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Last updated 31 March 2020

Following the COVID-19 outbreak there have been several measures either announced or already introduced to help businesses combat the fast-moving challenges brought on by the outbreak. More information on these incentives is being released every day.

To help businesses navigate the volume and complexity of information that exists, we have provided a summary of the big-ticket incentives and how to determine if your business is eligible. We have also outlined a number of concessions that have been announced for individuals.

We will continue to update this page as more information is released.

Quicklinks:

 

Key Federal Government Concessions

JobKeeper payment of $1,500 per employee

1. What is the concession?

Businesses who have seen their turnovers decline due to the COVID-19 pandemic will be able to access a wage subsidy from the Commonwealth Government of $1,500 per eligible employee, per fortnight, from 30 March 2020 for a maximum of six months.

The first payments will be received by eligible employers in the first week of May. These payments will be taxable, and therefore they will be deductible when paid to employees.

The government has not yet released the draft legislation for this concession, so only limited information is known at this point.

2. Is my business eligible?

If your business’ turnover is under $1 billion, your turnover must have reduced by at least 30% relative to a comparable period a year ago due to impacts of COVID-19. The minimum comparison period will be one month.

Businesses with turnover exceeding $1 billion, must see a reduction in turnover of at least 50%.

An eligible employee must be at least 16 years old and have been employed by the business at 1 March 2020. Businesses must confirm that the individual remains employed (even if they have been stood down temporarily or re-hired since that time) and earns more than $1,500 per fortnight. This is expected to be done through the Single touch payroll system.

Those employees on low incomes will need to have their income “topped up” to a minimum fortnightly payment of $1,500 in order for the business to receive the subsidy on their behalf. Employers will not be required to pay Superannuation Guarantee on such top up payments, however they have the discretion to do so.

Eligible employees include full-time, part-time or long-term casuals (i.e. casuals employed for longer than 12 months). Further, employees must be Australian citizens, holders of permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) visa holder in order to qualify for the subsidy. In addition, only one JobKeeper payment can be received per individual.

Not-for-profit entities and sole traders are also eligible to apply for the payments, provided they meet the turnover requirements.

From the limited information released on this concession, it appears that “turnover” will be measured as the entity’s ordinary income. In short, this is generally the total sales made by the business.

3. How do I access the concession?

At this stage, only registrations for interest are open by visitng the ATO website. Soon, eligible employers will be able to apply through an online applications with the first payments received (including back pay from 30 March 2020) by the first week of May.

Self-assessment of JobKeeper entitlements will be the responsibility of employers, who must provide monthly updates to the ATO and inform employees that they’re nominated for the subsidy.

Sole traders / self-employed individuals who do not have “employees” will need to register their interest and nominate an individual to receive the payment.

Small Business Cash Flow Boost –A refund of PAYG Withholding

What is the incentive?

The Australian Taxation Office (ATO) will assist business cash flows by issuing refunds for 100% (up from 50%) of the Pay As You Go (PAYG) withholding amounts for payments made between 1 January 2020 and 30 June 2020 up to a maximum of $50,000 (up from $25,000). In addition, there will be a minimum payment to all eligible businesses of $10,000 (up from $2,000). These incentives will be tax-free and will be paid within 14 days of lodging activity statements. These initial payments are known as the Boosting Cash Flows for Employers incentive.

The Government has bolstered this lifeline for businesses with a proposed additional payment to be received by businesses for wages paid between 1 July 2020 and 30 September 2020. This additional payment will be equal to the total of the Boosting Cash Flows for Employers payments received. Therefore, eligible employers will receive total payments of between $20,000 and $100,000 between April and October 2020 under this incentive.

Is my business eligible?

These refunds will apply to businesses and Not-for-Profit entities with aggregated turnovers not exceeding $50m and that employ staff (even if they are not required to withhold from wages paid).

Aggregated turnover comprises the entity’s turnover, together with the turnover of the entity’s affiliates and connected entities from the previous financial year.

