Legislation in relation to the Governments stimulus package has now passed through parliament, so there is more clarity around how the measures announced are being implemented.
Below is a summary on the measures for business and individuals.
1. Federal Support for Businesses
1.1 Boosting cash flow for businesses
Businesses with less than $50 million turnover (based on their prior year) that employ staff, may be eligible to receive a payment of up to $100,000 (with a minimum total payment of $20,000) based on their PAYG withholding in two stages.
1.1 (a) Stage 1 payment credits
Commencing from 28 April 2020, qualifying businesses will receive a tax-free payment/credit equal to 100% of the tax withheld on employees’ wages, up to a maximum of $50,000 but no less than $10,000.
The tax-free payment will be calculated and paid by the ATO as an automatic credit to your Client Account with the ATO.
Businesses who lodge quarterly Activity Statements will have credits processed after the lodgement of their March and June Activity Statements.
Monthly Activity Statement lodgers will receive the payment each month from March to June.
If you are only eligible for the minimum amount of $10,000, that credit will be processed with the March Activity Statement.
1.1 (b) Stage 2 payment credits
For employers that remain active, an additional tax-free payment will be available from June 2020 to September 2020. Businesses that lodge Activity Statements quarterly will receive additional payments with each payment equal to 50% of their total Stage 1 payment (up to a maximum of $50,000).
Monthly lodgers will receive an additional payment in their June 2020, July 2020, August 2020 and September 2020 Activity Statement lodgements with each payment being equal to a quarter of the total initial Stage 1 payment (up to a maximum of $50,000).
Any stage 2 payments will be credited to your ATO account to first clear any debt and then any available credit will be paid to businesses.
1.2 Incentives for businesses to purchase assets
These are available for those businesses with turnover is less than $500 million, based on their prior year.
1.2 (a) Instant asset write off
The threshold for asset purchases that can be written off in full in the year of purchase has been increased from $30,000 to $150,000 from 12 March 2020 to 30 June 2020.
1.2 (b) Accelerated depreciation
A 50% immediate deduction will be available for eligible NEW assets as long as they are installed and ready for use prior to 30 June 2021. NOTE: The assets must be new, not second hand.
1.2 (c) Temporary Relief for Financially Distressed Businesses
There is a temporary increase to the threshold at which creditors can issue a statutory demand on a company, (from $2000 to $20,000) and the time companies have to respond to statutory demands they receive (from 21 days to 6 months).
This includes six months temporary relief for directors from any personal liability for trading while insolvent (till September 2020). The intention is that when economic conditions improve the company can pay back any debt incurred during the coronavirus downturn.
There will be a temporary flexibility in the Corporations Act 2001 to provide relief from provisions of the Act. Any relief from provisions will last 6 months from the day they are announced.
The ATO has also committed to tailoring solutions for owners or directors of businesses that are currently struggling due to the coronavirus, including temporary reduction of payments or deferrals, or withholding enforcement actions including Director Penalty Notices and wind-ups. Businesses under strain should contact the ATO’s Emergency Support Infoline for businesses on 1800 806 218.
1.3 Subsidy for trainees and apprentices
A tax-free payment to eligible employers for the period 1 January 2020 to 30 September 2020. They will be able to claim a wage subsidy of 50% of an trainees or apprentice’s wage up to $21,000 per person.
To qualify employers must register by April 2020 and all claims must be made by 31 December 2020.
2. Bank Support for Businesses
2.1 Bank loan support
A number of measures have been announced in relation to assistance to be provided by the banks. Because of variances in the assistance measures offered by different banks, we recommend that you contact your bank manager directly.
2.2 Coronavirus SME Guarantee unsecured loan scheme
Businesses with turnover of up to $50 million will be eligible to apply for an unsecured loan of up to $250,000. The loans will be for a maximum term of 3 years with an initial 6-month reprieve from payments.
The loans will, however, be subject to the banks credit assessment processes. Again, contact your bank for more details.
3. Support for Individuals
Various measures have been announced to assist individuals which will also comprise of individuals who have businesses that have been impacted.
3.1 Expanding access to Centrelink support – $550 Coronavirus Supplement
For those individuals who have been impacted, Centrelink will provide a Coronavirus Supplement for the next 6 months of $550 per fortnight. To be eligible to receive this payment, you need to be receiving the Jobseeker Payment, Youth Allowance or Parenting Payment.
It is also expected that the Government will expand access to the above income support payments to assist people who have been impacted by the economic downturn. Asset testing for the above payments will also be waived for the period of the Coronavirus supplement.
3.2 $750 tax free payment
Two separate $750 tax free payments will be made to social security, veteran and other income support recipients and to eligible concession card holders. The first payment will be made on 31 March 2020. The second payment will be made on 10 July 2020 (unless you are receiving the $550 Coronavirus supplement).
3.3 Early access to superannuation
Will be available to individuals who meet one or more of the following requirements:
To apply for early release, you must satisfy any one or more of the following requirements:
You are unemployed.
You are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment, special benefit or farm household allowance.
- On or after 1 January 2020, you were either made redundant, had your working hours reduced by 20% or more or if you are a sole trader, your business was suspended or there was a reduction in your turnover of 20% or more.
From mid-April eligible individuals will be able to apply online through myGov and to access (as a lump sum) up to $10,000 of their superannuation before 1 July 2020 and a further $10,000 from 1 July 2020 (subject to a six-month time frame).
If you are looking to access this entitlement, you will need to apply though myGov website
If you are struggling and need assistance to apply for the JobKeeper Payment and other government stimulus packages, please check out our Cash Boost Service Offer here.
The $500 Million Business Support Fund that was recently released, advises that you can use the grant funding to seek financial, legal or other advice to support business continuity planning, which may mean that you can use it om our fixed price Cash Boost Engagement offer mentioned above.
Please contact us on 03 8419 9800 for more information.