CULTIV8 ACCOUNTING - COVID-19 GOVT STIMULUS PACKAGE SUMMARY

FEDERAL GOVERNMENT STIMULUS PACKAGE

The Federal Government has announced a comprehensive Stimulus package to assist SMEs (Small to Medium Enterprises) and Households.

It is designed to support continued business investment, provide cash flow assistance, help businesses to continue to employ their workers and targeted support to the most severely affected sectors.

There is also a stimulus package that consists of payments to households which benefit the wider economy as a whole.

It really consists of the following measures:

1. Cash flow assistance for businesses
2. Early Access to superannuation benefits
3. Providing support for Retirees
4. Payments to support households; &
5. Income Support for Individuals

We will provide you with a detailed summary of each of the 5 measures above plus some of the another announcements from the State Govt and the Banks that will support you, your business and your employees during this time of need.

Cultiv8 Accounting has not seen anything like this in our lifetime, and the stimulus package provided here is far larger than the one we saw in the Global Financial Crisis (GFC).

 

1. CASH FLOW ASSISTANCE FOR BUSINESSES

These measures are to support business in managing their cash flow and to help business retain their employees. It is designed to support small to medium businesses as well as the not-for-profit organisations

• Boosting Cash Flow for Employers

The Federal Govt is providing up to $100,000 to eligible business and not-for-profits organisations that have employees. The minimum payment is $20,000 so the eligible business' can continue operating, paying rent, paying wages to staff and to retain their staff in the long term.

Employers will receive a payment equal to 100% of the amount you withhold from employees wages up to the maximum of $50,000. The most positive factor being that the minimum payment is now $10,000

Additionally, a further payment will also be introduced in the July to October Period, equal to the total you have withheld in March and June BAS.

This means you will now receive a minimum of $20,000

This payment will be a tax free payment and will be calculated by the ATO. You do not have to apply.

Eligibility:

You must be an active employer who was established as an employer prior to 12 March 2020

• Even if you do not withhold tax from your employees, you will still be eligible to receive the $10,000 from 28 April 2020.

We caution you not to inflate your amounts withheld just to obtain more. We anticipate integrity measures such as this payment being relative to the actual amount to be withheld under your existing obligations – Refer to the weekly/fortnightly/monthly PAYG Tables for reference.

Method & Timing of the Cash Flow boost

This cash flow assistance will be applied to your Business Activity Statements (BAS). Where this places the BAS in a refund position the ATO will pay this within 14 days of lodgement.

• Quarterly BAS lodgers will receive the payment for the quarters ending March 2020 and June 2020.
• Monthly lodgers (and there are not that many of you) will receive the payments in your monthly BAS from March 2020. The March amount will be three times the amount in your march BAS – to put you on a level playing field with your quarterly counterparts.

Additional Payments

• To qualify for the additional payment ( minimum of $10,000 ) you must simply remain an active employer. The timing of this additional payment will be following the lodgement of your Activity Statement. If this payment places you in a refund position, the ATO will deliver this payment to you within 14 days of lodgement.

• Quarterly lodgers will receive half of the additional payment following the June 2020 BAS and the remaining half following the September 2020 BAS.

• Monthly lodgers will receive a quarter of their payment following the June 2020, July 2020, August 2020 and September 2020 BAS

THE MINIMUM PAYMENT WILL BE A TOTAL OF $20,000 UP TO A MAXIMUM OF $100,000

This means larger employers receive a larger share of the stimulus – but it is about protecting these businesses and hence the jobs of the employees that they employ.

 

SUPPORTING APPRENTICES AND TRAINEES

Eligible employers can apply for a wage subsidy of up to 50% of their apprentice or trainee’s wages paid during the 9 months from January 1 to 30 September 2020.

• The maximum to be applied for is a total of $21,000 per apprentice or trainee ( or $7,000 per quarter )
• Employers will be eligible where they employ fewer than 20 full time employees, who also retain an apprentice or employee. The apprentice or employee must have been in training as at 1 March 2020.

