COVID-19 and Government Assistance update

The Federal and State Governments have announced assistance to support businesses, workers and households as we navigate the significant economic consequences of the coronavirus.

These packages are unlikely to be the last, and we will continue to bring you details of further support as announcements are made.

Federal Government

Economic stimulus packages 1 (announced 12 March 2020) and 2 (announced 22 March 2020) are summarised below.

Income support for individuals and households

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, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.

Two separate $750 payments will be made 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. The second payment will not be made to those eligible for the Coronavirus supplement. 

Individuals affected by the Coronavirus will be allowed access of 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. The application process will be available from mid-April 2020.

To help support retirees, the Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50 per cent for 2019-20 and 2020-21. This measure may benefit retirees holding these products by reducing the need to sell investment assets to fund minimum drawdown requirements. This measure is available immediately.

Social security deeming rates will be reduced 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. 

Support for businesses

Cash flow assistance for business

Cash flow assistance for eligible employing businesses by way of a PAYGW rebate was initially announced on 12 March 2020. Further enhancements to this assistance were announced on 22 March 2020. The two packages are summarised below:

Part 1 (announced 12 March 2020):

• Eligible business and not-for-profits will receive a payment of up to 100 per cent (was originally 50% but increased to 100% in part 2) of the PAYG tax withheld for a limited number of Business Activity Statement (BAS) lodgements. For quarterly BAS lodgers, this applies to the March and June quarters. For monthly BAS lodgers, this applies to March, April, May and June 2020.
• The maximum rebate is $50,000, with a minimum payment of $10,000.
• The ATO will deliver the payment as a credit to the business upon lodgement of their activity statements. Where this places the company in a refund position, the ATO will provide the refund within 14 days.
• The payment will be tax-free and is available from 28 April 2020.

Eligibility: Small and medium-sized business entities and NFPs with aggregated annual turnover under $50 million (based on prior year turnover) and that employ workers are eligible.

Part 2 (announced 22 March 2020):

• For eligible small and medium-sized businesses and not-for-profits (NFPs), the Government will provide an additional payment to be delivered from July to October 2020.
• Under Part 2, eligible entities will receive a payment equal to the total of all of the Part 1 payments they have received. 

• For quarterly BAS lodgers, this applies to the June and September quarters. For monthly BAS lodgers, this applies June, July, August and September 2020.
• Payment will be available from 21 July 2020.

• This means that in total (Part 1 and Part 2), eligible entities will receive at least $20,000 and up to a total of $100,000 in payments.

Eligibility: Small and medium-sized business entities and NFPs with aggregated annual turnover under $50 million (based on prior year turnover) and that employ workers are eligible.

2.    Tax incentives for businesses

• Businesses are being encouraged to spend on equipment and other investments through an extension of the instant asset write-off scheme. 
• Currently, the scheme is restricted to businesses with turnovers of up to $50 million, for maximum investments of $30,000.
• Under the new arrangements, companies with turnovers of up to $500 million will be able to take advantage of assets write-offs of up to $150,000.
• The $150k deduction limit applies from 12 March 2020 until 30 June 2020, for new or second-hand assets first used, or installed ready for use in this timeframe.
• For assets over the $150,000 limit, businesses will receive an instant 50% depreciation with the remainder depreciated at normal rates.
• The 50% instant depreciation applies from 12 March 2020 until 30 June 2021, for new assets only that are first used, or installed ready for use in this timeframe.
• The proposed changes do not take effect until new laws are passed. We will keep this page updated.

3.    Keeping apprentices in work

• Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage paid during the nine months from 1 January 2020 to 30 September 2020.
• Where small business is not able to retain an apprentice, the subsidy will be available to a new employer.
• Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter). 
• Eligibility: The subsidy will be available to small businesses employing fewer than 20 full-time employees who retain an apprentice or trainee. The apprentice or trainee must have been in training with a small business as of 1 March 2020.
• Employers can register for the subsidy from 2 April 2020. Final claims for payment must be lodged by 31 December 2020. 
• Further information is available at www.dese.gov.au. 

4.    Temporary relief for financially distressed businesses

• The threshold for the minimum amount a creditor can issue a statutory demand on a company will temporarily increase from $2,000 to $20,000. The time frame to respond to the demand will increase from 21 days to 6 months.
• Directors will be temporarily relieved of their duty to prevent insolvent trading concerning any debts incurred in the ordinary course of the company’s business. This will apply for six months. 
• The threshold for the minimum amount of debt required for a creditor to initiate bankruptcy proceedings against a debtor will temporarily increase from its current level of $5,000 to $20,000. 
• The time a debtor has to respond to a bankruptcy notice will be temporarily increased from 21 days to six months. 
• In the case of voluntary bankruptcy, the period of protection when unsecured creditors cannot take further action to recover debts will be temporarily extended from 21 days to six months. 
• The solvency safety net and the bankruptcy safety net will apply for six months.

5.    Supporting the flow of credit

• Under the Coronavirus SME Guarantee Scheme, the Government will provide a guarantee of 50 per cent to SME lenders to support new short-term unsecured loans to SMEs with a turnover of up to $50 million
• The 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 are expected to commence by early April 2020 and will be available for new loans until 30 September 2020

Queensland

A deferral of payroll tax

If your business has been affected by the coronavirus, you may be able to apply for a relief package to defer paying payroll tax returns until 31 July 2020.

