Coronavirus: what are your obligations as an employer?

 

As you have no doubt heard by now, the World Health Organisation (WHO) has now declared the Coronavirus as a pandemic, and Trump has gone to the extreme of banning all travel between the US and Europe. 

With the full impact of coronavirus unknown, employers are left with the task of balancing their obligations to worker health and safety with business continuity.

To assist employers to navigate through the uncertainty caused by Coronavirus, Cooper Grace Ward has developed an FAQ sheet, which can be accessed here.

The Stimulus Package: What You Need To Know

 

The Government has announced a $17.6 billion investment package to support the economy as we brace for the impact of the coronavirus.

The yet to be legislated four part package focuses on business investment, sustaining employers and driving cash into the economy.
 
For business

  1. Business investment
    • Increase and extension of the instant asset write-off
    • Accelerated depreciation deductions
  2. Cash flow assistance for small and medium sized business
    • Tax-free payments up to $25,000 for employers
    • Wage subsidy of up to 50% of an apprentice or trainee wage
  3. Targeted support for severely affected sectors, regions and communities

For individuals

  1. Household stimulus payments to drive cash into the economy
    • Tax-free $750 payment to social welfare recipients

Parliament sits on 23 March. The Prime Minister has stated, "we have no plans to change the parliamentary sitting schedule."
 
Here’s what we know so far:
 

Business Investment
 

Increase and extension of the instant asset write-off

From 12 March 2020, the instant asset write-off threshold will increase from $30,000 to $150,000, and access to the write-off will be expanded to include businesses with aggregated annual turnover of less than $500 million until 30 June 2020.
 
The instant asset write-off is a tax deduction that reduces the tax liability of your business. It enables your business to claim an upfront deduction for depreciating assets in the year the asset was purchased and used (or installed ready to use). For example, if your business is a base rate entity (turnover under $25 million) in a company structure, you will get back 27.5% in your 2019-20 company return if the company acquires an asset that is used by 30 June 2020. If your business is likely to make a tax loss for the year, then the instant asset write-off is unlikely to provide a short-term benefit to you.
 
This is the fourth increase or extension to the instant asset write-off and businesses will need to be wary of what they are claiming and when:

 

Instant asset write-off thresholds Small Business* Medium business** Large business***
1 July 2018 - 28 January 2019 $20,000 - -
29 January - 2 April $25,000 - -
2 April - 12 March 2020 $30,000 $30,000 -
12 March  - 30 June 2020 $150,000 $150,000 $150,000

* aggregated turnover under $10 million
** aggregated turnover under $50 million
***aggregated turnover under $500 million

 
Assets will need to be used or installed ready for use from when the changes were announced on 12 March 2020 until 30 June 2020 to qualify for the higher threshold. Anything previously purchased does not qualify for the higher rate but may qualify for one of the other thresholds. Similarly, anything purchased but not installed ready for use by 30 June 2020 will not qualify.
 
The instant asset write-off only applies to certain depreciable assets such as a concrete tank for a builder, a tractor for a farming business, or a truck for a delivery business. You will also need to ensure there is a relationship between the asset purchased by the business and how the business generates income. For example, you can’t just go and purchase multiple television sets if they have no relevance to your business.
 
There are some assets that don’t qualify, such as horticultural plants, capital works (building construction costs etc.), or assets leased to another party on a depreciating asset lease.
 

What businesses can access the instant asset write-off

To access the instant asset write-off, your business needs to be a trading business (the entity buying the assets needs to carry on a business in its own right). It also needs to have an aggregated turnover under $500 million. Aggregated turnover is the annual turnover of the business plus the annual turnover of any “affiliates” or “connected entities”. The aggregation rules are there to prevent businesses splitting their activities to access the concessions.  Another entity is connected with you if:

  • You control or are controlled by that entity; or
  • Both you and that entity are controlled by the same third entity.

 

Accelerated depreciation deductions
In addition to the increased instant asset write-off rules, accelerated depreciation deductions will apply from 12 March 2020 until 30 June 2021. This will bring forward deductions that would otherwise be claimed in later years.  
 
Businesses with a turnover of less than $500 million will be able to deduct 50% of the cost of the asset in the year of purchase. They can also claim a further deduction in that year by applying the normal depreciation rules to the balance of the asset’s cost. This will presumably only be relevant if the business cannot already claim an immediate deduction for the full cost of the asset.
 
For example, let’s assume that a business purchases a new truck for $250,000 (exclusive of GST) in July 2020. In the 2021 tax return the business would claim an upfront deduction of $125,000. The business would also claim a further deduction for the depreciation that would have arisen on the balance of the cost. If the business is a small business entity and using the simplified depreciation rules, this would mean an additional deduction of $18,750 (i.e. 15% x $125,000). The total deduction in the 2021 tax return would be $143,750. Without the introduction of this investment incentive the business would have claimed a deduction of $37,500 (i.e. 15% x $250,000).
 
