Covid 19 Stimulus Measures

Updated 22 March 2020 based on Government Stimpack 2 information.

As a business owner, it is vitally important that you evaluate your business continuation strategy and cash flow forecast with your accountant before implementing any of the following strategies.

If considering these tax and lending incentives, your priority actions should include:

Making sure your accounting records are up to date

  • Due to the lock-down and social distancing, records will have to be made available digitally to your bookkeeper or accountant.

Preparing your 3-6-12 month cash flow forecasts

  • This can be done in software or Excel

Gathering copies of tax documents

  • Lenders may ask to see 2019 tax returns, financial statements, ATO balances, BAS’s and cash flow forecasts.

Ask – should your business continue?

  • As a business owner, you’ve got to make the right decisions now to protect yourself, your personal assets and your family.
  • Injecting more more money into a troubled business just to keep it afloat may be the worst decision.
  • If you have to stand down your employees, it’s the government’s role to care for them now, so don’t feel guilty if you cannot continue to support them. But do check your Fair Work obligations.

Please book a meeting with your accountant to run through your options before committing to more debt and exposure. These stimulus measures may not be suitable for all businesses.

CORONAVIRUS STIMULUS MEASURES

The Australian Government and banking institutions have united to assist small businesses weather economic uncertainty.

This live document will monitor track of all the grants, tax breaks and assistance packages available to Australian Small Businesses in Qld.

The objective is to centralise all of the concessions available to ensure every small businesses in the our region can easily access this information and apply accordingly.

*last updated 22nd March 2020

1) FEDERAL GOVERNMENT (available to all SMEs)

The Australian Government has thus far announced 2 Economic Stimulus packages to the sum of $189 billion.

The package includes both cash* and tax incentive measures, as followed:

CASH FOR SMALL BUSINESS OWNERS

(a) 100% Cashback on PAYG Withholding, up to $100,000 in total

Eligible small and medium-sized employers will be provided a 100% tax-free ‘cash back’ of up to $50,000 (and a minimum of $10,000) on your PAYG Withholding on wages between 1 January 2020 and 30 June 2020.

A second tranche of tax-free, cash back payments of up to $50,000 (and a minimum of $10,000) on your PAYG Withholding on wages will also be paid for the period 30 June 2020 – September 2020.

This second payment is calculated as the total cash back credit calculate in the first payment, split evenly over the June-20 to September 20 BAS/IAS lodgement period.

So to summarise – the cash back is now calculated on 100% of PAYGW of your wages, paid in 2 separate calculation periods:

PAYMENT CALCULATION PERIOD CALCULATION METHOD BENEFIT
Payment 1 1 Jan 2020 – 30 June 2020 100% of PAYGW Capped at $50,000 for the period, with a minimum of $10,000
Additional Payment (Payment 2) 30 June 2020 – 30 Sep 2020 Calculated the same as Payment 1 Capped at $50,000 for the period, with a minimum of $10,000

So, breaking this down:

Payment 1

If you have spent more than $50k in PAYGW for the 6 month period between 1 January and 30 June 2020, you will receive $50,000 in cash from the Government for this period.

If you have spent $30k in PAYGW for the same period, you will get $30,000

Regarding the Additional Payment (Payment 2):

The same total benefit per Payment 1 is paid equally over your BAS/IAS lodgement period between 30 June 2020 and 30 September 2020

A couple of other points on this:

If you take your ‘salary’ as a dividend or directors drawing and want to maximise your ‘cash back’, you could explore changing the treatment of your remuneration from drawings to salary… but wait until your accountant confirms whether or not this will work in your circumstances!

* If you have an existing debt with the ATO this benefit will offset your existing liability.

💡 How to apply?

This credit will automatically be processed upon lodgement for your BAS and IAS. Your accountant and/or bookkeeper will process it for you. We strongly recommend seeking professional advice before changing any usual payments to business owners and associates, as the legislation could make this tricky.

👉 Use this worksheet to calculate an estimation of your PAYGW incentive benefits (‘make a copy’ that you can edit)

(b) 50% subsidy on apprentice wages, up to $21,000

Eligible employers can apply for a wage subsidy of 50% of apprentice or trainee wages for up to 9 months from 1 January 2020 to 30 September 2020 (up to a maximum of $21,000 per eligible apprentice or trainee).

