Stage two of the Government’s response to COVID-19
Since our previous update on 13 March, the Federal Government has announced another series of measures aimed at supporting the economy through the COVID-19 pandemic. The Government described stage one as a stimulus and stage two this past weekend as a ‘safety net’.
The official Treasury overview and detailed fact sheets can be found here.
To summarise the announced measures thus far:
A minimum of $20,000 over 3 quarters, capped at $100,000 in total for businesses with a turnover less than $50 million. This is an automatic process, with the amount due credited against the BAS/IAS lodgement due. This has been updated since 13 March.
The ATO has announced that they will not be applying interest and penalty charges in respect of PAYG Instalment variations made in the March 2020 quarter, which includes refund claims for September and December. This is simply a deferral, as any underlying tax for the year will still be payable on lodgement.
At this point the ATO will look at payment and lodgement deferrals for people and businesses affected by COVID-19. Currently this needs to be applied for and is not a blanket deferral.
It is important to note that none of the deferrals or subsidies are applicable to superannuation guarantee obligations. There is no deferral and superannuation must continue to be paid on time.
Victorian payroll tax
There is a refund of 2020 payroll tax in place for employers with total payroll under $3,000,000. There is also a deferral of lodgement for the first quarter of financial year 2021 until January 2021. Lodgement of returns is still required, even if payment is not.
Other State taxes
Each State also has differing deferrals and discounts in place for payroll tax. Each State also has a stimulus package separate to the Federal one.
Apprentice and trainee wage subsidies
For small businesses with less than 20 full time employees who employ apprentices and trainees. The subsidy is half the wage of an eligible employee, capped at $21,000 per apprentice/trainee. The subsidy applies for the 9 months to 31 December 2020 and that employee had to be eligible with the business at 1 March 2020. This has not changed since 13 March.
Instant asset write-off
Has been increased to $150,000 for businesses that turnover less than $500 million and purchase assets before 30 June 2020. The threshold applies on a per asset basis. This has not changed since 13 March.
Accelerated depreciation deductions
For new depreciable assets purchased and installed prior to 30 June 2021 for businesses with turnover less than $500 million. There is a deduction of 50% of the cost of an asset, with normal depreciation applying to the balance. This has not changed since 13 March.
Banking and liquidity
The Government is guaranteeing 50% of unsecured loans made by SME lenders to support short-term unsecured loans. Temporary exemptions from responsible lending obligations for providing credit to small businesses are also in place. The Reserve Bank is putting downward pressure on borrowing costs for households and businesses.
There are temporary measures in place for 6 months to extend thresholds and timing in relation to creditor claims and liquidation initiations. There is also a temporary 6 month relief in relation to insolvent trading and Directors’ duties, for any debts that are incurred in the normal course of business.
Superannuation pension minimum payments
These are being halved for financial years 30 June 2020 and 2021. If your minimum pension was set at 4%, then the fund only needs to pay 2% to remain compliant.
Temporary early release of $10,000
From superannuation for financial years 30 June 2020 and 2021 for certain people. This is generally for people made redundant or unemployed, or where working hours have been reduced by greater than 20%. An application for this is made through the myGov platform.
Stimulus payments to households
One-off payments of $750 to lower-income Australians who receive certain social security payments. A second payment of $750 has now been added to be made in July. There is also a time limited $550 fortnightly supplement for people receiving various allowances and payments related to job seeking and parenting. This is an update made since 13 March.
Assistance for severely affected regions
$1 billion is set aside to support regions and communities disproportionately affected, including those with heavy reliance on tourism, agriculture and education.