This incentive will only be available in relation to new assets acquired after 12 March 2020 and are first used or installed ready for use by 30 June 2021. It will not apply to second-hand assets or buildings and other capital works expenditure.

 

Cash flow assistance for small and medium sized business
 

Tax-free payments up to $25,000 for employers

Tax-free cash flow support between $2,000 and $25,000 will be available to eligible businesses with a turnover of less than $50 million that employ staff between 1 January 2020 and 30 June 2020.
 
This is not a direct cash payment but a credit equal to 50% of the PAYG amounts withheld from salary and wages paid to employees. The employer will need to lodge an activity statement to trigger the entitlement. If the credit puts the business in a refund position, the excess amount will be refunded by the ATO within 14 days.
 
If a business pays salary and wages to employees but is not required to withhold any tax, then a minimum payment of $2,000 will still be made.
 
Businesses that lodge activity statements on a quarterly basis will be eligible to receive the credit for the quarters ending March 2020 and June 2020. Businesses that lodge on a monthly basis will be eligible for the credit for the March 2020, April 2020, May 2020 and June 2020 lodgements. The minimum $2,000 payment will be applied to the first lodgement.
 
Eligibility for the measure will be based on prior year turnover. We will have to wait for the legislation for the finer details.
 

Wage subsidy of up to 50% of an apprentice or trainee wage

Eligible employers can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage for up to 9 months from 1 January 2020 to 30 September 2020. The payments are accessible to businesses with less than 20 employees. Employers will receive up to $21,000 per apprentice ($7,000 per quarter).
 
Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.
 
In order to qualify for this payment, the apprentice or trainee must have been in training with the business as at 1 March 2020. Employers of any size and Group Training Organisations that re-engage an eligible out-of-trade apprentice or trainee will also be eligible for the subsidy.
 
It is expected that employers will be able to register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020.

 

Targeted support for severely affected sectors, regions and communities

$1 billion has been committed to support sectors, regions and communities disproportionately affected by the economic impact of the coronavirus. Tourism, agriculture and education are specifically mentioned.
 
Initial measures include:

  1. Waiver of fees and charges for tourism businesses that operate in the Great Barrier Reef Marine Park and Commonwealth National Parks
  2. Additional assistance to help businesses identify alternative export markets or supply chains
  3. Measures to promote domestic tourism

Further plans and measures will be developed with the affected industries and communities.
 
Administrative relief for certain tax obligations will also be provided, including deferred tax payments up to four months. The ATO will establish a temporary shop front in Cairns within the next few weeks to support the region’s small businesses. Other initiatives to bring support to the communities are being considered.

 

Household stimulus packages to drive cash into the economy
 

Tax-free $750 payment to social welfare recipients

A one-off, $750 cash 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, 90% are expected to be made by mid-April.
 
The payment will be tax-free and will not count as income for Social Security, Farm Household Allowance and Veteran payments.
 
There will be one payment per eligible recipient even if they qualify in multiple ways.
 

Casual employees able to access the Newstart ‘sickness payment’

While not part of the stimulus package, the Prime Minister has stated that casual employees required to self-isolate or who contract the coronavirus will be eligible for a sickness payment (jobseeker payment) through Newstart. The normal waiting period for this payment will be waived.
 
We’ll bring you more details as soon as they become available.
 
More information:

A message from PT regarding COVID-19

Following the increasing concerns relating to COVID-19 (Coronavirus), we wanted to reach out to you, our valued clients and business partners.

Our first thoughts are with you and your families, and trust you remain safe and healthy.

The team here at Power Tynan will continue to operate on a ‘business as usual’ basis, available to assist you wherever we can through these challenging circumstances.

We have spent a lot of time over the last few years ensuring we are all able to work remotely, and have now enacted our plan for employees to work from home in rotating teams. We are also equipped for web, video and teleconferencing to ensure we can assist you all throughout this period, regardless of location.

We are taking reasonable precautions to ensure not only our team, but also you as clients and business partners, are protected as much as possible.

What we are doing, and how you can help

  • Our team members are working from home on a rotational basis to minimise widespread personal contact
  • We are keeping face to face meetings to a minimum - wherever possible, we are holding meetings via phone, Skype, Messenger, Zoom etc
  • While it is uncomfortable for all of us, when face to face contact is required we are minimising personal contact (eg. handshakes) and maintaining some 'personal space' during meetings
  • If you have a face to face meeting booked with our team and you have flu like symptoms, please call in advance of your meeting so we can make alternate arrangements
  • Any team member showing signs of flu like symptoms will take extra precautions not to infect anybody else
  • We are encouraging regular hand washing and ensuring all other health standards are maintained

These are times when we need to stay calm, be kind to each other, and rely on reliable news sources and information from State and Australian Government websites.

