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SURVIVING THE IMPACTS OF COVID-19 IN AUSTRALIA
Surviving the impacts of COVID-19
By Juston Jirwander B.Bus, CA Associate Director – Bishop Collins.
The Federal government and every State and Territory government of Australia, have announced multiple stimulus and relief packages. Updates and changes have been announced every week since the beginning of March.
It is not surprising that many business leaders are confused and unsure what they are eligible for and how they can access these stimulus packages and when they might need them. Getting access to this stimulus at the right time could mean life or death for many businesses so we have summarized the various levels of relief from all levels of government, Australian Taxation Office and Banks.
FEDERAL GOVERNMENT STIMULUS
The Australian Government has announced three stimulus packages as an economic response to the Coronavirus. The Government’s economic response targets three key areas: 1. Support for businesses 2. Supporting the flow of credit 3. Support for individuals and households – Not covered in this article
SUPPORT FOR BUSINESSES
JobKeeper Payment
Under the JobKeeper Payment, businesses significantly impacted by the Coronavirus outbreak will be able to access a subsidy from the Government to continue paying their employees. l The JobKeeper Payment is a temporary scheme. l The JobKeeper Payment will also be available to the self-employed. l The Government will provide $1,500 per fortnight per employee for up to 6 months. l The subsidy will start from 31 March 2020 l First payment to be received by employers in the first week of May. Eligible Employers There are a number of criteria which need to be satisfied with one of the key criteria being a reduction in comparative revenue. Employers will be eligible If, at the time of applying: l their business has an annual turnover of less than $1 billion and they estimate their turnover has fallen or will likely fall by 30 per cent or more; or l their business has an annual turnover of $1 billion or more (or is part of a consolidated group for income tax purposes with turnover of $1 billion or more) and they estimate their turnover has fallen or will likely fall by 50 per cent or more; and l For charities and Not-For-Profit, they will be eligible for the subsidy if they estimate their turnover has or will likely fall by 15 per cent or more.
The Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been significantly affected by the impacts of the Coronavirus. There will be some tolerance where employers, in good faith, estimate a greater than 30 (or 50) per cent fall in turnover but actually experience a slightly smaller fall. Eligible Employees Eligible employees are employees who: l are currently employed (including those stood down or re-hired); l were employed by the employer at 1 March 2020; l are full-time, part-time, or long-term casuals (a casual employed on a regular basis for longer than 12 months as at 1 March 2020); l are at least 16 years of age; l are an Australian citizen, and l are not in receipt of a JobKeeper
Payment from another employer. Application Process Eligible employers will be able to apply for the scheme by means of an online application via ato.gov.au Payment Process The JobKeeper payment to employers will be made monthly in arrears by the ATO.
Boosting Cash Flow for Employers
The Government is providing up to $100,000 to eligible small and mediumsized enterprises (SME), sole traders and not-for-profits (NFPs) that employ people, with a minimum payment of $20,000. SME with aggregated annual turnover under $50 million that employ workers are eligible.
ROUND 1 : Under the enhanced scheme, employers will receive a payment of 100 per cent of their salary and wages withheld for the period 1 January to 30 June 2020. The maximum payment for this period is $50,000 and the minimum payment is $10,000.
ROUND 2: An additional payment is also being introduced in the July — October 2020 period. Eligible entities will receive an additional payment equal to the total of the first round of payments.
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 businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020. This proposal applies from 12 March 2020 until 30 June 2020, for new or second-hand assets first used or installed ready for use in this timeframe.
Backing Business Investment (BBI)
The Government is introducing a time-limited 15 month investment incentive (through to 30 June 2021) by accelerating depreciation deductions. 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.
Supporting apprentices and trainees
The Government is supporting small business to retain their apprentices and trainees. Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for 9 months from 1 January 2020 to 30 September 2020. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter). Eligibility criteria apply.
Employers will be able to access the payment after an eligibility assessment is undertaken by an Australian Apprentiship Support Network (AASN) provider
One element of that safety net is to lessen the threat of actions that could unnecessarily push them into insolvency and force the winding up of the business.
