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Business and Government concessions: COVID-19 response

By 23/03/2020 April 17th, 2020 No Comments

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

This content has been kindly shared with us by Jason Andrew from SBO Financial and we will use it to keep track of all the grants, tax breaks and assistance packages available to Australian Small Business.

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

*last updated 31 March 2020

 

1) Federal Government (available to all SMEs)

The Australian Government has thus far announced 3 Economic Stimulus packages to the sum of $320 billion.

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

Real, Cash Money for Small Business Owners

1) JobKeeper Payment

  • Under the JobKeeper Payment, businesses significantly impacted by the COVID-19 outbreak will be able to access a subsidy from the Government to continue paying their employees.
  • The Government will provide $1,500 per fortnight per employee for up to 6 months to eligible employers
  • Employers (including non-for-profits) will be eligible for the subsidy if:
    • their business has a turnover of less than $1 billion and their turnover will be reduced by more than 30 per cent relative to a comparable period a year ago (of at least a month); or
    • their business has a turnover of $1 billion or more and their turnover will be reduced by more than 50 per cent relative to a comparable period a year ago (of at least a month); and
    • the business is not subject to the Major Bank Levy.
    • Where a business was not in operation a year earlier, or where their turnover a year earlier was not representative of their usual or average turnover, (e.g. because there was a large interim acquisition, they were newly established or their turnover is typically highly variable), the Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been adversely affected by the impacts of the Coronavirus.
    • The Tax Commissioner will also have discretion to set out alternative tests that would establish eligibility in specific circumstances.
    • There will be some tolerance where employers, in good faith, estimate a greater than 30% fall in turnover but actually experience a slightly smaller fall.
  • Eligible employers will receive the payment for each eligible employee that was on their books on 1 March 2020 and continues to be engaged by that employer – including full-time, part-time, long-term casuals and stood down employees. Casual employees eligible for the JobKeeper Payment are those employees who have been with their employer on a regular basis for at least the previous 12 months as at 1 March 2020.
  • Eligible employers who have stood down their employees before the commencement of this scheme will be able to participate. Employees that are re-engaged by a business that was their employer on 1 March 2020 will also be eligible.
  • The subsidy will start on 30 March 2020, with the first payments to be received by employers in the first week of May. Businesses will be able to register their interest in participating in the Payment from 30 March 2020 on the ATO website.

💡 How to apply?

2) 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 – October 2020.
  • This second payment is calculated as the total cash back credit calculate in the first payment, split evenly over the June-20 to October 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:

Summary:

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 31 October 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…
  • 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.
  • 👉 Use this worksheet to calculate your incentive

3) 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 1 July 2019 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 1 July 2019 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 SMEs

  • 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) State Government

i) NSW

Business Grants for NSW Businesses

Grants of up to $10,000 are being offered to NSW businesses which must be used for funding unavoidable business costs such as utilities, overheads, legal costs and financial advice.

To be eligible, businesses will need to:

  • Have between 1-19 employees and a turnover of more than $75,000;
  • A payroll below the NSW Government 2019-20 payroll tax threshold of $900,000;
  • Have an Australian Business Number as at 1 March 2020, be based in NSW and employ staff as at 1 March 2020;
  • Be highly impacted by the Public Health (COVID-19 Restrictions on Gathering and Movement) Order 2020 issued on 30 March 2020;
  • Use the funding for unavoidable business costs such as utilities, overheads, legal costs and financial advice;
  • Provide appropriate documentation upon application.

💡 How to apply?

  • Applications for a small business grant of up to $10,000 will be available through Service NSW(external link) within a fortnight and remain open until 1 June 2020.

Payroll Tax Concessions

For businesses whose total grouped Australian wages for the 2019/20 financial year is less than $10M:

  • will have their annual tax liability reduced by 25% when they lodge their annual reconciliation, which is due on 28 July.
  • For those customers who lodge and pay monthly will have no payment required for the months of March, April or May 2020 will be required. ie. the payroll tax is completely waived
  • When lodging your annual reconciliation, you will still need to provide wage details paid in these months and will receive the benefit of a 25% reduction in the amount of tax you would have had to pay for 2019-20.

💡 How to apply?

  • This will be automatically applied for the payroll tax returns covering above mentioned periods.

ii) VIC

Business Grants for Melbourne Businesses

The city of Melbourne is offering $5 million in grants for small to medium-sized businesses to invest in online and e-commerce capabilities, take part in training and professional development, and undertake capital works.

