Federal Government Economic Stimulus Update

STIMULUS UPDATE TAKE 3

Further to our previous two posts, government has announced further measures to help businesses and employees in need. Additional $130 Billion stimulus package will mean businesses will be paid up to $1,500 a fortnight for each employee, as part of a “Job Keeper payment”. Major Banks have also announced further measures to assist with deferral of loan repayments for loans up to $10 mil. Temporary moratorium on evictions was also announced.

JOB KEEPER PAYMENT

Under the Job Keeper Payment, businesses impacted by the Coronavirus will be able to access a subsidy from the Government to continue paying their employees. Affected employers will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum period of 6 months. The idea behind this is that employers continue their relationship with their employees throughout the next 6-month period so they can restart the economy easier once we bridge the current situation impacting all of us.

Employers 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.

The employer must have been in an employment relationship with eligible employees as at 1 March 2020, and confirm that each eligible employee is currently engaged in order to receive Job Keeper Payments.
Not-for-profit entities (including charities) and self-employed individuals (businesses without employees) that meet the turnover tests that apply for businesses are eligible to apply for Job Keeper Payments.

Eligible employees are employees who:

  • are currently employed by the eligible employer (including those stood down or re-hired);
  • were employed by the employer at 1 March 2020;
  • are full-time, part-time, or long-term casuals (a casual employed on a regular basis for longer than 12 months as at 1 March 2020);
  • are at least 16 years of age;
  • are an Australian citizen, the holder of a 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; and
  • are not in receipt of a Job Keeper Payment from another employer.

If your employees receive the Job Keeper Payment, this may affect their eligibility for payments from Services Australia as they must report their Job Keeper Payment as income.

Businesses without employees

Businesses without employees, such as the self-employed will also be eligible for the Job Keeper Payment if their income has been reduced by 30% or more

Accessing the Job Keeper Payment

  • Register an intention to apply on the ATO website https://www.ato.gov.au/general/gen/JobKeeper-payment/ and assess that you have or will experience the required turnover decline
  • Provide information to the ATO on eligible employees, if using STP some of this will be done automatically, in case of self employed nominate an individual to receive the payment and provide that individual’s Tax File Number
  • Ensure that each eligible employee receives at least $1,500 per fortnight (before tax). If the employee presently receives less, their income must be topped up to the full amount. Super is still payable on the original wage amount, the employer has the option if they want to pay superannuation on any additional wage paid because of the Job Keeper Payment
  • Notify all eligible employees that they are receiving the Job Keeper Payment.
  • Continue to provide eligibility information to the ATO on a monthly basis, including the number of eligible employees employed by the business.

MAJOR BANK FURTHER MEASURES ANNOUNCED

  • 6-month deferral of payments extended to business with lending up to $10mil
  • Lenders will be seeking commitment from commercial landlords to not evict tenants in the next 6 months as part of the deferral
  • Existing deferral for individuals impacted on home loans and investment loans is still available. Please exercise caution as the interest component on deferrals will be capitalised resulting in loan balance increase at the end of the deferral period
  • Many lenders are also offering reduced rates so we suggest to renegotiate the rates first

MORATORIUM ON TENANT EVICTIONS

  • 6-month temporary moratorium on all tenant evictions was enacted by the PM on Sunday
  • While this may be good news for those struggling to make rent payments it’s also a worrying period for property investors relying on rent as income
  • No further detail was provided what happens at the end of the period with unpaid rent payments and if insurers will cover the loss
  • Advice for tenants in case of financial hardship is to talk to your landlords and come up with a solution that helps both of you
  • Advice for investors in case of tenant default is to understand the extent of tenant impact, explore deferring the loan repayments for 6 months, also speak to your insurer to see if they will cover the loss of rent
  • Commercial tenants and landlords are encouraged to negotiate best outcomes for all parties involved. Rent free periods or temporary reduction on rent are options that should be explored.
  • Further government announcements on this very issue are likely. We will update you on those as they happen

Our previous two announcements detailing the other components of stimulus for those who may have missed them are available for you to read on our website and Facebook page.

OUR COMMITMENT TO YOU
 
Many of you will need our help to navigate these announcements. We are here to help you whether it is assistance in

  • Interpreting the government stimulus packages,
  • Applying for payment relief from the ATO or lenders,
  • Working through strategies during this time of distress
  • Accessing the SME Guarantee Scheme, or
  • General cashflow assistance with the day to day operation of your businesses

Cash flow will be important to all our businesses over the coming months and therefore we are prepared to offer assistance via payment terms for our services if required. Please do not hesitate to discuss this with us.

Some of our staff will be working from home while others will be in the office. We are keeping our availability as flexible as possible and will remain contactable throughout this period.

Please rest assured that during this time, no phone call or email will go unanswered and we will continue to update you as more comes to hand.

Federal Government Economic Stimulus Update

WE ARE HERE TO SUPPORT YOU

We know many of you are doing it tough at the moment. We are here to support you with your financial needs the best way we can.

