Over the last 3 weeks the Federal and State Governments, and the Banking sector have released a wide range of initiatives in an effort to respond to the unprecedented challenge we face as a community, and as a business sector at the moment.

The measures are wide ranging, complex in application, and carry many key dates. Consequently, this article is designed to provide a ‘single source’ reference tool as at close of business on 30 March 2020 of measures to date across all areas.

The document summarises the key measures, eligibility requirements and relevant dates announced for coronavirus-related financial assistance by the Australian government and QLD state government; information about ATO assistance; and details of support from the banking sector.

Support from the federal government

As at 30 March 2020, Australia’s federal government has announced three rounds of financial measures to support the economy through the coronavirus pandemic. For SMEs there is a strong focus on providing assistance for maintaining and retaining employees over the next six months and stimulating business investment.

Here’s a summary:

Support for individuals Dates
Coronavirus supplement

$550 per fortnight payment.

Eligibility:
Payable to individuals in receipt of, or who become eligible for:

  • JobSeeker Payments
  • Youth Allowance JobSeeker
  • Payments
  • Parenting Payments
  • Farm Household Allowance
  • Special Benefits
Payable over the next six months. This is in addition to the eligible income support already paid.
Additional stimulus payment

$750 stimulus payment to eligible individuals.

This is in addition to an earlier $750 payment amount that was included in the first Stimulus Package announced on 12 March 2020.

Eligibility:

  • Pensioners
  • Social security recipients
  • Veterans
  • Concession card holders
  • Other income support recipients
Payable over the next six months. This is in addition to the eligible income support already paid.
Superannuation withdrawals

Impacted individuals will be allowed to withdraw up to $20,000 from their superannuation funds.

Eligibility:

  • Unemployed people
  • Those currently eligible for Job Seeker payments, Parenting Payments, a special benefit or Farm Household Allowance

Eligibility on or after 1 January 2020:

  • An employed individual is made redundant
  • Your working hours reduced by 20% or more
  • You are a sole trader whose business has been suspended or there has been a reduction in turnover of at least 20%.
Between April and 30 June 2020, eligible people can access up to $10,000.

During the income year ending 30 June 2021, eligible people can access up to the remaining $10,000.

On or after 1 January 2020.
Support for business and not-for-profits Dates
Employment support

JobKeeper wage support payment is a flat payment to employers of A$1500 per fortnight for six months for each employee. It is designed to keep staff in the business. (Employers will not have to pay the super guarantee levy on that amount.)

It can be claimed for staff that were on the books at 1 March 2020. Subsidy can be claimed for full-time and part-time employees, and for sole traders and casuals who have been with the employer for 12 months. (New Zealanders in Australia on 444 visas are eligible, but not other foreign workers on temporary visas.)

The self-employed and sole traders with NO employees can also claim the wage support if their revenue has dropped substantially.

Eligibility:

  • Small and medium businesses and not-for-profits that have had a drop in revenue of 30% or more.
  • The self-employed and sole traders that have had a drop in revenue of 30% or more.
  • Businesses with annual turnover of A$1 billion or more that have had a drop in revenue of at least 50%.
Early May 2020 – first payment due, but the amount will be backdated to 30 March 2020. Administered through the ATO.
Boosting Cashflow

This is in addition to tax-free payments to eligible businesses that employ people. The benefit is capped at A$100,000 with a minimum payment of A$20,000.

This measure is also available to not-for-profit organisations.

Eligibility:

  • Businesses and not-for-profits with aggregated annual turnovers under A$50M
  • Businesses and not-for-profits who need to employ workers
  • Businesses must be active eligible employers that hold an ABN as at 12 March 2020.


NB: An integrity rule applies designed to deny payments where artificial or contrived arrangements are implemented for the dominant purpose of accessing or increasing these payments. General interest charges may also apply to such payments received and later denied.
The payments will be equal to the lesser of 100% of the PAYG withheld on the employee’s salary and wages or A$50,000 for both the year ended 30 June 2020 and the next financial year from 1 July 2020 to 30 September 2020. As already noted, a minimum payment of A$20,000 applies under this measure for eligible parties.

