COVID-19 Government Stimulus Packages Guide

We have assembled a list of measures the Government has during the COVID-19 Pandemic for Businesses.

If you are an individual, employee, sole trader, partnership, trust or company WITHOUT employees click HERE to scroll down to information relevant to you.

Jobkeeper Payment

If your business has been significantly impacted by the Coronavirus you will be able to access a wages subsidy to continue paying your employees. Under the JobKeeper program, you will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum of six months. This assistance will help you keep staff and will help you restart when the crisis is over. In order to be eligible your business turnover must have DECREASED by more than 30% compared to the same period last year (ie what was lodged on your BAS). Businesses that were not operating a year ago will need to supply alternative information to the ATO and have their eligibility determined by the Commissioner. Eligible employees include 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 and are not in receipt of a JobKeeper Payment from another employer.
If you are an eligible employer you must register and maintain your eligible employees via the business portal using MyGovID.
There’s a detailed guide HERE.

For the latest on Jobkeeper visit https://www.ato.gov.au/general/JobKeeper-payment/.

Enhancing the instant asset write-off

This proposal applies from 12 March 2020 until 30 June 2020, for new or second-hand assets first used, or installed ready for use in this timeframe. The threshold has been increased from $30,000 to $150,000 (for businesses with an aggregated turnover of less than $500 million) until 30 June 2020. The $30,000 threshold remains for assets purchased before 12 March 2020.

Backing business incentive

A time limited 15-month investment incentive to accelerate certain depreciation deductions. This measure allows a deduction of 50% of the cost of an eligible asset on installation will apply, with existing depreciation rules applying to the balance of the asset’s cost. We expect this would be used where an asset’s cost exceeds $150,000.

CAUTION; As with the previous instant asset write off, we recommend you consider carefully any asset purchases. These measures will accelerate a tax deduction that you ordinarily would have received over several years. You won’t get cash back, and you may spend cash that you might need in the future. If you are thinking of buying an asset to get the instant write-off assuming the government is about to write you out a refund cheque you might want to think again. There is NO cash back. Also don’t forget fringe benefits tax, while this might seem like a great opportunity to buy a new “company car” to cash in on the immediate write off there are many more things to consider.

Boosting cash flow for employers

Tax-free credits of up to $100,000 for eligible small and medium businesses (i.e., with a turnover of less than $50 million that employ staff) based on their PAYG withholding obligations. This is not a cash payment, but it is a credit equal to 100% of the PAYG amounts withheld from salary and wages paid to employees. All employers will receive a minimum credit of at least $20,000 over the next 2 quarters ($10,000 per quarter) up to a maximum of $100,000. Again this is NOT a cash payment but a credit against your normal BAS obligations (although in some cases if you obligation is less than $10,000 you will receive a refund). To be eligible you must have been already been registered for PAYG withholding PRIOR to 12 March 2020, so you can’t register today and expect to get the payments. So even if you haven’t paid any employees, as long as you were registered for PAYG withholding on 12 March 2020 you will be eligible to receive the minimum credit of $20,000.
Any credits or resulting refunds are TAX FREE.

For business owners considering paying yourself wages or a consultant / contractor earning Personal Services Income the ATO have said they will be investigating any sudden changes to the characterisation of payments to determine whether the payments are in fact wages and whether past payments should have been subject to PAYG withholding and whether super guarantee contributions should have been made .

Supporting apprentices and trainees

Eligible employers can apply for a wage subsidy of 50% of an apprentice’s or trainee’s wage for 9 months from 1 January 2020 to 30 September 2020. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).

Temporary relief for financially distressed businesses

The Government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive. The package also includes temporary relief for directors from any personal liability for trading while insolvent, and providing temporary flexibility in the Corporations Act 2001 to provide temporary and targeted relief from provisions of the Act to deal with unforeseen events that arise as a result of the Coronavirus health crisis.

Government Small and Medium Enterprise (SME) Loan Guarantee Scheme

The Coronavirus SME Guarantee Scheme will provide support for these businesses. Under the Scheme, the Government will provide a guarantee of 50 per cent to SME lenders for new unsecured loans to be used for working capital. This will enhance these lenders’ willingness and ability to provide credit, which will result in

SMEs being able to access additional funding to help support them through the upcoming months.

SMEs with a turnover of up to $50 million will be eligible to receive these loans.

