March 12, 2020

Coronavirus – Stimulus Package

(Updated 12 May 2020)

It’s been an interesting few weeks across the world, with the outbreak of Coronavirus (COVID-19).

As it currently stands, the World Health Organization (WHO) has announced that COVID-19 is a pandemic and the Australian Government has unveiled a series of economic responses to the Coronavirus.

Here we provide updated information about assistance being provided to businesses, and also how we will ensure business continuity during this time – this will be updated as new information becomes available or if existing information changes

Federal Stimulus Measures

There are a number of key areas, with the following directly impacting on business:

Full details of the complete assistance (for both business and individuals) can be found here but in summary, here is what business will be able to access:

Supporting Businesses to Retain Jobs

Referred to as the JobKeeper Payment. This is a payment made to eligible businesses and not for profits affected by the Coronavirus to support them in retaining employees.

Eligible businesses that elect to participate will receive a payment of $1,500 per fortnight per eligible employee to support the people they employed as at 1 March 2020 who are retained in employment.

Businesses must have paid their employees before they are entitled to receive the JobKeeper payment.

Where an employee’s total remuneration is less than $1,500 per fortnight (before tax) or has been stood down, the employer must provide the employee at least $1,500 per fortnight (before tax).

Where an employee earns more than $1,500 per fortnight, employers can use the payment to subsidise the employee’s wages.

Self-employed individuals will also be eligible to receive the JobKeeper payment.

There is an additional fact sheet with a Q&A which explains further details.

The ATO has provided comprehensive guidance, regarding how to claim JobKeeper

Boosting Cash Flow for Employers

This measure will provide up to $100,000 back to eligible small and medium-sized businesses and Not For Profits that employ people, with a minimum payment of $20,000 to an eligible business that employs staff. The payment will be tax-free.

  • Available to business entities with an aggregated annual turnover <$50 million, and NFPs, including charities, with aggregated annual turnover <$50M
  • Must employ workers
  • Will be delivered by the ATO as a credit in the activity statement system from 28 April 2020 upon lodgement of activity statements
  • Payment will be equal to 100% of the amount withheld from employees salary and wages, up to a maximum payment of $50,000
  • Eligible businesses that pay salary and wages will receive a minimum payment of $10,000 even if they are not required to withhold tax.
  • An additional payment is being introduced in the July-Oct 2020 period, where eligible entities will receive an additional payment equal to the total of the previous payments they have received.  This means eligible entities will receive at least $20,000 up to a total of $100,000 under both payments.

At this stage, there will be no direct action required by our clients who will be eligible to access this measure – it will be dealt with automatically upon lodgement of activity statements.  Where the application of the measure places the activity statement account in credit, the ATO will trigger a refund within 14 days.

Supporting Apprentices and Trainees

Eligible employers can apply for a wage subsidy of 50% of an apprentice or trainees wage paid during the 9 months from 1 Jan 2020 to 30 Sep 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer.

  • Eligible to 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 at 1 Mar 2020
  • Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network (AASN) provider
  • Employers can register for the subsidy from early April 2020, and final claims for payment must be lodged by 31 Dec 2020

If you have apprentices and/or trainees, please reach out to us for assistance and we can work with you to ensure you are correctly registered and able to claim for this measure.

If you have apprentices and/or trainees, please reach out to us for assistance and we can work with you to ensure you are correctly registered and able to claim for this measure.

Temporary Relief for Financially Distressed Businesses

  • Temporary increase to the threshold at which creditors can issue a statutory demand on a company and initiate bankrupt proceedings on an individual and an increase to the time companies and individuals have to respond to statutory demands that have been received.
  • Threshold increases from $2,000 to $20,000
  • Timeframe increases from 21 days to 6 months.
  • Temporary relieve for directions from any personal liability for trading while insolvent
  • Temporary flexibility in the Corporations Act 2001 and to provide targeted relief from provisions of the act to deal with unforeseen events that arise because of the Coronavirus health crisis
  • Tailored solutions for owners and directors of business currently struggling, including temporary reduction of payments or deferrals, or withholding enforcement action including DPNs and windups.

