COVID-19 Stimulus Packages as at 23 March 2020

Rudd Hannay Accountants • March 22, 2020

COVID-19 Stimulus Packages
as at 23 March 2020

The Federal Government has released its second stimulus package for Australia in response to COVID-19. Below is a summary of what has been released to date, including the first package, the second package and the Qld State Government's general response. Various industries will have some specific targeted stimulus so we recommend that you keep up to date with your various industry associations.

PAYG Withholding

Businesses will have up to 100% of their PAYG Withholding obligation paid by the Government via their Activity Statements.
Payment will be split into 2 groups, with each payment limited to $50,000.
It is limited to businesses with a turnover of less than $50m (based on prior year turnover).
It is limited to businesses that were active eligible employers prior to 12 March 2020.
First group of payments (from 28 April) will apply to Activity Statements for the months of March, April, May and June 2020 (if quarterly). 300% of PAYGW amount paid as part of the March BAS, with any adjustments in the subsequent IASs. Limited to $50,000.
Second group of payments (from July) will apply to the June BAS, July IAS, August IAS and September BAS.Limited to $50,000 and paid based on a 25% split.

Other Small Businesses Paying Wages

Businesses that do not pay PAYG Withholding, but still pay wages, will receive a payment of $10,000. We suspect this will also be via Activity Statements, and will be paid in a similar fashion to above.

Casual Employees

If they are no longer able to work due to the Coronavirus downturn, they will be able to access Government income support payments quicker as the usual waiting period may be waived depending on their circumstances.

Instant Asset Write-off Increase

From 12 March 2020, the Instant Asset Write-off is being increased to $150,000 (up from $30,000) for businesses with turnover up to $500m (previously $50m). This implies that the funds are available in the first place to purchase the asset. The increase is only available to 30 June 2020 at this stage. It excludes second-hand goods and capital works.

Backing Business Investment Incentive

There has been a bit of confusion around this one. The most recent information we have is that it won't apply to assets less than $150,000 (if you are a small business per above). If you are purchasing an asset above $150,000, then you will be eligible to bring forward 50% of the cost of a new asset as a tax deduction, in the year of purchase. For example, if you purchase an asset for $160,000 that will last 5 years, you will be entitled to bring forward a deduction of 50% of the cost of the asset being $80,000, and then depreciate the remaining balance at normal depreciation rates so 40% x $80,000 = $32,000. The total deduction in the first year will be $112,000, and the remaining amount of $48,000 will be depreciated over the remaining effective life in subsequent years. This incentive is available to 30 June 2021.It excludes second-hand goods and capital works.

Wages for Apprentices

For businesses that employ less than 20 people on 1 March 2020 the Government will cover 50% of apprentices wages from 1 January 2020 to 30 September 2020, up to a maximum of $7,000 per quarter. The Government will soon allow registration for this.

Lending to SME's

The Government will guarantee 50% of new loans to SMEs via the Banks. This means the banks will be more willing to lend funds to SMEs as 50% of the security will be provided by the Government. There is a maximum limit of $250,000 and over a maximum term of 3 years. It will also come with a 6 month repayment holiday.

Superannuation Guarantee

We remind employers that superannuation contributions payments must still be made. There are no concessions for this. These payments are tax deductible if made within 28 days of the end of the quarter. Consider deferring other payments before not paying superannuation contributions.

Statutory Demands & Bankruptcy

For businesses that find themselves in difficulty, the Government is temporarily increasing the threshold creditors can issue a statutory demand on a business, and the timeframe in which they need to respond. The increase will go from $2,000 to $20,000, and from 21 days to 6 months. This will apply for the next 6 months.

Deferral of Loan Repayments

Australian banks will defer loan repayments for SMEs affected by COVID-19 for 6 months. Further details on how to apply to the various banks can be found on the Australian Banking Association website.

Government Assistance

Additional assistance to help businesses identify alternative export markets or supply chains, and measures to promote domestic tourism, although this will be short-lived.

Lodgement and Payment Extensions

Administrative relief for certain tax obligations, and auto deferral of up to 4 months.

Health & Safety Obligations

Workcover has reminded employers that you are required to ensure the health and safety of your employees. This includes identifying and managing risks around exposure to COVID-19. You may request an employee seek a medical clearance from a doctor, work from home or not work during an isolation period.

Temporary Relief for Directors

Directors can become personally liable for company debts if a company trades insolvently – this has always been the case. The Government is relaxing the laws surrounding this whereby Directors will be temporarily relieved of their duty to prevent insolvent trading in the course of the company's ordinary business. This will apply for 6 months. It should be noted that debts incurred will still be payable by the company, and cases of dishonesty and fraud will have criminal penalties applied.

Waiving of Fees

Specifically for business in tourism, agriculture and education. This includes Great Barrier Reef Marine Park fees, although we believe these to be quite minimal.

Payroll Tax (QLD)

Payroll tax returns for periods between 1 February 2020 and 30 June 2020 (including the annual reconciliation) are not required to be lodged or paid until 3 August 2020. You must apply for this – we can assist if needed.

Loan Facility (QLD)

The Queensland government has announced plans to provide low interest loans of up to $250,000 with an initial 12-month interest free period for businesses to retain staff.Details of the loan facility (including instructions for how to apply) have yet to be released and the State Government is only looking for expressions of interest at the moment.

Liquor Licensees (QLD)

Normally, you are not permitted to sell liquor for off-premises consumption (e.g. from attached or detached bottle shops) if you are not selling liquor for on-premises consumption at the main premises.When you have closed your main premises, you can continue to operate your attached and detached bottle shops.This only applies to licensees with the authority for takeaway sales.Bottle shops must still operate in compliance with the Liquor Act 1992 and any other government requirements.

INDIVIDUALS / SUPERANNUATION FUNDS

Cash Payments

Pensioners, social security and other income support recipients will receive a cash bonus payment of $750 each by 13 April 2020. A second payment of $750 will also be received in July 2020.We believe this will be pensioners who qualify and receive a pension from Centrelink.

Temporary Reduction in Minimum Super Withdrawal

There will be a 50% reduction in the minimum superannuation withdrawal amount for pensions. This will assist with funds not having to sell investments in the current environment. This will apply for the 2020 and 2021 Financial Years. Please review the letters previously sent to you and halve the amount of the minimum pension amounts that were advised at the time.

Income Support Payments

An increase in income support payments for the Coronavirus Supplement of $550 per fortnight for the next 6 months.

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 prior to 30 June 2020, and a further $10,000 after 1 July 2020, available for 3 months. The withdrawals will be tax free and can be applied for through your myGov account.

Deeming rates

For pensioners this will drop by 0.5%, plus now another 0.25% as part of the second stimulus package. The lower deeming rate from 1 May 2020 will be 0.25%, and the upper deeming rate will be 2.25%. This means if you were previously deemed as earning too much to qualify for the pension or Health Care Card, you may now qualify. We can assist you in assessing your eligibility for this.

Lodgement and Payment Extensions

Administrative relief for certain tax obligations, and auto deferral of up to 4 months.

These measures are due to pass a reduced numbers Parliament this week - 23 March to 26 March for both houses.

As with all changes to the law, further details will continue to emerge and we recommend that you wait for the measures to pass both houses of parliament before undertaking any material action relating to them. We will keep you updated about this as soon as information is to hand.

If you wish to keep updated, we recommend you follow our LinkedIn site or watch our website for any further changes.

If you have any questions or concerns, please don't hesitate to contact one of the team or myself.

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