Further to our previous email second stage of economic stimulus has been announced on the weekend. Totalling $189 Billion stimulus package aims to support your businesses and employees. Major Banks have also announced measures to assist with deferral of loan repayments.

Supporting the Business cashflow

  • Up to a $100k reduction of PAYG withholding payments over 6 months for period between Jan – Jun 2020. With a further similar reduction likely in the Jul – Sept period. In addition, the minimum payment is being increased from $2,000 to $10,000 per quarter meaning that if your business is withholding less than $10k in PAYG per quarter you will be seeing the difference as a credit on your integrated account
  • SME Guarantee Scheme, the Government will provide a guarantee of 50% to SME lenders for new working capital loans up to $250,000 for small businesses from 1 April. Government is cutting red tape and streamlining the lending requirements making it easier for business to access the much-needed funds.
  • SME’s will have access to defer principal and interest repayments on a range of business loans for up to 6 months. Similar measures are available on personal home loans for impacted small business owners. Note as it stands all lenders are capitalising the interest component meaning your loan will grow slightly during the deferred period.
  • ATO is allowing deferral of payment dates for income taxes also allowing remission of interest and penalties incurred post 23 Jan 2020. ATO will also allow business to enter into low interest payment plans.
  • NSW state government is providing a 25% reduction on Payroll Tax with no payment required for the months of March, April or May 2020. The tax-free threshold will increase from $900,000 to $1 million from July 2020 providing further relief for next financial year
  • Sole traders with a reduction in turnover of 20% or more will have access to early release of superannuation up to $10,000 before 1 July 2020. A further $10,000 will be available from 1 July 2020 for approximately three months. This payment will be tax free

Supporting the individuals and sole traders

  • Temporary early release of superannuation up to $10,000 before 1 July 2020 for those impacted by redundancy, unemployment or reduction in employment greater than 20%. A further $10,000 will be available from 1 July 2020 for approximately three months. This payment will be tax free
  • Temporarily reducing superannuation minimum drawdown requirements for account-based pensions by 50% for 2019-20 and 2020-21. Benefiting retirees by reducing the need to sell investment assets at a loss to fund minimum drawdown requirements.
  • Two separate $750 payments to social security, veteran and other income support recipients
  • An additional $550 per fortnight Coronavirus supplement for jobseekers, youth allowance and parenting payment recipients

Cutting the red tape

  • Temporary exemption from responsible lending obligations for lenders providing credit to existing small business customers
  • Temporary relief to directors’ personal liability for trading while insolvent
  • Temporary increase in thresholds for statutory demands on debt and bankruptcy

OUR COMMITMENT TO YOU

Many of you will need our help to navigate these announcements. We are here to help you whether it is assistance in

  • Interpreting the government stimulus packages,
  • Applying for payment relief from the ATO or lenders,
  • Working through strategies during this time of distress
  • Accessing the SME Guarantee Scheme, or
  • General cashflow assistance with the day to day operation of your businesses

Cash flow will be important to all our businesses over the coming months and therefore we are prepared to offer assistance via payment terms for our services if required. Please do not hesitate to discuss this with us.

Some of our staff will be working from home while others will be in the office. We are keeping our availability as flexible as possible and will remain contactable throughout this period.

Please rest assured that during this time, no phone call or email will go unanswered and we will continue to update you as more comes to hand.

Our thoughts go out to you. Stay strong.

Please contact us if you need to discuss this further.

Federal Government’s economic response to the Coronavirus

Federal Government’s economic response to the Coronavirus

In response to the Coronavirus crisis, the Federal Government has outlined new measures in a stimulus package worth nearly $18 billion. SMEs, pensioners and selected sectors such as tourism will be the biggest beneficiaries in an effort to boost the economy and save jobs. Below is a summary of the measures outlined in the plan.

1. SUPPORT FOR BUSINESS INVESTMENT

The following measures are designed to assist Australian businesses and economic growth in the short term:

INCREASING THE INSTANT ASSET WRITE-OFF

  • Threshold increased from $30,000 to $150,000
  • Applies to businesses with aggregated turnover of less than $500 million (up from $50 million)
  • Applies from the announcement to 30 June 2020
  • The $150,000 threshold applies on a per asset basis so eligible businesses can immediately write-off multiple assets
  • Applies for new or second-hand assets first used or installed ready for use by 30 June 2020.

INVESTMENT INCENTIVE

  • A deduction of 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost
  • Applies to businesses with aggregated turnover below $500 million
  • Eligible assets are new assets that can be depreciated under Division 40 of the ITAA97 (i.e. plant, equipment and specified intangible assets) acquired after the announcement and first used or installed by 30 June 2021 (NOTE: This measure does not apply to second-hand Division 40 assets or capital works subject to Division 43).

