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Understanding the COVID-19 Stimulus Response

Stimulus information that may affect you

The government has recently made multiple announcements regarding stimulus measures to support individuals and businesses through the ongoing COVID-19 economic impact. With so many reports, updates and sources of information available, we have summarised the aspects that we believe may impact our clients directly.

This is an evolving & fluid issue as you can appreciate and CountPlus One will continue to update you regarding the changes. We stand ready to help assist and see our clients through this difficult time.

Please contact us should you wish to discuss how these measures may impact you.

Boosting Cashflow for Employer Payment

Eligible employers will receive a refund equal to 100% of their PAYG Withheld which will be delivered as a credit on the March 2020 BAS.

Minimum payment will be $10,000 and capped at $50,000. This credit will automatically be applied when the March 2020 BAS is submitted.

For monthly lodgers of PAYGW, the benefit will be paid with the March BAS based on 3 times the March PAYGW.

All payments received by way of this credit refund will be received as a tax free payment.

Additional Cash Flow Boost to Employers

Eligible employers will receive an additional payment equal to the total of Boosting Cashflow for Employers payments they have received. This payment will be made in 2 stages, 50% with the June 2020 BAS and the remaining 50% with the September 2020 BAS. These payments will be credits automatically applied by the ATO to your BAS payments.

This is effectively a doubling of the Boosting Cashflow for Employers payment, of which the minimum is $10,000, resulting in an overall minimum benefit of $20,000, maximum benefit of $100,000 for eligible employers.

Employer Payments Eligibility;
Eligible employers are businesses with a turnover of less than $50million, charities and not for profit organisations, and have been registered to pay wages before 12 March 2020. The minimum payments will apply to employers that meet this criteria even if they are not required to withhold PAYG. Should the credits applied exceed the BAS payment amount the difference will be refunded to you.

https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Cash_flow_assistance_for_businesses_0.pdf

Payroll Tax Relief – NSW Only

Business subject to payroll tax with total grouped assessable wages less than $10million will be eligible for a 25% reduction  of the overall 2020 financial year payroll tax. This will be delivered as a credit on the annual return. For monthly lodgers, no payment will be required for the months of March, April and May 2020.
For the 2021 financial year, payroll tax threshold will be increased from $900,000 to $1 million.

https://www.revenue.nsw.gov.au/taxes-duties-levies-royalties/payroll-tax

SME Loan Guarantee Scheme

The Government will provide a guarantee of 50% to SME lenders for new unsecured loans to be used for working capital up to a maximum loan amount of $250,000 over 3 years with no repayments required within the first 6 months. These loans will be subject to lenders’ assessment and approval. This will be eligible for business with a turnover of less than $50 million and will be available in April for new loans up to September 2020.

https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Supporting_the_flow_of_credit_1.pdf

Apprentice & Trainee Support

Eligible small businesses will be able to apply for a 50% wage subsidy for apprentices & trainees in training as at 1 March 2020 for up to 9 months (1 January – 30 September 2020), capped at $21,000 per apprentice. Further details to come regarding registration which will be available in April with final claims and payments in December 2020.

https://www.employment.gov.au/supporting-apprentices-and-trainees

Early Release of Superannuation

Individuals in financial distress will be able to withdraw up to $10,000 of their superannuation in the 2020 financial year and a further $10,000 in the 2021 financial year, bringing the total to $20,000. Payments will be tax free and can be applied for in mid-April through MyGov. To qualify you must satisfy of the following;

  • Currently unemployed; or
  • Eligible for jobseeker payment, youth allowance for jobseekers, parenting payment, special benefit or farm household assistance; or
  • From 1 January 2020 you were either; made redundant, working hours reduced by 20% or more, or you are a sole trader that has suffered a reduced turnover of 20% or more

Careful consideration needs to be applied when thinking about accessing your superannuation as it may impact your long-term retirement strategy.

Providing Support for Retirees

The government is temporarily reducing superannuation drawdown requirements for account-based pensions by 50% for this financial year and next. This will reduce the need for withdrawals in a distressed market.

  • Upper & lower social security deeming rates are also being reduced by aa further 0.25% in addition to the 0.50% reduction to both rates announced on 12 March 2020. As of 1 May 2020, the upper deeming rate will be 2.25% and the lower deeming rate will be 0.25%
Note: if you are a financial planning client of CountPlus One, we will review your current pension drawdown strategy as part of your next review.
https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Providing_support_for_retirees_to_manage_market_volatility.pdf

Income Support for Individuals

JobSeeker Payment, Youth Allowance, Parenting Payment, Farm Household Allowance & Special Benefits
  • The government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight. These changes will apply for the next six months.
  • JobSeeker & Youth Allowance payments apply to permanent employees who are stood down or lose their employment (including sole traders, self-employed, casual and contract workers) as a result of the current economic slowdown.
  • To determine eligibility, an income test will apply however, the assets test component which usually is applied will not be for the period covering the Coronavirus supplement. This will expand the number of people eligible for the payment.
  • Furthermore, the one week waiting period has already been waived and an accelerated application and claim process has been introduced allowing for payments to be received faster.
See details at:
https://www.servicesaustralia.gov.au/individuals/job-seekers
https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Income_Support_for_Individuals.pdf

Temporary Relief for Distressed Business

  • Temporary increase of the minimum threshold for creditors to issue statutory demands increased from $2,000 to $20,000.
  • Timeframe to respond to a statutory demand will be increased from 21 days to 6 months.
  • Threshold for the minimum amount of debt required for a credit to initiate bankruptcy proceedings increased from $5,000 to $20,000.
  • Directors relieved of their duty to prevent insolvent trading with respect to personal liability to repay debts incurred in the ordinary course of business associated with insolvent trading.
  • These measures are temporary for 6 months only

https://www.business.gov.au/risk-management/emergency-management/coronavirus-information-and-support-for-business/temporary-relief-for-financially-distressed-businesses

ATO Support Measures

For business with a turnover of less than $500m, the following;

  • PAYG instalment variation on your next BAS
  • Tax payment deferral by up to 4 months and low interest payment plans available
  • Ability to adjusts GST reporting cycles
  • Remission of ATO interest charges and penalties from 23 January 2020 for affected businesses
  • Increase in the instant asset write off from $30,000 to $150,000, acquired by 30 June 2020 acquired by 30 June 2020
  • Accelerated depreciation by 50% on other plant and equipment asset purchases exceeding $150,000

Deferred Loan Repayments

The Australian Banking Association (ABA) has announced provisions for Australian banks to defer loan repayments for six months for small businesses affected by the Coronavirus.

  • Check with your institution as eligibility requirements differ.
https://www.brokernews.com.au/news/breaking-news/banks-to-defer-loan-repayments-for-six-months-270617.aspx