Economic stimulus packages are being announced regularly, so we felt it important to provide regular advice and updates so we can keep track of the announcements, and what impact they have on us, our businesses and our super funds.
We are here to assist you, with either understanding the available incentives, assisting to claim them or helping build a continuity plan for your business. We can separately deliver a document you can use in regard to planning for business continuity. Please contact us here to discuss.
The announcements have so far included:
- Providing cash flow assistance to help businesses who employ people
- Supporting business investment (a stimulus to encourage investment)
- Superannuation access and minimum pension rates
- Bank support and government SME guarantee scheme
- State Government Payroll Tax rebates
- Household stimulus package
- Targeted support for the most severely affected sectors, regions and communities
Please read below for detail around these measures.
Cash flow assistance – Increase in previously announced grant
A tax free grant of up to $100,000, with a minimum grant of $20,000, for businesses with a turnover of less than $50 million that employ staff, between 1 January 2020 and 30 June 2020. The payments will be tax free to recipients and will be based on 100% on taxes withheld from employees’ salary and wages.
The grant is calculated with reference to PAYG withheld for the period January to June 2020, with half of the grant available when the BAS or IAS is lodged and the other half paid between July and September, subject to still being an active employer, matching the amounts paid in the previous months.
Note: All employers paying wages should contact us prior to lodging their March BAS. We will be contacting all NCA clients where we prepare the BAS prior to lodging, to ensure the correct grant is made available.
Eligible employers, those with less than 20 employees can apply for a wage subsidy of 50% of apprentices’ or trainees’ wages for up to 9 months from 1 January 2020 to 30 September 2020 up to a maximum of $7,000 per quarter, where that apprentice was employed on 1 March 2020.
Delivering support for business investment
The instant asset write off threshold will increase from $30,000 to $150,000 and expand access to include businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.
Further, a 15 month investment scheme will be introduced (through to 30 June 2021) by providing accelerated depreciation deductions. Businesses with a turnover of less than $500 million will be able to deduct an additional 50% of the asset cost in the year of purchase.
Superannuation Access – early release (new)
The Government will allow individuals in financial stress as a result of the Coronavirus to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21.
Eligible individuals will be able to apply online through myGov for access of 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 another three months. They will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.
Temporarily reduce superannuation minimum drawdown rates (new)
The Government is temporarily reducing superannuation minimum drawdown requirements for account based pensions and similar products by 50 per cent for 2019-20 and 2020-21.
This measure will benefit retirees by providing them with more flexibility as to how they manage their superannuation assets.
Bank Support – (new)
All of the major banks have made announcements where they may:
- Reduce interest rates for small business loans
- Deferral of principal and interest repayments for loans for up to 6 months
- Defer credit card payments
- Provide fixed rate 2-3 year home loans for much lower rates, some as low as 2.19% that we have seen
We recommend discussing options with us, your bank or finance broker.
Coronavirus SME Guarantee Scheme – (New)
The Government will establish the Coronavirus SME Guarantee Scheme which will support small and medium enterprises (SMEs) to get access to working capital to help them get them through the impact of the coronavirus. We understand the amount guaranteed is up to $250,000.
Under the Scheme, the Government will guarantee 50 per cent of new loans issued by eligible lenders to SMEs.
The Government’s support will enhance lenders’ willingness and ability to provide credit to SMEs with the Scheme able to support $40 billion of lending to SMEs.
The Scheme will complement the announcement the Government has made to cut red-tape to allow SMEs to get access to credit faster. It also complements announcements made by Australian banks to support small businesses with their existing loans.
The Government will guarantee up to $20 billion to support $40 billion in SME loans.
State Government Payroll Tax
Each State government has announced payroll tax assistance. We have detailed the Western Australian governments approach, and please let us know if you would like detail in relation to other states.
In WA, a one-off grant of $17,500 will be available for employers, or groups of employers, whose annual Australian taxable wages are more than $1 million and up to $4 million.
For a group of employers, a single grant will be payable to the designated group employer.
You do not need to apply for the grant.
Grants will automatically be paid by cheque from July but there will be delays for taxpayers whose tax status changed in 2018-19 or who became liable for payroll tax during the 2018-19 or 2019-20 assessment year.
- The payroll tax threshold will increase to $1m effective 1 July 2020
- There are extensions available to allow taxpayers with payroll of less than $7.5m to apply to pay their liability by 21 July 2020.
Providing temporary relief for financially distressed businesses – (new)
The Government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive.
The package also includes temporary relief for directors from any personal liability for trading while insolvent. The Corporations Act 2001 will be amended to provide temporary and targeted relief for companies to deal with unforeseen events that arise as a result of the Coronavirus.
Stimulus payments to households – (modified)
A one-off $750 payment will be made to pensioners, social security, veteran and other income support recipients and eligible concession card holders. Payments will be from 31 March 2020 on a progressive basis, with over 90% of payments expected to be made by mid-April.
In addition, a further $750 will be paid to those eligible in July 2020.
There is also a $550 per fortnight supplement available to new and existing recipients of Jobseeker payment, Youth Allowance jobseeker, Parenting Payment and Farm Household Allowance.
Assistance for severely-affected regions
$1 billion to support those sectors, 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.
The Government has also announced that it will offer administrative relief for certain tax obligations, including deferring tax payments up to 4 months.
We will be continuing to monitor the quickly evolving landscape and keep you updated but if you have any questions regarding the above you can contact us here.
Thank you for your continued support and we hope you all stay safe.