Our team are always here to help you, and we will be touching base with you all during this period, but please do not hesitate to contact us if you have any questions or concerns, as we are committed to ensuring we meet all of your needs.   

Queensland Payroll Tax Support For Businesses Affected By COVID-19

 

The Queensland Payroll tax support package is now available for all businesses registered for payroll tax in Queensland.

Businesses who apply will have their payment obligations deferred until 31 July 2020.

If you would like more information on how to apply, please visit the Queensland Government Business Queensland web page or click here to complete the application form.

Please note that:

·       you will still need to lodge your payroll tax returns as normal; and
·       you will need to pay your payroll tax following the period of deferral.

You can however pay at any time during the deferral period if you choose to do so.

If you have any further queries or concerns regarding your payroll tax, please do not hesitate to contact our office.

 

 

The Second $66.1bn Stimulus Package: What You Need To Know

 

The Government yesterday released a second, far reaching $66.1bn stimulus package that boosts income support payments, introduces targeted changes to the superannuation rules, provides cash flow support of up to $100,000 for small business employers, and relaxes corporate insolvency laws. 
 
The stimulus measures are not yet legislated. Parliament will reconvene on Monday 23rd March.
 
The Prime Minister has warned that there are no “quick solutions” and that businesses should prepare for six months of disruption.
 

In Summary

Business

  • Tax-free payments up to $100,000 for small business and not-for-profit employers - an increase in the previously announced initial tax-free payments for employers to a maximum of $50,000. In addition to this, a second round of payments will be made up to a maximum of $50,000, accessible from July 2020. 
  • Solvency safety net – temporary six month increase to the threshold at which creditors can issue a statutory demand on a company from $2,000 to $20,000, and an increase in the time companies have to respond from 21 days to 6 months. Directors also are provided with temporary relief from personal liability for trading while insolvent for six months.
  • Access to working capital – introduction of a Coronavirus SME guarantee scheme protecting financial institutions by guaranteeing 50% of new loans to SMEs.
  • Sole traders and self-employed eligible for Jobseeker payment – the eligibility criteria to access income support relaxed for the self-employed and sole traders.
  • Temporary relief from some Corporations Act requirements

Individuals

  • Early release of superannuation – individuals in financial distress able to access up to $10,000 of their superannuation in 2019-20, and a further $10,000 in 2020-21. The withdrawals will be tax-free and will not affect Centrelink or Veterans’ Affairs payments.
  • Temporary reduction in minimum superannuation draw down rates – superannuation minimum drawdown requirements for account based pensions and similar products reduced by 50% in 2019-20 and 2020-21.
  • Deeming rates reduced – from 1st May, superannuation deeming rates reduced further to a lower rate of 0.25% and upper rate of 2.25%.
  • Supplements increased, access extended and eased – for six months from 27th April 2020:
    • A temporary Coronavirus supplement of $550 will be paid to existing income support recipients (people will receive their normal payment plus $550 each fortnight for six months).
    • A second one-off stimulus payment of $750 will be paid automatically from 13th June 2020 to certain income support recipients (in addition to the payment made from 31st March 2020).
    • Eligibility for access to income support eased to include sole traders and the self-employed, and to those caring for someone infected or in isolation.
    • Waiting periods and assets tests temporarily waived.  
  • Bankruptcy safety net – temporary six month increase to the threshold for the minimum amount of debt required for a creditor to initiate bankruptcy proceedings against a debtor from $5,000 to $20,000.

The Government has flagged that additional stimulus packages will be required.
 

In detail

Support for businesses

Tax-free payments up to $100,000 for employers

  • From: 28th April 2020
  • Eligibility: Small and medium business entity employers and not-for-profit entities, with an aggregated annual turnover under $50 million.

The Government has increased the previously announced measures to provide cash flow support to businesses.
 
Now, eligible businesses with a turnover of less than $50 million will initially be able to access tax-free cash flow support, with the minimum amount being increased to $10,000 and the maximum amount increased to $50,000 (previously $2,000 to $25,000). However, additional support will be provided in the July – October 2020 period so that eligible entities will receive total minimum support of $20,000 and up to $100,000.
 
In order for a business to qualify for this support it must have been established prior to 12 March 2020. The rules are more flexible for charities because the Government recognises that new charities might be established in response to the pandemic.
 
