COVId-19 Financial aid
Over the past few weeks, the government and leading financial institutes have outlined financial payments or benefits that you may be eligible for, as well as further hardship leniency. The following is our understanding of these and should not be considered advice. Please consult with your accountant for information specific to your situation.
Federal Stimulus Package One (announced 12th March 2020)
- From the 12th March 2020, the Federal Government will increase the instant asset write-off threshold for depreciating assets from $30,000 to $150,000. The revenue threshold for this has also increased to include businesses with turnover over $50 million or less.
- From the 12th March 2020, the Federal Government will allow for all capital purchases (for businesses with $50 million turnover or less) to depreciate 50% of the asset immediately and 50% the following year (until 30 June 2021).
- The Federal Government will reimburse eligible businesses (turnover of less than $50 million) 50% of the PAYG they have previously withheld on behalf of employees (for the period 1 January 2020 - 30 June 2020) and pay this back to the business through their ATO Integrated Client Account. A minimum of $2,000 will be paid up to a maximum $25,000. The payments will be made once Business Activity Statements (BAS) are submitted and the due date is reached (28 days after quarter end).
- Eligible businesses can apply for a wage subsidy of up to 50% of an apprentice's or trainee's wages, for a 9-month period, starting 1 January 2020.
- The Federal Government will provide a one-off $750 payment to social security, veteran and other income support recipients and eligible concession card holders. This will automatically be allocated based on an individuals status with Centrelink.
Federal Stimulus Package Two (announced 22nd March 2020)
- From the 27th April 2020, for six months, the Federal Government will pay a Coronavirus Supplement of $550 per fortnight, in addition to any benefits currently received by an individual. This
will be paid to both existing and new recipients of Job Seeker, Youth Allowance, Parenting Payments, Farm Household Allowances and Special Benefits.
The Job Seeker Payment will provide payment access for permanent employees who are stood down or lose their employment, sole traders, the self-employed, casual workers and contract workers who meet the income tests as a result of economic downturn. This could also include a person required to care for someone who is affected by the coronavirus.
Asset testing for the Job Seeker, Youth Allowance and Parenting Payments will be waived for the period of the Coronavirus Supplement, income testing will still apply.
Waiting periods will also be waived during this time.
- An additional $750 payment will be provided under the same criteria as listing in point 5 of the Stimulus Package one, above.
- The Federal Government is allowing up to $10,000 per financial year (for the 2019/20 and 2020/21 FY) be withdrawn from an individuals superannuation fund for eligible individuals. Eligible individuals must either be unemployed, or eligible to receive a payment listed above, or in this calendar year, have been made redundant, had their working hours or income reduced by 20% or - if the applicant is a sole trader - their business was suspended of there was a reduction in its turnover of 20% or more. This can be applied for through the myGov website.
- The superannuation minimum draw-down requirement for account-based pensions and similar products are being reduced by 50% for the 2019/20 and 2020/21 financial year.
- From the 1st of May, the social security deeming rates will be reduced by a further 0.25%. The upper deeming rate will be 2.25 and the lower deeming rate will be 0.25%
- Replacing point 3 in Stimulus Package One (above). The Federal Government will reimburse eligible businesses (turnover of less than $50 million) 100% of the PAYG they have previously withheld on behalf of employees (for the 3rd Qtr BAS) and pay this back to the business through their ATO Integrated Client Account. A minimum of $10,000 will be paid up to a maximum $50,000. The payments will be made once Business Activity Statements (BAS) are submitted and the due date is reached (28 days after quarter end). For businesses continuing operations, 50% of the initial payment will be replicated once the BAS are submitted for Q4 and another 50% once the Q1 2020 BAS has been submitted and the due date is reached.
- The Federal Government will guarantee 50% of new loans issued by eligible lenders to SME's, up to $250,000, for a period of three years.
