E-news

Our Pause Newsletter

COVID-19: Government Support Package Summary

//
Posted By
/
Comment0
/
Categories

The table below summarises the key measures announced in the second stimulus package for businesses, their employees and other targeted areas, including earlier announcements.

COVID-19: Federal tax support measures announced 22 March 2020

EFFECTIVE FROMCONDITIONSBCR ADVISORY COMMENT
BOOSTING CASH FLOW FOR EMPLOYERS – ENHANCED
Employer cash support payment up to $100k (increased from previously announced $25k support on 12 March 2020)

Payment calculation method also accelerated from 50% to 100% of PAYG withholdings

Payments are tax free

Covers amounts withheld from 1 January 2020 to 30 June 2020 (for monthly PAYG withholding lodgers it applies to amounts withheld from 1 March.

However, to provide a similar treatment to quarterly lodgers the payment will be calculated based on 3 times the March PAYG withholding)

Aggregated turnover less than $50m (generally based on prior year turnover)

Now also includes Not-For-Profits and Charities that are employers

Must have been an employer established before 12 March 2020 with an exception for Charities registered with the Australian Charities and Not-for-profits Commission (ACNC)

Employers with nil PAYG withholding will have the minimum support payment increased from $2k to $20k

The $100k cash support cap is effectively made of two components. The first component is a doubling of the boosting cash-flow support from $25k to $50k for March to June PAYG withholdings. The second component is a cash support payment equal to the first component received and applied to activity statements from June to September

Although this is welcomed relief, if your business has a running account deficit, it is unlikely that you will see any positive cash stimulus. BCR Advisory can provide you with alternative options.

GOVERNMENT LOAN SUBSIDY – SME GUARANTEE SCHEME
To enhance the ability for SMEs to obtain loans from lending institutions, a 50 per cent Government guarantee will be provided to SMEs for new unsecured loans to be used for working capital. A 6 month loan repayment holiday to be providedNew loans from early April to 30 September 2020Turnover up to $50m

Limit of $250k loan per borrower.

Loans up to 3 years

Loans will be based on lender’s loan conditions but the Government will be expecting lenders to look past current conditions when making loan assessments

It is expected that many cash strapped SMEs may consider this option. Of note, no loan security will be required but still subject to lender’s lending requirements.
TEMPORARY RELIEF FOR FINANCIALLY DISTRESSED BUSINESSES – DEALING WITH CREDITOR DEMANDS
The current minimum threshold for creditors issuing a statutory demand under Corporations law will be temporarily increased from $2,000 to $20,000.

Timeframe for responses to a statutory demand will be extended temporarily from 21 days to 6 months

Government has announced this will apply for a 6 month periodNo specific conditions notedAffected businesses should start liaising with their creditors. BCR Advisory can provide assistance where required.
TEMPORARY RELIEF FOR FINANCIAL DISTRESSED BUSINESSES – TRADING WHILST INSOLVENT
Temporary relief from personal liability for insolvent trading will apply with respect to debts incurred in the ordinary course of the company’s businessGovernment has announced this will apply for a 6 month periodCompanies will still be liable for their debtsOur view is that the Safe Harbour regime should still be considered for a period of 12 months. This will allow business an additional 6 months to recover from the trauma.
TEMPORARY RELIEF FOR FINANCIALLY DISTRESSED BUSINESSES – BANKRUPTCY PROCEEDINGS
Threshold to initiate bankruptcy proceedings against a debtor will temporarily increase from $5,000 to $20,000Government has announced this will apply for a 6 month periodNo specific conditions notedDistressed businesses should consult an advisor. BCR Advisory can provide assistance where required.
CERTAIN CORPORATIONS LAW REQUIREMENTS TO BE RELAXED
Relief from specific Corporations Law obligations to be introduced including modifying certain obligations to enable compliance with legal requirements during the crisisSix months from the date an instrument made by the Treasurer is madeFurther details to be providedThe Government has announced that this could cover for example the requirement to hold certain AGMs as a result of social distancing measures.

