after 30 June 2020.
- The State Revenue Office will contact all taxpayers eligible for this deferral.
Income Support for Individuals & Sole Traders
- Two $750 stimulus payments to pensioners, social security, veteran and other income support recipients and eligible concession card holders.
- The first of these payments was announced on 12 March 2020 and the second will be automatically made on 13 July 2020.
- The payment will be tax-free and will not count as income for social security, farm household allowance, and veteran payments.
- From 27 April 2020, the Government is also temporarily expanding eligibility to income support payments to include sole traders and establishing a new time limited Coronavirus Supplement to be paid at a rate of $550 per fortnight for the next 6 months on top of existing entitlements.
- The Coronavirus Supplement will be paid to both existing and new recipients of the JobSeeker Payment, Youth Allowance, Parenting Payment, Farm Household Allowance and Special Benefit and be in addition to the payments made on under these allowances.
- The Jobseeker payment is currently $550 per fortnight and the addition of the Coronavirus Supplement increases this payment to $1,100 per fortnight.
- Sole traders and casual workers who are currently making less than $1,075 a fortnight will be eligible to receive the full supplement.
- Wage subsidy to support small businesses to retain their apprentices.
- Business may be eligible to receive 50% of their apprentice’s wages, capping at $21,000, per apprentice, for the nine months from 1 January 2020 to 30 September 2020.
- Employers can register for the subsidy from 31 March 2020, and final claims of payment must be lodged by 31 December 2020.