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Latest Tax and Business Measures in response to the Coronavirus.

Please Note – These are the current changes the government have announced to offer small to medium sized businesses but please be mindful these measures may change once they become legislated. I will keep you informed as I receive any information.



1. Boosting Cashflow for Employers – Was updated 22nd March 2020

- Will provide up to $50,000 back to business, with a minimum payment of $10,000 for eligible businesses. Payment will be tax free.


- Small and Medium businesses that employ workers will be eligible.


- Quarterly Lodgers: The payment will automatically be delivered by the Australian Taxation Office as a credit in your March Activity Statement due 28th April 2020 or 25th May 2020 (depending on your lodgement method) and your June Activity Statement due 28th July or 25th August (depending on your lodgement method). Depending when your businesses cap of $50,000 has been reached.


- Monthly Lodgers: The payment will automatically be delivered by the Australian Taxation Office as a credit in your March Activity Statement due 21st April 2020 and your April, May and June Activity Statements until your cap of $50,000 has been reached.


- Eligible Monthly lodgers will receive a 300% of the tax withholding in their March PAYG instalment Activity Notice, paid on 21st April 2020. E.g. If you withhold $15,000 from your wages you will receive a credit of $45,000, which will result in a refund of $30,000.


- Eligible Quarterly lodgers that withhold tax to ATO on their employer salary and wages will receive a payment equal to 100 per cent of the amount withheld, up to a maximum of $50,000. If there is still GST and other tax obligations in the Activity Statement this payment will be applied to the other obligations first before it is paid out to businesses as a refund.


- Eligible businesses that pay salary and wages will receive a minimum payment of $10,000, even if they are not required to withhold tax. This minimum payment will only apply for the first Quarter, the March Quarter Activity Statement.


INTRODUCTION OF AN ADDITIONAL PAYMENT UNDER THE BOOSTING CASHFLOW FOR EMPLOYERS

- Government has introduced an additional payment if the business remains active.


- Quarterly lodgers will be eligible to receive the additional payment (credit) for the quarters ending June 2020 and September 2020. Each additional payment will be equal to half of their total initial payment (Up to $50,000). Eg. If the business received $50,000 in the initial Activity Statements, the business would receive an additional payment of $25,000 for June Quarter and $25,000 for the September Quarter.


- A minimum of $10,000 additional payment (credit) will apply for businesses that employ staff but are not required to withhold any PAYG withholding. The business will receive $5,000 payment (credit) in the June and September Activity Statements.


- Monthly lodgers will be eligible to receive the additional payment (credit) for June 2020, July 2020, August 2020 and September 2020 lodgements. Each additional payment will be equal to a quarter of their total initial Boosting Cash Flow for Employers payment (up to $50,000). Eg. If the business received $50,000 in the initial Activity Statements, the business would receive an additional payment of $12,500 in the June, July, August and September periods


2. Supporting Apprentices and Trainees

- The government is supporting small business to retain their apprentice and trainees. Eligible employers can apply for a wage subsidy of 50% of the apprentice’s and trainee’s wages paid during the 9 months 1 January 2020 until 30th September 2020.


- Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee.


- The subsidy will be available to small businesses employing fewer than 20 full-time employees who retain an apprentice or trainee. The apprentice or trainee must have been in training with a small business at 1st March 2020.


- Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network (AASN) provider.


- Can register from early April 2020. Final claims must be lodged by 31st December 2020.


- More information can be found at www.australianapprenticeships.gov.au.


- You can find a AASN provider using this link https://www.australianapprenticeships.gov.au/search-aasn


3. Key Tax Measures

INSTANT ASSET WRITE OFF THREHOLD

- From 12th March 2020, the instant asset write-off threshold has been increased from $30,000 (for businesses with an aggregated turnover of less than $50m) to $150,000 until 30th June 2020.


- Please note to date there has been no mention to increase the car depreciation limit of $57,581 therefore cars will be only be eligible to claim 100% if the cost of the vehicle is less than the depreciation limit of $57,581 (Excluding GST). Cars costing over the depreciation limit will be eligible for the 15 Month Investment Incentive.


15 MONTH INVESTMENT INCENTIVE

- Will operate to accelerate certain depreciation deductions.


- This measure will be available to immediately deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost. Claim 15% in the first year and 30% of the written down value in the following years.


- This incentive will only apply to new assets.


VICTORIAN STATE GOVERNMENT ANNOUNCEMENTS

- Released a statement that they will be refunding payroll tax from 1st July 2019 and businesses will no longer be required to pay payroll tax for the remainder of this financial year and for the first quarter of next financial year.


