In uncertain times like these when government announcements are coming thick and fast and anxiety levels are increased, it can be hard to take in the detail of everything. Please contact us to talk through how these announcements can help you to stay afloat – we are on-deck and remain committed to helping all our clients get through this period and access any and all of the government assistance to which they are entitled.
Apologies in advance for information overload, however, we are of the view that we should send as much information as possible to empower everyone to disseminate the relevant bits to family members, friends, colleagues and the community-at-large as far and wide as you can.
The 2nd wave of economic stimulus measures, largely to assist small and medium businesses to keep staff employed, include:
Increased Cash Subsidy for SMEs to Continue Employing Staff (businesses turning over <$50m in 2019 Financial Year)
- The tax-free cash subsidy to be credited against PAYG Withholding on employee wages has been increased from 50% (capped at $25,000 total subsidy) now to 100% (capped at $100,000 total subsidy), with the minimum payment increased from $2,000 to $10,000. Below is a useful example from Treasury of how it is all supposed to work…
- We also encourage you to talk to us before you lodge your BAS/IAS in the coming months, to ensure you legally maximise your entitlements to these concessions.
Example: Sarah’s Construction Business
Sarah owns and runs a building business in South Australia and employs 8 construction workers on average full-time weekly earnings, who each earn $89,730 per year. Sarah reports withholding of $15,008 for her employees on each of her monthly Business Activity Statements (BAS). Under the Government’s changes, Sarah will be eligible to receive the payment on lodgement of her BAS. Sarah’s business receives:
- A credit of $45,024 for the March period, equal to 300 per cent of her total withholding.
- A credit of $4,976 for the April period, before she reaches the $50,000 cap.
- No payment for the May period, as she has now reached the $50,000 cap.
- An additional payment of $12,500 for the June period, equal to 25 per cent of her total Boosting Cash Flow for Employers payments.
- An additional payment of $12,500 for the July period, equal to 25 per cent of her total Boosting Cash Flow for Employers payments.
- An additional payment of $12,500 for the August period, equal to 25 per cent of her total Boosting Cash Flow for Employers payments.
- An additional payment of $12,500 for the September period, equal to 25 per cent of her total Boosting Cash Flow for Employers payments.
Under the previously announced Boosting Cash Flow for Employers measure, Sarah’s business would have received a maximum payment of $25,000. Under the Government’s enhanced Boosting Cash Flow for Employers measure, Sarah’s business will receive $100,000. This is an additional $75,000 to support her business and help her retain her staff.
There are further examples in the Treasury Fact Sheet here, which we encourage you to review and/or talk to us about.
Increase in Subsidies to Support Trainees and Apprentices (businesses <20 FTE Employees)
Wage subsidy of 50% of apprentice/trainee wages paid during the 9 months from 1 January 2020 to 30 September 2020.
ATO Assistance and Administrative Relief
On a case-by-case basis, including:
- The ability to defer payment of certain taxes for up to 6 months.
- Allowing businesses to vary PAYG Instalment amounts to zero for the March 2020 quarter and, if so, claim a refund for any instalments paid in the September 2019 and December 2019 – this is a very useful measure and you should talk to us about potentially accessing some of these funds if you need them.
SME Loan Guarantee Scheme
Under the Scheme, the Government will guarantee 50 per cent of new loans issued by eligible lenders to SMEs.
Further Protection for Businesses from Risk of Insolvency
- The threshold at which creditors can issue a statutory demand on a company will temporarily be increased.
- There will be temporary relief for directors for any personal liability for trading while insolvent.
Key Measures for Individuals
- In addition to the $750 stimulus payment announced on 12 March 2020, the Government will provide a further $750 payment to social security and veteran income support recipients and eligible concession card holders, except for those who are receiving an income support payment that is eligible to receive the Coronavirus supplement (see below). This second payment will be made automatically from 13 July 2020. The first payment will be made from 31 March 2020.
- Individuals in financial distress as a result of the Coronavirus will be allowed early access to up to $10K of their superannuation tax free. You must apply for this before 1 July 2020 through myGov. You can apply to access a further $10K from 1 July 2020 for 3 months.
- Superannuation minimum drawdown requirements for account based pensions will be temporarily reduced by 50% for 2019-20 and 2020-21. For example, if your current minimum super pension is 4%, this has been reduced to 2%.
- Social security deeming rates will be reduced by a further 0.25 percentage points to reflect the RBA’s rate reductions.
- Eligibility for income support payments will be temporarily expanded for existing and new recipients of the Job Seeker payment, Youth Allowance jobseeker, Parenting payment, Farm Household allowance and Special Benefit. A ‘Coronavirus supplement’ of $550 per fortnight will be paid for 6 months and is in addition to payments already being received.
That’s a lot to take in! Please contact your friendly Halletts team member to discuss what it means for you.