The Government will provide eligible lenders with a guarantee for loans with the following terms:

  • Maximum total size of loans of $250,000 per borrower.
  • The loans will be up to three years, with an initial six month repayment holiday.
  • The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.

Loans will be subject to lenders’ credit assessment processes with the expectation that lenders will look through the cycle to sensibly take into account the uncertainty of the current economic conditions.

Sole Traders and Casual Workers
JobKeeper payment for employees, sole traders, partnerships, trusts and companies without employees.

The JobKeeper payment helps businesses significantly impacted by the Coronavirus cover the costs of their employees’ wages, so more Australians can retain their jobs and continue to earn an income. Your employer will notify you if they intend to claim the fortnightly payment of $1,500 on your behalf.

If you are a sole trader, partnership, trust or company WITHOUT you can apply for the job keeper through MyGov/ATO.
If you’re a sole trader WITHOUT employees, there’s a guide on what you need to do HERE.

Employees should NOT register their interest as your employer will do that if they intend to claim.
Employees can find out more here https://www.ato.gov.au/general/jobkeeper-payment/employees/

For partnerships, trusts and companies without employees it’s important to note that only ONE partner, beneficiary or director can claim the Jobkeeper payment. This is referred to as an “Eligible Business Participant”.
You enroll through MyGov/ATO using using the same steps as if you were a sole trader (HERE) except the question “Are you enrolling as a sole trader” will be replaced with “Are you enrolling as an eligible business participant”.

Please also note that as this time there is NO ability to report your actual income, this will not be available until after the 4th of May.

There’s more detail on the specifics requirements HERE.

Income support for individuals and sole traders

Sole traders and casual workers may be able to access a coronavirus supplement of $550 a fortnight if they are ineligible for the Jobkeeper payment. Centrelink has also waived various waiting periods and sole traders can meet their mutual obligation requirements by continuing to operate their businesses. Sole traders and casual workers who are currently making less than $1,075 a fortnight will be eligible to receive the full supplement. This is a cash payment. See https://www.servicesaustralia.gov.au/individuals/subjects/affected-coronavirus-covid-19/people-who-dont-get-payment-from-us-coronavirus-covid-19
It’s important to note you cannot get BOTH the Jobkeeper and the Jobseeker, only one.

Temporary early release of superannuation

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. There are various conditions that must be met. See https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Early_Access_to_Super_1.pdf

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. The second payment will not be made to those eligible for the Coronavirus supplement. For further details contact Centrelink.

Reducing social security deeming rates

On 12 March, the Government announced 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.

As of 1 May 2020, the upper deeming rate will be 2.25 per cent and the lower deeming rate will be 0.25 per cent. The reductions reflect the low interest rate environment and its impact on the income from savings. The change will benefit around 900,000 income support recipients, including around 565,000 Age Pensioners who will, on average receive around $324 more of the Age Pension in the first full year the reduced rates apply. For further details contact Centrelink.

Get your Will and Enduring Power of Attorney updated NOW.

If you have to self-quarantine or are admitted to hospital, and don’t have an EPOA then no-one else can make important business or financial decisions on your behalf. As a business owner, it is 100% essential that you have an up to date EPOA and Will, and that your family know where these are stored.

We can refer you to a local Lawyer who can assist, or contact your current Lawyer to ensure your documents are up to date.

Remember if you are having difficulties meeting your tax and super obligations as a result of a Coronovirus downturn it’s best to get on the front foot and contact the ATO Emergency Support Infoline on 1800 806 218.

This is everything we know as of Thursday the 30th of April 2020. As new details come to hand we will update this page.

Please also note that as a precaution we have closed our Joondalup office. However it’s business as usual as we are available via phone and e-mail as normal. If you do need to pick up or drop off documents please call us on 9301 4677 to make arrangements.

Also we are expecting a very high level of inquiries from clients. We ask that you please be patient and we will deal with your inquires as soon as we can. We must obviously prioritise inquires from business clients who have employees as they need the most help.

Further information

The ATO’s COVID-19 Support page is here https://www.ato.gov.au/Individuals/Dealing-with-disasters/In-detail/Specific-disasters/COVID-19/

The Government’s COVID-19 economic response page is here https://treasury.gov.au/coronavirus and also includes information about assistance available to individual outside the tax system