COVID-19 Stimulus, Financial Assistance & Support

This article has been updated to include the most recent stimulus announced by the Federal Government on 30 March 2020. We’ll keep this article updated as new information comes to hand.

The stimulus is designed to support small businesses and individuals during the COVID-19 health crisis, to cushion the economic blow and to build a bridge to recovery on the other side. We’re working hard to support and guide our clients through these troubling times.

Our team is operating remotely from Monday 23 March, and they are fully equipped to continue to deliver great service and valuable advice to our clients. Other than face to face meetings being replaced with Zoom meetings, everything else is business as usual here at Link.

1. Federal Government Stimulus for Business Owners

JobKeeper Payment for Employers 

What: Payments of $1,500 per fortnight (before tax) per eligible employee to all eligible employers to help them retain their staff

How: Payments will be delivered as a cash reimbursement into employer bank accounts monthly in arrears

When: Determined based on payroll figures from March 2020, with first payments to be made to employers in early May 2020

Eligibility: All  businesses with <$1billion turnover who experience at least a 30% reduction in turnover for a period (compared to same period last year)

Effect: Employers will be reimbursed $1,500 per fortnight for each eligible employee they retain.

Action required: Register for updates here Will require monthly reporting and declaration to confirm eligibility. Link will be working with our clients on this. More detail to come. Speak to your Advisor about your eligibility.

Full details can be found here: https://www.linkadvisors.com.au/blog/business/1500-per-fortnight-jobkeeper-payment-for-employers-to-keep-their-employees

Boosting Cashflow for Employers

What: Tax free payments of between $20,000 and $100,000 to small businesses who employ staff

How: Payments will be delivered as a credit through the Activity Statement system by the ATO over the course of the coming months.

When: Determined based on payroll figures from January 2020 to June 2020.

Eligibility: all businesses existing prior to 12 March 2020 with employees and with turnover up to $50m

Effect: 100% Cash back on PAYG Withholding for the period 1 January 2020 to 30 June 2020 + additional payments for June quarter 2020 and September quarter 2020. Minimum $20k per entity up to $100k per entity. Calculator here: https://www.linkadvisors.com.au/business-stimulus-package-calculator-australia

Action required: Lodge BASs as per usual. No other action required. Credits will offset any amounts owing to the ATO and any surplus refunded to your bank account. Speak to your Advisor about your eligibility for this stimulus.

Full details can be found here: https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Cash_flow_assistance_for_businesses_0.pdf

Apprenticeship / Traineeship Support

What: Eligible employers with apprentices can apply for a 50% wage subsidy of apprentice/trainee wages

When: Effective from 1 January 2020 to 30 September 2020

Eligibility: all small businesses with eligible apprentices and trainees who apply

Effect: Cash injection from the government equal to 50% of apprentice/trainee wages from 1 January 2020.

Action required: Apply for the rebate through an Australian Apprenticeship Support Network (AASN) Provider ASAP.

More information here, including AASN providers who can assist you to claim: https://www.australianapprenticeships.gov.au/node/3939

2. Tax Incentives for Small Business

Increase of immediate write off threshold

What: The immediate write off threshold for business assets has increased from $30,000 to $150,000. This means that business assets up <$150,000 will be immediately tax deductible. This includes trucks, cars, machinery, equipment etc. (Note that motor vehicle depreciation limits will still apply to ‘cars’)

When: Effective from 12 March 2020 to 30 June 2020 (i.e. approx. 3 months)

Eligibility: all businesses with turnover up to $500m

Effect: greater up front tax deductions, so less tax to pay come tax time.

Action required: Acquire the asset by 30 June 2020. Your Advisor will manage the tax treatment in your tax return.

Business Investment Incentive

What: Assets not eligible for immediate write off, will be allowed a 50% up front deduction, with the remaining amount being depreciated according to the usual depreciation rules.

When: Effective from 12 March 2020 to 30 June 2021 (i.e. 15 months)

Eligibility: all businesses with turnover up to $500m

Effect: greater up-front tax deductions, so less tax to pay come tax time.

