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Insight

COVID-19: Tax Breaks & Cash Assistance 24/03/2020

The “Coronavirus SME Guarantee Scheme” is due to come into effect from early April 2020 and will allow banks to make it easier to provide unsecured loans of up to $250,000 to businesses with a maximum 3 year term and an initial 6 month repayment holiday.

The Federal Government passed last night the following measures.

Kindly visit the following Australian Government website for links to fact-sheets with further information:

Business – Federal Government 

  • Up to $100,000 for businesses with turnover below $50m and who employ workers
    • To be applied against ATO debt in the first instance and refunded if in credit
    • Factsheet with details: Cash flow assistance for business
  • Wage subsidy of 50% of an apprentices or trainees wage
    • Available to small businesses with less than 20 full time employees
    • Factsheet with details: Cash flow assistance for business
  • Instant asset write off scheme – threshold increased from $30k to $150k
    • For businesses with turnover less than $500m and for assets purchased between from 12 March 2020 until 30 June 2020.
    • Factsheet with details: Delivering support for business investment
  • Accelerated depreciated of 50% for eligible new assets until 30 June 2021
    • For businesses with turnover less than $500m
    • Factsheet with details: Delivering support for business investment
  • Easier access to bank loans of up to $250,000
    • The “Coronavirus SME Guarantee Scheme” is due to come into effect from early April 2020 and will allow banks to make it easier to provide unsecured loans of up to $250,000 to businesses with a maximum 3 year term and an initial 6 month repayment holiday.
    • Factsheet with details: Supporting the flow of credit
  • Temporary increase in threshold that all allows a creditor to issue a statutory demand for a debt
    • Increase threshold from $2,000 to $20,000 for a 6 month period
    • Factsheet with details: Temporary relief for financially distressed businesses
  • Temporary relief from a director’s personal liability while trading insolvent for a 6 month period
    • Factsheet with details: Temporary relief for financially distressed businesses
  • Certain tax debts with the ATO can be deferred for up to 6 months, on a case by case basis
    • For taxpayers severely affected by the coronavirus, the ATO can be contacted to request extension of payment up to 6 months.
    • Factsheet with details: Assistance for severely affect regions and sectors
  • Taxpayers affected by the coronavirus, can vary PAYG income tax instalments in the March 2020 business activity statement to nil and claim a credit for previous instalments paid.
    • This can just be recorded in the March 2020 business activity statement
    • Factsheet with details: Assistance for severely affect regions and sectors

Business – other measures

  • NSW government
    • Payroll tax – for businesses whose total grouped Australian wages for the 2019/20 financial year are no more than $10 million
      • For businesses who lodge monthly payroll tax returns no payment for the months of March, April or May 2020 will be required. Lodgement still required.
      • Annual tax liability reduced by 25% when they lodge their annual reconciliation, which is due on 28 July
  • Western Australia government
    • Payroll tax – businesses with a payroll between $1 million and $4 million will receive a one-off grant of $17,500
    • Payroll tax – small and medium sized businesses affected by COVID-19 can now apply to defer payment of their 2019-20 payroll tax until July 21, 2020
  • New Zealand government
    • A wages subsidy equal to $585.80 per week for a full time New Zealand employee for a period of 12 weeks is available for eligible business whose turnover has reduced by 30% or more due to COVID-19.

Individuals – Federal Government

  • Expanded access to government income support for individuals including permanent employees who are stood down
    • If a stood down employee is getting paid by their employer, for example annual leave or receiving income protection they are not eligible
    • Extended access for payment due to start from 27 April 2020.
    • Example payment for a person with a partner is $1,068 per fortnight.
    • Factsheet with details: Income support for individuals
  • Eligible individuals can access up to $20,000 from their superannuation
    • Criteria for access includes being made redundant or working hours reduced by more than 20%.
    • Up to $10,000 can be accessed by 30 June 2020 and then another $10,000 prior to 30 June 2021.
    • Factsheet with details: Early access to superannuation
  • Two separate payments of $750 to social security, veteran and other income support recipients and eligible concession cardholders.
    • Factsheet with details: Payments to support households
  • Minimum pensions drawdown rates have been reduced by 50% for the 30 June 2020 and 30 June 2021 years
    • Individuals drawing down a pension from their superannuation balance can choose to drawer a lower minimum pension.
    • Factsheet with details: Providing support for retirees

Bank and lender repayment holidays

  • Numerous banks and lenders have announced they will support individuals and business customers during this time. If you are experiencing financial hardship during this time we suggest you contact your lender(s) to request repayment holidays.

Travel restrictions

  • The following states have announced they are closing their borders, except for essential services, which may affect business and personal travel:
    • Western Australia
    • Tasmania
    • South Australia
    • Northern Territory
  • The Federal government has also advised that the Australian borders are closed except for Australian citizens, residents and immediate family members.

Source for updated information
The Australian Government is recommending that people refer to the following website for updates and further information:

https://www.australia.gov.au/

Facts sheets included
Cash flow assistance for business
Delivering support for business investment
Supporting the flow of credit
Temporary relief for financially distressed businesses
Assistance for severely affect regions and sectors
Income support for individuals
Payments to support households
Early access to superannuation
Providing support for retirees

If you have any concerns, please do not hesitate to Contact our office.

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