TIMING

• Employers can register from early April 2020 – Final claims must be lodged by 31 December 2020

Further information can be obtained from:

• Dept of Education, Skills & Employment dese.gov.au
• Australian Apprentices australianapprenticeships.gov.au
• Verto verto.org.au
• Job Centre Australia jobcentreaustralia.com.au
• Any other providers that you may use

INSTANT ASSET WRITE OFF INCREASE

• The maximum asset value that can be written off in full has been increased from $30,000 to $150,000
• The timing of this is for any asset used or first installed from 12 march to 30 June 2020.

This means that the asset must be delivered and ready for use by 30 June 2020.

An invoice for equipment but not yet delivered and ready for use prior to June 30 2020, is not eligible. It is our expectation that this will be policed vigorously by the ATO – insofar as suppliers may  even be required to provide delivery dates.

• This is for all new or second hand assets – and also applies on a per asset basis – so 3 items costing $80,000 each will all be fully deductible so long as they are delivered, installed and ready to use by 30 June 2020

This is simply a higher tax deduction for your business and will not be received as a cash payment.  It is designed o reduce your end of year Income tax Position. 

50% INVESTMENT INCENTIVE

This will provide a further deduction for eligible businesses of accelerated depreciation deductions for eligible assets upon installation from 12 March 2020 until 30 June 2021

To be eligible:

• Turnover must be below $500 Million
• There is no asset value threshold.
• This measure is to allow an immediate deduction of 50% of the cost of the asset, plus the normal depreciation that you can claim for that year.
• This will be calculated in your 2020 and 2021 Income tax Return
• It appears that this is only available for those assets that exceed $150,000, where you cannot claim the immediate asset write off.
• As such – we expect that this will be available on large asset purchases which exceed the $150,000 threshold.

TAX PAYMENT DEFERRALS

The ATO has announced a number of payment deferral concessions for businesses directly impacted by COVID-19

• You can defer by up to 4 months the payment date of amounts due from lodging your BAS (PAYG Instalments) Income tax Assessments and so on
• Allowing quarterly BAS lodgers to opt into lodging monthly to allow them to receive faster access to GST refunds and the wages tax stimulus credit.
• Allowing businesses to vary their PAYG Instalments (business income tax) for the march 2020 quarter. This may even allow you to claim a refund of your instalments from the September and December 2019 quarters.
• Apply for any penalties and interest incurred after 23 January that the ATO may have already applied.
• Allowing affected businesses to enter in low interest payment plans for existing and ongoing tax liabilities.

2. EARLY ACCESS TO SUPERANNUATION

These measures are to allow those individuals who are significantly affected by the Coronavirus to access up to $10,000 of their superannuation before July 1 2020. A further access will be allowed for another payment of up to $10,000 from July 1 2020 for up to 3 months.

Eligibility:

• You must be unemployed
• You must be eligible to receive Job Seeker (formerly Newstart ), Youth allowance for Jobseekers, parenting payment (both single and partnered) special benefit (further information required) or farm household allowance.
• On or after 1 January 2020 :
• You were made redundant
• Your working hours were reduced by 20%; or
• If you are a sole trader – your business was suspended or you incurred a reduction in turnover of 20% or more

THE MONEY YOU WITHDRAW WILL NOT BE TAXABLE, NOR WILL IT AFFECT ANY CENTRELINK OR VETERAN’S AFFAIRS PAYMENTS

 

3. PROVIDING SUPPORT FOR RETIREES

These measures are designed to help retirees manage the impact on their investments within their retirement savings. Meaning that the amounts to be drawn down form their superannuation can be reduced. It is also designed to lower the impact that their assets have on the Social Security Deeming Rates that affect their Pensions.

SELF FUNDED RETIREES

• The govt is reducing the required minimum that is to be drawn from your Account Based Pensions ( Superannuation Pensions ) by a factor of 50%
• This is for the 2020 financial year and also for the 2021 financial year.
• The rates will be as follows:
•                                             Existing                                 New

Under 65 years                               4%                                          2%

65-74 years                                      5%                                          2.5%

75-79 years                                      6%                                          3%

80-84 years                                      7%                                          3.5%

85-89 years                                      9%                                          4.5%

90-94 years                                      11%                                        5.5%

95 or more                                       14%                                        7%

This is designed to allow you to manage your financial affairs and the investments that support your pensions in these uncertain times so that you will be better placed in which to decide yourselves when to seel investments, rather than be required to sell now to fund your pensions.