Action required: Acquire the asset by 30 June 2021. Your Advisor will manage the tax treatment in your tax return.

IMPORTANT NOTE RELATING TO TAX INCENTIVES: It’s important to note that these incentives are tax incentives only, not cash back. You are required to spend the money on the assets to be eligible, but you only get the tax benefit of the expense when it’s time to lodge your 2020 or 2021 income tax return.

3. ATO Tax Payment Deferrals (Income Tax & GST)

The ATO is providing business owners with payment deferral concessions for businesses directly impacted by COVD-19 as follows;

  • Up to 4 month deferral of the payment due date for BAS, IAS, income tax, FBT and excise. Contact the ATO on 1800 806 218 to put this in place OR contact your Advisor to assist.
  • Allow businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get faster access to GST refunds they may be entitled to. Contact your Advisor to assist.
  • Allowing businesses to vary Pay As You Go (PAYG) instalment amounts to $0 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. Contact your Advisor to assist.
  • Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities. We expect this to be auto applied, but if not, ask the ATO.
  • Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low interest payment plans. Contact your Advisor to assist.

4. Superannuation

As always, continue to pay your employee superannuation on time if at all possible. Late or non-payment of superannuation means you lose the tax deduction completely.

5. Government Underwritten Cashflow Loans for Businesses

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 does not mean the Federal Government is issuing loans directly, instead, it means that the Government is 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.

How does it work: We expect to see a new type of loan issued by the banks and finance companies, tailored for small businesses that have been directly disrupted by COVID-19.

How to apply: Contact your bank or finance company about products which they may be able to offer you. Also, feel free to contact our in house finance broker, Hugh Dellit from Link Advance, to discuss lenders who are offering these loans.

More information here: https://business.gov.au/risk-management/emergency-management/coronavirus-information-and-support-for-business/coronavirus-sme-guarantee-scheme

6. State Government Stimulus & Support

New South Wales

  • Payroll tax relief for businesses with no more than $10m Australian total wages as follows;
    • Employers will have their annual tax bill reduced by 25% when they lodge their 2020 annual reconciliation, which is due on 28 July 2020. This relief is automatically applied.
    • Employers who lodge and pay monthly will not be required to make payments for the months of March, April or May 2020. When lodging your annual reconciliation, you will still need to provide wage details paid in these months and will receive the benefit of a 25% reduction in the amount of tax you would have had to pay for 2019-20.

Victoria

  • Payroll tax relief for businesses with no more than $3m Australian total wages as follows;
    • Businesses with annual taxable wages up to $3 million will have their payroll tax for the 2019-20 financial year waived in full. This relief will be automatically applied, look out for an email or call from the Victorian Office of State Revenue.
    • Eligible businesses must continue to lodge returns but do not need to make further payments for the 2020 financial year.
    • The State Revenue Office will directly contact eligible businesses in relation to reimbursement for payroll tax already paid in the financial year.

Queensland (Updated 25 March 2020)

  • Power Bill Relief – $500 rebate off energy bills for small and medium businesses going forward. This will happen automatically for eligible businesses (up to 100,000kwh use per year). There are also a number of other benefits for household utility bills too.
  • Rent relief for businesses using government owned premises – if you lease property from the government, rental relief is coming.


Western Australia

  • Payroll Tax relief for businesses as follows;
    • The payroll tax threshold will be increased to $1 million on 1 July 2020. This brings the increase forward from the planned date of 1 January 2021 and will result in approximately an additional 300 businesses no longer being liable for payroll tax.

Northern Territory

Tasmania


7. Support from the Banks

Based on a directive from the federal government and the Reserve Bank of Australia, many banks are providing assistance to their customers in various ways. Below is a selection of banks and the support they are providing to their customers. If you don’t see your bank listed here, still speak to them, this list is not every offer from every bank.