In addition, these payments will only be available to active eligible employers established prior to 12 March 2020 (this requirement will not apply to Not-for-Profit entities). This suggests that registering an entity for PAYG withholding after 12 March will not give rise to eligibility for the incentive.

The legislation specifically includes anti-avoidance provisions denying access to those who have engaged in activities for the purpose of accessing payments that would not have otherwise been available.  In the era of Single Touch Payroll, these activities will not be very difficult for the ATO to detect.  Given any excess or ineligible payments will attract general interest charges from the time they are granted until repayment. We would caution against such moves.

To be eligible for the additional payment, the business must remain active employers.

How do I access this concession?

The ATO has advised that credits will be processed following the lodgements of activity statements from 28 April 2020. For quarterly lodgers, this means that the March and June BASs will attract the initial payment. Monthly lodgers will be eligible to receive the initial payment in relation to their BASs from March to June 2020, with the payment for March being calculated at 3 times the rate of withholding on that activity statement (as a catch-up) up to the $50,000 cap.

The legislation is drafted in a way that suggests the ATO is looking to assess eligibility based upon the tax rate applied in the tax return for the 2019 year such that eligibility is automatically assessed.  This does appear to have some issues given that some businesses that would be eligible for the stimulus payments will not have lodged their 2019 tax returns before the first payments are due, and some eligible businesses may not have been able to access the lower corporate tax rate in the 2019 year.  We expect some opt-in to still be required.

The payments will be made as follows:

Activity Statement lodgement Initial payments received Additional payments received
Quarterly lodgers Following the lodgement of the March and June 2020 BASs.  

One-half of the initial payments will be received after lodgement of the following activity statements:

  • June 2020 (50% of initial payments)
  • September 2020 (50% of initial payments)
Monthly lodgers Following the lodgement of the activity statements from March to June 2020.

 

 

 

One-quarter of the initial payment will be received after lodgement of the following activity statements:

  • June 2020 (25% of initial payments)
  • July 2020 (25% of initial payments)
  • August 2020 (25% of initial payments)
  • September 2020 (25% of initial payments)

 

In short, the initial payments will front-end the benefit received by employers. For example, where a monthly withholder has more than $50,000 in PAYGW on their March Business Activity Statement (BAS), the full $50,000 will be credited to the entity’s Activity Statement Account following the lodgement of the activity statement.

Further, the explanatory documents make it clear that the “payments” will only be available as cash refunds if the full amount of the BAS has already been paid.  In other words, the amount will be applied to reduce debts owed to the ATO, rather than as a cash payment in most circumstances.  This is the case even if deferrals for payments have been granted.

Expanded depreciation deductions

What is the incentive?

The instant asset write-off will be expanded to assets costing up to $150,000 (up from $30,000) purchased and installed between 12 March until 30 June 2020.

In addition, a further “business investment incentive” that will accelerate depreciation deductions for assets of any cost. Businesses may deduct 50% of the cost of eligible assets on installation, with the remaining amount being depreciated as per the existing rules.

Is my business eligible?

These incentives apply to businesses with aggregated turnovers not exceeding $500 million, and to assets purchased from 12 March 2020.

Assets up to $150,000 must be installed before 30 June 2020 to obtain the instant tax deduction, while depreciating assets qualifying for the 50% investment incentive must be installed before 30 June 2021.

How do I access this concession?

These incentives will be factored in when preparing the income tax return for the 2020 and 2021 financial years.

We note that these announcements have not yet been legislated but it is intended that they will apply to assets purchased from 12 March 2020.

The ATO’s administrative concessions

What are the concessions?

