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Understanding the COVID-19 Economic Response Package

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At STS Accounting Group, we are working hard to ensure you are able to understand what you’re entitled to through the Australian Government’s Economic Response Package.

We will continue to monitor and update this list of stimulus offers as they come to light.

To date here are the current tax relief opportunities:

 

ATO Obligations

All outstanding tax payments to ATO with due dates before 23 January 2020 cannot be deferred. However, you can contact the ATO to request a:

  • remission of interest that has accrued on those debts from 23 January 2020
  • interest-free payment arrangement
  • payment arrangement that can be adequately managed

ATO debt incurred after 23 January 2020can be deferred upon request. Remission also applies to interest and penalties that were incurred on or after 23 January 2020.

 

 

BAS Relief options

Assistance measures for those impacted by COVID-19 will not be automatically implemented.
Anyone impacted by COVID-19 is advised to contact the ATO to request assistance.

Options available may include:

  • Deferring by up to six months the payment date of amounts due through the business activity statement (including PAYG instalments), income tax assessments, fringe benefits tax assessments and excise and/or
  • Allowing 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.
    Please note:

    • you can only change from the start of a quarter, so a change now will take effect from 1 April 2020
    • changing your GST reporting cycle doesn’t mean you have to change your PAYG withholding reporting cycle – you can manage this by specifying the roles you are changing
    • once you choose to report and pay GST monthly, you must keep reporting monthly for 12 months before you can elect to revert to quarterly reporting
    • if you’re registered for fuel tax credits, and change your GST reporting from quarterly to monthly, you will also need to claim your fuel tax credits monthly.

 

 

Super guarantee payments

If you are an employer, you need to meet super guarantee obligations for your employees. Legally, we can’t extend the due date to pay the super guarantee contributions for your employees.
Pay as much as you can by the due date, even if you can’t pay in full. This will reduce the super guarantee charge.

If you didn’t pay the full super guarantee by the due date:

  • lodge a Super guarantee charge statement
  • pay the charge to us.

If you do this within the month, there will be no penalties. Interest will still apply.

Please note there is a superannuation guarantee (SGC) reporting amnesty in place for unreported/incorrect SGC obligations. This concludes on 7 September 2020.

 

 

Monthly GST credits

  • GST Turnover more than $20 million – must pay and report monthly
  • Turnover less than $20 million – It is worth considering if you should temporarily change your reporting cycle.

 

 

For sole traders, who do not employ any staff 

  • Under normal circumstances, individual assets less than $30,000 are eligible for the instant asset write off. The Government has lifted this threshold to $150,000 for assets that are either installed or ready for first use by 30 June 2020 – read on for full detail below.
  • 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 supplement will be paid to both existing and new recipients of the eligible payment categories. These changes will apply for the next six months. Recipients must be registered with Centrelink to receive these payments.
  • SME Guarantee Scheme – This will provide businesses with funding to meet immediate cash flow needs, by further enhancing lenders’ willingness and ability to provide credit. Businesses with a turnover of up to $50 million will be eligible to receive these loans. Note: You will need to be able to prove serviceability of the loan in the loan term.

 

 

Temporary early release of superannuation

You can access up to $10,000 of your superannuation in 2019-20 and a further $10,000 in 2020-21. You will be able to apply for early release of your superannuation from mid-April 2020. To be eligible, you must meet one of the following conditions:

  • you’re unemployed
  • you’re eligible to receive Jobseeker Payment, Youth Allowance (jobseekers), Parenting Payment, Special Benefit or Farm Household Allowance
  • On or after 1 January 2020 you
    • were made redundant
    • had your working hours reduced by 20% or more
    • are a sole trader, your business was suspended or your turnover reduced by at least 20%.

 

 

Apprentice wage subsidy

  • Small businesses with fewer than 20 full-time workers will receive 50% of an apprentice or trainee’s wage.
  • For each apprentice or trainee, the Government will provide up to $7,000 in wage assistance per quarter up to a maximum of $21,000.
  • The wage subsidy will be open to businesses with fewer than 20 full-time workers and employers of any size that re-employ someone who loses their position as a result of the coronavirus downturn.

 

 

Income support

  • People unable to attend work because of coronavirus or whose income has been impacted by the economic downturn may be eligible for income support payments.
  • The Government is temporarily expanding eligibility, establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight and making it quicker to access by waiving the usual waiting period.

 

 

Temporary relief for financially distressed businesses

The Government is lessening the threat of actions that could unnecessarily push otherwise profitable and viable businesses into insolvency to help ensure businesses can resume normal operations when the crisis has passed.

This includes temporarily:

  • increasing the threshold at which creditors can issue a statutory demand and the time companies have to respond
  • relieving directors from personal liability for trading while insolvent
  • providing flexibility in the Corporations Act 2001 to deal with unforeseen events that arise as a result of the Coronavirus health crisis.

 

 

Payroll tax refund and deferral

  • Small and medium-sized businesses with total payroll of less than $3 million will be refunded payroll tax for the 2019-20 financial year.
  • Payroll tax for the first three months of the 2020/21 financial year will be deferred until 1 January 2021.

 

 

Licensing, land tax and rent relief

  • Liquor licensing fees for 2020 will be waived for affected venues and small businesses.
  • Commercial tenants in government buildings can apply for rent relief and 2020 land tax payments will be deferred for eligible small businesses.

 

 

Small business loans deferral 

  • Australian banks have agreed to defer repayments on loans to small businesses affected by the coronavirus outbreak for six months.
  • Interest will be capitalised and be repaid in a yet-to-be-determined time frame (not the remaining term of the loan).

 

 

Coronavirus Guarantee Scheme

  • The Coronavirus Guarantee Scheme will provide a Government guarantee of 50% of the value of new loans issued by eligible lenders to small and medium-sized businesses.
  • The intention of this measure is to increase access to loans by businesses impacted by the Coronavirus.

 


Instant asset write-off

Period covered                                             Threshold                         Eligibility range covers businesses with:

  • 12 Mar 2020 – 30 Jun 2020                  $150,000                             aggregated turnover of less than $500 million
  • 1 July 2020 onwards                               $1,000                                  aggregated turnover of less than $10 million

 


PAYG Withholding

Small to medium businesses and not-for-profits (NFPs) with aggregated annual turnover under $50 million that pay salary and wages and held an ABN on 12 March 2020 that continues to be active who made eligible payments are required to withhold from (even if the amount that needs to be withheld is zero) will:

  • Automatically receive a minimum payment of $10,000, or payment equalling 100% of the amount withheld in tax on employee salary and wages, up to maximum of $50,000 for the quarters 30 Mar 2020 and 30 Jun 2020.
  • An additional payment equal to the total of all the previous payments will be made in the July – October 2020 period, meaning eligible entities will receive at least $20,000 up to a total of $100,000. Payments will be delivered by the Australian Taxation Office (ATO) upon lodgement of business activity statements.

 

 

If you have any queries regarding the elements of the Australian Government’s Economic Response Package, please don’t hesitate to CONTACT US.