Government Stimulus Package

A more detailed explanation of all of the stimulus packages can be found at https://treasury.gov.au/coronavirus/businesses

What has been announced and affects most of our client base is as follows:

1. PAYG withholding reductions and cash-back before June 2020

This measure applies only to employers with turnovers of less than $50m per financial year.
You do NOT need to lodge any additional forms as the ATO will perform their own calculations and credit this against your account.
If the calculation results in a credit account with the ATO you will receive a refund of the additional amount.
Commencing from lodgement of the March BAS on 28th April 2020:

    1. Quarterly Lodgers will get a rebate of PAYG withholding (employee tax) in the March, June and, if still operating their business and paying employees, will continue to receive rebates in the next two quarters as well.                                                                

I. In the March Quarters, you receive a minimum rebate of $10,000 regardless of the amount of PAYG in those BAS (even if the wages paid in the March quarter did not require PAYG to be withheld), Or they will receive 100%  PAYG in the March BAS – whichever is the higher of the two.

II. In the June Quarter, you will receive 100% of the PAYG withholding amount.

III. For businesses that continue to be active in the following September and December quarters, you will receive 50% of whatever the amounts paid in the first two quarters were i.e. a minimum of $5,000.

    1. Monthly Lodgers will get a rebate each month from the lodgement of the March BAS.

I. On lodgement of the March BAS, you will receive three times the amount of the PAYG in the March BAS OR  a minimum of $10,000 whichever is the highest of the two. This payment, however, will be capped at a maximum of $50,000,

II.     On lodgement of the April, May, June  BAS/IAS you will receive a payment or100% of your PAYG withholding amount.

III. On lodgement of your monthly statements from July to September, you will receive a payment equal to one-quarter of your rebates in the March to June months.

IV. The total payable over the full period is capped at $100,000.

 

2. Wage Subsidies for Apprentices and trainees

Employers with less than 20 full-time employees, who retain an apprentice or trainee who was in training with the employer as at 1 March 2020, may be entitled to Government-funded wage subsides equal to 50% of the apprentices or trainees wage paid during the nine months from 1 January to 30 September 2020.  The maximum wage subsidy over the nine-month period will be $21,000 per eligible apprentice or trained.

Employers can register for the subsidy from early April 2020. Final claims for payment must be lodged by 31st December 2020. Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network (AASN) provider.

 

3. Instant asset write-off

For Businesses with a turnover of less than $500m:

a. From 13 March 2020, if acquired and first used or installed ready for use by 30 June 2020, businesses purchasing new and second-hand “eligible assets” (generally plant and equipment) less than $150,000 (excl GST) will receive an immediate income tax deduction. This excludes Cars which are still subject to the depreciation cost limit.

b. Between 13 March 2020 and 30 June 2021, businesses purchasing new and second-hand  “eligible assets” (generally plant and equipment) that are used or installed ready for use during this period costing more than $150,000 (excl GST to 1 July 2020, and from 1 July 2020 to all “eligible assets” (excl GST) will receive a 50% accelerated depreciation income tax deduction in addition to the normal write-off they are entitled to. This excludes Cars which are still subject to the depreciation cost limit.

c. What is an eligible asset?

I It can be a new or second hand asset
II. It cannot be a building or other capital works, i.e. Anything that is claimed under building write off rules.

 

4. Tax-free superannuation withdrawals.

a. Under the existing “compassionate grounds” rules the Government will be reducing the criteria to be able to access this type of payment but only if one or more of the following criteria is met:

I. The individual is unemployed
II. The individuals working hours were reduced by at least 20%., OR
III. If the individual is a sole trader – their business was suspended or there was a reduction in the business’s turnover of at least 20%

b. The payment can be made in two withdrawals of $10,000 before 30 June 2020 and $10,000 after 1 July 2020.

c. You must apply directly to the ATO via MyGov for this payment after mid-April 2020.

d.Unlike the current rules, no tax will be withheld or payable on this withdrawal and it will NOT affect any Centrelink payments you may be receiving.

 

5. Reduction in the amount Self-funded retirees MUST withdraw from super

a. For the 2020 and 2021 financial years, the amount of super you MUST withdraw out of your fund will be halved.
b. This will allow you to leave your money in your super fund and wait out the market decline rather than realising the losses in share values now while it is so far down.
c. You will be best to discuss this with your financial advisor or directly with your super fund.

 

6. Temporary relief for insolvent trading

Generally, Company Directors can be found personally liable for debts where a company is liquidated due to insolvent trading.

As of 22 March 2020, measures have been introduced to temporarily change this, these include:

  1. Creditors can only issue statutory demands for debts for a minimum of $20,000 (up from $2,000).
  2. Companies will also have 6 months to deal with insolvency notices (up from 21 days).

NB: If you need advice in this area we have excellent insolvency firms to which we can refer you – remember it is better to save the ship before it goes down and not wait until it has to call in for help.

 

7. Qld State and Federal Government job support loans

Details of Qld Government job support loans announced can be found at http://www.qrida.qld.gov.au/current-programs/covid-19-business-support/queensland-covid19-jobs-support-scheme

The Federal Government has also announced its intention to offer job support loans – details of application have not yet been announced.

Once again this has been a long email and a lot to take in.  Remember if you need advice around what is the best choice for your business, give Joe, Peter or Tracey a call and we will be here to help you plan your strategy over the next six months and help you come out on the other side.