Support businesses affected by COVID-19
Stimulus Package
Support for Individuals and Households
1. Income support for individuals
Over the next six months, the Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight. This will be paid to both existing and new recipients of Jobseeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit. The expanded access covers permanent employees who are stood down or lose their employment, sole traders, the self-employed, casual workers, and contract workers who meet the income tests as a result of the economic downturn due to the Coronavirus.
2. Payments to support households
The Government is providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders. The first payment will be made from 31 March 2020 and the second payment will be made from 13 July 2020.
To be eligible for the payment, you must be residing in Australia and be receiving certain social security payments for example age pension, disability support pension and carer payment, or holding certain concession cards for example pensioner concession card and Commonwealth seniors health card.
3. Temporary early release of superannuation
The Government is allowing individuals affected by the Coronavirus to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21. Individuals will not need to pay tax on amounts released, and the money they withdraw will not affect Centrelink or Veterans’ Affairs
4. Temporarily reducing 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. This measure will benefit retirees with account-based pensions and similar products by reducing the need to sell investment assets to fund minimum drawdown requirements.
5. Reducing social security deeming rates
As of 1 May 2020, the upper deeming rate will be 2.25 per cent, and the lower deeming rate will be 0.25 per cent.
Support for Businesses
1. Job Keeper Payment
Businesses that have a turnover of less than $1 billion and estimate a 30% or more decline in their turnover because of the Coronavirus will be eligible to receive a fortnightly wage subsidy up to $1,500 per employee. For businesses with a turnover greater than $1 billion, the decline needs to be 50% or more.
Eligible employers will be required to pass on the payments they receive to the employees. An eligible employee is an employee who is currently employed by the employer as a full-time or part-time, or a casual employed on a regular and systematic basis for longer than 12 months as at 1 March 2020.
2. Boosting cash flow for employers
The Government is providing up to $100,000 to eligible small and medium-sized businesses, and not-for-profits (NFPs) that employ people, with a minimum payment of $20,000. Employers will receive a sum equal to 100 per cent of their salary and wages withheld (up from 50 per cent), with the maximum amount increased from $25,000 to $50,000. Also, the minimum payment increases from $2,000 to $10,000.
An additional payment also applies in the June — September 2020 period. Eligible entities will receive an additional amount equal to the total of all of the Boosting Cash Flow for Employers payments they have received. Eligible entities will receive at least $20,000 up to a total of $100,000 under both payments.
3. Temporary relief for financially distressed businesses
The Government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company and to initiate bankruptcy proceedings against an individual as well as temporarily increasing the time companies, and individuals have to respond to statutory demands they receive. The package also includes temporary relief for directors from any personal liability for trading while insolvent, and providing temporary flexibility in the Corporations Act 2001 to provide targeted assistance from provisions of the Act to deal with unforeseen events that arise as a result of the Coronavirus health crisis.
The ATO will tailor solutions for owners or directors of business that are currently struggling due to the Coronavirus, including temporary reduction of payments or deferrals, or withholding enforcement actions including Director Penalty Notices and wind-ups.
4. Increasing the instant asset write-off
The Government is increasing the instant asset write-off threshold from $30,000 to $150,000 and expanding access to include businesses with aggregated annual turnover of less than $500 million until 30 June 2020.
5. Backing business investment
The Government is introducing a time-limited 15-month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating depreciation deductions. Businesses with a turnover of less than $500 million will be able to deduct 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.
6. Supporting apprentices and trainees
Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for nine months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
7. Coronavirus SME Guarantee Scheme
The Government will provide a guarantee of 50 per cent to SME lenders to support new short-term unsecured loans to SMEs. The Scheme will guarantee up to $40 billion of new lending. This will provide businesses with funding to meet cash flow needs by further enhancing lenders’ willingness and ability to ensure credit.
8. Payroll tax refunds (Victoria State Government)
The Victoria State Government will provide full payroll tax refunds for the financial year 2019/20 to small and medium sized businesses with payroll of less than $3 million. The same businesses will also be able to defer payroll tax payments for the first three months of the financial year 2020/21 until 1 January 2021.
9. Business support fund (Victoria State Government)
The Victoria State Government will provide $10,000 to the eligible businesses which employ staff, have been subject to closure or are highly impacted by Victoria's Non-Essential Activity Directions issued by the Deputy Chief Health Officer, have a turnover of mover than $75,000 and have payroll of less than $650,000.
Protect Your Business from the Coronavirus
To help protect your business and reduce the risk/effect of the coronavirus on your business, you should consider the following:
1. Avoid unnecessary interstate and overseas travel, you may not be able to come back or you may be quarantined (in isolation for extended periods regardless of health). All this can mean lengthy time off work and away from your business. There could be also enforced travel restrictions.
2. If someone at your business gets sick, they can infect the rest of the employees. Then, your business won’t be able to function. If possible, businesses may allow certain staff to work from home to reduce the potential of wiping out their team by limiting exposure and risk.
3. Improve basic hygiene – more frequent hand washing and wiping down of surfaces. Alcohol-based products are recommended.
4. Have a documented contingency plan. For example, have back-up arrangements in case employees responsible for certain roles are unable to perform or make special arrangements for vulnerable employees.
Vincent Wan
CPA, Registered Tax Agent
April 2020
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