The cash flow support measures will be provided in the form of a credit in the activity statement system. The support will be provided in two phases:

  • The first phase ensures that eligible employers receive a credit equal to 100% of the PAYG amounts withheld from salary and wages paid to employees during the relevant period, up to the maximum amount of $50,000.
  • The second phase ensures that eligible employers receive another series of credits, equal to the credits that were received under the first phase. For example, if a business received $40,000 of credits in the first phase it will receive a further $40,000 of credits in the second phase. These additional credits will be spread over two or four activity statement periods, depending on whether the employer lodges on a quarterly or monthly basis.

If a business pays salary and wages to employees but is not required to withhold any tax, then a minimum payment of $10,000 will be made in the first phase and a further payment of $10,000 will be made in the second phase.
 
The credits are automatically calculated by the ATO and employers will need to lodge an activity statement to trigger the entitlement. If the credit puts the business in a refund position the excess amount will be refunded by the ATO within 14 days.
 
Businesses that lodge activity statements on a quarterly basis will be eligible to receive credits in the first phase for the quarters ending March 2020 and June 2020. Credits in the second phase will be available for the quarters ending June 2020 and September 2020. The minimum $10,000 payment will be applied to the first lodgement.
 
Business that lodge on a monthly basis will be eligible for the credits in the first phase for the March 2020, April 2020, May 2020 and June 2020 lodgements. Credits in the second phase will be available for the June 2020, July 2020, August 2020 and September lodgements. The minimum $10,000 payment will be applied to the first lodgement.
 
Eligibility for the measure will be based on prior year turnover. We will have to wait for the legislation for the finer details.
 
Not-for-profit employers, including charities, with an aggregated turnover under $50 million will also be able to access the cash flow support.

See: Cash flow assistance for businesses
 

Solvency safety net

A safety net has been put in place to protect businesses in temporary financial distress as a result of the pandemic by lessening the threat of actions that could unnecessarily push them into insolvency and force the winding up of the business. These include:

  • A temporary six month increase to the threshold at which creditors can issue a statutory demand on a company from $2,000 to $20,000.
  • The time a company has to respond to statutory demands will increase from 21 days to six months.
  • For six months, directors will be provided with temporary relief from personal liability for trading while insolvent.
  • See also bankruptcy safety net below

It will be more important than ever for businesses to stay on top of their debtors.
 
Debts incurred will still be payable by the business. Only those debts incurred in the ordinary course of the business will be subject to the safety net measures.

See: Temporary relief for financially distressed businesses
 

Access to working capital for SMEs – supporting lenders

The Government has announced a Coronavirus SME guarantee scheme that will guarantee 50% of new loans to SMEs up to $20 billion. These loans are new short-term unsecured loans to SMEs.
 
SMEs with a turnover of up to $50 million will be eligible to receive these loans.
 
The Government will provide eligible lenders with a guarantee for loans with the following terms:

  • Maximum total size of loans of $250,000 per borrower
  • The loans will be up to three years, with an initial six month repayment holiday
  • The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan

Loans will be subject to lenders’ credit assessment processes with the expectation that lenders will look through the cycle to sensibly take into account the uncertainty of the current economic conditions.
 
This latest measure builds on the previous initiatives to ensure small business can access capital, including:

 

Sole traders and self-employed eligible for Jobseeker payment

The eligibility criteria to access income support payments will be relaxed to enable the self-employed and sole traders whose income has been reduced, to access support.
 
More:

 

Temporary relief from Corporations Act requirements

The Treasurer has been given a temporary instrument-making power to amend the Corporations Act to provide relief or modifications to specific compliance obligations.
 
ASIC has announced measures for those companies with a 31st December financial year that need to hold their AGMs by 31st May 2020, providing a two month no action period and enabling hybrid virtual AGMs.
 

Individuals

Early release of superannuation

From mid-April, individuals in financial distress will be able to access up to $10,000 of their superannuation in 2019-20, and a further $10,000 in 2020-21. The withdrawals will be tax free and will not affect Centrelink or Veterans’ Affairs payments.
 
To be eligible to access your superannuation you need to meet the following requirements:

  • you are unemployed; or
  • you are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or
  • on or after 1st January 2020:
    • you were made redundant; or
    • your working hours were 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.

For those eligible to access their superannuation, you can apply directly to the ATO through the myGov website from mid-April.
 
More: Early access to superannuation  
 

Temporary reduction in minimum superannuation draw down rates

Superannuation minimum drawdown requirements for account-based pensions and similar products will be reduced by 50% in 2019-20 and 2020-21.
 

Age Default minimum drawdown rates (%)

Reduced rates by 50 per cent for the 2019-20 and

2020-21 income years (%)

Under 65 4 2
65-74 5 2.5
75-79 6 3
80-84 7 3.5
85-89 9 4.5
90-94 11 5.5
95 or more 14 7

 
The upper and lower social security deeming rates will be reduced further. As of 1st May 2020, the upper deeming rate will be 2.25% and the lower deeming rate 0.25%.