If a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.

TAX INCENTIVES FOR SMALL BUSINESS OWNERS

  • The immediate tax deduction threshold has been increased from $30,000 to $150,000 for assets purchased between 12 March 2020 and 30 June 2020
  • Assets over $150,000 will attract an additional 50 percent depreciation rate of the asset cost in the year of purchase for assets purchased between 12 March 2020 and 30 June 2021

A couple of other points on this:

  • It’s important to note that these are tax incentives, not cash back incentives. In other words, you need to spend the money, and pay income tax in order to get the tax benefit.
  • The tax benefits will be applicable for your FY20 and FY21 tax returns, which means you won’t see any benefit until you’ve lodged your 2020 and 2021 returns.

💡 How to apply?

This credit will be processed by your tax accountant upon preparation and lodgement for your 2020 and 2021 income tax returns.

TAX PAYMENT DEFERRALS

The ATO is providing SMEs payment deferral concessions for businesses directly impacted by COVD-19.

They are outlined as followed:

  • Deferring by up to 4 months the payment date of amounts due through the business activity statement (including PAYG instalments), income tax assessments, fringe benefits tax assessments and excise.
  • 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.
  • Allowing businesses to vary Pay As You Go (PAYG) instalment amounts to zero 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.
  • Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities.
  • Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low interest payment plans.

A couple of very important things to note:

  • You will still need to pay Superannuation –
  • These relief provisions are not automatically applied. You or your accountant will need to contact the ATO to make any of the above requests for assistance.

💡 How to apply?

Businesses can call the ATO’s Emergency Support Infoline on 1800 806 218 to discuss relief options based on their needs and circumstances.

GOVERNMENT UNDERWRITTEN, CASH FLOW LOANS FOR SME’S

  • 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.
  • Important clarification – this does not mean the Federal Government is issuing loans directly.
  • 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.

So what does this mean for me?

Expect a new type of loan product issued by the banks and lenders, tailored for SMEs that have been directly disrupted by COVID-19

💡 How to apply?

Contact your bank/lending institution about this package.

Refer to the ‘Coronavirus SME Guarantee Scheme’ and ask what new loan products are available to assist.

2) QLD STATE GOVERNMENT

Interest Free State Government Loans

The QLD Government will offer $500m in loans to eligible businesses to retain employees and maintain operations. Details are:

  • Loans up to $250,000
  • First 12 months interest free
  • Currently taking expressions of interest before rolling the concessional loans out

💡 How to apply?

Expressions of interest application is here

Payroll Tax Concessions

Deferred payroll tax returns until 31 July 2020

Payroll Tax Concession Summary: Deferred due date of 3 August 2020 for all monthly, quarterly and annual returns in the 2020 financial year.

💡 How to apply?

Complete the online payroll tax deferral application form

3) BANKS AND LENDING INSTITUTIONS

Specific COVID-19 concessions have been announced by the following banks:

i) CBA

Deferring repayments on a variety of business loan and overdraft products, for 6-months.

Reducing commercial interest rates by 0.25

Waiving merchant terminal fees for impacted customers with CBA payment terminals, for 90 days.

Waiving early redraw fees on business term deposit accounts (including Farm Management Deposit accounts).

Waiving establishment fees and excess interest on Temporary Excess products.

Deferring repayments on vehicle and equipment finance loans, and providing tailored restructuring options that meet individual customer needs.

💡 How to apply?

More information can be found here

ii) 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

💡 How to apply?

Contact ANZ or your relationship manager.

iii) 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.

💡 How to apply?

Contact NAB or your relationship manager

1300 769 650 (Monday to Friday 8am-6pm AEST/AEDT)

iv) Westpac

Continuing it’s hardship assistance program

Deferral of business loan repayments for up to 6 months, assessed on a case-by-case basis

💡 How to apply?

Contact Westpac or your relationship manager

v) 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

💡 How to apply?

Contact Bendigo or your relationship manager

Please contact us for further information.

We will be updating this post as legislation is passed during the week.

Please stay safe and well.

The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.

Some of this content has been re-purposed with permission from https://www.notion.so/, who we thank for sharing their updates with us.