- According to the State’s announcement, businesses will be able to access the payroll tax cash refunds by this Friday.


4. Other Measures

TAX-FREE PAYMENTS OF $750

- To Social security, veteran and other income support recipients and eligible concession card holders.


- Providing two separate payments. A person can be eligible for both the first and second payments.


- These payments will commence to be automatically made from 31st March 2020.


SMALL AND MEDIUM SIZED BUSINESSES GUARANTEE LOAN SCHEME

- The coronavirus SME Guarantee Scheme will provide support for these businesses.


- Under the scheme, the Government will provide guarantee of 50 per cent to SME Lenders for new unsecured loans to be used for working capital.


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

o Maximum size of loans $250,000

o Loans will be up to three years, with an initial six-month repayment holiday.

o Loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.


BIG FOUR BANKS HAVE ALL RELEASED SOME OF THEIR MEASURES

- Please refer to your banking providers website and coronavirus information regarding the automatic and/or deferral process for your business and home loans.


- Interest Rates have been reduced including fixed rates with some lenders.


EARLY ACCESS TO 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.


- Eligible Individuals will be able to apply online through myGov to access their superannuation before 1st July 2020.


- They will be able to access up to a further $10,000 from 1 July 2020 for approximately three months (exact timing will be made when the legislation has been passed).


- People accessing superannuation will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink and veterans Affairs Payments.


- Eligibility:

o You must satisfy any one or more of the following:

§ You are unemployed; or

§ You are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment, special benefit or farm household allowance; or

§ On or after 1 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 by 20 per cent or more.


- This measure will be available from Mid-April 2020.


- Separate Arrangements will apply for members of Self-Managed Superannuation Funds. These requirements will be released by the ATO soon.


TAX ASSOCIATIONS AND ACCOUNTING MEMBER BODIES ARE LOBBYING FOR DEFERRAL LODGEMENT AND PAYMENT DUE DATES

- I will keep you updated if any blanket deferrals are released by the ATO. Currently we need to apply to the ATO on a case-by-case basis to have any lodgement and payment deferrals put in place. Therefore, Tax Payments are due as normal unless we apply to the ATO.


TEMPORARY RELIEF FOR FINANCIALLY DISTRESSED BUSINESSES IN RELATION TO INSOLVENCY LAWS, BANKRUPTCY AND DIRECTOR PERSONAL LIABILITY LAWS.

- A temporary increase in the threshold at which creditors can issue a statutory demand on a company from $2000 to $20,000 and the increase of time companies have to respond to statutory demands they receive will increase from 21 days to six months;


- A temporary increase in the threshold for a creditor to initiate bankruptcy proceedings from $5,000 to $20,000, an increase in the time period for debtors to respond to a bankruptcy notice from 21 days to six months, and extending the period of protection a debtor receives after making a declaration of intention to present a debtor’s petition from 21 days to six months;


- Temporary relief for directors from any personal liability for trading while insolvent; and


- Providing temporary flexibility in the Corporations Act 2001 to provide targeted relief for companies from provisions of the Act to deal with unforeseen events that arise as a result of the Coronavirus health crisis.


- Any debts incurred by the company will still be payable by the Company.


- Fraud and dishonesty will still be subject to criminal penalties.


- For owners or directors of a business that are currently struggling due to the Coronavirus, the ATO will tailor solutions for their circumstances, including temporary reduction of payments or deferrals, or withholding enforcement actions including Director Penalty Notices and wind-ups.


INCOME SUPPORT FOR INDIVIDUALS.

- 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 supplement will be paid to both new and existing recipients. These changes will apply for 6 months.


Expanded access to support

1. Expanded access: Jobseeker Payment and Youth Allowance jobseeker criteria will provide a payment access for permanent employees who are stood down and lose their employment; sole traders; the self-employed; casual workers; and contract works who meet the income tests as a result of the economic downturn.


2. Reduced means testing: Asset Testing for JobSeeker Payment, Youth Allowance Jobseeker and Parenting Payment will be waived. Income Testing will still apply to the person’s other payments, consistent with current arrangements. This has been unclear if your partners income will still reduce the payment by 60 cents for every dollar, if they earn over the threshold of $993.50 fortnightly payments. I’m following this carefully as the Treasurers announcement today was conflicting to the information provided on the Australian Governments Website.


3. Reduced Waiting Times


- These measures are expected to commence on 27th April 2020.


If you should have any questions regarding the above changes please contact Carolyn at carolyn@abtaccounting.com.au or 0400594160.



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