You can apply at any time the relief package is available. If approved, your deferral will begin from the next return that is due.

You must continue to lodge returns (without paying them) during this time, and you can resume paying returns at any time during the deferral period.

You can apply for the deferral here.

Jobs Support Loans

The Queensland Government announced on Tuesday, 17 March a new $500 million loan facility, interest-free for the first 12 months, to support Queensland businesses impacted by coronavirus to retain employees and maintain their operations.

The $500 million concessional loan facility will comprise low-interest loans of up to $250,000 for carrying on finance with an initial 12-month interest-free period for businesses to retain staff.

The Queensland Rural and Industry Development Authority (QRIDA) is responsible for the administration of these concessional loans. It is currently taking expressions of interest in the lead up to rolling these loans out as soon as possible.

You can register your interest here or by calling 1800 623 946.

New South Wales

Payroll tax waiver

Payroll tax for employers whose total grouped Australian wages for the 2019/20 financial year is no more than $10 million will have their annual tax liability reduced by 25% when they lodge their annual reconciliation, which is due on 28 July.

For employers who lodge and pay monthly and whose total Australian wages will be no more than $10 million for the current financial year, no payment for March, April or May 2020 will be required.

From 1 July 2020, the payroll tax threshold will be raised from $900,000 to $1 million.

• $80 million to waive a range of fees for small businesses including Business support and jobs stimulus package
• $250 million to employ additional cleaners of public infrastructure such as transport assets, schools and other public buildings
• more than $250 million to bring forward maintenance on public assets including social housing and crown land fencing
• $500 million to bring forward capital works and maintenance

Victoria

Payroll tax refunds 

Payroll tax refunds for the 2019-20 financial year will be available to SME businesses with a payroll of less than $3 million. The same businesses will also be able to defer any payroll tax for the first three months of the 2020/21 financial year until 1 January 2021. Payments will start flowing in late March.

Business Support Fund

A Business Support Fund of $500 million will be established to support the hardest-hit sectors, including hospitality, tourism, accommodation, arts and entertainment, and retail. You can register your interest here.

Western Australia

Payroll Tax

Payroll tax-paying businesses with a payroll between $1 million and $4 million will receive a one-off grant of $17,500 to assist them in managing the impacts of COVID-19.

From 1 July 2020, the payroll tax threshold will increase from $950,000 to $1 million.

SME businesses affected by coronavirus can now apply to defer payment of their 2019-20 payroll tax until July 21, 2020. This is available to employers who pay $7.5 million or less per year in Australian Taxable Wages. You can find out more about the deferral and apply here.

Other measures

On 20 March 2020, Premier Mark McGowan announced the State Government is developing further policies and support for businesses and households. We will provide more details on these policies when they are available.

South Australia

Premier Stephen Marshall has announced a $350 million stimulus package, highlighting in his statement that it was there to combat the issues brought on by coronavirus, bushfires and droughts in the region.

While the Premier did not release much detail about the breakdown of this offering, he said that the fund would allow the state to invest in “road and hospital upgrades”, “significant tourism infrastructure” and additional funding for SA’s “Economic and Business Growth Fund to support industry sectors”. We will provide more details on this package as they are available.

Tasmania

Payroll Tax waivers

Payroll tax liabilities will be waived for hospitality, tourism and seafood industry businesses for the last four months of 2019-20. Other businesses with payrolls of up to $5 million will be able to apply, based on the impact of the virus, to have their payroll tax waived for April to June 2020.

Interest-free business loans for small business

$20 million in interest-free loans to small businesses in the hospitality, tourism, seafood production, and exports sectors. The loans will be available to businesses with a turnover of less than $5 million to purchase equipment or restructuring business operations and will be interest-free, for three years. You can find out more about the loans and register your interest here.

Australian Capital Territory

Payroll Tax

Businesses that pay up to $10m in wages will be able to defer payroll tax for 12 months. Affected industries will receive a one-off six-month waiver on the payroll tax. Further information on how to apply for the deferral or waiver is yet to be released.

Other measures

$500,000 in arts grant funding has been brought forward, and a $20 million fund has been established for contractors to undertake simple works on government assets. Again, we will provide more details on this package and how you can access it as they become available.

Northern Territory

$30 million ‘Home Improvement Scheme’

The Home Improvement Scheme will provide Territorians who own a home a $6,000 grant for renovations if they contribute $2,000 of their own money. Alternatively, homeowners can spend $1,000 to get a $4,000 renovation grant.

$20 million ‘Business Improvement Scheme’.

Under the Business Improvement Scheme, all eligible businesses will receive $10,000 and can receive a further $10,000 if they input $10,000 of their cash on business upgrades. This could include buying new equipment or shop fit-outs.

Both measures are said to begin within approximately two weeks, and money is expected to be spent within six months. To date, we don’t have further details but will update this article as information becomes available. 

Further help:

We will continue to provide details on government assistance to support the economy through coronavirus as soon as the information is available. Should you have any questions about how these measures affect you or your business, please contact us for further advice. You can reach us at mail@marshpartners.com.au.