Published: March 26, 2020

As you would be aware from media reports, the Australian Government has announced new and improved measures to ease the burden on Australian small business.

Whilst overwhelming, it is crucial that we identify measures that will apply to your business, so that you are able to factor these into crucial business decisions you may be facing over the coming weeks, if not days.

These measures are accurate as at 23 march 2020.

 

SMALL BUSINESS MEASURES

i.  Boosting Cash Flow for Employers payment:

• Small and medium business entities with aggregated annual turnover under $50 million and that employ workers will be eligible. Eligibility will generally be based on prior year turnover.
• The payment will be delivered by the Australian Taxation Office (ATO) as a credit in the activity statement system from 28 April 2020 (being the March 2020 BAS due date) upon businesses lodging eligible upcoming activity statements.
• Eligible businesses that withhold tax to the ATO on their employees’ salary and wages will receive a payment equal to 100% of the amount withheld, up to a maximum payment of $50,000.
• Businesses that remit PAYG Withholding on a monthly basis will receive a payment equal to 300% of the amount withheld, up to a maximum payment of $50,000, to bring them into line with quarterly registered entities. (From when ?)
• Eligible businesses that pay salary and wages will receive a minimum payment of $10,000, even if they are not required to withhold tax.

Please note the payments will only be available to active eligible employers established prior to 12 March 2020. However, charities which are registered with the Australian Charities and Not for profits Commission will be eligible regardless of when they were registered, subject to meeting other eligibility requirements.

ii.  Boosting Cash Flow for Employers – Additional Payment:

To qualify for the additional payment, your business must continue to be active.

• For monthly activity statement lodgers, your additional payments will be delivered as an automatic credit in the activity statement system. This will be equal to 25% of your total initial Boosting Cash Flow for Employers payment following the lodgement of your June 2020, July 2020, August 2020 and September 2020 activity statements (up to a total of $50,000).
• For quarterly activity statement lodgers, the additional payments will be delivered as an automatic credit in the activity statement system. This will be equal to half of your total initial Boosting Cash Flow for Employers payment following the lodgement of your June 2020 and September 2020 activity statements (up to a total of $50,000).

Here is a simple worked example:

Tony owns a small business in Brisbane.  He employs 12 staff, with average salary of $50,000 per year. Tony reports withholding of $8,650 for his employees in each of his monthly BAS.
Under the Government’s new scheme, Tony will be eligible to receive the payments on lodgement of his relevant BAS. Tony’s business will receive the boosting cash flow for employers payments as:

• A credit of $25,950 for the March period, equal to 300% of his total withholding;
• A credit of $8,650 for the April period;
• A credit of $8,650 for the May period; and
• A credit of $6,750 for the June period, before he reaches the $50,000 cap

Assuming the business is active:

• Tony will also receive an additional payment of $12,500 for the June period, equal to 25% of his total Boosting Cash Flow for Employers payments (being the full $50,000 prior to 30 June 2020)
• An additional payment of $12,500 for the July period, equal to 25% of his total Boosting Cash Flow for Employers payments.
• An additional payment of $12,500 for the August period, equal to 25 % of his total Boosting Cash Flow for Employers payments.
• An additional payment of $12,500 for the September period, equal to 25% of his total.

As mentioned, the payment will be delivered as a credit to your activity statement, reducing the amount you will need to pay on your BAS, keeping the cash in your business.  Where this results in a refund to the business, it will be issued within 14 days.

iii.  Business Investment:

This incentive is being expanded to include businesses with aggregated annual turnover of less than $500 million, up from $50 million, until 30 June 2020.

• From Thursday 12 March 2020, the instant asset write-off threshold has been increased from $30,000 (for businesses with an aggregated turnover of less than $50 million) to $150,000 (for businesses with an aggregated turnover of less than $500 million) until 30 June 2020.
• A time-limited 15-month investment incentive (through to 30 June 2021) which will operate to accelerate certain depreciation deductions. This measure will also be available to businesses with a turnover of less than $500 million, which will be able to immediately deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost. As announced, this measure is proposed to only apply to new depreciating assets first used, or installed ready for use, by 30 June 2021.

iv.  Wage subsidies to support the retention of apprentices and trainees:

Employers with less than 20 full-time employees may be entitled to apply for Government funded wage subsidies amounting to 50% of an apprentice’s or trainee’s wage for up to nine months from 1 January 2020 to 30 September 2020. The maximum subsidy for each apprentice/trainee is $21,000.

Please make contact with your apprentice group to obtain more details.

v.  ATO Administrative Concessions:

The ATO will implement the following administrative measures to assist during this time:

• Deferring by up to six months the payment date of amounts due through the business activity statement (including PAYG instalments), income tax assessments, fringe benefits tax assessments and excise
• Allow businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get quicker access to GST refunds they may be entitled to
• Allowing businesses to vary Pay As You Go (PAYG) instalment amounts to zero for the March 2020 quarter. Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters
• Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities
• Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low interest payment plans.

The ATO have stressed the importance of employers needing to continue to comply with their ongoing super guarantee obligations for their employees.  Please contact your accountant to come up with a plan that will have a positive impact on your business operations.

vi.  Temporary Relief for financially distressed business:

This measure is designed to provide a safety net to business owners, and lessen the threat of legal actions that could result in the business winding up.  Some of these measures include:

• Statutory demands:  increasing the threshold at which these can be issues and extending response times.
• Insolvent trading:  temporary relief for directors for personal liability.
• ATO:  withholding enforcement actions including Director Penalty Notices and wind-ups.

GOVERNMENT SUPPORTING THE FLOW OF CREDIT:

In conjunction with the Reserve Bank of Australia and APRA, the government has implemented a measure whereby:

• The Government will provide a guarantee of 50% of new loans written by banks and SME lenders to support new short-term unsecured loans to SMEs.
• This will see the Government providing a guarantee to banks and SME lenders to reduce their risk to provide unsecured loans to SMEs that need the cash for working capital.
• We should start to see products in the marketplace targeted around this type of lending.
• Cutting red tape to enable fast and efficient lending.
• Measures designed to cut the cost of lending

OTHER MEASURES FOR INDIVIDUALS & HOUSEHOLDS:

The following are additional measures to assist Australians:

• Expansion of the eligibility to income support payments to existing and new recipients of Jobseeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
• 2 payments of $750 to social security, veteran and other income support recipients and eligible concession cardholders.
• Temporary early release of superannuation up to $10,000 for 2019-2020 and a further $10,000 in 2020-21.
• Reduction of minimum drawdown rates for account-based pensions in 2019-20 and 2020-21.

Here is a link to further discussion on these measures:

Treasury Measures for Individuals and Households – Information Sheet

BANKS AND LENDING INSTITUTIONS:

Most of the major banks and lending institutions have made a commitment to assist during the Covid-19 Pandemic.  Please get in contact with your lender to secure their support during this time.

STATE GOVERNMENT – QLD:

i.Interest Free State Government Loans

The QLD Government will offer $500m in loans to eligible businesses to retain employees and maintain operations. Details are:

• Loans up to $250,000
• First 12 months interest free
• An expression of interest is the first step to secure such a loan:  Expressions of interest application is here

ii.Payroll Tax Concessions

• Payroll tax payment date concessions are being provided, summarised below.
• Payroll tax returns still need to be lodged on time.
• You must complete an online payroll tax deferral application form for the payment deferrals to apply.  The link can be found here:

Complete the online payroll tax deferral application form

These are trying times, but we are here to help the best we can, so don’t hesitate to contact us if you need further guidance.

Susan & the Team at Aspire Consulting