State Based Stimulus Packages
Individual states around Australia have announced various stimulus packages:
New South Wales
- Waiver of payroll tax for businesses with payroll up to $10 million for three months.
- Raising the threshold for payroll tax to $1 million in payroll for the 2020/21 FY.
- Waiving a range of fees and charges for SME's, focusing on bars, cafes, restaurants and trades.
- Waiver of payroll tax for businesses with payroll up to $3 million for the entire 2019/20 FY.
- SME's with payroll up to $3 million will be able to defer payroll tax for three months of the 2020/21 FY until 1 January 2021.
- Commercial tenants in government buildings can apply for rent relief.
- 2020 land tax payments for eligible small businesses will be deferred.
- The government will pay all outstanding supplier invoices within five business days.
- Liquor licensing fees for 2020 will be waived.
- a $500 million Business Support Fund will be established to help the hardest hit sectors.
- Access to up to $250,000 loans with 12 month interest free period to support Queensland businesses impacted to retain employees and maintain their operations.
- Refund of payroll tax for businesses with payroll of $6.5 million or less in payroll for 2 months. No payroll tax for eligible businesses for the following 3 months and the ability to defer payroll tax for the 2020 calendar year.
- Refund of payroll tax for businesses with payroll of $6.5 million or more in payroll for 2 months. The ability to defer payroll tax for the 2020 calendar year.
- Supply chain support and assistance for businesses who are having difficulty accessing suppliers to continue operation, employ and meet customer needs.
- Access to financial workshops and a small business hotline to access information.
- Waiving of various fees for hospitality and tourism businesses
- A one off grant of $17,500 for businesses with payroll between $1 million and $4 million.
- Increasing the payroll tax threshold to $1 million from 1 July 2020.
- SME's with payroll of less than $7.5 million can now apply to defer payment of the 2019/20 payroll tax until 21 July 2020.
- Payment deferrals and varied instalments plans my be negotiated with ATO for income tax, activity statement, PAYG instalments and FBT for up to 6 months.
- Taxpayers currently reporting quarterly for BAS may elect to report monthly if their GST turnover is less than $20 million.
- PAYG instalments may be varied on the activity statement by lodging a revised activity statement before the next instalment is due.
- Low interest payment plans may be negotiated with the ATO for businesses effected the coronavirus.
- Payment arrangement for super guarantee schemes may be negotiated with the ATO.
- Unsecured loans of up to $250,000 (lending criteria applies) with no establishment or account fees, and no repayments required for six months for businesses with less than $50 million annual turnover. For the first six months, interest will be deferred and capitalised at a reduced variable rate of 5.5%, reducing to 4.5% on 3 April 2020. From six months onwards, principal and interest repayments will be required
- Decrease in variable interest small business loan rates by 0.25%pa from 27 March 2020.
- Six month payment deferral on loan repayments for term loans, with interest capitalised.
- Making available temporary increases in overdraft facilities for 12 months.
- Reduction by 0.80%pa to a new two and three year fixed rate of 2.59%pa for secured small business loans up to $1 million from 3 April 2020.
- ANZ is supportive of the announced guarantees for small and medium enterprise loans and is working through how it can provide this to customers.
- Deferral of principal and interest repayments for up to six months on a range of business loans including floating and variable rates and equipment finance loans.
- An additional 100 basis point reduction on variable rates for small business loans, from 30 March 2020. This is on top of a 25 basis point reduction earlier in March.
- Quickbiz loans and overdraft support receive a 200 basis point reduction from 30 March 2020.
- Pause on business credit card repayments for up to six months (including a three month checkpoint).
- Fee waiver on terminal rentals for up to 6 months.
- Access up to $65 billion of additional secured limits to pre-assessed customers, with $7 billion currently available for fast assessment processing.
- Access up to $9 billion in additional limits for unsecured lending for existing customers via QuickBiz.
The above is our best understanding of these measures at the time of publishing and should not be considered advice. Please consult with your accountant for information specific to your situation.