More: Providing support for retirees
 

Time limited fortnightly $550 ‘Coronavirus supplement’

For the next six months, the Government is introducing a new Coronavirus supplement to be paid at a rate of $550 per fortnight. This supplement will be paid to both existing and new recipients in the eligible payment categories.
 
The payment will be made to those receiving:

  • Jobseeker payment (and those transitioning to the Jobseeker payment)
  • Youth allowance jobseeker
  • Parenting payment
  • Farm household allowance
  • Special benefits recipients

In addition, eligibility to income support payments will be expanded to:

  • Permanent employees who are stood down or lose their job
  • Casual workers
  • Sole traders
  • The self-employed
  • Contract workers who meet the income test

The Government notes that these criteria could include those required to care for someone affected by the Coronavirus.
 
Asset testing has also been reduced and will be waived for six months. Income testing will still apply.
 
The payment is not available if you have access to any employer entitlements such as annual or sick leave or income protection insurance.
 
More: Income support for individuals
 

Second $750 payment to households

The Government is now providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders residing in Australia (see the full list here). The payment will be exempt from taxation and will not count as income for the purposes of Social Security, Farm Household Allowance and Veteran payments.

  • Payment 1 from 31 March 2020 (previously announced on 12 March): Available to people who are eligible payment recipients and concession card holders at any time between 12 March 2020 to 13 April 2020;
  • Payment 2 from 13 July 2020: Available to people who are eligible payment recipients and concession card holders on 10 July 2020.

The payments will be made automatically to those that meet the criteria.
 
More: Payments to support households
 

Bankruptcy safety net

A temporary six month increase to the threshold for the minimum amount of debt required for a creditor to initiate bankruptcy proceedings against a debtor will increase from $5,000 to $20,000. In addition, the time a debtor has to respond to a bankruptcy notice will be temporarily increased from 21 days to six months.
 
Where someone declares their intention to enter voluntary bankruptcy, the period of protection from unsecured creditors will be extended from 21 days to six months.
 
More: Temporary relief for financially distressed businesses 

 

More information:

 

 

 

COVID-19 Small Business Relief

 

If your small business has been impacted by the coronavirus pandemic and lock downs, Australian banks have hardship teams ready to help.

Whether you're dealing with the impact of the COVID-19 pandemic, or drought, bushfire or flood, there are practical ways your bank can help.

The type of assistance will depend on individual circumstances, however Australian banks will defer loan repayments for small businesses affected by COVID-19 for six months.

For further information, including how to best contact your bank, please click here to read the latest article from the Australian Banking Association.

UPDATE: Coronavirus QLD Payroll Tax Relief

 

The Queensland Government recently announced a $4 billion stimulus package which includes payroll tax relief for those businesses liable to pay payroll tax. 

There are two tiers of relief available:

  • Employers who pay $6.5 million or less in Australian taxable wages
  • Employers who pay more than $6.5 million in Australian taxable wages and have been negatively affected (directly or indirectly) by Coronavirus

 

In Summary
 

Employers who pay $6.5 million or less is taxable wages will receive:

  • A refund of your payroll tax for two months
  • A payroll tax holiday (i.e. no payroll tax to be paid) for three months
  • Ability to apply for a deferral of payroll tax for the 2020 calendar year

Employers who pay more than $6.5 million in taxable wages will receive:

  • A refund of your payroll tax for two months
  • Ability to apply for a deferral of payroll tax for the 2020 calendar year

 
For those employers who a registered to pay payroll tax, you will be receiving an email from the Office of State Revenue, detailing the application process.

If you don’t not receive an email, or you are unsure about your eligibility, you can complete a refund/holiday application form which can be found on the OSR website using the following link:
 
https://qldtreasury.syd1.qualtrics.com/jfe/form/SV_0H5S0mZGFLwsY61
 
Applications for the refund/holiday assistance must be submitted by 31st May 2020.

 

What happens next?


Once applications have been processed, the Office of State Revenue will be sending out an email with instructions on what you as an employer need to do.
 
You must continue to lodge your payroll tax returns as usual within the OSRConnect platform, although you are not required to make payments in relation to these returns.
 
For more details, please visit the OSR website:
 
https://www.business.qld.gov.au/running-business/employing/payroll-tax/lodging/coronavirus-tax-relief

If you have any further queries or concerns regarding your payroll tax, please do not hesitate to contact our office.
 

COVID-19 Changes - Hospitality Industry (General) Award 2010

 

As industries and government grapple with the implications of the COVID-19 pandemic, the Fair Work Commission (FWC) has granted a joint party application to insert a special COVID-19 flexibility schedule in the hospitality award that expires in three months.

