The recent developments around the Coronavirus (or COVID-19) has left many business owners and individuals feeling uncertain. We understand you may have many questions around this situation. Below are explanations, a summary of the announcements from government stimulus for business and individuals and other government support.
Below we have included information that may be of use for whether you are a Business, Individual or Household.
SUPPORT FOR WORKERS AND HOUSEHOLDS
The Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight. This will be paid to both existing and new recipients of the Jobseeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
The Coronavirus supplement will be paid for the next 6 months. Eligible income support recipients will receive the full amount of the $550 Coronavirus supplement on top of their payment each fortnight.
Asset testing has been reduced and will be waived for 6 months. Income testing will still apply. This payment is not available if you have access to any employer entitlements such as annual or sick leave or income protection insurance.
To access this supplement you will need to apply via your myGov account. https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Income_Support_for_Individuals.pdf
Payments to support households
In addition to the $550 stimulus payment announced on 12 March 2020, the Government will provide a further $750 payment to social security and veteran income support recipients and eligible concession card holders, except for those who are receiving an income support payment that is eligible to receive the Coronavirus supplement.
The first payment will be made automatically from 31 March 2020 to people who are eligible payment recipients and concession card holidays at any time between 12 March 2020 and 13 April 2020.
This second payment will be made automatically from 13 July 2020 to all eligible payment recipients and concession card holders on 10 July 2020. https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Payments_to_support_households.pdf
Temporarily reduce superannuation minimum drawdown rates
The Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50 per cent for 2019-20 and 2020-21. This measure will benefit retirees by providing them with more flexibility as to how they manage their superannuation assets. https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Providing_support_for_retirees_to_manage_market_volatility.pdf
Reducing social security deeming rates
On top of the deeming rate changes made at the time of the first package, the Government is reducing the deeming rates by a further 0.25 percentage points to reflect the latest rate reductions by the RBA.
As of 1 May 2020, the lower deeming rate will be 0.25 per cent and the upper deeming rate will be 2.25 per cent. https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Providing_support_for_retirees_to_manage_market_volatility.pdf
Victorian Business Support Fund
A $500 million economic survival and jobs package containing:
Establishment of Working for Victoria Fund to help workers who have lost their jobs to find new opportunities
Facilitate job matching to help Victorians find short-term or casual roles
To apply for information regarding this package visit:
Early Access to Superannuation
Individuals will be able to apply for early access to their superannuation, to be eligible you must satisfy the following criteria :
Be unemployed or eligible to receive job seeker, youth allowance, parenting payment, special benefit or farm household allowance on or after 1 January 2020
You were made redundant or
Your working hours were reduced by 20 per cent or more or
If you are a sole trader – your business was suspended or there was a reduction in your turnover of 20 per cent of more
If you access your super under these measures you won’t need to pay tax on the amounts released and the payments won’t affect Centrelink payments.
You will be able to apply for early release through the MyGov website.
ASSISTANCE TO BUSINESSES
Coronavirus SME Guarantee Scheme
Under the Coronavirus SME Guarantee Scheme, the Government will provide a guarantee of 50% to SME lenders to support new short-term unsecured loans for SMEs. The Scheme will provide businesses with funding to meet cash flow needs and assist otherwise viable businesses across the economy who are facing significant financial challenges.
The Government will provide eligible lenders with a guarantee for loans with the following terms:
- SMEs, including sole traders, with a turnover of up to $50 million.
- The maximum total size of loans of $250,000 per borrower.
- Loans will be up to three years, with an initial six month repayment holiday.
- Unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.
The Government is cutting red tape by providing a temporary exemption from responsible lending obligations for lenders providing credit to existing small business customers. A list of participating lenders will be added to the https://treasury.gov.au/ website once approved.
Early release of superannuation
The Government will allow individuals in financial stress as a result of the Coronavirus to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21.
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. https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Early_Access_to_Super_1.pdf
Providing temporary relief for financially distressed businesses
The Government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive. The package also includes temporary relief for directors from any personal liability for trading while insolvent. The Corporations Act 2001 will be amended to provide temporary and targeted relief for companies to deal with unforeseen events that arise as a result of the Coronavirus.
Increasing the instant asset write-off
From 12 March 2020, the instant asset write-off threshold will increase from $30,000 to $150,000, this is available to all trading businesses with an aggregated annual turnover of less than $500 million until 30 June 2020.