SOCIAL SECURITY DEEMING RATES

• From 1 may 2020, the upper deeming rate will be 2.25% and the lower deeming rate will be 0.25%

• This reduction is to reflect the low interest rate environment and its flow on impact on the income generated from those investments.

• This will potentially provide for an increase in the pension for those Centrelink Pensioners who are currently receiving a lower pension because of their assets.
• What is not known yet is wether both of these measures will impact the deemed income from investments and self funded retiree investments on the determination of the eligibility of the Commonwealth Seniors Health Card
• Having said this – we believe that it will. HOWEVER – WE MUST WAIT FOR THE LEGISLATION BEFORE THIS WILL BE KNOWN

 

4. PAYMENTS TO SUPPORT HOUSEHOLDS

These payments are to provide Government assistance to lower income Australians, including Pensioners, other Social Security and veteran Income support recipients, and eligible concession holders.

• This will consist of 2 separate $750
• The first payment will be available to eligible people at any time from 12^th march 2020 to 13^th April 2020
• The second payment will be available from 10th July 2020

A person can receive both payments, however, you will only receive one payment in each round – even if you qualify for each payment in multiple ways for each payment

THIS PAYMENT WILL BE TAX FREE AND WILL NOT COUNT AS INCOME FOR CENTRELINK PURPOSES IN DETERMINING YOUR ELIGIBILITY FOR OTHER BENEFITS.

Eligibility:

To be eligible you must be living in Australia, and be receiving one of the following payments at any time between 12 march 2020 to 13 April 2020

• Age Pension
• Disability Support Pension
• Carer Payment
• Parenting payment
• Wife Pension 
• Widow B Pension
• ABSTUDY (Living Allowance)       
• Austudy
• Bereavement Allowance       
• Newstart Allowance
• Jobseek Payment       
• Youth Allowance
• Partner Allowance       
• Sickness Allowance
• Special Benefit        
• Widow Allowance
• Family tax Benefit         
• Double orphan Pension
• Carer Allowance                 
• Pensioner Concession Card
• Commonwealth Seniors Health Card         
• Veteran Service Pension
• Veteran Income Support           
• Veteran Compensation
• DVA PCC Holders     
• DVA Education Scheme
• DVA Disability Pension         
• DVA Income Support
• Veteran Gold Card Holders          
• Farm Household Allowance

If you lodge a new claim between 12 March and 13 April – and the claim is granted, you will also receive the payment.

To be eligible for the 2^nd payment, you must be living in Australia and be receiving one of the above payments

HOWEVER, IF YOU ARE ENTITLED TO RECEIVE THE NEXT ITEM – THE CORONAVIRUS SUPPLEMENT YOU WILL NOT BE ENTITLED TO THE 2^ND PAYMENT OF $750

These people are –

• Jobseeker recipients
• Youth Allowance Jobseeker recipients
• Parenting Payment ( Partnered and Single)
• Farm Household Allowance
• Special Benefit

 

INCOME SUPPORT FOR INDIVIDUALS

This is to temporarily increase payments to those people who are receiving income support payments. This will be paid to existing and new recipients of eligible payments, and will apply for the next 6 months.

The payment is to be at a rate of $550 per fortnight

These measures are to ensure that jobseekers can reliably access income support, whilst safely looking for work, and fill critical vacancies as they arise

Jobseekers are also encouraged to stay connected to their employment service provider and to remain job ready.