COVID-19: Federal tax support measures announced 12 March 2020

EFFECTIVE FROMCONDITIONSBCR ADVISORY COMMENT
ASSET WRITE OFFS
100% write off for assets up to $150kFrom 12 March 2020 until 30 June 2020Aggregated turnover less than $500mAsset must be first used or installed ready for use by 30 June 2020 to qualify.

It is yet to be determined if cars are still subject to the cost limit for depreciation.

Upfront 50% deduction for “eligible assets” and existing depreciation rules applying to balanceImmediate effect for “eligible asset” purchases until 30 June 2021Aggregated turnover less than $500m“Eligible assets” are new assets that can be depreciated for tax purposes, except second-hand assets. Therefore, this does not apply to capital works.
EMPLOYER CASH SUPPORT – SMALL TO MEDIUM ENTERPRISES
50% of an apprentice or trainee’s wage over a 9 month periodEffective from 1 January 2020 to 30 September 2020For businesses with less than 20 full time staff who retain an apprentice or trainee. The apprentice/trainee must have been in training as at 1 March 2020.Where a small business is not able to retain an apprentice, the subsidy will still be available to a new employer of that apprentice.

Further details can be found here:

New South Wales

EFFECTIVE FROMCONDITIONSBCR ADVISORY COMMENT
PAYROLL TAX:
Three month waiver of payroll taxImmediate to 30 June 2020Payrolls up to $10mBusinesses will effectively receive a 25% reduction in their 2019-2020 payroll tax liability
Bring forward of higher payroll tax threshold limit from $900k to $1mFrom 1 July 2020n/aThis measure has been brought forward from the later intended start date of 1 July 2021
STATE FEES AND CHARGES:
Waiver of various State fees and chargesFurther details to be providedFurther details to be provided but to be targeted at small businesses.Intended to cover bars, cafes, restaurants and trade persons
PUBLIC WORKS AND INFRASTRUCTURE:
$250m to employ additional cleaners of public infrastructureFurther details to be providedFurther details to be providedThis will cover additional cleaning support for transport infrastructure, schools and public buildings
Over $250m to bring forward maintenance of public assetsFurther details to be providedFurther details to be providedThis is to cover social housing and crown land fencing
$500m to bring forward capital works and maintenanceFurther details to be providedFurther details to be provided

Further details can be found here:

Queensland

EFFECTIVE FROMCONDITIONSBCR ADVISORY COMMENT
ASSISTANCE TO AFFECTED INDUSTRIES:
$27.25m package for tourism and seafood businessesFurther details to be providedMust be in specific industries or regions
$500M LOAN FACILITY:
Interest free loan facility for first 12 monthsFurther details to be providedLoans up to $250kIntended to assist businesses to retain staff
PAYROLL TAX:
Payroll tax deferral extended from SMEs to all businessesFurther details to be providedApplies to all businesses impacted by COVID-19Eligible businesses in Queensland will not need to pay payroll tax until 3 August 2020 which includes the February 2020 payroll tax return

Further details can be found here:

Western Australia

EFFECTIVE FROMCONDITIONSBCR ADVISORY COMMENT
BUSINESS GRANTS:
One-off grant up to $17,500 to businesses who pay wages between $1m and $4mGrants to be paid from 1 July 2020Based on annual Australian taxable wages between $1m and $4mFor employers grouped for payroll tax only a single grant will be paid to the designated group employer
PAYROLL TAX:
Payroll tax deferral offered to affected businesses by the coronavirusCovers the 2019-20 monthly payroll tax payments until 21 July 2020Australian taxable wages do not exceed $7.5m and business has been affected by the coronavirusThe deferral mechanism is to be confirmed
Increase in payroll tax threshold to $1m brought forward by 6 monthsEffective from 1 July 2020Current payroll tax threshold is $950k
HOUSEHOLD RATES AND CHARGES FREEZE:
Planned increases to electricity, water, motor vehicle registration, ESL and public transport will not go aheadUntil at least 1 July 2021N/AIntended to keep household costs at a manageable level
WELFARE SUPPORT:
The Energy Assistance Payment will double to $600Until 30 June 2021Must be an eligible concession card holderAimed to ease the financial burden for vulnerable citizens