The payments will be provided by the ATO as a credit via the quarterly or monthly Activity Statements as follows:

  • Quarterly lodgers – March 20 and June 20 quarter BAS
  • Monthly lodgers – March 20, April 20, May 20, June 20 Activity statements
    The bulk of the 2020 financial year entitlement is paid in the earlier March 20 quarter BAS.

NB: Eligible businesses that are not required to withhold tax from employees’ salary and wages will receive a minimum payment of A$20,000 – 50% or A$10,000 is paid in the March 20 quarter. The other 50% is paid as A$5000 in June 20 quarter and A$5,000 in September 20 quarter.
Instant asset write-off

Eligible businesses will be able to deduct in full the cost of acquiring eligible assets costing less than A$150,000 (on a “per asset basis”).

Eligibility:

  • All businesses with aggregated turnover of less than A$500M until 30 June 2020
  • Assets can be new or used
Assets need to be installed ready for use or first used before 30 June 2020.

Deduction claimed in the businesses 2020 Financial Year Income Tax Return.
Business investment allowance

Eligible businesses will be allowed to claim a business investment allowance comprising the normal depreciation permitted on the asset item and a bonus 50% depreciation deduction

Eligibility:

  • All businesses with aggregated turnover of less than A$500M
  • New assets only
  • No limit to the cost of acquiring the individual asset
Only for assets acquired after 12 March 2020.

Assets need to be installed ready for use or first used on or before 30 June 2021.
Insolvency and directors’ personal liability relief

A raft of measures designed to provide extended protection to financially distressed businesses arising from the economic impacts of the COVID-19 health crisis.

These include:

  • A temporary increase in the threshold for a creditor to initiate bankruptcy proceedings
  • A temporary increase in the time the debtor has to respond to both statutory demands and to initiated bankruptcy proceedings
  • Temporary relief for directors of companies from any personal liability for trading while insolvent
These measures extend the debtor response periods to six months (previously 21 days).They provide time extension and increased $ trigger points to protect and shield impacted businesses and company directors from any Insolvency and personal liability actions.

Support from the Queensland government

The QLD government has announced a range of business assistance measures.

Key items are summarised below:

Support for business Dates
Employment support – QLD Payroll Tax

$950 million payroll tax relief Small and medium businesses All small and medium businesses (annual payrolls of $6.5 million or less) in Queensland will be eligible for:
  • a two-month refund of payroll tax, giving an average of nearly $9,000 cash
  • a three-month payroll tax holiday, saving an average of $13,360
  • deferral of all payroll tax payments for the rest of 2020.

Larger businesses
  • Larger businesses (annual payrolls over $6.5 million) affected by COVID-19 will be eligible for the two-month payroll tax refund and have their deferral extended for all of 2020.
  • All this means no Queensland business impacted by COVID-19 will have to make a payroll tax payment in 2020.

Immediate payroll tax refunds will be provided for COVID-19 affected businesses. Eligible businesses can also apply for deferral until the end of 2020 and a payroll tax holiday for 3 months.
$500 million COVID-19 jobs support loans

A loan facility of at least $500 million, interest free for the first 12 months, is being created to support Queensland businesses impacted by COVID-19 to retain employees and maintain operations. The concessional loan facility comprises low interest loans of up to $250,000 for carry on finance with an initial 12-month interest free period for businesses to retain staff. Any eligible business can apply for a loan.
Applications open now. Time is of the essence given the funding cap.
$1 billion Industry Support Package

The Industry Support Package will assist large businesses through this period to ensure they will be able to scale up and service the community when economic activity improves. The package will be focussed to support businesses:

  • which make a significant contribution to Queensland
  • that employ people in Queensland at scale
  • which are significant in a regional context
  • that can make a key contribution to a rapid response by the economy as conditions improve
  • which are significantly impacted as a result of COVID-19
  • to leverage current support measures and those available from other jurisdictions

Awaiting application advice
Other support

Other support that businesses may be eligible for includes:

Fee waivers for tourism businesses

  • Waiver of a range of fees, charges and levies to support tourism operators to continue to operate. Includes application and liquor licencing fees for businesses impacted by enforced shutdowns, registration renewal fees for Inbound Tour Operators, rebates on marina charges and passenger levies, and deferral of tourism lease rent payments.