CBA

ANZ

  • Suspending interest repayments
  • Deferral of business loan repayments for up to 6 months, assessed on a case-by-case basis
  • Providing early access to term deposits without incurring break fees
  • Providing access to additional credit subject to approval
  • Contact ANZ for more information: https://www.anz.com.au/promo/covid-19/

NAB

  • Deferral of business loan repayments for up to 6 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.
  • Contact NAB for more information: https://www.nab.com.au/personal/customer-support/covid19-help/business-support

Westpac


Bendigo

  • 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
  • Contact Bendigo here for more information: https://www.bendigobank.com.au/help/coronavirus-assistance-package/

8. Other Stimulus and Offers

Facebook Grants

9. Recommended Operational Precautions for Employers

The Queensland Government has released guidelines around recommended Coronavirus workplace risk management. The guidelines cover recommendations for both employees and employers and provides some easy and simple ways to reduce risk around your business. You can access the full guidance here:

https://www.worksafe.qld.gov.au/news/2020/coronavirus-covid-19-workplace-risk-management

Be aware of restrictions on the operation of your business. Government authorities are regularly releasing updates on what can and cannot occur on an industry by industry basis, and this can vary from state to state.

10. Employee Rights & Entitlements

Fair Work has released guidance about the application of Australian workplace laws in relation to Coronavirus. Employers should familiarise themselves with the content of this article as it provides guidance around what to do if an employee (or a family member) is ill or quarantined along with information in relation to working from home and other options. You can access the full guidance here:

https://www.fairwork.gov.au/about-us/news-and-media-releases/website-news/coronavirus-and-australian-workplace-laws

Here is a link to an excellent, short series of Podcasts covering redundancy, standing down of staff and other key areas which employers are facing right now: COVID-19 Support Podcast

11. Government Stimulus for Individuals

Cash Payments

  • A one-off payment of $750 will be made to all to social security, veteran and other income support recipients and eligible concession card holders. Payments will commence from 31 March 2020.
  • A further one-off payment of $750 will be made to all to social security, veteran and other income support recipients and eligible concession card holders. Payments will commence from 13 July 2020.

Changes to Jobseeker payments (formerly Newstart) eligibility

The government has changed the eligibility requirements for people who have lost their job (or self-employment) to make it faster and easier to claim. Contact Centrelink to discuss your eligibility for these support payments: https://www.servicesaustralia.gov.au/

12. Access to your own superannuation

Individuals will be able to withdraw up to $10k from their own super fund before 30 June 2020, and again after 30 June 2020 if you can demonstrate that your income has reduced by at least 20% due to COVID-19.  Apply for access to your superannuation via your MyGov account here: https://www.business.gov.au/Risk-management/Emergency-management/Coronavirus-information-and-support-for-business/Early-access-to-superannuation

13. Rental Assistance for Businesses

No word yet on any formal government assistance in relation to specific assistance for non-operational businesses to pay their rent.

In the interim, reach out to your landlord and attempt to negotiate a reduction and/or deferral in your rent. Explain to them the impact that COVID-19 is having on your cashflow and ability to meet obligations like wages, rent and other overheads. Note tenants of Queensland Government properties will be receiving rental relief soon.

14. Assistance for Home Owners & Landlords

No specific assistance is available as yet for home owners or landlords. Contact your Bank ASAP to ask what assistance they can provide (reduced interest, repayment holidays, conversion of principal and interest loans to interest only). Queensland Government is extending some support to households via utility bills.

15. Assistance for Tenants

No specific assistance is available as yet for tenants as yet. Contact your property manager ASAP if you are unable to pay your rent or if you will have difficulty paying your rent going forward.

Be sure to reach out to Centrelink and see if you are eligible for rent assistance. Also, consider early access to your superannuation (point 12) if you are struggling for cashflow.

16. Trading and activity restrictions for business

Keep an eye on the relevant State Government websites for updates to trading and activity restrictions for businesses.

On 22 March, the Australian Government announced a further stimulus package to support small businesses and individuals during the COVID-19 health crisis, to cushion the economic blow and to build a bridge to recovery on the other side.

We’re working hard to support and guide our clients through these troubling times. Our team is operating remotely from Monday 23 March, and they are fully equipped to continue to deliver great service and valuable advice to our clients. Other than face to face meetings being replaced with Zoom meetings, everything else is business as usual here at Link.