Further details can be found here:

South Australia

EFFECTIVE FROMCONDITIONSBCR ADVISORY COMMENT
INFRASTRUCTURE INVESTMENT:
A total of $350m to fund various infrastructure upgrades to roads, hospitals, tourism and increased funding for the Economic and Business Growth FundFurther details to be providedProjects must be able to be started within a short period of time. Projects must also be labour intensive and/or require significant purchasing of local materials, services and supplies

Further details can be found here:

Tasmania

EFFECTIVE FROMCONDITIONSBCR ADVISORY COMMENT
INTEREST FREE LOANS:
$20m will be allocated to providing loans to small business and $50m will be allocated to providing loans to local government. The loans will be interest free for three yearsFurther details to be providedSmall businesses with less than $5m turnover in the hospitality, tourism, seafood and export sectors, as well as local governments
PAYROLL TAX:
Four month waiver of payroll taxImmediate to 30 June 2020Hospitality, tourism and seafood businessesOther businesses may apply for this concession, but only if they have less than $5m payroll and have been impacted by the virus

Further details can be found here:

Northern Territory

EFFECTIVE FROMCONDITIONSBCR ADVISORY COMMENT
BUSINESS SUPPORT:
Eligible businesses will receive a one-off payment of $10,000. If a business puts in $10,000 of their own money, then the government will grant another $10,000. $20m has been allocated for this package.ImmediateMust use money to improve a business in the Territory. The purchases must be made from another Territory business.
$5m has been allocated to help businesses with adjusting to the conditions caused by the virus.ImmediateAll businesses can apply, but the hospitality sector will have first priority. Further details to come.
$5m has been allocated to grant money for repairs, renovations and upgrades. The grant is up to $50,000.ImmediateMust be an incorporated not-for-profit or a community organisation. If the organisation puts in their own money, it will be matched dollar for dollar up to $50,000.The grant and dollar-matched grant can be added together for a total grant of up to $100,000.
FREEZING OF GOVERNMENT CHARGES:
All government fees and charges will be frozen.Until 1 July 2021N/AThis includes electricity, water and car registration.
HOME IMPROVEMENT:
$30m of grants will be provided to Territory homeowners and landlords for home improvement.ImmediateIf the owner contributes $1,000 they will receive a $4,000 grant, if the owner contributes $2,000 they will receive a $6,000 grant.

Further details can be found here:

Australian Capital Territory

EFFECTIVE FROMCONDITIONSBCR ADVISORY COMMENT
PAYROLL TAX WAIVER FOR 6 MONTHS
Businesses in the hospitality, creative arts and entertainment industries.Covers waiver of payroll tax from April to September 2020

For monthly lodgers, first credit will be applied to the April 2020 liability.

For annual lodgers, the credit will be applied at the end of the 2019-2020 financial year

Business must be in the hospitality (cafes, pubs, hotels, clubs and restaurants), creative arts or entertainment industries.

Businesses will need to apply online at the ACT Revenue Office website at www.revenue.act.gov.au

This should be a priority for all ACT businesses that qualify. The online application page is yet to be created at the time of writing.
PAYROLL TAX DEFERRAL
SME businesses can defer their 2020-21 payroll tax, interest free until 1 July 2022For monthly lodgers, deferral can be applied to the April 2020 liability.