Increasing the Instant Asset Write-Off

The Government is increasing the instant asset write-off threshold from $30,000 to $150,000 and expanding access to include all businesses with an aggregated turnover of less than $500 million (previously $50 million).

  • The threshold applies on a per asset basis – businesses can immediately write-off multiple assets
  • Applies from the announcement (12 March 2020) until 30 Jun 2020, for new or second-hand assets first used or installed ready for use in this timeframe

If you are considering purchasing assets, please consider the cash flow implications of the purchase.  The increase to the instant asset write-off DOES NOT mean that you will receive a tax refund, but rather that your taxable position as at 30 Jun 2020 will be reduced due to the expense being 100% recognised this financial year.  Please contact your accountant or ourselves to discuss the cashflow implications further.

Backing Business Investment

The Government is introducing a time limited 15-month investment incentive to support business investment and economic growth, by accelerating depreciation deductions.

  • A deduction of 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.
  • Eligible to businesses with an aggregated turnover below $500 million
  • Eligible assets are new assets that can be depreciated under Division 40 of the Income Tax Assessment Act 1997, acquired after the announcement (12 March 2020) and first used or installed by 30 Jun 2020.
  • Does not apply to second-hand Division 40 assets, or buildings and other capital works depreciable under Division 43.

We recommend that prior to purchasing assets that may be deductible under this measure, that you contact your Tax Agent and seek their specific advice, to ensure your business, and the asset being purchased is eligible for the measure.

Support for Immediate Cash Flow Needs for SMEs

  • A guarantee of 50% to SME lenders to support new short term unsecured loans to SMEs

Quick and Efficient Access to Credit for Small Business

  • Cutting red tape by providing a temporary exemption from responsible lending obligations for lenders providing credit to existing small business customers

ATO Support Measures

The ATO have released details on support measures to assist those affected by COVID-19.

The full media release can be found here

  • Deferral of payment dates for activity statements, income tax assessments, FBT assessments and excise
  • Option to change from 1/4 to 1/12 reporting to access GST refunds
  • Option to vary PAYGI to nil for the March quarter BAS and claim a refund for any instalments made for Sep and Dec 2019 quarters
  • Remission of interest and penalties incurred on or after 23 Jan 2020
  • Availability to enter into low interest payment plans.

Other Business Support Details

Western Australia

Government of Western Australia

Relief for businesses and households

  • $607 million stimulus package to support WA households and small businesses in the wake of COVID-19
  • $402 million to freeze household fees and charges until at least July 1, 2021
  • Freeze will apply to entire ‘household basket’, including electricity, water, motor vehicle charges, emergency services levy and public transport fares
  • Energy Assistance Payment (EAP) doubled to support vulnerable Western Australians, including pensioners
  • $114 million in additional measures to support small businesses
  • Small businesses that pay payroll tax will receive a one-off grant of $17,500
  • $1 million payroll tax threshold brought forward by six months to July 1, 2020
  • Businesses impacted by COVID-19 can defer payroll tax payments until July 21, 2020
  • Building on $760 million announced in the past few months to stimulate economy
  • Stimulus measures made possible due to McGowan Government’s responsible financial management and strong budget surplus

For more details of WA Stimulus package – Click Here

Western Australian Government Website – https://www.wa.gov.au/

Fair Work

Coronavirus and Australian Workplace Laws

https://www.fairwork.gov.au/about-us/news-and-media-releases/website-news/coronavirus-and-australian-workplace-laws

General Advice Warning:  Information provided on this website is general in nature only and does not constitute personal advice. The information has been prepared without taking into account your personal objectives or needs. Before acting on any information on this website, you should consider the appropriateness of the information having regard to your objectives and needs.

Filed Under: Business Advisory, Tax

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