While we prepare to go into hibernation, the Government is doing everything they can to deal with COVID-19 and an inevitable recession. As part of the financial measures taken so far, the Government plan to inject a total of $189B in various ways and it’s important to understand how these may help you and your business.
So far the following measures have been announced by Government and associated entities, these are top-line dollars and below we’ll look at how they may affect your operations. All packages are with the intention to soften the blow caused by the outbreak of COVID-19:
- Federal Government’s $17.6B package (1st in the series)
- The RBA lowering interest rates and other measures being implemented by banks totalling to $105B
- Victoria State Government’s $1.7B package for SMEs. For other state-specific, please view NSW, QLD, Tasmania, WA, NT, SA and Canberra.
- Federal Government’s 2nd relief package totalling $66B
Federal Government Measures for Business
The key business tax measures include additional cash flow assistance for an employer:
- The previously announced tax-free payment of $25,000 for employers under $50m turnover (based on prior year) will be increased to $50,000.
- The minimum payment will be increased from $2,000 to $10,000 and will include Not For Profit organisations.
- The payment will be based on 100% (instead of 50%) of the PAYGW amount reported in the activity statement from January to June 2020.
- An additional payment equal to this amount will also be available from July to October 2020, taking the total available payments to $100,000 (minimum $20,000).
- The payments will be automatically credited by the ATO through the activity statement system.
- The payments will only be available to active eligible employers (other than charities) established prior to 12 March 2020.
- Other measures include:
- Increased instant asset threshold of $150,000 and turnover threshold of $500m until 30 June 2020;
- Limited 50% depreciation incentive until 30 June 2021;
- 50% wages subsidy for apprentices and trainees until 30 September 2020
- Coronavirus SME Guarantee Scheme introduced where the government will guarantee 50% of new loans to SMEs up to $40B
- The Government is also providing up to $715 million in support for Australian airlines and airports
- Limited time $550 per fortnight for six months coronavirus supplement will be available for people receiving following income support payments:
- Jobseeker Payment1 (and all payments progressively transitioning to JobSeeker Payment; those currently receiving Partner Allowance, Widow Allowance, Sickness Allowance and Wife Pension)
- Youth Allowance Jobseeker
- Parenting Payment (Partnered and Single)
- Farm Household Allowance
- Permanent Employees stood down or loss of employment
- Sole traders/self-employed/contract/casual workers subject to passing income test
Key Superannuation and Income support measures for Individuals
Early access of up to $10,000 superannuation money will be available from mid-April to 30 June 2020. A similar amount will be accessible for the period starting 1st Jul 2020 for approximately 3 months. This payment will be tax-free.
Applications can be made to ATO via myGov. Separate arrangements will be made for SMSFs.
Conditions applied are:
▪ eligible for a job seeker payment; or
▪ on or after 1 January 2020:
- Made redundant;
- Reduction in working hours by 20% or more; or
- If a sole trader — the business was suspended or reduction in turnover of 20% or more.
The Government is also offering a halving of minimum pension drawdown requirements (i.e. 4% → 2%) for 2019–20 and 2020–21.
The previously announced $750 payment for income support recipients and concession cardholders will now be two separate payments: one from 31 March 2020 and the other from 13 July 2020. There will also be a new time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight from 27 April for the next 6 months.
As part of reducing means-testing deeming rate range dropped to 0.25% – 2.25%. Income support recipients will also have:
▪ Expanded access
▪ Reduced means-testing
▪ Reduced waiting times
▪ Claims accelerated
▪ The application process streamlined
Victorian State Government Measures
- Businesses with payroll less than $3M will get a refund for the tax paid for the current financial year. As per the announcement, the Government will refund already paid tax. Processing will start this week.
- $500 million packages to assist SMEs and people who have lost their jobs at this difficult time. If you are a business that’s been impacted view here, if you are an individual view here.
Other measures include:
- Waiver of liquor licencing fee for 12,500 businesses
- Rent-free period for commercial tenants in Government buildings
Major Bank Measures
Broadly speaking measures for businesses include:
- Defer principal and interest for up to six months
- Drop-in rates for up to 2% for new loans and overdraft facilities
- 1% reduction on variable rates for small business loans
- Defer business credit card repayments
- Waiver or reduction of redraw and merchant fee
- Deferring repayments on vehicles and equipment finance and providing restructuring options
- Pause home loan repayments for up to six months
- Access to fixed interest rates ranging from 2.19% to 2.39%
- Most lenders have increased interest they will pay on term deposits. Increase amount is around 1.70%. This is to help seniors earn extra income for the money sitting in their bank accounts.
Please note the above list from the financial institutions is a general guideline to help you understand your possible avenues. If you need information specific to an institution, please feel free to contact me.
The Federal Government is meeting on 23rd March 2020 to pass a Federal relief package. Since Labour has made an outright announcement stating they won’t oppose the bill, it more likely will pass the parliament.
Whilst I have made every attempt to understand various publications issued by the Federal and Victorian Government, please make sure you get proper advice before acting on any of the above.
If anyone needs more clarity, please feel free to call or email me. I will do whatever I can to support the community in this difficult time. Please pass it on to anyone you think it will be worth. I hope this helps.