Please Note: this information was current as at 3pm Monday 23 March 2020. We will provide updates as further information becomes available or other announcements are made.
A number of announcements were made by Federal and State Governments on Sunday 22 March 2020 which will impact the way we live and work in South Australia, and around the country.
The below details are based on press releases and our understanding of the announcements. We are expecting legislation to be introduced to Parliament and passed today or tomorrow and further details will follow once we have seen the detail in the legislation.
SUPPORT FOR AUSTRALIAN BUSINESSES
From the Federal Government
Supporting Business Cash flow
The Federal Government has built on the announcement made on 12 March providing cash to businesses with turnover less than $50 million who employ staff. Eligible businesses may be entitled to up to $100,000 in tax-free payments which will be paid from 28 April 2020, via the March monthly/quarterly BAS. Businesses must have been an active employer as at 12 March 2020.
There are now two payments available and below is our understanding of how these will work.
The first payment, referred to as the “Boosting Cash Flow for Employers Payment”, will be equal to 100% of PAYG withheld between March and June capped at $50,000. For monthly remitters, the March PAYG withholding amount disclosed on the BAS will be multiplied by 3 and 100% of that amount will be refunded to businesses capped at $50,000.
The second payment, which will be paid from July – October will be an additional payment equal to the amount received from January to June. For example, where a business receives a $50,000 payment between March – June 2020 and they are a monthly remitter, they will receive an automatic credit of $12,500 in each of their monthly BAS’s from June – October 2020. A quarterly remitter will receive a $25,000 payment in each of their June and September BAS up to a total of $50,000.
This means businesses can get up to $100,000 paid over the next 7 months.
Businesses will receive a minimum of $20,000 ($10,000 in each period) including businesses that employ staff but are not required to remit PAYG withholding.
The above is subject to the legislation being introduced and passed, and may change.
These cash injections, along with concessions to be provided by banks, will hopefully provide businesses the cash flow support they need to continue operations.
Sole traders and partners in partnerships
- A sole trader or partner in a partnership is unable to employ themselves, therefore they will not be eligible for the above payments
- Where a sole trader has a significant decrease in income, they may be entitled to the expanded Jobseeker allowance and the new time-limited Coronavirus supplement to be paid at $550 per fortnight
Support for the immediate cash flow of SMEs
- The Coronavirus SME Guarantee Scheme will be introduced where the Government will provide a guarantee of 50% to lenders to support new short-term unsecured loans to SMEs (turnover up to $50 million) for working capital starting from early April and ending in September
- The maximum loan which can be guaranteed is $250,000 per borrower
- There is a maximum 3 year term with a 6 month repayment holiday
- The Government is providing a temporary exemption from responsible lending obligations for lenders to existing small business customers for 6 months
Insolvency measures – for the next six months
- The Government is increasing the threshold at which creditors can issue a statutory demand on a company and instigate bankruptcy proceedings (from $2,000 to $20,000)
- Increase in time for directors to respond from 21 days to 6 months
- There will be relief for directors from insolvent trading
- ATO will work with directors and tailor solutions for businesses struggling due to the Coronavirus
Investment allowance and accelerated depreciation (investment incentive)
- No changes were announced to this measure originally announced on 12 March 2020
Apprenticeships and trainees
- No changes were announced to these measures originally announced on 12 March 2020
From the State Government
No major tax initiatives for business have been announced by the State Government.
On 11 March 2020 a $350 million infrastructure package was delivered by the State Government in response to the bushfires and Coronavirus.
From the Banks
After the RBA announcement last Thursday, all of the big four banks, and others, have announced how they will be supporting individuals and businesses. Most banks are providing support for small business including:
- Reduced rates on small business lending
- Reduced rates on overdraft facilities
- Repayment relief for small business customers (applications will need to be made)
- Merchant terminal fees waived
- No establishment fees for equipment finance loans for businesses wanting to take advantage of the instant asset write off
If you think you may need financial assistance you should get in touch with your banker ASAP to understand your options.
From the ATO
There are a number of deferrals and other relief options available from the ATO, including changes to PAYG instalments payments, debt repayment options and interest remission. None of these options are applied automatically, they must be requested. Please contact us if you would like further information in relation to these relief options.
What next for businesses?
If you are a business owner, you should be considering your income and expenses and the resulting cash flow. If you think you may have an issue going forward with regards to your expenses, in particular rent, wages and loan/debt repayments, you need to take action now.
This action could include talking to your land lord, talking to your bank about restructuring or deferring loan repayments or talking to the ATO to negotiate or renegotiate payments that are due. We can assist you with all or some of these actions.
Most importantly, look after yourself, your families and you staff. Stay across announcements by the Prime Minister and our Premier, Steven Marshall.
SUPPORT FOR INDIVIDUAL & HOUSEHOLDS
From the Government
- The government will allow the temporary release of up to $10,000 from superannuation in the 2019-2020 year and another $10,000 in the 2020-2021 financial year. The payments will be tax free and will not affect Centrelink or Veterans’ Affairs payments
- Account based pension drawdown rates have also been halved to reduce the need to sell down assets and realise losses to fund the drawdown
- Social security deeming rates have been reduced by 0.5 percentage point
- A new time-limited Coronavirus supplement of $550 per fortnight will be paid to existing and new recipients of Job Seeker Payments, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefits
- Two separate payments of $750 will now be made to recipients of social security, veteran payments and other income support payments. The first payment will be made as originally announced from 31 March 2020 with the second one being made from 13 July 2020
From the banks
Banks have also announced hardship packages for individuals which includes reduced fixed home loan rates and repayment relief for home loan customers.
From the ATO
There are a number of deferrals and other relief options available from the ATO. None of these options are applied automatically, they must be requested. Please contact us if you would like further information in relation to these relief options.
What next for individuals?
You should consider the availability of the above concessions and please contact your Holman Hodge adviser if you need any assistance.
Most importantly, take care of yourself and your family and stay across announcements by the Prime Minister and our Premier, Steven Marshall.