This follows on from an article written last week.
What a week of change we have all faced. Especially with the events occurring over the last weekend our personal and business lives have, for now, completely changed.
Green Taylor Partners are working hard to be here for all clients during this period. If you, your family or friends need assistance please feel free to contact us – we’re here to help with the stimulus packages, business concerns or just for a friendly chat.
Several announcements have occurred since we informed you of the initial Federal Government stimulus package. The aim of this article is to recap a few things from the initial package, expand on the announcement from last week and in particular the cover off the questions clients are asking us.
The Victorian Government has asked that all Non-Essential businesses cease as of midday 23 March, 2020.
Those Non-Essential business are defined as:
If your business is not in the above, you can still operate. However, we would strongly suggest you ensure you have policies for social distancing and controls to mitigate the risk to your team and customers. Such controls may be regular hand cleaning, office cleaning and limiting interaction between groups. If we are relaxed in our control the number of virus cases will continue to escalate and the Government will enforce higher levels of business shut down on us.
Currently business assistance is being broken down by Federal and State Government assistance. Please note, most of the following are only announcements and still require being processed through the respective parliaments.
Payroll Tax
Small and medium-sized business will payroll of less than $3 million will have their payroll tax for the 2019-20 financial year refunded. Payroll tax for July, August and September 2020 will be deferred until 1 January 2021. More information can be found at sro.vic.gov.au
Government Contractors
The Victorian Government will pay all their supplier accounts within five business days.
Business Support Fund
A $500 million Business Support Fund will be set up to assist small to medium businesses most impacted by the Covid-19 virus.
See the Business Victoria website for more grants and to register your interest www.business.vic.gov.au/support-for-your-business
Tax-free cashflow
One of the most common questions we are receiving relates to the ‘When do I get the $20,000 mentioned on the weekend?’ This is an expansion on last week’s announcement to reduce the cashflow burden on PAYG Withholding for employers with turnover of less than $50 million (aggregates/grouped).
Between the March 2020 and June 2020 BAS/IAS lodgements, employers will receive a minimum of $10,000 and up to a maximum of $50,000 towards their BAS payments where they had employees. Payment will only be available to employers active before 12th March 2020.
There will be a further round of refunds in the July 2020 to October 2020 period for an additional minimum of $10,000 and maximum of $50,000.
The ATO will take the additional payment into account when lodging your return for you. In the event the additional payment puts the BAS/IASs into a refund position this will be refunded back to the business.
FACT SHEET
Apprentice & Trainees
No changes have been made to this initiative which provides employers a 50% reimbursement of employee apprentice/trainee wages for nine months, to a maximum of $21,000 per apprentice/trainee ($7,000 per quarter).
This can be applied after undertaking an eligibility assessment provided by an Australian Apprenticeship Support Network (AASN).
For more information refer to www.dese.gov.au or www.australianapprenticeships.gov.au
For more details and examples on the above Cashflow for Employers and Apprentice incentives refer to the following Federal Government fact sheet: FACT SHEET
Asset Write Off
There have been no changes since last week to the $150,000 immediate write for businesses up to $500 million turnover. The assets for this incentive must be installed in place ready for use between 12 March 2020 and 30 June 2020.
One question we are commonly asked is, “Can claim this even if the asset was financed?”. Yes, you can, the purchase need not have been paid in cash.
Accelerated Depreciation
There have been no changes since last week – this applies only to NEW assets.
We do want to clarify since our last article that after the initial immediate write off of 50% of the acquisition costs on NEW plant items that the remainder is either added to the Small Business Entity (SBE) Pool for applicable SBEs or depreciated using Useful Life system for those not utilising the SBE Pooling. Previously we not certain of the ability to add the balance to the SBE Pool.
We also note that this incentive is for plant purchased and in place ready for use by 30 June 2021.
For more details and examples of the business investment incentive refer to the following Federal Government fact sheet: FACT SHEET
Temporary early release of superannuation
Announced on the weekend, the Government is allowing individuals affected by the Covid-19 virus to withdraw tax free up to $10,000 from their superannuation in 2019-20 and an additional $10,000 in 2020-21. This will have no affect on income support payments.
Although an enticing incentive, we generally caution withdrawal of funds from your retirement saving, especially whilst the balances may be affected by the share market turmoil. If being withdrawn as a last resort for business, be aware that superannuation is generally safe from creditors.
Reduced minimum superannuation pensions
There is a temporary reduction in the superannuation minimum drawdown requirements for account-based pensions of 50%. This will take pressure off requirements to sell down investments in distressed markets for those members in pension phase. These rates are aged based and vary from 4% – 14% but will now range from 1% – 7%.
Income support for individuals and households
Eligibility for income support payments is being expanded and in addition there is a six-month Covid-19 supplement of $550 per fortnight.
Eligibility access includes a reduction to Asset Test for 6 months for some payments, and reduced waiting times.
In addition, there are two separate $750 payments to Social Security, veteran and other income support recipients and eligible concession card holders.
Government guarantee for business borrowings
The Government in providing a 50% Guarantee for Small to Medium business lenders on new short-term unsecured loans. This also involves the temporary exemption from ’Responsible lending obligations’ for lenders to existing small business customers.
ATO Help
The ATO will be assisting employers with deferral of payments, varying PAYG instalment amounts, and refunding past instalments.
In addition, there will be deferral of withholding enforcement action relating to Director Penalty Notices and wind-ups.
IMPORTANT – No change to employee superannuation guarantee payment due date
Please note, there is no change to the due date for payment of employee superannuation guarantee. The March quarter payment will still be due to employee funds by 28 April 2020. No concessions are available for this.
Interest rate reduction
The Reserve bank announced a reduction in the official interest to just 0.25% in addition to allowing banks access to at least $90 billion of funding to assist banks to reduce funding costs and in turn reduce interest rates to customers.
Loan payment deferrals
The Australian Banks have agreed to defer payments on loans to Small businesses affected by the Covid-19 outbreak by six months. Many have also reduced their interest rates on business and home loans. More information can be found at www.ausbanking.org.au or contact your banker to discuss.
In addition to this article, we encourage you to follow our Social Media feeds and keep your eye on emails as we try and keep you up to date with further changes.
If you have friends, family or neighbours that you think could use this information please feel free to pass these articles on.
While the GTP office is closed is visitors, the team at GTP are available to assist and support our clients navigate through these challenging and uncertain times. If we can help you with any queries or concerns, please contact us on 03 5382 4761 or via email.