The ATO intends to provide relief to businesses impacted by COVID-19 through the following measures:

  • Deferring payments relating to Activity Statements, Income Tax assessments and Fringe Benefits Tax assessments by up to six months;
  • Allowing businesses who report GST quarterly to swap to monthly reporting to access GST refunds faster than they would usually be able to;
  • Allowing businesses to vary down their Pay As You Go (PAYG) instalments to zero for the March 2020 quarter (monthly payers will need to contact the ATO to discuss further);
  • Allowing businesses to claim refunds for PAYG instalments paid during the September 2019 and December 2019 quarters;
  • Remitting interest and penalties incurred after 23 January 2020 which had been applied to tax liabilities; and
  • Allowing businesses to enter into low-interest payment plans for their existing and ongoing tax liabilities.

Our early experience with the ATO on these matters is that it is best to contact the ATO prior to lodging the relevant forms (e.g. Activity Statements and tax returns) when seeking a payment deferral.

The ATO have also made a point of mentioning that employers will still need to meet their ongoing Superannuation Guarantee obligations.

Is my business eligible?

A case-by-case assessment of individual circumstances and how your business is affected will be made by direct contact with the ATO. However, the ATO appears willing to be cooperate in this space due to the wide-ranging impacts of COVID-19.

How do I access this concession?

The proposed concessions will not be automatically applied to assist taxpayers. The ATO will need to be contacted (either directly or by Pilot as the registered tax agent) in order to request assistance which will be tailored to individual circumstances.

The deferrals relate to certain tax payments, not lodgements. Considering that Directors have personal obligations relating to GST and PAYG withholding in addition to superannuation, we recommend that all statements are lodged on time.

R&D Tax Incentive concessions

What is the concession?

Companies impacted by COVID-19 can obtain an automatic lodgement deferral of their 2019 R&D tax incentive application from 30 April until 30 September 2020. Further extensions may also be possible.

Is my business eligible and how do I apply?

Any business which has a July-June income year and is impacted by the virus is eligible for this automatic extension of lodgement.

Federal Government support for SME loans

What are the concessions?

The Commonwealth Government will provide a guarantee of 50% for loans made to SMEs with turnover of up to $50 million. The maximum amount of the loans will be $250,000 per borrower with an initial 6 month repayment holiday and a term of up to 3 years.

Is my business eligible?

These loans will be unsecured, meaning that eligible borrowers (i.e. those with turnovers not exceeding $50 million) will not have to provide security for the loan.

How do I access this concession?

Loans will be provided through banks. Discussions regarding these Government-backed loans can take place with your lenders from today.

$250,000 loans from the Queensland Government

What is the concession?

The Queensland Government has recently announced an intention to create a new $500 million loan facility to be offered to Queensland businesses. Loans can be taken out up to a maximum amount of $250,000 and will have a 12 month interest-free period.

These loans are available for up to 50% of an entity’s annual wage expense which will be calculated as the average of the wage and superannuation expenses for FY2018 and FY2019, including salaries or drawings for business owners working in the business.

The loans will be for a maximum term of 10 years, with the first 12 months being interest and repayment free. The loan repayments will then be interest-only (at 2.5% p.a.) for the following 2 years and will then becoming Principal and Interest repayments for the remaining term.

Further, the State Government has outlined that the loans are designed to be used to boost working capital, rather than for refinancing or asset purchases.

Is my business eligible?

To be eligible for these loans, the following conditions must be met:

a. The business must hold an ABN and be registered for GST (or be an incorporated Not-For-Profit entity);
b. The business must have been in operations since 1 July 2017;
c. The business must have at least one full-time employee in Queensland who works at least 35 hours per week for the entity;
i. Note that business owners will be considered “employees” if they work in the business and meet the 35 hour test.
d. The business must have suffered a loss of income due to COVID-19;
e. Applicants must be considered viable under normal business conditions;
f. Applicants must be able to service the loan under normal business conditions; and
g. Businesses must intend to continue operations.

Eligible business structures include companies (both public and private), sole traders, trusts and partnerships.

How do I apply?

Applications can be made online through the Queensland Rural and Industry Development Authority’s website.

