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.
- 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)
- 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)
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.
- See: Cash flow assistance for businesses
- See: https://www.ato.gov.au/Business/Business-activity-statements-(BAS)/In-detail/Boosting-cash-flow-for-employers/
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:
- An exemption to the responsible lending obligations to enable financial institutions to provide new credit, credit limit increases, and credit variations and restructures,
- $15bn to the Australian Office of Financial Management to invest in wholesale funding markets used by small banks and non-banks to enable these lenders to support SMEs, and
- Australian Banking Association members will defer loan repayments for 6 months for small businesses (affected small businesses will need to apply for relief).
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:
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.
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.
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:
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
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.
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.
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.
Default minimum drawdown rates (%)
Reduced rates by 50 per cent for the 2019-20 and 2020-21 income years (%)
95 or more
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%.
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.
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.
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.
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.
- Joint media release with The Hon. Scott Morrison MP Prime Minister
- Treasury: Support for Businesses
- Treasury: Supporting Individuals and Households