The second stage of the Commonwealth Government’s economic plan to assist with impacts of the Coronavirus on business and individuals has been announced.
This is what you need to know. Assistance to Business to Keep People in a Job Boosting Cash Flow for Employers
Up to $100K to eligible small and medium sized businesses and not-for-profits, with a minimum payment of $20K, received by a reduction in payment of your PAYG withholding.
Eligible businesses include businesses with aggregated turnover of <$50M that employ people.
Employers will receive a payment up to 100% of tax withheld on salary & wages (PAYGW), the maximum payment being increased from $25K to $50K.
In addition, the minimum payment has been increased from $2K to $10K.
Payment is available from 28 April 2020 and is tax-free.
Payment flows automatically through the ATO BAS lodgement system, and will be credited to your Integrated Client Account, it will not be refunded directly to your business.
An additional payment is being made in the July – October 2020 period that will be equal to the amount paid to your business in the period up to 30 June 2020.
This means that if you received $50K to June 30, you will receive another $50K from 21 July, equating to the announced maximum of $100K per business.
The payment that you are entitled to is actually a credit and is claimed by short payment of your BAS.
Regulatory Protection and Financial Support for Businesses to Stay in Business Coronavirus SME Guarantee Scheme
Supporting small and medium enterprises to access working capital. The government will guarantee 50 percent of new loans issued by eligible lenders to SMEs.
The government guarantee is for the lender, not the borrower, to encourage banks to lend short-term unsecured loans to businesses.
To commence early April and be available for new loans until 30.9.20.
This complements the announcement to cut red-tape to allow SMEs to get access to credit faster and support by the Australian banks to support small businesses with existing loans.
Several lenders have introduced new rules in relation to Hardship. Here is a link to the Reserve Bank’s support. https://www.rba.gov.au/media-releases/2020/mr-20-08.html
Providing Temporary Relief for Financially Distressed Businesses
The government is adopting a 6 month regulatory shield for distressed businesses.
They are temporarily increasing the threshold at which creditors can issue a statutory demand on a company and the time to respond (this was $2K, now $20K, and companies will have 6 months to respond to demands).
Relief for Directors from any personal liability from trading whilst insolvent.
ATO will tailor solutions for business owners/Directors by temporarily reducing payments & deferrals and withholding enforcement actions such as Director Penalty Notices (where the Director becomes personally liable for unpaid PAYGW, GST & Super)
Prior Stimulus Announcements
This builds on the support for business and business investment provided in the first economic support package which included:
Increased instant asset write off from $30K to $150K for business with turnover <$500M – effective immediately
Accelerated depreciation deductions of 50% of asset value for businesses with turnover <$500M – effective immediately
Support of apprentices and trainees with a wage subsidy of up to $21K per employee for wages paid between 1.1.20 and 30.9.20 – applications from early April 2020
$1B support for coronavirus-affected regions and communities – effective as soon as practical
Support for the aviation industry – effective 1.2.20 to 30.9.20.
ATO Support for Businesses Options Available to Assist Businesses Impacted by COVID-19
Deferring by up to 6 months the payment date of amounts due through BAS’s (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.
Allowing businesses to vary Pay As You Go (PAYG) instalment amounts to zero for the March 2020 quarter. Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters.
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.
Support for Workers and Households Supplements to Eligible Income Recipients
Coronavirus supplement of $550 per fortnight paid to both existing and new recipients of the JobSeeker Payment, Youth Allowance jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
Eligible income recipients will receive the full amount of the $550 Coronavirus supplement on top of their usual payment each fortnight.
Effective from 27 April 2020 for 6 months.
New recipients can apply online through Centrelink.
Boosting Cash Flow for Sole Traders
Sole traders and casual workers who are currently making less than $1,075 a fortnight will be eligible to receive the full supplement of $550/fortnight.
Effective from 27 April 2020 for 6 months.
New recipients can apply online through Centrelink.
Payments to Support Households
In addition to the $750 stimulus payment already released, the Government will provide a further $750 payment to social security and veteran income support recipients and eligible concession card holders, except for those who are receiving an income support payment.
First payment from 31 March, second payment from 13 July 2020.
Early Release of Superannuation
The Government will allow individuals in financial stress as a result of the Coronavirus to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21.
Eligible individuals will be able to apply online through myGov from April 2020.
No tax payable on amounts released and they will not affect Centrelink or Veterans Affairs payments.
Temporarily Reduce Superannuation Minimum Drawdown Rates
The Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50% for 2019-20 and 2020-21.
This means that if you were withdrawing 4% of your member balance, you are now required to draw down only 2%.
This is effective immediately.
Reducing Social Security Deeming Rates
On top of the deeming rate changes made at the time of the first package, the Government is reducing the deeming rates by a further 0.25 percentage points to 2.25 per cent to reflect the latest rate reductions by the RBA.
This is effective from 1 May 2020.
For more information on this second stage of support, please visit https://www.pm.gov.au/media/supporting-australian-workers-and-business.
Over and above the Commonwealth Government support there is also State Government Funded support. Please see here for more detail: https://www.sullivandewing.com.au/post/nsw-government-unveils-2-3-billion-coronavirus-package There are some helpful websites for employers and workers to help navigate support available. 1. For employers this guide https://www.businessaustralia.com/how-we-help/be-a-better-employer/getting-legal-advice/employer-guide-to-coronavirus assists with managing coronavirus in the workplace. 2. For workers who have lost their job due to the coronavirus this is an excellent source of information https://www.finder.com.au/coronavirus-lost-job-help. We will be following closely developments on all assistance to individuals and businesses. Many of the announcements are being legislated in parliament today and tomorrow.
Below is the recording of our webinar: COVID-19 Stimulus Packages Explained Webinar
You can download a copy of the webinar slides HERE
As promised in the webinar here is a couple of other helpful links!
Business Australia - Employer Guide to Coronavirus
Kathryn MacMillan 923|Recruitment & HR - HR Assistance
Please review the above and come to us with any questions that you have regarding your specific circumstances.
Kind Regards,
Jeni, Terry & the Sullivan Dewing Team