Eligibility

The payment will be available to people who are or will be eligible to receive the following Income Support payments:

• Jobseeker payments ( and others that are transitioning to this payment – Partner Allowance, Widow Allowance, Sickness Allowance & Wife pension)
• Youth Allowance Jobseeker
• Parenting payment ( partnered and Single )
• Farm Household Allowance
• Special Benefit recipients

If you are eligible – you will receive the full rate of $550 per fortnight

EXPANDED ACCESS

• Jobseeker and Youth allowance criteria will be relaxed to provide payment access to employees who lose their employment, sole traders & self employed, casual workers and contract workers who meet a reduced income test due to the economic downturn
• Asset testing for Jobseeker, Youth Allowance will also be waived. However Income Testing will still be applied
• The one week waiting period is also waived
• The liquid asset test will be waived – beneficial to those employees who are terminated but receive their annual leave etc in their final pay ( if they have any )
• You will not be entitled to receive this payment where you are eligible to receive Income Protection, or are not accessing annual leave or long service leave ( in other words you access these whilst being on leave)
• There will be an accelerated claims process – such as verifying identification over the phone
• New claimants will be required to set up a MyGov account
• Rent assistance can also be claimed

NSW STATE GOVERNMENT MEASURES

• If you currently pay NSW Payroll Tax, and your turnover(grouped) is less than $10 Million you will be able to
• Reduce your annual liability by 25% when you lodge your annual reconciliation which is due 28^th July 2020.
• If you lodge and pay monthly, no payment is required for March, April or may 2020 – this is completely waived
• You still need to provide the wage details paid in these months, and you will receive the 25% reduction on the amount you would have paid.
• The NSW State Govt is also raising the payroll tax threshold to $1 Million from 1 July 2020
• The NSW State Govt is also waiving a range of fees and charges for small businesses including bars, cafes, restaurants and tradies.

If you fall into one of these categories – we suggest speaking to the NSW

State Govt and your professional associations for more information.

BANKING AND LENDING MEASURES

Unfortunately we cannot list all of the banking institutions here, so we will concentrate on the major lenders. Cultiv8 Accounting encourage each and everyone of you to contact your Bank/Credit Union/Lending and Finance Provider for specific information for your individual circumstances

CBA

• Deferring repayments on a variety of business loan, and overdraft payments for 6 months
• Reducing commercial interest rates by 0.25%
• Waiving merchant terminal fees for impacted customers with CBA payment terminal, for 90 days
• Waiving early redraw fees on business term deposit accounts (including farm management deposit accounts)
• Waiving establishment fees and excess interest on Temporary Excess products
• Deferring repayments on vehicle and equipment finance loans, and providing tailored restructuring options that meet individual customer needs

ANZ

• Suspending interest repayments
• Deferral of business loan repayments for up to 6 months, assessed on a case by case basis
• Providing early access to term deposits without incurring fees
• Providing access to additional credit subject to approval 

NAB

• Deferral of business loan repayments for up to 6 months, assessed on a case by case basis
• Extension of a business loan term by a period of up to 3 months, where individual circumstances warrant
• Support to restructure business loans, including equipment finance
• Business Credit card deferred payments

 WESTPAC

• Continuing it’s hardship assistance program
• Deferral of business loan repayments for up to 6 months, assessed on a case by case basis

 BENDIGO

• Home Loan and Business Loan Customers can apply for relief on loans for up to 3 months
• Waiver of fees for restructuring or consolidation of loans
• Credit card customers can apply for an emergency credit card limit increase
• Discounted interest rates on new personal loans taken out by existing Bendigo Bank Customers
• Waiver of interest rate reduction for early withdrawals on term deposits prior to maturity
• Deferral of payments and extensions for Equipment Finance on a case by case basis

Cultiv8 Accounting urges you all to speak to your Accountant, Advisor and Financial Institution regarding your own circumstances.

Now is the time for to remain calm, examine what is available for you, and to take positive steps for you, your family, and your business in these extremely trying times.

CULTIV8 ACCOUNTING CAN BE CONTACTED ON:

 Phone:                      02 6382 1884

 Email                         manager@cultiv8financial.com.au

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Liability limited by a scheme approved under professional standards legislation

The advice contained above is considered informative only and is based on a reproduction of Government and banking announcements within the last couple of days. Cultiv8 Accounting is not responsible or liable for any facts or omissions in this summary provided. This summary is for your information only, and is not to be regarded as specific advice to your circumstances. Accordingly Cultiv8 Accounting recommends that you seek the advice of your own professional advisors to the relevance of these measures to your specific individual, or business requirements.