2. CASHFLOW ASSISTANCE FOR BUSINESS

TAX-FREE PAYMENTS UP TO $25,000 FOR EMPLOYERS

  • Tax-free cash flow support between $2,000 and $25,000 will be available to eligible businesses with a turnover of less than $50 million that employ staff between 1 January 2020 and 30 June 2020.
  • This is not a direct cash payment but a credit equal to 50% of the PAYG amounts withheld from salary and wages paid to employees. The employer will need to lodge an activity statement to trigger the entitlement. If the credit puts the business in a refund position the excess amount will be refunded by the ATO within 14 days.
  • If a business pays salary and wages to employees but is not required to withhold any tax then a minimum payment of $2,000 will still be made.
  • Businesses that lodge activity statements on a quarterly basis will be eligible to receive the credit for the quarters ending March 2020 and June 2020. Business that lodge on a monthly basis will be eligible for the credit for the March 2020, April 2020, May 2020 and June 2020 lodgments. The minimum $2,000 payment will be applied to the first lodgement.
  • Eligibility for the measure will be based on prior year turnover. We will have to wait for the legislation to be released to get more details on how this will be implemented.

SUPPORTING APPRENTICES AND TRAINEES

  • Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage paid during the 9 months from 1 January 2020 to 30 September 2020 (and this subsidy will be available to a new employer where the business is unable to retain an apprentice)
  • Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee (i.e. $7,000 per quarter)
  • Eligible small businesses are those employing fewer than 20 full-time employees who retain  an apprentice or trainee (with the apprentice or trainee being in training with a small business as at 1 March 2020)
  • Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network provider.

3. ASSISTANCE FOR SEVERELY AFFECTED REGIONS

Funds will be available to assist during the next few months and over the year ahead to ensure these communities are well placed to recover:

SUPPORT FOR CORONAVIRUS-AFFECTED REGIONS AND COMMUNITIES

  • An initial $1 billion allocation to support regions and communities disproportionately affected by the economic impacts of the Coronavirus (e.g. tourism, agriculture, education) that will be provided through existing or newly established Government programs
  • The Minister for Trade, Tourism and Investment will work with affected industries and communities to develop recovery plans and measures.

ATO ADMINISTRATIVE RELIEF

  • The ATO will provide administrative relief for certain tax obligations for taxpayers affected by the Coronavirus outbreak, on a case-by-case basis

4. STIMULUS PAYMENTS TO HOUSEHOLDS TO SUPPORT GROWTH

This measure will assist around 6.5 million lower income Australians, which will support confidence and domestic demand in the economy.

STIMULUS PAYMENT

  • The Government will provide a one-off $750 payment to social security, veteran and other income support recipients and eligible concession card holders. Around half of those that will benefit are pensioners.
  • There will be one payment per eligible recipient. For example, if a person qualifies for the one-off payment in multiple ways, they will only receive one payment.
  • The payment will be tax free and will not count as income for Social Security, Farm Household Allowance and Veteran payments.

 

Please contact us if you need to discuss this further.

Single touch payroll (STP) will your business be ready on 1 July 2018?

Many busy owners and managers of medium sized businesses have missed this important change to the way you MUST communicate with the ATO.

Single Touch Payroll is the next step in ATO payroll reporting. The way you report your employees’ payroll information to the ATO will change. From 1 July 2018 all employers with 20 or more employees will need to report payments such as salaries and wages, pay as you go (PAYG) withholding and super information to the ATO at the same time you pay your employees.

If you are a business with 19 or less employees then you will need to be ready by 1 July 2019, however you can choose to start earlier.

The reported information will be used by ATO to pre-fill business activity statements and remove the need for Payroll Summary Annual Reports. Additionally, the employers will no longer need to provide payment summaries to employees for certain payments reported through STP, as that information will be automatically provided by the ATO via MyGov.

Your existing payroll software (such as accounting software) will need to be updated to offer Single Touch Payroll reporting. Most payroll packages are still working with the ATO on publishing the required changes so please keep an eye out on your provider notifications in case you need to install the required updates to remain compliant.

 

How will this impact your business

  • There will be no change to your payroll cycle. This will continue as per normal
  • From 1 July each time you pay your employees you will also need to report your employees’ payroll and super information
  • PAYG and superannuation payment dates will not change although you will be able to pay them earlier
  • Payment summaries in most instances will become redundant and you may no longer need to provide them to employees as all information will be available on MyGov. This will be up to date information that employees will be able to view at any time via MyGov.
  • ATO have also committed to having Tax file number declaration, Super standard choice form and Withholding declaration online, you will be able to provide to your employees as a link rather than printing out manual forms. This may not be available right from the start though

 

How can we help your business with the new changes?

Any change in business can be stressful so we can help remove that stress by:

  • Helping you understand if your business will be impacted by these changes
  • Showing you how to perform the required count and what employees to include who to exclude (eg. Count your regular employees but exclude casual employees who did not work in March, independent contractors, labour hire, company directors)
  • Helping you choose the right payroll solution in case you don’t have one
  • Advising on what information to report on to reduce the need for additional reporting at the end of the year
  • Training your staff and implementing best practice payroll process to ensure error free processing and reporting
  • Reporting your payroll information STP to the ATO on your behalf

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