government grants and advice

COVID-19 Stimulus Packages & Government Grants by the ATO

We have outlined below a summary of the key governments measures to help businesses and investors navigate through the uncertainty as a result of COVID-19. Also, keep in mind that due to the rapid release of information, some details have not yet been provided by the government.

We will update our website as we know more.

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    Hillyer Riches are Tax Accountants & Business Advisors in Caulfield East, 50 meters from Caulfield Station.

    If you have any questions on the below and how these changes affect your business, book a free strategy session with us by reaching out via
    03 9571 5333 or info@hillyerriches.com.au

    ATO & Government Grants & Updates on Coronavirus COVID-19

    The government has enacted legislation to support its economic response to novel coronavirus (COVID-19) to help the economy withstand and recover from the economic impact of coronavirus.

    They are implementing processes to ensure you have access to these measures as quickly as possible.

    1st Tranche $10 to $50k tax free payment

    • <$50m turnover
    • Held an ABN on 12 Mar 2020
    • Carrying on business and earned assessable income in FY 2019 OR made supplies in course or further of an enterprise starting 1 July 2018 and ending before 12 March 2020
    • Based on 100% of PAYG amount in activity statement from Jan to June 2020

    2nd Tranche $10 to $50k tax free payment

    • <$50m turnover
    • Same tests per Tranche 1
    • Based on 100% of PAYG amount in Tranche 1 and paid in activity statement from Juy to Oct 2020

    50% subsidy apprentice wages

    • Wage subsidy of 50% of apprentice or trainee wages for up to 9mths from Jan 2020 to Sep 2020.
    • If SME not able to retain apprentice subsidy available to new employer
    • Maximum benefit $21k per apprentice or trainee
    • Available to SME employing fewer than 20 employees who retain an apprentice or trainee
    • Can register from 2 April 2020
    • Final claim lodged by 31 Dec 2020

    Tax payment deferral - ATO

    • Abolity to vary Mar 2020 PAYGI installment to NIL
    • Ability to claim a refund for PAYGI Installement for Sep 2019 and Dec 2019 quarter. 
    • Ability to remit any interest and penalties incurred on or after 23 Jan 2020
    • Assisting business to pay ATO debts including low interest payment plans
    • Quarterly reports can opt in for monthly to get access to GST refunds quicker

    JobKeeper Payment

    • Claim $1,500 per fortnight including self-employed individuals for each worker that is employed.
    • Includes employees as at 1 March 2020.
    • Maximum period 6 mths
    • Turnover < $1BN and turnover reduced > 30% relative to a comparable period 1 yr ago
    • Turnover > 1$BN and turnover reduced > 50% relative to a comparable period 1 yr ago
    • Not subject to Major Bank Levy
    MORE INFO

    Accelerated depreciation

    • <500m turnover
    • Not using simplified depreciation rules
    • 50% deduction of the cost
    • Existing depreciation rules apply to the balance
    • Asset must be installed and ready to use by 30 June 2021

    Government backed loans - SME Guarantee Scheme

    • < $50m turnover.
    • 50% guarantee on new loands for SME's up to $250k.
    • Financial institutions will be providing the products.
    • Operates from 1 Apr 2020 to 30 Sep 2020.
    • 3 year term Initial 6 months repayment holiday.
    • No security required.

    Instant asset write off $150k

    • <500M turnover
    • Asset must be installed and ready to use by 30 June 2020
    • Only applies until 30 June 2020

    Early access to super

    • Access $10k before 1 July 2020
    • Access a further $10k from 1 July 2020 until 24 Sep 2020
    • Must be unemployed 
    • Eligible to received job seeker payment, youth allowance for job seekers, parenting benefits, special benefits or farm household allowance.
    • On or after 1 Jan 2020 either: made redundant, working hours reduced by >20%, sole trader turnover reduced by <20%

    Boosting cashflow for employers

    The Government is enhancing the Boosting Cash Flow for Employers measure it announced on 12th March 2020.

    The Government is providing up to $100,000 to eligible small and medium-sized
    businesses, with a minimum payment of $20,000. These payments will help businesses with their cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff.

    Small and medium-sized business entities with aggregated annual turnover under $50 million and that employ workers are eligible.

    Under the enhanced scheme, employers will receive a payment equal to 100 per cent of their salary and wages withholdings (PAYGW) (up from 50 per cent), with the maximum payment being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000.

    An additional payment is also being introduced in the July – October 2020 period. Eligible entities will receive an additional payment equal to the total of all of 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

    The credits will be calculated when preparing Business activity statements starting from the March 2020 quarter. It is therefore vital to lodge BAS/IAS returns to the ATO as soon as possible.

    Increasing the instant asset write-off / Investment Incentive

    1. New and Second Hand Acquisitions after 12th March 2020:
      - The Government is increasing the instant asset write-off threshold from $30,000 to
      $150,000 and expanding access to include businesses with aggregated annual
      turnover of less than $500 million (up from $50 million) the assets must be ready for
      use by the 30 th June 2020.
    2. New Acquisitions after 12th March 2020, installed ready for use by 30th June 2021:
      Items that don’t qualify per (i) above can be depreciated at 50% of the cost.
    Covid 19 ATO

    State Revenue Office relief measures

    Payroll Tax Relief

    Payroll tax will be waived in 2019-20 for eligible businesses with taxable wages up to $3 million.
    The SRO will directly contact eligible businesses in relation to reimbursement for payroll tax already paid in the financial year.

    They will begin making reimbursements from 27th March 2020.

    Eligible businesses must continue to lodge payroll tax returns but do not need to make further payments for this financial year.

    Businesses with annual taxable wages up to $3 million can also defer paying payroll tax for the first quarter of the 2020-21 financial year until January 2021.

    Land Tax Relief

    2020 land tax will be deferred for people that have at least one non-residential property and total taxable landholdings below $1 million. Eligible land owners can defer their entire assessment, which may include residential land.

    Non-residential property includes:
    • Commercial property,
    • Industrial property, and
    • Vacant land (excluding residential vacant land).

    Your 2020 land tax payment can be deferred until after 1st January 2021 and will need to be paid in full by 31st March 2021.

    If you have already paid your 2020 land tax you can request a return of the tax paid. The tax will need to be paid in full by 31st March 2021.

    The SRO will contact all eligible land owners and provide further information, including about how to request the return of your payment. You do not need to do anything at this stage.

    tax return paper

    ATO Support

    Payment deferrals

    If you or your business has been affected by COVID-19, we can work with you to defer some payments and vary instalments you have due. These include your income tax, activity statement, pay as you go (PAYG) instalments, FBT and excise payments by up to six months.

    GST Credits - turnover less than $ 20million It is worth considering if you should temporarily change your reporting cycle. If you report quarterly and you are due for a GST refund, moving to monthly reporting means you can get quicker access to GST refunds you are entitled to.

    PAYG instalments

    If you are a pay as you go (PAYG) instalments payer, you can vary your PAYG instalments on your
    activity statement. You can do this by lodging a revised activity statement before your instalment is due and before you lodge your tax return for the year. Those who vary their PAYG instalment rate or amount can also claim a refund for any instalments made during the 2019–20 financial year.

    Where you choose to vary your PAYG instalments, the ATO won't apply penalties or charge interest to varied instalments for the 2019–20 financial year. If you realise you've made a mistake working out your PAYG instalment, we can correct it by lodging a revised activity statement or varying a subsequent instalment.

    Remitting interest and penalties

    If your business is affected by COVID-19, the ATO will consider remitting interest and penalties incurred on debts arising after 23rd January 2020.

    Low interest payment plans

    If your business has been affected by COVID-19 and you need help to pay your existing and ongoing tax liabilities, contact the ATO to discuss entering a low interest payment plan.

    Super guarantee payments

    If you are an employer, you need to meet super guarantee obligations for your employees.

    Self Managed Superannuation Funds

    The minimum pension payments have been reduced by 50% for the year ended 30th June 2020, and 30th June 2021.

    Pension members that have already taken more than the minimum for 2020 will not be able to recontribute any excess amount unless they meet the normal conditions of contributing into
    superannuation.

    Early Release of Superannuation

    Individuals in financial stress as a result of COVID-19 will be allowed to access up to $10,000 of
    superannuation in 2019–20 and a further $10,000 in 2020–21.

    You will be able to apply online through myGov for access of up to $10,000 of your superannuation before 1st July 2020, and will also be able to access up to a further $10,000 from 1st July 2020 for another three months.

    Eligibility


    • You must be unemployed; or
    • You must be eligible to receive a jobseeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or
    • On or after 1st January 2020:
    • You were made redundant; or
    • Your working hours were reduced by 20 per cent or more; or
    • if you are a sole trader, your business was suspended or there was a reduction in your turnover of 20 per cent or more.

    Eligible individuals will not need to pay tax on amounts released and the money you withdraw will not affect Centrelink or Veterans’ Affairs payments.

    Centrelink benefits – Services Australia

    Income Support

    People unable to attend work because of coronavirus or whose income has been impacted by the economic downturn may be eligible for income support payment. The Government is temporarily expanding eligibility, establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight and making it quicker to access by waiving the usual waiting period. Visit the services

    Australia website for more information or to apply.

    There are a range of other COVID-19 support assistance which can be viewed on the Services Australia website.

    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 31st March 2020 and the second payment will be made from 13th 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.

    Supporting apprentices and trainees

    The Government is supporting small business to retain their apprentices and trainees. Eligible
    employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for 9
    months from 1st January 2020 to 30th September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.

    Employers

    will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter). Support will also be provided to the National Apprentice Employment Network, the peak national body representing Group Training Organisations, to co-ordinate the re-employment of displaced apprentices and trainees throughout their network of host employers across Australia.

    Temporary changes to insolvency

    The Government is lessening the threat of actions that could unnecessarily push otherwise profitable and viable businesses into insolvency to help ensure businesses can resume normal operations when the crisis has passed.

    This includes temporarily:
    • increasing the threshold at which creditors can issue a statutory demand and the time
    companies have to respond
    • relieving directors from personal liability for trading while insolvent
    • providing flexibility in the Corporations Act 2001 to deal with unforeseen events that arise
    as a result of the Coronavirus health crisis.

    Supporting the flow of credit

    Under the Coronavirus SME Guarantee Scheme, the Government will provide a guarantee of
    50 per cent to SME lenders to support new short-term unsecured loans to SMEs. The Scheme will
    guarantee up to $40 billion of new lending.

    This will provide businesses with funding to meet cash flow needs, by further enhancing lenders’ willingness and ability to provide credit. This will assist otherwise viable businesses across the economy who are facing significant challenges due to disrupted cash flow to meet existing obligations.

    The Government is cutting red tape by providing a temporary exemption from responsible lending
    obligations for lenders providing credit to existing small business customers. This reform will help small businesses get access to credit quickly and efficiently.

    jobkeeper patment

    JobKeeper Payment – for small and medium sized businesses

    We've created a video summarising the JobKeeper ATO update.

    Employees and businesses have been further supported by the government with the introduction of the JobKeeper Payment. The measure has been created to better support employers to retain staff and continue to pay employees wages.

    The JobKeeper Payment will be available for 6 months and provide a $1500 Payment per fortnight per employee.

    he JobKeeper payment is intended to provide wage subsidies to businesses that are significantly affected by COVID-19.

    The Government has announced its intention to pass additional legislation to introduce this new measure.

    If legislation is enacted, support will be directed to employers to pass on to employees.

    Is my business eligible for the JobKeeper Payment – economic stimulus package?

    If your business has a turnover of less than $1 billion and your turnover will be reduced by more than 30% relative to a comparable period a year ago (at least one month) you may be eligible.

    There will be a monthly reporting process to update the ATO on your affairs.

    How do you register for the JobKeeper scheme?

    Currently you can only register your interest in the scheme - to receive further updates when the systems become available. You will then be able to apply for the scheme with an online application.

    Once available, you must register for the scheme and supply supporting information showing a slowdown in your business and make a declaration. You will also at that point report on the number of eligible employees.

    To register with the ATO:

    Search: “ATO Jobkeeper

    Information you will be required to enter:

    • Business Name
    • Business ABN
    • Contact person details: Name, Email, Mob Pho No.

    Note: larger business structures with multiple ABN entities paying wages should each register/apply separately.

    Eligible employees for the JobKeeper Payment

    Employees need to have been employed as at 1 March 2020.

    Employees include full time, part time, and long term casual 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).

    Employees stood down since 1 March 2020 are also eligible.

    Note: An eligible employee must be 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.

    Job Keeper Payments for sole traders

    The JobKeeker Payment is also available to sole traders. This is available even for sole traders without employees. You will need to have suffered or expect to suffer a 30% decline in turnover (sales) relative to a comparable period a year ago (of a minimum of one month).

    If you are a sole trader you will need to give the ATO a monthly update and declare your continued eligibility to the JobKeeper Payments.

    Doris is a sole trader running a small business as a florist. She does not have employees. Doris’ business has been in operation for several years. The economic downturn due to COVID-19 has adversely affected her sole trader business, and she expects that her sole trader business turnover will fall by more than 30 per cent compared to a typical month in 2019. Doris the florist will be able to apply for the JobKeeper Payment and would receive $1,500 per fortnight before tax, paid on a monthly basis.

    What if I’m now receiving Centrelink / Services Australia Payments and my employer reinstates me through the JobKeeper Payment scheme?

    The employee should advice services Australia to update them of the change in circumstances.

    What if I’m ordinarily paid less than the JobKeeper Payment?

    Your employer will receive $1500 before tax, per employee, irrespective of how much they earn. The Payment must be passed on to the staff member, via the employers payroll. It will be an employers choice if they wish to pay superannuation guarantee on any additional salary because of the JobKeeper Payment.

    Example: Employer pays some employees less than $1500

    Olaf owns a refrigeration business in Caulfield. He has experienced a 30% drop in sales and is eligible to apply for the concession. He pays 2 staff, one that is paid more than $1500 and one whom is paid less.

    • Elsa who is a permanent fulltime employee on $3000 per fortnight before tax and continues to work for Olaf
    • Anna who is a permanent part time employee on $1000 per fortnight before tax and who continues to work for Olaf
    • Olaf is eligible to receive the JobKeeper Payment for both staff members, and this would affect the employees by:
    • Continuing to pay Elsa her full-time salary of $3000 per fortnight before tax (and Olaf’s business will receive $1500 to subsidise her salary).
    • Olaf will continue to pay Anna her $1000 per fortnight before tax salary and an additional $500 per fortnight before tax, totalling $1500 before tax. Olaf will pay superannuation on the original $1000 paid per fortnight and not on the additional payment, unless he chooses to.

    What if you pay a staff member more than the $1500 JobKeeper Payment?

    The staff member will continue to receive the same salary. The JobKeeper Payment will assist your business to continue to operate by subsidising all or part of your payroll.

    Example: Employees with 4 employees all currently getting paid more than $1500 per fortnight

    Cadel runs a bicycle shop in Brighton and employs 4 full time mechanics. Cadel is paying his mechanics $2000 per fortnight before tax. He expects his turnover will decline by more than 30% in the coming months and that he will have to either reduce staff hours or stand down staff.

    Cadel will be required to pay his staff only the $500 gap before tax between the JobKeeper Payment of $1500 and the normal salary of $2000.

    Other Bank Assistance

    Your financial institution can provide support when you are unable to meet your credit card, personal loan or home loan payments by reducing or deferring your repayments.

    Hillyer Riches are Tax Accountants & Business Advisors in Caulfield East, 50 meters from Caulfield Station.

    If you have any questions on the below and how these changes affect your business, book a free strategy session with us by reaching out via
    03 9571 5333 or info@hillyerriches.com.au

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    Disclaimer:
    This document contains general advice only and is not personal financial or investment advice. Also, changes in legislation may occur frequently. We recommend that our formal advice be obtained before acting on the basis of this information.

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