Are you impacted by the economic and health anxiety, courtesy the corona virus pandemic? Here is your simple guide to understanding how you may be able to benefit from the federal government’s $189 billion “coronomics” fiscal support package to cushion the impact the pandemic on your financial health.
Here’s how you can benefit from the Cornovirus Stimulus Package:
Cashflow is a significant challenge for businesses in times of economic uncertainty to be able to pay salaries. The stimulus package is meant to support employers cashflow to retain staff.
You are eligible for cashflow kickback payments if you:
(i) are an active employer
(ii) have a turnover of less than $50 million
(iii) were established before 12 March 2020
Employers that withhold tax to ATO on their employees’ salary and wages will receive a payment equal to 100% of the amount withheld between January 1 to June 30 2020, up to a maximum payment of $100,000 and a minimum of $20,000. Even the employers who pay salaries and wages but are not required to withhold tax will receive a minimum of $20,000.
In other words, all eligible employers get a minimum of $20,000 cash back with some getting more but up to a maximum of $100,000.
These kickback payments will be delivered in two parts as an automatic credit in the activity statement system. First half of the credit will be in the period April-June 2020 and the final payment in July-October 2020 period. You do not need to lodge any separate paperwork. Discuss with your tax accountant on lodging your BAS.
Will the Cash Assistance be taxable as income?
No, the cash back under the scheme is tax free and you will not be paying any income tax on these receipts.
Businesses with a turnover of up to $50 million will be eligible to receive loans of up to $250,000 per borrower. The loans will be up to three years, with an initial six month repayment holiday and will be in the form of unsecured finance for working capital needs.
The Government will provide a guarantee of 50 per cent to small and medium enterprise (SME) lenders for new unsecured loans.
The Government will encourage lenders to provide facilities to SMEs that only have to be drawn if needed. This will mean that you will only incur interest on the amount they draw down. If you do not draw down any funds from the facility, no interest will be charged, but you will retain the flexibility to draw down in the future should you need to.
Businesses with a turnover of up to $50 million that pass the lenders’ credit assessment processes.
The scheme will commence by early April 2020 and be available for new loans made by participating lenders until 30 September 2020.
If you employee apprentices, you can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for up to 9 months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.
Eligible employers can apply for a wage subsidy of 50 per cent of an apprentice’s or trainee’s wage for up to 9 months from 1 January 2020 to 30 September 2020. Businesses can be reimbursed up to a maximum of $21,000 per eligible apprentice, (which is $7,000 per quarter for the first three quarters of 2020).
Small businesses with fewer than 20 full time employees who retain an apprentice or trainee. The apprentice must have been in training with the small business as at 1 March 2020.
You will be able to register for the subsidy from early April 2020. For more information on how to apply, including eligibility criteria, contact an Australian Apprenticeship Support Network (AASN) provider. Please note: Claims for this subsidy must be lodged by 31 December 2020.
Generous tax breaks have been offered for limited times by increasing the limits for instant asset write off and depreciation and also expanding the eligibility of small businesses to avail these incentives.
An immediate deduction is available for purchase of an asset costing $150,000 of less. This is a fivefold increase from $30,000 to $150,000. Also, the eligibility of small business to avail this concession has been expanded to now include businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.
This is a limit per asset and not an aggregate limit. So an eligible business investing in two separate assets of $150,000 will be able to claim an instant asset write off of $300,000. Assets have to be purchased by June 30,2020.
Businesses with a turnover of less than $500 million will be able to deduct 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost. This is a limited 15-month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating depreciation deductions.
Eligible people will be able to apply to access up to $10,000 of their superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020 for approximately three months (exact timing will depend on the passage of the relevant legislation).
To apply for early release you must satisfy any one or more of the following requirements:
• you are unemployed; or
• you are eligible to receive Centrelink welfare payments; or
• you were made redundant on or after 1 January 2020; or
• your working hours were reduced by 20 per cent or more; or
• if you are a sole trader — your business was suspended or there was a reduction in your turnover of 20 per cent or more.
There will be no exit tax and will not affect Centrelink or Veterans’ Affairs payments. Application is completed via your personal MyGov account.
Eligible sole traders can now access the job seeker allowance, which now includes an additional coronavirus supplement of $550 per fortnight for the next six months. Sole traders will be allowed quicker access to payments by waving standard waiting periods and asset test. Sole traders will still be able to keep operating their businesses and earn up to $1,075 per fortnight before their payments are affected.
Sole traders that meet the job seeker allowance income test.
After your application has been approved via the Services Australia website.
Sole Traders can also avail the other benefits for small businesses where they are eligible.
If you are a Centrelink welfare recipient, you could be eligible to a one-off payment of $1,500. It will be delivered in two instalments of $750 each on 31st March 2020 and 13th July 2020.
The Australian Tax Office (ATO) is also providing administrative relief for taxpayers experiencing difficulties which can include:
• Payment deferrals
• Businesses on a quarterly reporting cycle may elect to change their GST reporting and payment to monthly, to get quicker access to GST refunds.
• Low interest payment plans; and
• Remission of interest and penalties applied to tax liabilities incurred after 23 January 2020
• You can vary PAYG instalments if using the current amount or rate will result in paying too much tax for the year. If the business varies the next quarterly PAYGI to nil they may also request a refund of PAYGI paid in the September 19 & December 19 quarters. Please remain aware if lodging your own BAS’s and choosing to take advantage of this variation that it may leave you with a large tax obligation next year if no instalments have been paid towards the 2019-2020 income tax.
• Keeping your tax returns and Business Activity Statements up to date will mean the ATO is more open to tax debt deferment requests.
Please contact us for a free first consult if you need any help.
This measure provides $1 billion to support those regions and communities that have been disproportionately affected by the economic impacts of the Coronavirus, including those heavily reliant on industries such as tourism, agriculture and education.
This will include the waiver of fees and charges for tourism businesses that operate in the Great Barrier Reef Marine Park and the waiver of entry fees for Commonwealth National Parks. It will also include additional assistance to help businesses identify alternative export markets or supply chains. Targeted measures will also be developed to further promote domestic tourism.
Please get in touch with us if you need any help of further information.