Supply chains support

  • For manufacturers and businesses having difficulties accessing supplies to continue to operate, employ and meet customer needs, we are identifying alternative suppliers of Queensland manufactured goods and services which are vital for businesses.

Trading hours

  • Businesses that mainly sell food or groceries can open for longer to enable people to obtain essential groceries.

Government premises rent relief

  • Six months relief for businesses renting government premises.

$100 million electricity bill relief for small and medium businesses
  • Sole traders, small and medium businesses will get a $500 rebate on their power bill. Any business consuming less than 100,000 kilowatt hours will receive the rebate, which will be automatically applied on business electricity bills.
Awaiting application advice

ATO assistance during COVID-1

The Australian Taxation Office (ATO) will provide support to taxpayers affected by COVID-19.

For individuals and businesses that may be having financial difficulties due to the current business conditions, the ATO is providing assistance in the form of payment deferrals, tax variations, interest and penalty remissions, etc as follows:

  1. Payment deferrals If you have been impacted by COVID-19, the ATO has undertaken to work with taxpayers and their tax agent to facilitate deferral of a range of tax payments, including tax instalments, FBT, GST, etc.
  2. PAYG (Pay-as-you-go) instalment variationsThe ATO is loosening the rules regarding variations. Businesses that vary their PAYG instalment rate or amount for the March 2020 quarter can also claim a refund for any instalments made for the earlier September 2019 and December 2019 quarters.
  3. Remitting interest and penalties charged Where you or your business is affected by COVID-19, the ATO will consider remitting interest and penalties incurred after 23 January 2020 that have been applied to tax liabilities that remain unpaid during this disruptive period.
  4. GST payments The ATO is easing the ability for businesses to change their reporting cycle (between quarterly and monthly) in order to enhance their cash flow with respect to either receiving BAS refunds sooner or deferring BAS payments to a later date.
  5. Superannuation guarantee payments The ATO has advised that employers still need to meet their superannuation guarantee obligations, and that the ATO cannot vary the contribution date or waive the superannuation guarantee charge where super guarantee payments are late or unpaid

Banking sector support

The Australian government, Reserve Bank of Australia and Australian Prudential Regulation Authority are working with Australia’s large banks to facilitate the flow of credit. The following are some of the key measures as they primarily apply to SMEs:

  1. SME Guarantee scheme
    • Eligible lenders will provide unsecured working capital loans up to a maximum of $250,000
    • The Australian government will guarantee 50% of the loan issued by the eligible lenders
    • The loans will be for periods up to three years with an initial six-month repayment holiday
    • Application periods run from early April 2020 to 30 September 2020
    • Proposed drawdown facility with interest only paid on the amount drawn down
    • Simpler and faster application processes
    • Loans subject to lenders’ credit assessment process, with consideration made for business disruption associated with COVID-19
  2. Reducing the cost of credit
    The Reserve Bank of Australia has introduced a number of measures into finance and credit markets designed to put downward pressure on borrowing costs for both households and businesses. These measures have facilitated the ability of major lenders to provide most (if not all) the following credit concessions:

    • Interest rate reductions for both small businesses and households
    • Additional interest rate reductions on SME business loans, most commencing during March 2020
    • Relief from fees for Merchant Facility customers that are either facing financial hardship or seek to temporarily suspend a facility until they recommence trading or wish to permanently close the facility
  3. Loan repayment deferrals
    The introduced measures noted above have also assisted with the provision of loan repayment deferrals as follows:

     

    • Defer loan repayments (principal and interest) for up to six
    • Pause business credit card repayments for up to six months
    • Commercial landlords with loans up to A$10M can delay loan repayments for up to six months on the condition that they do not evict tenants or terminate a lease due to rent arrears during that six months.

Please note that your respective lender should be contacted with the specific concessions being provided which may include others not noted above.