Grants include:

  • Up to $5000 for investing in online and e-commerce activities.
  • Up to $2000 for training and professional development.
  • Up to $10,000 for capital works projects (matching dollar-for-dollar) to adapt to changing conditions.

💡 How to apply?

  • Eligible businesses and organisations can apply online.
  • To discuss your situation, or if you have any questions, contact our COVID-19 Business Concierge Hotline on 9658 9658 (press 1 for business).

Payroll Tax Concessions

  • Businesses with annual taxable wages up to $3 million will have their payroll tax for the 2019-20 financial year waived.
  • Eligible businesses must continue to lodge returns but do not need to make further payments for the 2020 financial year.
  • The State Revenue Office will directly contact eligible businesses in relation to reimbursement for payroll tax already paid in the financial year.

💡 How to apply?

  • The State Revenue Office will directly contact eligible businesses in relation to reimbursement for payroll tax already paid in the financial year.
  • Expect an email from them!

iii) QLD

Interest Free State Government Loans

  • The QLD Government will offer $500m in loans to eligible businesses to retain employees and maintain operations. Details are:
    • Maximum loan up to $250,000
    • No repayments or interest charged for the first year
    • Plus two years interest only
    • 2.5% fixed interest rate
    • 10-year term of loan
    • Open until 25 September 2020 or until funding is fully committed.

💡 How to apply?

Payroll Tax Concessions

If you are an employer (or part of a group of employers) who pays $6.5 million or less in Australian taxable wages, you may receive an email about a:

  • refund of your payroll tax for 2 months
  • payroll tax holiday (i.e. no payroll tax to be paid) for 3 months.

You can also apply for a deferral of payroll tax for the 2020 calendar year. (If you have already applied for a deferral, you do not need not reapply – it will be extended.)

If you are an employer (or part of a group of employers) who pays more than $6.5 million in Australian taxable wages and have been negatively affected (directly or indirectly) by coronavirus, you can apply for a:

  • deferral of payroll tax for the 2020 calendar year (If you have already applied for a deferral, you do not need not reapply – it will be extended.)
  • refund of your payroll tax for 2 months.

A business is directly or indirectly affected by coronavirus if their current turnover, profit, customers, bookings, retail sales, supply contracts or other factors are negatively affected compared with normal operating conditions.

💡 How to apply?

iv) WA

Payroll Tax Concessions

  • The payroll tax threshold will be increased to $1 million on 1 July 2020. This brings the increase forward from the planned date of 1 January 2021 and will result in approximately an additional 300 businesses no longer being liable for payroll tax. The threshold increase will be reflected in Revenue Online when it comes into effect.
  • Employers, or groups of employers, who pay $7.5 million or less in Australian taxable wages and have been directly or indirectly impacted by COVID-19 can apply to defer their monthly payroll tax payments until 21 July 2020.
  • A one-off grant of $17,500 will be available for employers, or groups of employers, whose annual Australian taxable wages are more than $1 million and up to $4 million. For a group of employers, a single grant will be payable to the designated group employer. You do not need to apply for the grant. Grants will automatically be paid by cheque from July but there will be delays for taxpayers whose tax status changed in 2018-19 or who became liable for payroll tax during the 2018-19 or 2019-20 assessment year. Eligible taxpayers should log in to Revenue Online to ensure their postal address is correct.

v) TAS

Interest-Free State Government Loans

  • $20 million in interest-free loans available to small businesses in the hospitality, tourism, seafood production and export sectors.
  • Businesses with turnover of less than $5 million will be eligible, and the loans are intended to be used for purchasing of equipment, or for restructuring business operations.
  • Loans will be offered interest-free for three years. Details on how to apply have not yet been released.

Payroll Tax Concessions

  • Payroll tax waiver will be available to businesses in the hospitality, tourism and seafood industries, and will apply for the last four months of the 2019-20 financial year.
  • Other businesses with payrolls of up to $5 million will also be able to apply for a waiver, but eligibility will be based on how significantly the virus has affected business.
  • Further details on this criteria have not yet been released.

vi) NT

Business Improvement Grant

All Territory businesses will be able to access a $10,000 grant, followed by an additional $10,000 grant if they contribute $10,000 of their own.

  • Each business is only eligible to receive one grant, and it can be used to complete one or two different jobs on their premises.
  • The grant can be used to purchase goods and services to make permanent physical improvements to a business (land and / or building) that help improve its efficiency and customer experience.
  • Registrations for businesses to provide services open 30 March 2020. Businesses can apply for a grant from 13 April 2020.
  • Read more on the Business Improvement Grant.

Payroll Tax Concessions

3) Banks and Lending Institutions

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

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?

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 its 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

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