Update - COVID19 Stimulus packages for business
I attended a very insightful webinar yesterday that provided clarification on a number of the Government's measures. I have updated the stimulus data below to reflect the changes made on 22 March and advise that the laws have now been passed through parliament to enact these measures.
However, please note the following key points:
Before you can claim ATO assistance, ensure your tax obligations are up to date. That is, make sure your FY19 and prior year tax returns are lodged and your BAS lodgements are up to date. Debt deferrals and other concessions with the ATO will be less easy to come by if your prior reporting obligations have not been met.
So far as the lending support for business - the Government has asked banks to ease lending criteria for overdraft style loans. That is, you won't pay interest if you don't drawdown on the money. Therefore, if you only drawdown what you need, as you need, you can reduce your interest on these loan facilities. These loans are for up to $250k and are unsecured against your assets. Talk to you bank if you think you will need this sort of facility.
The initial PAYGW provisions will require you to submit your March BAS or IAS. However, regardless of how quickly you submit that statement, the government offsets and refunds (where applicable) will not be processed prior to 28 April. This is simply so the ATO have time to implement the necessary programming etc to allow these adjustments to take effect. Therefore, please don't expect $10k (for example) to be paid to your bank account on 1 April because you got your BAS in early.
If we are all reasonable and can keep our heads, we'll get through this. There are so many background requirements to be actioned before this is all running smoothly, but everyone is doing the best they can to keep up with the fast pace of changes.
I know some people are still feeling left out. I know some measures seem unfair. But there is still more to be developed and the Government and their various departments are working around the clock. Hopefully the banks will be on board to work with us all as well.
Stay safe, stay healthy, follow the distancing, hygiene and isolation guidelines and we'll be through this quicker than if we don't.
Updated details on the stimulus packages follows:
Federal stimulus package – for businesses
Details announced 12 & 22 March 2020. It is now law.
Businesses with turnover below $500m
Instant asset write-off up to $130k per asset – only until 30 June 2020
50% instant depreciation for “certain” assets – until 30 June 2021
Employers (including Not for Profits) with turnover below $50m
Credit on BAS for 100% of PAYGW (taxes withheld from employee wages) up to $100k paid in two allotments via the BAS lodgements. These monies will not be paid to you, but will offset your BAS payable to the ATO. If there are funds left over from your entitlements, they may be credited by the ATO to your connected bank account
Stage 1 - Minimum entitlement $10k and maximum of $50k post lodgement of your March BAS
Stage 2 - To businesses still trading and paying employees, a second entitlement on lodgement of the September BAS of another $10k minimum and $50k maximum.
Employers of Apprentices or Trainees with fewer than 20 employees
Subsidy of 50% of wages for 9 months to a maximum of $21k per apprentice
Sole traders
Possible refund of previously paid PAYG Instalments on Sept and Dec 2019 BAS
If income reduced by 20% then eligible for Jobseeker support and a special supplement of $550 per fortnight
Working capital unsecured loans up to $250k (subject to reduced bank assessment requirements)
Lending Support for Business
Lending / Borrowing Capacity increased
Banks deferring repayments for 6 months (subject to detail)
Unsecured loans up to $250k
Struggling Businesses
Directors personal liability relief
Longer times before Liquidation action including increasing the thresholds before a creditor can instigate liquidation action
For individuals (partial details only)
Upon loss of Job: Income Support for Job Seekers with a waiver of the Asset Test and no waiting period
The Government is allowing individuals affected by the Coronavirus to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21. Individuals will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments
Businesses are required to apply for these initiatives by contacting the ATO on 1800 806 218. Your BAS or Tax Agent can contact the ATO on your behalf.
Case-by-case discussion with the ATO determines eligibility for:
Up to 4 month deferral on payments to the ATO
Converting to Monthly BAS to enable quicker access to GST refunds (if applicable)
PAYG Instalments (Income Tax) being varied to Nil – I recommend this be discussed with your tax agent/accountant
Remitting penalties and interest imposed on tax liabilities since 23 January 2020 Low-interest payment plans
Note: There is no discretion available for super payments. Super must be paid as per normal.
The law includes provisions for misuse or contrived arrangements to take advantage of these concessions when the business would not ordinarily have such arrangements.
NSW State stimulus package – for businesses
(Excerpt from nsw.gov.au website)
$450 million for the waiver of payroll tax for businesses with payrolls of up to $10 million for three months (the rest of 2019-20). This means these businesses will save a quarter of their annual payroll tax bill in 2019-20
$56 million to bring forward the next round of payroll tax cuts by raising the threshold limit to $1million in 2020-21
$80 million to waive a range of fees and charges for small businesses including bars, cafes, restaurants and tradies
$250 million to employ additional cleaners of public infrastructure such as transport assets, schools and other public buildings more than $250 million to bring forward maintenance on public assets including social housing and crown land fencing
$500 million to bring forward capital works and maintenance.
The above packages have now been passed by Parliament and are ready to be enacted as and when they apply to you and/or your business. I recommend you contact your BAS or Tax Agent to discuss further.
Of course, Easy Books for Better Business would be happy to assist if you don't already have a BAS Agent for your business.