Note that applications will be open until 26 September 2020, or until the funding is fully committed.

Queensland Payroll Tax deferrals

What are the concessions?

The Queensland Government has recently announced a number of payroll tax concessions for Queensland employers. The concessions depends on whether the business pays more or less than $6.5 million in Australian taxable wages, and will apply as follows:

Australian taxable wages Concession
$6.5 million or less  

i.  Refund of 2 months of payroll tax paid;

ii. A waiver of payroll tax for the next 3 months; and

iii. A further deferral of payroll tax for the 2020 calendar year.

More than $6.5 million and the business has been impacted by COVID-19  

i.  Deferral of payroll tax for the 2020 calendar year; and

ii. A refund of 2 months of payroll tax paid.

Is my business eligible?

As per the above table, eligibility for the concessions depends on the Australian taxable wages paid in a year.

How do I access this concession?

Employers can apply for these concessions through the Office of State Revenue’s website.

Note that refunds and waivers must be applied for prior to 31 May 2020.

Temporary relief for distressed businesses

What is the concession?

The economic impacts of COVID-19 and health measures to prevent its spread could see many otherwise profitable and viable businesses temporarily face financial distress. It is important that these businesses have a safety net to make sure that when the crisis has passed they can resume normal business operations. One element of that safety net is to lessen the threat of actions that could unnecessarily push them into insolvency and force the winding up of the business.

The Australian Government is implementing temporary measures (to apply for 6 months) to ease the ongoing payment deadlines for businesses to suppliers. These measures include:

  • Statutory demand limits increased to $20,000 (previously $2,000 for Corporate and $5,000 for Personal)
  • Statutory demand response periods increased to 6 months (previously 21 days). This will stave off creditors from taking action for unpaid liabilities.
  • Relieve directors of personal liability that would otherwise be associated with insolvent trading provided the debts are incurred in the ordinary course of the Company’s business.

The above measures provide businesses time to consider what options are best for them and give companies confidence to continue to trade through the crisis with the aim of returning to viability when the crisis has passed.

Small business banking relief

What is the concession?

The Australian Banking Association (“ABA”) has announced Australian banks will defer loan repayments for small businesses affected by COVID-19 for six months on application. Other forms of assistance differ between each bank with options including:

  • deferring loan payments;
  • waiving fees and charges;
  • debt consolidation;
  • waiving penalties for early withdrawal of a term deposit; or
  • deferring upcoming credit card payments and increasing emergency limits.

Businesses must be careful in choosing which option is correct for them. Options of deferrals generally cease mandatory repayments with interest continuing to accrue.  Times like these, cash is king, if you have the ability to endure without these measures that is almost always the best option.  If you have no choice, these are excellent options your business can utilise to stabilise in these tumultuous times.

Contact details for the majority of banks can be found here https://www.ausbanking.org.au/campaigns/financial-hardship/

The key is to communicate early and often with your financial institution, it is never too early.  If you need help to determine what is best for you, your Pilot Advisor can assist.

Early access to Superannuation for individuals

What is the concession?

The Government intends to allow individuals in financial distress due to COVID-19 access of up to $20,000 of their superannuation over the 2019 and 2020 financial years. These withdrawals are intended to be tax-free.

How do I apply?

Eligible individuals will be able to apply for the withdrawal through the myGov website.

Changes to minimum Superannuation withdrawals

What is the concession?

The government intends to temporarily reduce the minimum withdrawal requirements for account-based pensions from superannuation accounts. The minimum withdrawal rates will be reduced by 50% for the 2019-20 and 2020-21 financial years.

As an example, someone currently required to withdraw 5% from their superannuation account under an account based pension will only be required to withdraw 2.5% for this financial year and the next.

These changes will be legislated in due course.

 

Should you have any queries relating to the impact of COVID-19 on your business, please contact your Pilot Advisor or Murray Howlett via mhowlett@pilotpartners.com.au.