Our friends at Sharpe Workplace Solutions have released information in regards to this update, which can be viewed here.

Employers looking to understand the potential impacts of Coronavirus on their business, and to gain an understanding of their rights and obligations, should contact the team at Sharpe Workplace Solutions by email info@sharpews.com.au or call on (07) 4691 5046.

APPLICATIONS NOW OPEN: QLD COVID-19 Jobs Support Loans

 

Applications are now open for the Queensland Government’s $500 million COVID-19 Jobs Support Loan scheme.

This scheme is for Queensland businesses and non-profit organisations financially affected by COVID-19 to retain employees and maintain their operations.

Low interest loans of up to $250,000 are available to assist with carry-on expenses such as employee wages, rent and rates and other related expenditure.

These loans are available until 25 September 2020 or until funding is fully committed.

For further information or to apply online, click here, and if you need any assistance whatsoever, please give us a call!

 

 

 

 

Stimulus Summary

 

As we are sure you have noticed, there is a lot of information out there about what kind of relief is available amidst these uncertain times. We have weeded through a lot of the information and have prepared a summary of all the different types of stimulus that are available to both business and individuals in hopes of creating some clarity for our clients and community.

Please note at time of writing this Summary an additional Stimulus Package of $1,500 per employee per fortnight known as JobKeeper Payment has been released. Further details will be provided in relation to this stimulus once more information is available.

 

In Summary

Business

  • Tax-free payments up to $100,000 for small business and not-for-profit employers.
  • Increase of the instant asset write-off to $150,000
  • Wage subsidy of up to 50% of an apprentice or trainee wage
  • Solvency safety net
  • Access to working capital
  • 6 month freeze of home & business loans
  • ATO assistance in relation to payments & debt
  • Sole traders and self-employed eligible for Jobseeker payment
  • Temporary relief from some Corporations Act requirements
  • SMSF Property Rental Relief
  • Payroll tax relief (QLD)
  • $500 electricity rebate on electricity bills (QLD)
  • Rent relief for businesses who lease government premises (QLD)
  • Liquor licensing fees will be waived for businesses impacted by enforced shut downs (QLD)
  • Concessional loan of up to $250,000 to retain staff (QLD)

Individuals

  • Early release of superannuation
  • Temporary reduction in minimum superannuation draw down rates
  • Deeming rates reduced
  • Supplements increased, access extended and eased
  • Bankruptcy safety net
  • All Queensland households will receive a $200 rebate on electricity bills (QLD)

 

In detail

Support for business

Tax-free payments up to $100,000 for employers

  • From: 28 April 2020
  • Eligibility: Small and medium business entity employers and not-for-profit entities, with an aggregated annual turnover under $50 million.

The support will be provided in two phases.

  • The first phase ensures that eligible employers receive a credit equal to 100% of the PAYG amounts withheld from salary and wages paid to employees during the January – June 2020, up to the maximum amount of $50,000.
  • The second phase ensures that eligible employers receive another series of credits, equal to the credits that were received under the first phase. For example, if a business received $40,000 of credits in the first phase it will receive a further $40,000 of credits in the second phase. These additional credits will be spread over two or four activity statement periods, depending on whether the employer lodges on a quarterly or monthly basis.

If a business pays salary and wages to employees but is not required to withhold any tax then a minimum payment of $10,000 will be made in the first phase and a further payment of $10,000 will be made in the second phase.

The credits are automatically calculated by the ATO and employers will need to lodge an activity statement to trigger the entitlement. If the credit puts the business in a refund position the excess amount will be refunded by the ATO within 14 days.

 

Increase and extension of the instant asset write-off

From the 2020 financial year, the instant asset write-off threshold will increase from $30,000 to $150,000, and access to the write-off will be expanded to include businesses with aggregated annual turnover of less than $500 million until 30 June 2020.

 

Accelerated depreciation deductions

In addition to the increased instant asset write-off rules, accelerated depreciation deductions will apply from 12 March 2020 until 30 June 2021. This will bring forward deductions that would otherwise be claimed in later years.  

Businesses with a turnover of less than $500 million will be able to deduct 50% of the cost of the asset in the year of purchase. They can also claim a further deduction in that year by applying the normal depreciation rules to the balance of the asset’s cost. This will presumably only be relevant if the business cannot already claim an immediate deduction for the full cost of the asset.

This incentive will only be available in relation to new assets that are acquired after 12 March 2020 and are first used or installed ready for use by 30 June 2021. It will not apply to second-hand assets or buildings and other capital works expenditure.

