Update: What’s in the second COVID-19 stimulus package
Following the $17b package released a short time ago, the Federal Government announced a second stimulus package to support the Australian economy while we fight the Coronavirus. The package now totals $189b and has been marketed as a measure to provide timely support to affected workers, businesses sand the broader community.
Alongside the stimulus package, the government also announced dramatic new measures, temporarily closing clubs, pubs, cafes, restaurants and places of worship and has placed further restrictions on social gatherings (in light of this, our team has shifted to remote work, find more details here).
This article will detail the following:
- Key tax and stimulus measures
- Government assistance for employees stood down from work
- How the Here Business & Wealth team can assist at this challenging time
Key tax and stimulus measures
- Tax-free payments of up to $100,000 for eligible small and medium businesses (i.e., with a turnover of less than $50 million that employ staff) and not for profit organisations based on their PAYG withholding obligations. This is not a cash payment, but it is a credit in the activity statement system equal to 100% of the PAYG amounts withheld from salary and wages paid to employees.
These payments will only be available to active eligible employers established prior to 12 March 2020, and you simply need to have employees for whom you withhold tax on wage payments.
First payment of up to $50,000 - Businesses that lodge activity statements on a quarterly basis will be eligible to receive the credit for the quarters ending March 2020 and June 2020. Businesses that lodge on a monthly basis will be eligible for the credit for the March 2020, April 2020, May 2020 and June 2020 lodgements.
Second payment of up to $50,000 – To qualify for this additional payment, the business must continue to be active. Businesses that lodge activity statements on a quarterly basis will be eligible to receive the credit for the quarters ending June 2020 and September 2020. Businesses that lodge on a monthly basis will be eligible for the credit for the June 2020, July 2020, August 2020 and September 2020 lodgements.
If a business pays salary and wages to employees but is not required to withhold any tax, then a minimum payment of $10,000 will still be made in the period up June 2020, and a second minimum payment of $10,000 in the period after June 2020 and up to September 2020. These payments will be applied to the first activity statement lodged in each period.
- Wage subsidies to support the retention of apprentices and trainees – Employers with less than 20 full-time employees may be entitled to apply for Government funded wage subsidies amounting to 50% of an apprentice’s or trainee’s wage for up to nine months from 1 January 2020 to 30 September 2020. The maximum subsidy for each apprentice/trainee is $21,000.
- From Thursday 12 March 2020, the instant asset write-off threshold has been increased from $30,000 (for businesses with an aggregated turnover of less than $50 million) to $150,000 (for businesses with an aggregated turnover of less than $500 million) until 30 June 2020.
- A time-limited 15-month investment incentive (through to 30 June 2021) which will operate to accelerate certain depreciation deductions. This measure will also be available to businesses with a turnover of less than $500 million, which will be able to immediately deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost. As announced, this measure is proposed to only apply to new depreciating assets first used, or installed ready for use, by 30 June 2021.
Temporary Relief for Financially Distressed Businesses
These measures are designed to give a safety net for businesses to ensure that when this crisis has passed, they can resume normal business operations. It includes lessening the threat of actions that could unnecessarily push them into insolvency and force the winding up of the business. They include:
- A temporary increase in 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.
- A temporary increase in the threshold for a creditor to initiate bankruptcy proceedings, an increase in the time period for debtors to respond to a bankruptcy notice, and extending the period of protection a debtor receives after making a declaration of intention to present a debtor’s petition.
- Temporary relief for directors from any personal liability for trading while insolvent.
Business Lending Guarantee
- The Government will provide a guarantee of 50% to Small and Medium Enterprise lenders for new unsecured 3 year loans of up to $250,000 per borrower to be used for working capital. These loans will be up to three years, with an initial 6 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.
- Tax-free payments of $750 to social security, veteran and other income support recipients and eligible concession cardholders. It is estimated that around half of those who will benefit will be pensioners. These payments will commence automatically from 31 March 2020.
Ask your tax advisor about opportunities to restructure how you pay yourself so that you can receive the maximum cashflow assistance amounts from the Government.
Chat to us if you would like to discuss how to ensure you receive your maximum cashflow assistance from the Government.
The Federal Government is also providing support to assist staff you have stood down due to business financial/operational uncertainty
With the recent requirements that many businesses are to be temporarily closed, you may have had to (or will have to) stand down many of your employees from their employment.
The good news is that the Government is providing support for individuals to assist them in the next 6 months.
The Government has expanded the access to the Jobseeker Payment and the Youth Allowance Payment so that the following people affected by the Coronavirus can immediately receive them, commencing 27 April 2020:
- permanent employees who are stood down or lose their employment
- sole traders
- casual workers
Please refer to the fact sheets below for an excellent summary of what individuals are entitles to. We recommend providing these to your employees.
Income support for Individuals –
Payments to support households –
Temporary early release of Superannuation –
How we can help you
You need to decide whether your business can continue to trade or if it needs to temporarily close or reduce its operations.
We have developed a Cash Flow Forecast template that we are using with our clients so that we can help you to quickly make a decision about what you should do.
We have also developed a Business Continuity Plan that we have just updated with the latest Government announcements.
If you would like to learn more about the options presented above, please contact us to schedule in an online meeting.
If neither of these options are right for for you/your business, but you like advice, get in touch. We have 100% capacity to continue helping you and your business.