The Federal Government announced a $17.6 billion dollar Coronavirus stimulus package on March 20 with a second-round on March 22 taking the total spend now to $189 billion.

The packages are aimed at supporting businesses and those on low incomes, as well as those who may have suddenly lost their source of income, or paid employment at this time. The latest details are summarised below.

The government has also recently freed up credit for smaller lenders (small banks and credit unions) to allow small businesses to immediately access low-cost loans if they need these in these difficult times. In addition facilities to draw down on super tax-free are also now available.

There are also new tax regulations with a special help centre established to allow businesses to put off BAS payments for the next few months.

Please call us if you would like more information on eligibility, or how to apply for assistance.

Highlights.

• Access Job Seeker allowance as well as the government fortnightly subsidy for casual workers, sole traders and those who lose jobs due to Coronavirus. No waiting periods.
• New support for low income families and individuals, with special fortnightly supplements announced.
• Business boosters – Cashflow support for employing SMEs with a turnover of less than $50 million are eligible for a tax-free payment of up to $100,000 in order to retain staff.
• Eligible employers can now apply for a wage subsidy of 50 per cent of an apprentice’s or trainee’s wage for up to nine months from January 1, 2020 to September 20, 2020.
• Australian Banking Association has announced all small businesses affected by the crisis will be able to apply for and access a deferral of all loan repayments.
• An increase in the instant asset write off threshold from $30,000 to $150,000 for businesses with aggregated annual turnover of less than $500 million until June 30, 2020.
• Businesses with a turnover of less than $500 million will be able to deduct an additional 50 per cent of the asset cost in the year of purchase through to June 20, 2021.
• New tax plans and extended deadlines for those struggling with cashflow to be negotiated with the ATO. Possible to delay BAS payments.
• $15 billion worth of credit released by the Commonwealth for consumers and business owners that need low-cost loans. The money will be distributed through small banks and credit unions who can provide a variety of unsecured loans for distressed businesses and individuals who need it.
• A $1 billion fund for regional areas affected by the virus. This is likely to affect industries affected like tourism, agriculture and education. Details are still to be released on these programs.

 

Details

Low income payments 

Those on low incomes will receive a one-off tax-free $750 payment to encourage spending in the economy. These payments will be made from the 31 March 2020 and a second payment from 13 July 2020.

Families who receive family tax benefits are also eligible. There is no application required as the government will pay this money straight into bank accounts of those eligible on either March 31 or 13 July.

The payment will be made to all social security, veteran and other income support recipients and eligible concession card holders. This includes those on Newstart, those who have Commonwealth Seniors Health cards, and families receiving family tax benefits.

 

Coronavirus supplement and Jobseeker payments

Those who lose their income due to the coronavirus crisis are eligible for Jobseeker payments immediately, and will also be able to access a special Coronavirus supplement of $550 a fortnight.

 

Freeing up superannuation draw downs

Those who are eligible can now draw down on their superannuation early, up to $10,000 in 2019-20, and a further $10,000 in 2020-21. No tax will be payable on the withdrawals. Applications need to be lodged online through MyGov before July 1. For retirees, the government is also providing more flexibility around how superannuation assets are managed. This new scheme temporarily reduces superannuation minimum drawdown requirements for account-based pensions and similar products by 50 per cent for 2019-20 and 2020-21.

Up to $100,000 for SMEs employing staff

Small and medium-sized businesses will receive up to $100,000 to cover the costs of employee wages and salaries, paid by the Australian Taxation Office based on tax withheld. This measure will happen automatically based on the business activity statements lodged by business. However, there is no provision for those working as sole traders, this scheme applies only to employing businesses. This means payments will be directly linked to keeping someone employed as the tax is calculated and withheld based on a worker’s wage. Eligible businesses that pay salary and wages will receive a minimum payment of $20,000, even if they are not required to withhold tax.

More details here: https://www.theguardian.com/business/2020/mar/22/what-australias-189bn-coronavirus-economic-rescue-package-means-for-you

 

Tax relief

The Government is offering a deferral of GST, income and other tax payments on a case-by-case basis. Please call us as soon as possible if you need to take advantage of these provisions so we can begin planning to ensure you can access these provisions:

More details here: https://www.ato.gov.au/Media-centre/Media-releases/Support-measures-to-assist-those-affected-by-COVID-19/

 

Keep jobs — subsidies for employing an apprentice

The government is focused on keeping people in jobs. Around $1.2 billion will be made available as a wage subsidy of 50 per cent of apprentice’s wages for up to nine months from 1 January 2020. If a business cannot keep the apprentice on during this time, the subsidy will move with the person to the new employer.

 

Instant Asset Write-Off for business now boosted to $150,000

A new raft of incentives has been launched to encourage businesses to spend money quickly. The most significant of these is the increase in the existing instant asset write off – up from $30,000 to $150,000. SMEs can use this program to buy tools, cars, and industrial equipment to use in the business. There is also a separate 15-month incentive to invest through accelerating depreciation deductions if the instant asset write off doesn’t apply. Businesses with a turnover of less than $500m will be able to deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.)

 

Regional support grants

With the recent bushfires, many regional areas are suffering from a double whammy of economic crisis. A new $1 billion fund has been established to support regional areas affected by the virus. This is likely to include businesses in areas like tourism, agriculture and education. Details are still being decided, but it is expected to work in a similar way to the grants that became available after the bushfires in badly affected areas.

 

SA state government incentives

The South Australian government has also announced a $350 million construction-focused package, to be spent in the next 12 months. It includes a $15 million spend on regional health projects and fast tracks of regional upgrades in across the state. It will likely include work on housing, tourism, and road projects in an effort to increase economic activity in the state with the recent loss of trade and international education revenue. So far there has been no word on payroll tax changes, although changes have already been announced in WA and NSW.

 

What’s to come

It is expected the Federal Government will move to release more funding in coming weeks with specific programs to support badly affected industries including the tourism, retail and hospitality sectors. We will update you when further news comes to hand.

 

Further Links

https://business.gov.au/risk-management/emergency-management/coronavirus-information-and-support-for-business

https://treasury.gov.au/