 

Wage subsidy of up to 50% of an apprentice or trainee wage

Eligible employers can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage for up to 9 months from 1 January 2020 to 30 September 2020. The payments are accessible to businesses with less than 20 employees. Employers will receive up to $21,000 per apprentice ($7,000 per quarter). You will be able to register for this rebate from 02/04/2020 if eligible.  Eligibility assessments will need to be done by an Australian Apprenticeship Support Network Provider. Your provider should be in contact if you have an Apprentice so that they can ensure you are registered in April when applications open. 

 

Solvency safety net

A safety net has been put in place to protect businesses in temporary financial distress as a result of the pandemic by lessening the threat of actions that could unnecessarily push them into insolvency and force the winding up of the business. These include:

  • A temporary 6 month increase to the threshold at which creditors can issue a statutory demand on a company from $2,000 to $20,000.
  • The time a company has to respond to statutory demands will increase from 21 days to 6 months.
  • For 6 months, directors will be provided with temporary relief from personal liability for trading while insolvent.
  • See also bankruptcy safety net below

It will be more important than ever for business to stay on top of their debtors.

Debts incurred will still be payable by the business. Only those debts incurred in the ordinary course of the business will be subject to the safety net measures.

 

Access to working capital for SMEs – supporting lenders

The Government has announced a Coronavirus SME guarantee scheme that will guarantee 50% of new loans to SMEs up to $20 billion. These loans are new short-term unsecured loans to SMEs.

SMEs with a turnover of up to $50 million will be eligible to receive these loans.

The Government will provide eligible lenders with a guarantee for loans with the following terms:

  • Maximum total size of loans of $250,000 per borrower.
  • The loans will be up to three years, with an initial six month repayment holiday.
  • The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.

Loans will be subject to lenders’ credit assessment processes with the expectation that lenders will look through the cycle to sensibly take into account the uncertainty of the current economic conditions.

This latest measure builds on the previous initiatives to ensure small business can access capital, including:

 

6 month freeze of home & business loans

The Australian Banking Association (ABA) has announced a 6 month deferral of principal and interest repayments for all term loans and retail loans for small business customers with less than $3 million in total debt.

After the deferral period, either the term of the loan will be extended, or the amount of loan repayments will be increased.  The package applies to the following participating banks:

  • ANZ                                           
  • CBA
  • Macquarie
  • NAB
  • Westpac
  • Bank of Melbourne

 

  • Suncorp
  • ING
  • Bankwest
  • ME Bank
  • Judo Bank

 

ATO assistance in relation to payments & debt

The ATO have released a number of options available to assist businesses impacted by COVID-19 including:

  • Deferring payment dates for up to six months for BAS, income tax & fringe benefits tax
  • Allowing businesses to vary PAYG income tax instalment amounts to $0 for the July 2019 – March 2020 period and allowing them to claim any refunds owed as a result of varying prior quarters
  • Remitting any interest and penalties incurred on or after 23 January 2020

 

Sole traders and self-employed eligible for Jobseeker payment

The eligibility criteria to access income support payments will be relaxed to enable the self-employed and sole traders whose income has been reduced, to access support.

More:

 

Temporary relief from Corporations Act requirements

The Treasurer has been given a temporary instrument-making power to amend the Corporations Act to provide relief or modifications to specific compliance obligations.

ASIC has announced measures for those companies with a 31 December financial year that need to hold their AGMs by 31 May 2020, providing a two month no action period and enabling hybrid virtual AGMs.

 

SMSF Property Rental Relief

The ATO have indicated that there will be no action taken for the 2019-20 and 2020-21 financial years where an SMSF gives a tenant – including related party tenants – a temporary rent reduction during this period.

More:https://www.ato.gov.au/Individuals/Dealing-with-disasters/In-detail/Specific-disasters/COVID-19/?anchor=Selfmanagedsuperfunds#Selfmanagedsuperfunds

 

Payroll Tax Relief

All businesses will receive a refund of payroll tax paid for the months of January & February 2020 as well as be eligible to apply for a deferral of payroll tax for the 2020 calendar year –effectively this means that no Queensland business impacted by COVID-19 will have to make a payroll tax payment this year. In addition, small & medium sized businesses (those that pay $6.5 million or less in Australian taxable wages) will be eligible for a payroll tax holiday (i.e. no payroll tax to be paid) for 3 months

Applications for deferral of payroll tax can be made here: https://qldtreasury.syd1.qualtrics.com/jfe/form/SV_9Eu9CxhAOX5dIhf

Registered businesses will receive an email in the coming weeks with information regarding their eligibility. If you do not receive an email or have questions regarding your eligibility, you will need to complete the “refund/holiday application form”. Applications must be submitted by 31 May 2020 and can be found here:

https://qldtreasury.syd1.qualtrics.com/jfe/form/SV_0H5S0mZGFLwsY61

Payroll tax relief is also available for NSW employers. More information can be found here: https://www.business.gov.au/Grants-and-Programs/COVID19-Tax-Relief-Measures-NSW

 

Electricity rebate

Small & medium sized businesses will receive a $500 rebate on electricity bills – all businesses which consume less than 100,000 kilowatt hours will have the rebate automatically applied to their electricity bills.