The Government is temporarily increasing the threshold at which creditors can issue a statutory demand and to initiate bankrupt proceedings as well as temporarily increasing the time to respond to statutory demands.
The package also includes temporary relief for directors from any personal liability for trading while insolvent.
SUPPORTING THE FLOW OF CREDIT
The Reserve Bank of Australia, the government and the Australian Prudential Regulatory Authority have taken coordinated action to ensure the flow of credit in the Australian economy.
Reserve Bank of Australia — supporting the flow and reducing the cost of credit
Banks will have access to at least $90 billion in funding at a fixed interest rate of 0.25 per cent. This will help reduce interest rates for borrowers.
To encourage lending to businesses, the facility offers additional low-cost funding to banks if they expand their business lending to new loans to SMEs. Consider contacting your lender to see how your current mortgage rate and business loans have been reduced.
Government Coronavirus SME guarantee scheme
Under the Coronavirus SME Guarantee Scheme, the Government will provide a guarantee of 50 per cent to SME lenders as follows: l Loans will be short-term unsecured loans. l Maximum of $250,000. l Three year term, with six month repayment holiday l Loans are subject to lenders credit assessment.
STATE GOVERNMENT STIMULUS
Each state government has issued a range of stimulus measures from Grants to Payroll tax relief and waiver of government rates and fees. Below is just an example of the ones we believe are most applicable to businesses. Please refer to the websites of the relevant states and territories for further detail.
New South Wales
l Waiver of payroll tax for businesses with payrolls of up to $10 million for
March, April and May 2020. l Annual liability will be reduced by 25% when you lodge your annual reconciliation (due 28 July). Any refunds owing will be paid at that time. l Raising the threshold limit to $1 million in 2020-21 l NSW Government $10,000 grant to entities highly impacted by COVID-19 restrictions. Eligibility criteria apply.
Victoria
l Payroll tax for SME enterprises with payroll less than $3 million in the first three quarters of this financial year will be handed back. l Businesses are able to access the payroll tax cash refunds immediately. l Any payroll tax that is payable in the last quarter will be waived. l Hardship payments, small grants of varying amounts are available to businesses. Eligibility criteria apply.
Queensland
l All employers will receive a refund on November and December 2019
Payroll Tax. l Larger businesses > $6.5 million in wages must prove they have been negatively affected. l Employers with less than $6.5 million will get the months of January,
February and March 2020 free of
Payroll tax and may defer all payroll tax payments for the rest of 2020. l Jobs support Loans - interest free for the first 12 months up to $250,000 to retain staff.
Western Australia
l Payroll tax-paying businesses with a payroll between $1 million and $4 million will receive a grant of $17,500. l Additional payroll tax relief will also apply for small businesses as a result of the payroll tax threshold increasing to $1 million from 1 July 2020 (six months earlier than planned). l There is also a payroll tax payment deferral available for businesses with a payroll of $7.5 million or less that are impacted by COVID-19.
A.C.T.
l All businesses whose operations are directly affected by the prohibited activities list will be eligible to receive a six-month waiver of payroll tax from
April to September 2020. l Additional payroll tax relief will also apply for small businesses as a result of the payroll tax threshold increasing to $1 million from 1 July 2020 (six months earlier than planned). l All ACT businesses with Australiawide wages of up to $10 million can defer their 2020-21 payroll tax, interest free until 1 July 2022. l Commercial tenants that can demonstrate their business operations have been significantly impacted by COVID-19 may receive rental relief for up to six-months from 1 April 2020. l Small business owners with electricity usage below 100 megawatts per year will see rebates of $750 automatically applied to their next electricity bill in around June or July 2020.
South Australia
l Small businesses and not-forprofit entities that employ South
Australians who have been highly impacted by the COVID-19 pandemic may be eligible to receive a $10,000 grant to support the operation of their business.
(continued on page 31)
