Economic Response to the Coronavirus for Small Business

As we move to more stringent measures in the community and more pressure on small business I wanted to keep communications open in relation to the current support available and initiatives the Government is putting in place.

Temporary cash flow support

This is the $20,000 to $100,000 Small Business cash flow boost that has been in the media

Employers who are employing staff are eligible for a refundable rebate on their PAYGW.  Please note this is not in addition to the PAYGW rebate mentioned in my previous Stimulus Package email it is just an enhancement to the initial rebate the Government had proposed.

Instead of the 50% rebate of PAYGW the Government is now proposing a 100% rebate of PAYGW up to a maximum of $50,000 (up from the previous $25,000).

What this means is when you lodge your March BAS the ATO will rebate you your PAYGW up to a maximum of $50,000.  Where PAYGW reported is less than $10,000 a minimum rebate of $10,000 will be refunded.  The payments for this are set to be paid after lodgement of your quarterly or monthly activity statements.

Additional payments will then be paid following the lodgement of your June 2020 and September 2020 activity statements (or monthly statements for June, July, August & September).  These are equivalent to half the initial amount refunded from the March BAS.  Effectively this means whatever you received in your March BAS you will receive an additional 50% following the June BAS lodgement then another 50% following September BAS lodgement.

The total of these rebates will be a minimum of $20,000 ($10k on March BAS, $5k on June BAS, $5k on September BAS) and a maximum of $100,000.

Additional Cash Flow Options – Coronavirus SME Guarantee Scheme

Under this scheme the Government will provide a guarantee of 50% to small to medium businesses for unsecured loans to be used for working capital.  Based on the information from the Government these loans will be made under the following terms:

  • Maximum Loan $250,000
  • Term of Loan 3 Years (Initial 6mth repayment holiday)
  • Unsecured Loan so no asset is required for security

Early Release of Superannuation

Individuals in financial stress can access up to $10,000 in 2019/20 financial year and up to $10,000 in 2020/21.  The amount released will be tax free and can be applied for through myGov.  For businesses this can be accessed if your working hours have been reduced by 20% or as a Sole Trader your business has been suspended or there has been a reduction in your turnover of 20% or more.

Asset Purchase and Depreciation

There has been announced a limited time 15 month incentive to accelerate depreciation allowing 50% depreciation upfront for eligible assets.  This is not a cash payment but just bringing forward the deduction you would have been eligible for over a few years into the first year.

No change to the original stimulus package announcement of the $150,000 immediate deduction threshold.  This stands that “The immediate deduction threshold is to be increased for a limited time (until 30 June 2020) from the existing $30,000 to $150,000.”  Again this is not a cash payment but allows an immediate deduction rather than having to depreciate the asset.

Apprentice Wages

Eligible employers can apply for 50% wage subsidy for apprentice’s or trainee’s wages paid between 1st January 2020 and 30th September 2020.  This subsidy is to a maximum of $21,000 ($7,000 per quarter) and will be paid after 31st December 2020.

Temporary Reduction of Minimum Superannuation Drawdowns

For those on pension the Government is temporarily reducing the minimum Superannuation pension requirements by 50% to enable retirees not requiring funds from super to reduce the need to sell investment assets.

Payroll Tax Relief

The NSW Office of State Revenue has announced a 25% reduction in the payroll tax liability of businesses with no more than $10mil in wages for the 2019/20 financial year.

The threshold for payroll tax will increase from $900,000 to $1mil for the 2020/21 financial year.

For Further Information you may look at

https://www.ato.gov.au/General/New-legislation/The-Australian-Government-s-Economic-Response-to-Coronavirus/

https://www.revenue.nsw.gov.au/taxes-duties-levies-royalties/payroll-tax