On Sunday 22 March the government announced a revised package of measures to support business continuity and cash flow during the economic downturn associated with COVID-19.
The finer details of these measures are currently being drafted and are set to be presented in parliament this week. Below is a summary of major announcements. Further details and examples can be found here.
We are here to assist our clients through this difficult time and encourage you to contact us with any queries you may have regarding any of the assistance measures or what potential likely cash boost may be due to your business.
Boosting cash flow for employers
Small and medium business and not-for-profit (including charities) employers with aggregated annual turnovers of under $50m will be eligible for tax-free payments of up to $100,000 per employer. The first round of payments (capped at $50,000) will be made after 28th April and the second round of payments (also capped at $50,000) after 28 July 2020.
The first round of payments will be equal to 100% of the PAYG withheld on salary and wages to $50,000, reported in the March and June quarter. The second round of payments will be equal with the amount paid in the first round, for a total maximum payment of $100,000.
Eligible businesses that pay salary and wages but are not required to withhold tax will receive a minimum payment of $20,000. The payment will be available from 28 April 2020 and will be paid as a credit to the business upon lodgement of their activity statements.
The payments are tax free, there will be no new forms and payments will flow automatically through the ATO.
Coronavirus SME Guarantee Scheme
The Government commits to underwrite $20b worth of loans as a 50 per cent guarantee to support lending of up to $40 billion to SMEs from bank and non-bank lenders.
Starting in early April, this will apply to new eligible loans for businesses with annual turnovers of up to $50 million and will include an upfront six month freeze on repayments.
The loans will be unsecured but used only for working capital purposes and will apply to loans granted within six months from April 1, 2020. New and existing bank customers will be able to apply for loans up to $250,000 over three years.
Providing temporary relief for financially distressed businesses
Temporary increase to the thresholds at which a creditor can take action to initiate insolvency (from $2,000 to $20,000) or bankruptcy (from $5,000 to $20,000), and giving companies and individuals six months instead of 21 days to respond.
Relief for directors from personal liability when the company is trading while insolvent.
The Treasurer will be given temporary power to amend the Corporations Act 2001 to provide temporary and targeted relief for companies to deal with unforeseen events that arise as a result of the coronavirus.
Early release of superannuation
From April, individuals will be able to access their superannuation, capped at $10,000 this financial year and a further $10,000 next financial year. The withdrawals will be tax-free and will be made available to those eligible for the coronavirus supplement as well as sole traders who have seen their hours of work, or income fall, 20% of more as a result of the coronavirus.
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. This measure is estimated to cost $1.2 billion over the forward estimates period.
Incentives to retain your apprentices and trainees
Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage paid during the 9 months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
Employers can register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020.
Further information is available at www.dese.gov.au and www.australianapprenticeships.gov.au
Victorian Government Support
Victorian Payroll Tax
As part of the package, the Victorian Government will provide full payroll tax refunds for the 2019-20 financial year to small and medium-sized businesses with payroll of less than $3 million. Payments will start flowing this week and will save eligible business up to $113,975 a year, with businesses saving an average of $23,000.
The same businesses will also be able to defer any payroll tax for the first three months of the 2020/21 financial year until 1 January 2021.
Rent
Commercial tenants in government buildings can apply for rent relief, a move private landlords are also being encouraged to undertake.
Land Tax
2020 land tax payments will be deferred for eligible small businesses.
Liquor licensing fees
The Government will also be waiving liquor licensing fees for 2020 for affected venues and small businesses.
Business Support Fund
$500 million Business Support Fund will be created. The fund is to support the hardest hit sectors, including hospitality, tourism, accommodation, arts and entertainment, and retail. The Government will work with the Victorian Chamber of Commerce and Industry, Australian Hotels Association and Australian Industry Group to administer the fund, which will help these businesses.
To register your interest click here.