For annual lodgers, deferral can be made to the full 2020-21 liability usually payable in July 2021

For grouped Australia wide payrolls up to $10m

Businesses will need to apply online at the ACT Revenue Office website at www.revenue.act.gov.au

This should be a priority for all ACT businesses that qualify. The online application page is yet to be created at the time of writing.
COMMERCIAL GENERAL RATES REBATE
For commercial owners of property a rebate for fixed rates of $2,622The credit will be applied to the 2019-20 general rates, in fourth quarterCommercial properties with an average unimproved land value (AUV) of less than $2 millionThe rebate will be automatically applied.
ELECTRICITY REBATES
Small business owners with electricity usage may qualify for rebates of $750From June or July 2020 depending on the issue of the next electricity billApplies only to business they use less than 100 megawatts per yearThe rebate will be automatically applied.
RIDESHARE AND TAXI VEHICLE LICENCE FEES
Licence fees will be waived for 12 months for rideshare operators.

Waiver of government leased taxi plate fees

From 1 April 2020N/AFees will be waived automatically.

Cases where licences have already been prepaid 12 months in advance, an additional 12 months credit will be added to the licence at the next due date.

FOOD BUSINESS REGISTRATION, OUTDOOR DINING AND LIQUOR LICENCE FEES
12 month waiver of food business registration and on-licence liquor fees for licensed venuesFrom 1 April 2020Waiver only applies to licensed venuesCases where food business registration has been prepaid for more than one year in advance, an additional 12 months will be added to the licence.
Outdoor licence fees to be waivedFor 2020-21Waiver only applies to licensed venuesCases where food business registration has been prepaid for more than one year in advance, an additional 12 months will be added to the licence.
SUPPORT TO CLUBS
Additional payment of $1.5 million and freeing up the existing $1.8 million in the Clubs Diversification FundDetails to be providedDetails to be providedThis is targeted at assisting clubs to retain their employees at existing award rates.
INFRASTRUCTURE SPENDING
$20 million to be immediately spent on infrastructure projectsWill have a focus on works that can start immediatelySpending for maintenance on local schools, roads, and public transportThis is targeted at keeping locals employed in public works.
FUNDING FOR ARTS SECTOR $500K
Funding for artists of up to $10,000 to support arts development and the sustainability of arts practice over the next six to nine months through a $500,000 grants programGrant applications will open on 30 March 2020 and close at 5pm 17 April at 5pm. Announcements on successful recipients will be made around 1 May 2020Application must be madeThose in the arts sector should start their applications immediately.
SUPPORT FOR HOUSEHOLDS AND WELFARE AND OTHER AREAS
Various other support to be provided to households, targeted welfare groups and other areas. See link below for class=”section-heading” further details

Further details can be found here:

Victoria

EFFECTIVE FROMCONDITIONSBCR ADVISORY COMMENT
PAYROLL TAX REFUNDS
Full payroll tax refunds for the 2019-20 financial year.Immediate to 30 June 2020Immediate to 30 June 2020 For small and medium businesses with payroll of less than $3 million.This assistance is a refund, not a loan.
PAYROLL TAX DEFERRAL
Payroll tax deferral for the first three months of the 2020/21 financial year.1 July 2020Payments can be deferred until 1 January 2021.
COMMERCIAL TENANTS RENT RELIEF
Commercial tenants rent relief –

Commercial tenants in Government buildings can apply for rent relief.

More details to come.More details to come.Private landlords are also being encouraged to undertake this measure.
2020 LAND TAX PAYMENTS
2020 land tax payments will be deferred for eligible small businesses.More details to come.More details to come.
GOVERNMENT SUPPLIER INVOICE PAYMENTS
Government supplier invoices will be paid within five business days.More details to come.More details to come.The private sector is urged to do the same, where possible.
LIQUOR LICENSE FEES
All liquor license fees will be waived for 2020.More details to come.More details to come.This measure is for affected venues and small businesses.
BUSINESS SUPPORT FUND
A $500 million Business Support Fund will be established.More details to come.More details to come.This fund will support the hardest hit sectors including hospitality, tourism, accommodation, arts and entertainment, and retail.
WORKING FOR VICTORIA FUND
A $500 million Working for Victoria Fund will be established.More details to come.More details to come.This fund will help workers who have lost their jobs find new opportunities, including work cleaning infrastructure or delivering food.

Download PDF

 

Source: Bentleys Chartered Accountants