YML Insight – Special Edition COVID-19

Federal and NSW Government Stimulus Packages – accessible for a LIMITED TIME

What you need to know NOW

Federal Government – SMEs / Employers

Tax-free Payments for Employers

The Government will support employers with a credit equal to 100% of a business’s PAYG withholding amounts from salaries and wages, even for those employers who are not required to withhold tax.

If your business has employees working since 1 January 2020 and your business has an annual turnover of up to $50 million, then upon assessment of your BAS in these two quarters, an entitlement – at least $20,000 and up to $100,000 maximum tax-free – will be credited to eligible employers and refunded by the ATO.

Wage Subsidy for Apprentices/Trainees

The Government will support jobs with a wage subsidy of 50% of an apprentice’s or trainee’s wages during the period of 1 January 2020 to 30 September 2020.

If your business has fewer than 20 employees and has been employing an apprentice/s or a trainee/s prior to and including 1 March 2020, you may be eligible to receive up to $21,000 during this nine-month period.

Claims for this subsidy may be made from 2 April 2020 and must be made no later than 31 December 2020.

Loan Guarantee Scheme

For all businesses with an annual turnover of up to $50 million and affected by COVID-19, an eligible loan through participating banks/lenders will be guaranteed to 50% of the loan by the Commonwealth.

A loan up to $250,000 for a term of up to three years may only be used for working capital and no repayments will be required for the first six months. Loans must be granted by a bank/lender within six months of 1 April 2020.

Instant Asset Write-Off (IAWO)

From 12 March 2020 until 30 June 2020, the Government:

• is increasing the IAWO from $30,000 to $150,000 for each qualifying asset – used or installed for use during this time period;
• is expanding the eligibility of the new IAWO limit to businesses with an annual turnover of up to $500 million; and
• will continue to apply the luxury car limit to car purchases.

These new criteria, applicable to 2020 tax returns, will enable eligible businesses to immediately write off the full purchase price of multiple qualifying assets.

Backing Business Investment (BBI)

From 12 March 2020 until 30 June 2020, a 15-month period, the Government:

• is introducing an immediate 50% depreciation of installed cost of qualifying depreciable assets purchased and used by businesses whose annual turnover is up to $500 million; and
• the other 50% of the installed cost falls under existing depreciation rules for qualifying depreciable assets.

These new criteria are applicable to 2020 tax returns.

Insolvency

A moratorium on insolvency laws for trading businesses will be introduced and changes made to attempt to mitigate the number of businesses collapses. Changes will include:

• a temporary increase of the debt thresholds at which creditors can a) issue a demand and b) initiate bankruptcy proceedings – both will increase to $20,000.
• a temporary increase in the time in which affected companies will have to respond to demands – an increase to six months.
• a temporary relief for directors from personal liability during insolvent trading.

These measures will last for six months only.

NSW Government – SMEs / Employers

The NSW Government’s stimulus package includes:

• a waiver of payroll tax for three months ending on 30 June 2020 for businesses with payrolls of up to $10 million.
• bringing forward by one year an increase of the payroll tax threshold to $1 million (from $900,000), effective 1 July 2020.
• a waiver of a range of fees and charges for small businesses.

It is expected that many businesses will benefit from these initiatives by saving the equivalent of at least one quarter of this financial year’s payroll costs.

Federal Government – Workers / Welfare Recipients

Superannuation Savings Access

Individuals experiencing “financial stress” due to lowered income or lost income will be allowed to access their superannuation savings up to twice, as outlined:

• in 2019-20, access capped at up to $10,000;
• from 1 July 2020, further access capped at up to $10,000;
• with no tax payable on withdrawn amounts; and
• with no effect on Centrelink or Veteran Affairs payments.

Application is via an individual’s MyGov online account – you will need to set up an account if you do not already have one – before 1 July 2020 for the first accessible amount and from 1 July 2020 for a further request.

Jobseeker Payment for Sole Traders / Individuals

Those individuals who work as a sole trader or who are self-employed may become eligible for Centrelink’s Jobseeker Payment (formerly Newstart Allowance), a payment being increased by the Government by up to $550 extra per fortnight for all current and newly-eligible recipients.

The extra $550 maximum extra amount, paid by Centrelink, will be in effect for up to six months only.

New applicants for the Jobseeker Payment must make an online declaration to Centrelink about any reduction in income or suspension of work.

One-off $750 Cash Payment + Extra $750 Cash Payment

To help boost the household economy, from 31 March 2020, the Government will provide $750 as a one-off payment to all eligible welfare, income support, veteran affairs and concession card holders to help boost the economy.

From 13 July 2020, the Government will provide an extra $750 payment to all eligible welfare, income support, veteran affairs and concession card holders. This second round will only be available to those people not receiving the up to $550 extra per fortnight in their Jobseeker Payment.

The ATO will automatically make these payments via Centrelink to eligible recipients.

ATO Support Measures for Employers and Individuals

The ATO is offering, on a case-by-case basis, administrative relief for some tax obligations, such as:

• Significantly-affected taxpayers may be able to defer tax payments by up to four months.
• Payment dates for activity statements and income tax may be deferred.
• GST refunds may be accessed sooner with a change from quarterly to monthly reporting.
• PAYG instalments may be varied to NIL for the March quarter BAS with a refund for any instalments paid for the previous two quarters.
• Interest and penalties incurred on or after 23 January 2020 may be remitted.
• Low interest payment plans may be entered into.

Act Now for your Business’s Eligibility – Consult YML Group

You’re not alone. YML Group is continuing to provide information and advice needed for you to steer your business through the COVID-19 disruption. Together we can review your business strategy and help you to move forward better-prepared by benefiting from the Federal and NSW Governments’ stimulus packages.

How can YML help?

Talk to our Accountants today to see how YML Chartered Accountants can assist you with your ‘COVID-19’ business strategy. Contact us on (02) 8383 4400 or by visiting the Contact Us page on our website.