Coronavirus fact sheet for business

Tax-free payments of up to $100,000 for eligible small and medium businesses (i.e., with a turnover of less than $50 million that employ staff) and not for profit organisations based on their PAYG withholding obligations. This is not a cash payment, but it is a credit in the activity statement system equal to 100% of the PAYG amounts withheld from salary and wages paid to employees.

These payments will only be available to active eligible employers established prior to 12 March 2020, and you simply need to have employees for whom you withhold tax on wage payments.

First payment of up to $50,000 – Businesses that lodge activity statements on a quarterly basis will be eligible to receive the credit for the quarters ending March 2020 and June 2020. Business that lodge on a monthly basis will be eligible for the credit for the March 2020, April 2020, May 2020 and June 2020 lodgements.

Second payment of up to $50,000 – To qualify for this additional payment, the business must continue to be active. Businesses that lodge activity statements on a quarterly basis will be eligible to receive the credit for the quarters ending June 2020 and September 2020. Business that lodge on a monthly basis will be eligible for the credit for the June 2020, July 2020, August 2020 and September 2020 lodgements.

If a business pays salary and wages to employees but is not required to withhold any tax, then a minimum payment of $10,000 will still be made in the period up June 2020, and a second minimum payment of $10,000 in the period after June 2020 and up to September 2020. These payments will be applied to the first activity statement lodged in each period.

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.

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.

These measures are designed to give a safety net for businesses to ensure that when this crisis has passed, they can resume normal business operations. It includes lessening the threat of actions that could unnecessarily push them into insolvency and force the winding up of the business. They include:

• A temporary increase in 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.
• A temporary increase in the threshold for a creditor to initiate bankruptcy proceedings, an increase in the time period for debtors to respond to a bankruptcy notice, and extending the period of protection a debtor receives after making a declaration of intention to present a debtor’s petition.
• Temporary relief for directors from any personal liability for trading while insolvent.

The Government will provide a guarantee of 50% to Small and Medium Enterprise lenders for new unsecured 3 year loans of up to $250,000 per borrower to be used for working capital. These loans will be up to three years, with an initial 6 month repayment holiday.

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.

Loans will be subject to lenders’ credit assessment processes with the expectation that lenders will look through the cycle to sensibly take into account the uncertainty of the current economic conditions.

The Scheme will commence by early April 2020 and be available for new loans made by participating lenders until 30 September 2020.

The Job Keeper Subsidy was announced on 30 March. A subsidy of $1,500 per fortnight per employee (called Job Keeper), will be paid to businesses that have experienced a downturn of more than 30% (50% for businesses over $1bn). This will be administered by the ATO. To be a part of the subsidy, employers will need to ensure that their employees receive at least $1,500 per fortnight (before tax). We’ve written an example of how the Job Keeper will work and how to register your interest. Click here to read.

Payroll Tax is our least favourite tax (honestly why tax businesses to employ people?!). Good news is that payroll tax has been suspended in NSW. NSW Premier Gladys Berejiklian has now committed $450 million to waive the payroll tax for businesses with payrolls of up to $10 million for three months ending 30 June 2020. Further, the NSW government will bring forward the raising of the payroll tax threshold to $1 million from 1 July 2020, up from $900,000 and one year earlier than planned.

Cafes, corner stores, gyms and even boutique accommodation providers will be among the small businesses in NSW eligible for $10,000 cash grants to cover overheads and bills during the coronavirus crisis. We’ve yet to see a official fact sheet released from NSW government, but this article on the SMH goes into a little more detail. Will update this section when we know more.

Tax-free payments of $750 to social security, veteran and other income support recipients and eligible concession card holders. It is estimated that around half of those who will benefit will be pensioners. These payments will commence to be automatically made from 31 March 2020.

Most banks have hardship assistance programs in place to help those in need. They can be found on their websites. Specifically relating to COVID-19 the following has been announced. The Australia Banking Association is a great resource to understand what you bank is offering – check their info our here.

CBA – check more info out here

• Reducing commercial interest rates by 0.25
• Extended hours for lending teams for faster decisions
• Deferring repayments on a variety of business loan and overdraft products, for 90 days.
• Waiving merchant terminal fees for impacted customers with CBA payment terminals, for 90 days.
• Waiving early redraw fees on business term deposit accounts (including Farm Management Deposit accounts).
• Waiving establishment fees and excess interest on Temporary Excess products.
• Deferring repayments on vehicle and equipment finance loans, and providing tailored restructuring options that meet individual customer needs.

ANZ – check more info out here

• Suspending interest repayments
• Providing early access to term deposits without incurring break fees
• Providing access to additional credit subject to approval

NAB – check more info out here

• Deferral of business loan repayments for up to three months, assessed on a case-by-case basis
• Extension of a business loan term by a period of up to three months, where individual circumstances warrant
• Support to restructure existing business loans, including equipment finance
• Business credit card deferred repayments.

Westpac – check more info our here

• Continuing it’s hardship assistance program
• Deferring repayments for 3 months

Bendigo Bank – check more info out here

• Home Loan and Business Loan customers can apply for relief on loans for up to three months
• Waiver of fees for the restructuring or consolidation of loans
• Credit card customers can apply for an emergency credit card limit increase
• Discounted interest rates on new personal loans taken out by existing Bendigo Bank customers
• Waiver of interest rate reduction for early withdrawals on term deposits prior to maturity
• Deferral of payments and extensions for Equipment Finance on a case by case basis

‍(Big Thanks to Illumi8 for putting this information together!)

When we have our 2020 Tax Planning meeting with you over the next few weeks, we will assist you with opportunities to restructure how you pay yourself to that you can receive the maximum cashflow assistance amounts from the Government.

Contact us today if you would like to meet with us earlier to ensure you receive your maximum cashflow assistance from the Government.