Federal Governments response to the Coronavirus pandemic

In response to the Coronavirus crisis, the Federal Government has outlined new measures and support through its $17.6 billion stimulus package and $66.1 billion economic support package. Below is a summary of the measures outlined in the plan and actions you do and do not need to take:

Cashflow assistance for business:

Tax-free payments up to $100,000 to businesses, with a minimum payment of $20,000 for eligible businesses with employees

• – Eligible businesses are those small and medium-sized businesses and not‑for-profits (including charities) with aggregated annual turnover under $50 million that employ people.
• – Payment 1 – Available from lodgement of March 20 BAS – Eligible businesses that withhold tax on their employees’ salary and wages will receive a credit equal to 100 per cent of the amount withheld, up to a maximum payment of $50,000. Eligible businesses that pay salary and wages and are not required to withhold, or who have a small withholding liability, will still receive the minimum payment of $10,000. When this puts the entity in a refund position, the ATO will deliver the refund within 14 days.
• – Payment 2 – Available from lodgement of June 20 BAS – Eligible entities will receive an additional payment equal to the total of ‘Payment 1’ received. This means that eligible entities will receive at least $20,000 and up to a total of $100,000 under both payments.
• – The payments will be tax-free, together with being delivered and calculated by the ATO as a credit in the Activity Statements and will be available from 28 April 2020 – this will happen automatically and no action is required to be taken by your business. We will work with each client directly to ensure that you get the maximum that your business is eligible for and we will correspond with you directly when completing the Activity Statements.

New unsecured loans with government guarantee

• -The Government will provide a guarantee of 50 per cent to small and medium-sized business lenders for new unsecured loans to be used for working capital.
• -Small and medium-sized businesses with a turnover of up to $50 million will be eligible to drawdown loans to assist in the management of working capital.
• -Terms include a maximum total loan of $250,000 per borrower, which is limited to up to three years, together with an initial six-month repayment holiday where no repayments are required.
• -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.
• -The Scheme will commence by early April 2020 and be available for new loans made by participating lenders until 30 September 2020.
• -We encourage all our business clients to be in communication with your bank for early assessment.

Quick and efficient access to credit for small businesses

• -The Government is providing an exemption from responsible lending obligations for lenders providing credit to existing small business customers. This exemption is for six months, and applies to any credit for business purposes, including new credit, credit limit increases, and credit variations and restructures.
• -This means that loans will be easier to obtain as the criteria for lending will be relaxed by the banks.

NSW Payroll tax relief

• -NSW businesses who have payroll tax obligations, with payrolls of up to $10 million will have their payroll tax obligations waived for 3 months. No payroll tax will be payable during this time.
• -The payroll tax threshold has also been raised to $1million from 1 July 2020.
• -Please note that we have only commented on NSW payroll tax and other measures have been taken in different states.

Wage subsidy for eligible employers to support the employment of apprentices and trainees 

• -Eligible small businesses are those employing fewer than 20 full-time employees who retain an apprentice or trainee (with the apprentice or trainee being in training with a small business as of 1 March 2020).
• -Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage paid during the 9 months from 1 January 2020 to 30 September 2020.
• -Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee (i.e. $7,000 per quarter).
• -Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network provider. Applications open from early April 2020 and final claims for payment must be lodged by 31 December 2020.

Support for business investment

Increased instant asset write-off from $30,000 to $150,000 (per asset basis) until 30 June 2020

• -Applies to businesses with an aggregated turnover of less than $500 million.
• -This provides an immediate tax deduction for assets purchased by eligible businesses up to $150,000.
• -Please note that this is essentially a timing deduction i.e. the ability to claim the expense instantly rather than over time.
• -Purchases should still be well considered and evaluated in light of the impact on cash flow.

Accelerated depreciation deductions for eligible assets acquired after the 12 March 2020 and first used or installed by 30 June 2021

• -A deduction of 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.
• -Applies to businesses with aggregated turnover below $500 million.

• -Eligible assets are new assets that can be depreciated under Division 40 of the ITAA97 (i.e. plant, equipment, and specified intangible assets) acquired after 12 March 2020 and first used or installed by 30 June 2021 (NOTE 1: This measure does not apply to second-hand Division 40 assets or capital works subject to Division 43. NOTE 2: the announcement did not reference the removal of the depreciation limit for cars).

Support to households

Temporarily reduced 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.

The Government will provide two separate one-off tax-free $750 payments (with one payment per recipient)

• -Eligible recipients are those residing in Australia and receiving a payment specified by the Government (such as the Age Pension, Carer Payment, Newstart Allowance etc.) or hold a concession card on 12 March 2020.
• -The one-off payment will be paid automatically from 31 March 2020 for those eligible – no action required.
• -The second $750 payment is 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 (below).
• -This second payment will be made automatically from 13 July 2020 for those eligible – no action required.

Coronavirus supplement to be paid at a rate of $550 per fortnight.

• -The Government is temporarily expanding eligibility to income support payments. 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 normal payment each fortnight.
• -Please note for the period of the Coronavirus supplement, there will be expanded access to the income support payments listed above and reduced means-testing.

Early release of Super

• -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.
• -There will be no tax on the amounts released and the money withdrawn will not affect Centrelink or Veterans’ Affairs payments. Applications for the early release of superannuation funds will be from mid-April 2020
• -Eligibility:
• -Unemployed.
• -If 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; your working hours were reduced by 20 per cent or more or if you are a sole trader and your business was suspended or there was a reduction in your turnover of 20 per cent or more.

Australian Taxation Office (ATO) assistance

ATO administrative relief for certain tax obligations for taxpayers affected by the Coronavirus outbreak

• -Assessed on a case-by-case basis. Unlike the bushfire relief measures which applied automatically, it will be up to businesses and individuals impacted by the Coronavirus to contact the ATO for assistance so please get in touch as there are several options available.

Relief for financially distressed businesses

Temporary relief package for companies and directors

• -Directors of companies will be temporarily relieved of their duty to prevent insolvent trading (incurring debts in the ordinary course of business) – this will apply for six months.
• -The amount required to issue a creditor’s statutory demands, the first step in a creditor winding up a company, will temporarily increase to $20,000 (from $2,000).
• -The time to comply with creditor’s statutory demands will temporarily increase from 21 days to 6 months.
• -Similarly, in respect to claims against individuals, the amount required to issue a bankruptcy notice will temporarily increase to $20,000 (from $5,000) and the time to comply with a bankruptcy notice will also increase to 6 months (from 21 days).