This write-off 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) between 12 March 2020 to 30 June 2020. Anything previously purchased does not qualify for the higher rate or anything purchased after 30 June 2020.
In addition to the increased instant asset write-off rules, accelerated depreciation deductions will apply from 12 March 2020 until 30 June 2021, to 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 as well as the depreciation deduction that would be applied under the normal depreciation rules. This will likely only be relevant if the business cannot claim an immediate deduction for the full cost of the asset within the period 12 March 2020 to 30 June 2020.
Victorian Business Support Fund
- A $1.7 billion economic survival and jobs package containing:
- Full payroll tax refunds for the 2019-20 financial year to SMEs with a payroll of less than $3 million
- Payroll tax deferrals for the first three months of the 2020-21 financial year until 1 January 2021
- Commercial tenants in government buildings can apply for rent relief
- The Government will pay all outstanding supplier invoices within five business days
- 2020 land tax payment deferrals for eligible SMEs
- Support for the hospitality industry by waiving liquor licensing fees for 2020 for affected venues and small businesses
- Establishment of a fund to support the hardest-hit sectors, including hospitality, tourism, accommodation, arts and entertainment, and retail.
To apply for information regarding any of the Victorian Business Initiatives visit: https://fs2.formsite.com/diirdwebteam3/u3qeftcfcc/index.html
The government has realised that more is needed to help businesses keep people in employment and that these funds need to flow quickly.
They have come up with the following changes and additions to the previous PAYGW rebate:
- Rebate is now based on 100% of PAYGW
- Increase minimum assistance that will be received to $10,000 – with the opportunity to double to $20,000 if the business continues to employ into the June and September quarters.
- Increased maximum assistance that can be received to $50,000 – with the opportunity to double to $100,000 if the business continues to employ into the June and September quarters.
Monthly BAS Reporters
- Rebate is now based on 100% of PAYGW (or W2) amount in your BAS This will apply for your March, April, May and June 2020
- For the March period, your rebate will be 300% of W2 (this is to average a rebate over the period Jan to Mar)
- The minimum you will receive is $10,000 – applied to the March BAS You’ll then have to withhold more than 10,000 in total between your March and June BAS to get any more
- The maximum receivable is $50,000
- There is then a second payment, which will be equal to the amount you have already received – this will be paid in stages: 25% on June BAS
- 25% July IAS
- 25% Aug IAS
- 25% on September BAS
- If you received the minimum $10,000 on March BAS, you will receive an additional 2.5k for each month Jun to Sep
Quarterly BAS Reporters
- Rebate is now based on 100% of PAYGW (or W2) amount in your BAS, this will apply for your March & June 2020 BAS
- The minimum you will receive is $10,000 – applied to the March BAS
- You’ll then have to withhold more than 10,000 in total between your March and June BAS to get any more
- The maximum receivable is $50,000
- There is then a second payment, which will be equal to the amount you have already received – this will be paid in stages 50% on June BAS
- 50% on September BAS
- If you received the minimum $10,000 on March BAS, you will receive an additional 5k in June and September (provided you are still operating)
The aim is that businesses will need to continue into the June and September quarter to get the second payment, so it is important that you don’t ‘close’ your business completely during this timeframe – even if you just keep paying yourself a very small wage into the June and September quarters, you will qualify for the additional payments.
For Individuals, Sole Traders and Partnerships
Whilst sole traders and partnerships that employ others can access the PAYGW rebate, you cannot employ yourself. It is still disheartening that the government hasn’t provided additional support to assist sole trader, partnership and freelancers. Below are some options to consider:
- The only option available to you if this is your business is to access JobSeeker (formally Newstart) payments.
- The government has added a Coronavirus Supplement of $550 per fortnight to these payments.
- They are also waiving the normal one week waiting period
- Whilst income tests still apply, they won’t be applying asset tests, which previously would have meant that you would need to
- We suggest that if you’re in this category that you contact Centrelink directly as each individual case will be different.
Supporting apprentices and trainees
Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for 9 months from 1 January 2020 to 30 September 2020. Where small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter). This subsidy needs to be applied for via an Australian Apprenticeship Support Network.
https://www.australianapprenticeships.gov.au/ https://treasury.gov. au/sites/default/files/2020-03/Fact_sheet-Cash_flow_assistance_for_ businesses_0.pdf