 

Relief for those businesses who rent government premises

The Queensland government have promised that those businesses who rent government premises will receive relief under their stimulus package.

 

Liquor licensing fees will be waived for businesses impacted by enforced shut downs

From 1 February to 31 July 2020, liquor licensees will benefit from having fees waived for applications to change trading hours and temporarily or permanently change a licensed area.

 

QRIDA COVID-19 Jobs Support Loan

Low interest loans of up to $250,000 are available to assist with continuing to pay employee wages. Eligible business types include sole traders, partnerships, private and public companies and Trusts.

  • Maximum loan amount is 50% of your operation’s annual wage expense (up to $250,000)
  • No repayments or interest charged for the first year
  • Plus two years interest only
  • 2.5% fixed interest rate
  • 10-year term of loan

Open until 25 September 2020 or until funding is fully committed.

More: http://www.qrida.qld.gov.au/current-programs/covid-19-business-support/queensland-covid19-jobs-support-scheme

 

 

Individuals

Early release of superannuation

From mid-April, individuals in financial distress will be able to access up to $10,000 of their superannuation in 2019-20, and a further $10,000 in 2020-21. The withdrawals will be tax free and will not affect Centrelink or Veterans’ Affairs payments.

To be eligible to access your superannuation you need to meet the following requirements:

  • you are unemployed; or
  • you are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or
  • on or after 1 January 2020:
    • you were made redundant; or
    • your working hours were 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.

For those eligible to access their superannuation, you can apply directly to the ATO through the myGov website from mid-April.

More: Early access to superannuation

 

Temporary reduction in minimum superannuation draw down rates

Superannuation minimum drawdown requirements for account-based pensions and similar products will be reduced by 50% in 2019-20 and 2020-21.

Age

Default minimum drawdown rates (%)

Reduced rates by 50 per cent for the 2019-20 and 2020-21 income years (%)

Under 65

4

2

65-74

5

2.5

75-79

6

3

80-84

7

3.5

85-89

9

4.5

90-94

11

5.5

95 or more

14

7

 

The upper and lower social security deeming rates will be reduced further. As of 1 May 2020, the upper deeming rate will be 2.25% and the lower deeming rate 0.25%.

More: Providing support for retirees

 

Time limited fortnightly $550 ‘coronavirus supplement’

For the next 6 months, the Government is introducing a new Coronavirus supplement to be paid at a rate of $550 per fortnight. This supplement will be paid to both existing and new recipients in the eligible payment categories.

The payment will be made to those receiving:

  • Jobseeker payment (and those transitioning to the jobseeker payment)
  • Youth allowance jobseeker
  • Parenting payment
  • Farm household allowance
  • Special benefits recipients

In addition, eligibility to income support payments will be expanded to:

  • Permanent employees who are stood down or lose their job
  • Casual workers
  • Sole traders
  • The self-employed
  • Contract workers who meet the income test

The Government notes that these criteria could include those required to care for someone affected by the Coronavirus.

Asset testing has also been reduced and will be waived for 6 months. Income testing will still apply.

The payment is not available if you have access to any employer entitlements such as annual or sick leave or income protection insurance.

More: Income support for individuals

 

Second $750 payment to households

The Government is now providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders residing in Australia (see the full list here). The payment will be exempt from taxation and will not count as income for the purposes of Social Security, Farm Household Allowance and Veteran payments.

  • Payment 1 from 31 March 2020 (previously announced on 12 March): Available to people who are eligible payment recipients and concession card holders at any time between 12 March 2020 to 13 April 2020;
  • Payment 2 from 13 July 2020: Available to people who are eligible payment recipients and concession card holders on 10 July 2020.

The payments will be made automatically to those that meet the criteria.

More: Payments to support households

 

Bankruptcy safety net

A temporary 6 month increase to the threshold for the minimum amount of debt required for a creditor to initiate bankruptcy proceedings against a debtor will increase from $5,000 to $20,000. In addition, the time a debtor has to respond to a bankruptcy notice will be temporarily increased from 21 days to six months.

Where someone declares their intention to enter voluntary bankruptcy, the period of protection from unsecured creditors will be extended from 21 days to 6 months.

More: Temporary relief for financially distressed businesses

 

Electricity rebate

All Queensland households will receive a $200 rebate on electricity bills – this includes the $50 Asset Ownership Dividend which was announced in the original package and will be automatically applied to household electricity bills.

 

More information: