We Are Here to Help
With the imminent shut down of all non-essential services we are adequately prepared to continue to assist you during these uncertain times. We would encourage you to contact us via email or telephone should you be unsure on how any of the below will impact you.
Second Federal Government Stimulus Package
The Federal Government announced their second stimulus package on Sunday morning to provide additional assistance via a number of measures.
Supporting Individuals and Households
This assistance includes income support payments, payments to support households and temporary early releases of superannuation.
Income Support for Individuals
Over the next six months, the Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight. This will be paid to both existing and new recipients of JobSeeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit. Sole traders may also be eligible for the JobSeeker Payment where their income has significantly reduced as a result of the Coronavirus. Applicants will make a declaration to Centrelink that their business has been suspended or had turnover reduced significantly as a result of the downturn.
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 qualifying 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.
Temporarily Reducing Superannuation Minimum Drawdown Rates
The Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50 per cent for 2019-20 and 2020-21. This measure will benefit retirees holding these products by reducing the need to sell investment assets to fund minimum drawdown requirements.
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 $105 more of the Age Pension in the first full year the reduced rates apply.
Support For Businesses
This assistance includes cash flow support to businesses and temporary measures to provide relief for financially distressed businesses.
Boosting Cash Flow For Employers
The Government is providing up to $100,000 to eligible small and medium-sized businesses, and not for-profits (NFPs) that employ people, with a minimum payment of $20,000. These payments will help businesses and NFPs 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. NFPs, including charities, with aggregated annual turnover under $50 million and that employ workers will now also be eligible.
Under the enhanced scheme, employers will receive a payment equal to 100 per cent of their salary and wages PAYG withheld (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.
Temporary Relief For Financially Distressed Businesses
The economic impacts of the Coronavirus and health measures to prevent its spread could see many otherwise profitable and viable businesses temporarily face financial distress. It is important that these businesses have a safety net to make sure that when the crisis has passed they can resume normal business operations. One element of that safety net is to lessen the threat of actions that could unnecessarily push them into insolvency and force the winding up of the business.
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.
The ATO will tailor solutions for owners or directors of business that are currently struggling due to the Coronavirus, including temporary reduction of payments or deferrals, or withholding enforcement actions including Director Penalty Notices and wind-ups.
Supporting the Flow of Credit
The Government, the Reserve Bank of Australia and the Australian Prudential Regulation Authority have taken coordinated action to ensure the flow of credit in the Australian economy. Timely access to credit is vital for businesses to manage the impacts of the Coronavirus.
Support For Immediate Cash Flow Needs For SMEs
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. Starting in early April, this will apply to eligible loans for businesses with annual turnovers of up to $50 million and will include an upfront six month freeze on repayments.
Quick and Efficient Access to Credit For Small Business
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.
NSW Government Stimulus Package
The NSW Government has announced a state economic stimulus package which includes the following:
- Waiver of payroll tax for businesses with payrolls up to $10m for three months. This means that businesses will save a quarter of their annual payroll tax bill in 2019-20 and not have to pay any payroll tax for the months of March, April or May 2020. 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.
- Raising the payroll tax threshold limit to $1m for in 2020-21.
- $80 million to waive a range of fees and charges for small businesses including bars, cafes, restaurants and tradies (note that details are currently being finalised and will be published on the NSW Fair Trading, SafeWork NSW, Liquor & Gaming NSW and Service NSW websites).
Business Loan Repayments
Small businesses impacted by COVID-19 are now able to defer their business loan repayments for six months. Read more.
To find our more about deferring your loan repayments, contact your bank. Here are the dedicated business hardship contact lines for the key Australian banks:
Australian Tax Office Assistance
The ATO have advised that they will provide the following assistance for those affected by Coronavirus.
- Deferring by up to four 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 quicker 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.
Employers will still need to meet their ongoing super guarantee obligations for their employees.
What Can You Do?
We suggest you assess likely impact, update financial forecasts and strategies about what steps may be needed to minimise any adverse implications and develop a fall back position. Please let us know if you need any assistance.
The following may be considered.
- Assess what is likely to happen and how the business could be impacted. Identify the extent of the problem and potential implications via a review of the current financial position and cash flow projections
- Accept that, as a business owner, you have the obligation and power to manage this. In a competitive environment, it is an opportunity to create a long term strategic advantage
- Consider actions required now and later including and implements those strategies in an effective and timely manner. This may include the following:
- Operations - reduce fixed overheads including a consideration of whether and how employments costs can be reduced to maintain employees employment and loss of productivity via working from home, such as reducing casual hours, use of annual or long service leave.
- Supply chain management - consider likely impact on resources and any need for alternate supply.
- Marketing - delay or postpone marketing, redirect target audience, develop new strategies.
- Cashflow - update projections, review Government assistance, collect debts ASAP, review cash reserves, check banking facilities and covenants.
Please contact our office if you have any questions or need assistance. We are all able to work remotely and effectively to ensure your access to advice is not impacted. This is not business as usual but we are taking steps to minimise the adverse impact.