Both the Federal and State Government have moved swiftly to attempt to cushion the economic stress that many of us are feeling. The Victorian State Government announced its own measures last week. The Federal Government then handed down the second instalment of their stimulus package on Sunday. This brings the federal assistance to a total of $189 billion.
I have summarised the key aspects for you below. Most importantly though, I hope everyone stays well. This will be a very tough few months, but we will get through this together and our businesses will emerge on the other side bigger and better than before. If you have any questions about the measures on offer or need to speak generally about your business, please contact me and I am more than happy to assist during this troubling time.
Support for Businesses
Cash flow assistance
Small and medium-sized businesses and now also not for-profits that have employees with a turnover under $50 million will have access to tax-free payments of up to $100,000 (formerly $25,000) to help boost cash flow. These entities will receive a minimum for $20,000 (up from $2,000).
Under the enhanced scheme, employers will receive a payment equal to 100 per cent of their salary and wages withheld (up from 50 per cent).
The first part of these payments will be automatically delivered as a credit on the businesses’ Australian Tax Office (ATO) Integrated Client Account upon lodgement of their Activity Statements for the period March – June 2020. The maximum payment is being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000.
The second part of the payment will then be introduced in the July – October 2020 period. Eligible entities will receive an additional payment equal to the total of all the Boosting Cash Flow for Employers payments they have received. This means that eligible entities will receive at least $20,000 up to a total of $100,000 under both payments.
Temporary relief for financially distressed businesses
The threshold at which creditors can take legal action on a business will be temporarily increased. The package also includes temporary relief for directors from any personal liability for trading while insolvent. The ATO will tailor solutions for struggling businesses by temporarliy offering more flexible payment plans.
Under the plan, the government will offer small businesses up to $7,000 each quarter from 1 January 2020 to 30 September 2020 for every apprentice in wage assistance. This measure has been put in place in order to retain existing apprentices and trainees.
An eligible employer has been defined as less than 20 employees and can register for the subsidy early April 2020. The apprentice or trainee must have been training with a small business as at 1 March 2020.
Instant asset write off
Currently small businesses with a turnover of up to $50 million can instantly write off asset purchases costing less than $30,000. Under the plan business will be able to write off assets costing up to $150,000 until 30 June 2020. More business will also be eligible as the definition of a small businesses is expanded to include those with an annual turnover of up to $500 million. It’s expected to drive interest in the purchases of cars, utes and trucks, harvesters and trade equipment.
Income support for individuals
Eligibility to support payments has been expanded with reduced waiting times and changes to the assets test. Recipients of JobSeeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit will receive a new time limited Coronavirus supplement of $550 per week. This effectively doubles the original entitlement.
Payments to support households
The Government is providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders. The first payment will be made from 31 March 2020 and the second payment will be made from 13 July 2020. Around half of those that benefit are pensioners. This payment will help to support confidence and domestic demand in the economy. The second payment will not be made to those eligible for the Coronavirus supplement.
Temporary early release of superannuation
The Government is allowing individuals affected by the Coronavirus to access tax-free up to $10,000 of their superannuation before June 2020 and then a further $10,000 after July 2020.
Temporarily reducing superannuation minimum drawdown rates
If you are a currently drawing a pension from your superannuation fund, the minimum drawdown will be reduced by 50%. This will apply to the 2020 and 2021 financial years.
Reducing social security deeming rates
There has already been a 0.5 percentage point reduction in both the upper and lower social security deeming rates. The Government will now reduce these rates by another 0.25 percentage points.
Victorian State Government
Payroll tax refunds
The Victorian State Government will refund all payroll tax paid for the 2020 financial year for small and medium sized businesses. These businesses will also be able to defer any pay-roll tax for the July, August & September 2020 to January 2021.
- Commercial tenants in government buildings may apply for rent relief;
- Eligible businesses will have their 2020 land tax payments deferred;
- The government will pay all outstanding supplier invoices within five business days; and
- Liquor licensing fees will be waived for 2020 for affected businesses.
Businesses in the hospitality, tourism, accommodation, arts, entertainment and retail sectors may also receive additional assistance through a new business support fund to be established by the Victorian government.