The Federal and State Government continue to bring stimulus packages to help individuals and businesses manage the economic impact of the Coronavirus (COVID-19).
We have summarised the support announced below and will continue to update this blog as more information is released.
We understand these are difficult times and encourage you to get in touch with your AFS accountant to assist your business. Call 03 5443 0344 or email email@example.com
Last updated: 9 June 2020
SMALL TO MEDIUM BUSINESS (including sole traders)
From Monday 30 March 2020, businesses impacted by COVID-19 will receive a fortnightly wage subsidy of $1,500 per employee as part of a Federal Government bid to prevent millions of people from losing their jobs to the coronavirus pandemic.
- employers to receive $1,500 per fortnight JobKeeper Payment
- employers are legally bound to pay employees and keep them attached to the business
- every worker will get the same payment no matter what the regular wage of the employee
- the payment is available for full time workers, part time workers and casuals who have been employed for over 12 months
- stood down workers will be eligible (since 1 March 2020)
- workers need to have been with the employer before 1 March 2020
- turnover of the business must be down by 30% compared to the same period in the prior year, or more than 50% for businesses with a turnover of more than $1 billion
- JobKeeper payments starting flowing on 1 May to employers, and were backdated to 30 March
- the amount equates to 70% of the Australian median wage
We’ve have published a separate blog on this support package with full details. To view it visit: www.afsbendigo.com.au/jobkeeper-payments-everything-you-need-to-know
Please note: If an entity did not qualify for the month of April 2020 because its turnover was not yet sufficiently affected, it can retest in later months to determine if the test is met.
Commercial and residential tenancies
There will be a moratorium on evictions for commercial and residential tenancies in financial distress who are unable to meet their commitments due to the impact of COVID-19.
Some principles to underpin and govern intervention to aid commercial tenancies include:
- tenants and landlords are encouraged to agree on rent relief or temporary amendments to the lease
- the reduction or waiver of rental payment for a defined period for impacted tenants
- the ability for tenants to terminate leases and/or seek mediation or conciliation on the grounds of financial distress
- landlords and tenants not significantly affected by COVID-19 are expected to honour their lease and rental agreements
Commercial property owners should ensure that any benefits received in respect of their properties should also benefit their tenants in proportion to the economic impact caused by COVID-19.
We’ve have published a separate blog on this support package with full details. To view it visit: www.afsbendigo.com.au/lease-agreements-stand-landlord-tenant
Boosting Cash Flow for Employers
The Federal Government is providing up to $100,000 to eligible businesses that employ people, with a minimum payment of $20,000. This includes sole traders, partnerships, trusts, companies and not-for-profits and charities.
The payments will provide cash flow support to businesses with a turnover of less than $50 million and not-for-profit entities that employ people.
The measure initially provided up to $25,000 to business, with a minimum payment of $2,000 for eligible businesses but has since been increased.
An additional payment is also being introduced in the July – October 2020 period. Eligible entities will receive the additional payment equal to the total of all of the Boosting Cash Flow for Employers payments they have received.
This means that eligible entities will receive at least $20,000 up to a total of $100,000 under both payments.
The first payment was delivered by the Australian Taxation Office (ATO) as a credit in the activity statement system from 28 April 2020 upon businesses lodging eligible upcoming activity statements.
In order to qualify for the cash boost, you needed to have lodged your 2019 Individual Tax Return (ITR) by 12 March 2020 OR lodged a Business Activity Statement (BAS) containing sales in the 2020 financial year by 12 March 2020.
Employers should have receive a payment equal to 100% of their salary and wages withheld, with a maximum payment of $50,000 (and minimum of $10,000).
If you need assistance lodging your Instalment Activity Statement (IAS) or Business Activity Statement (BAS) please call us on 03 5443 0344.
Increasing the Instant Asset Write-Off
The instant asset write-off threshold has been increased from $30,000 to $150,000 and expanded access to include businesses with aggregated annual turnover of less than $500 million (up from $50 million). This applies from 12 March 2020 until 31 December 2020, for new or second hand assets first used or installed ready for use in this timeframe.
Business owners will be able to claim the deduction in their 2019/20 tax return.
Supporting apprentices and trainees
If you employ an apprentice or trainee you may be eligible for a wage subsidy of 50% of their wage paid from 1 January 2020 to 30 September 2020. Employers will be reimbursed up to a maximum of $21,000, per eligible apprentice or trainee ($7,000 per quarter).
The subsidy is available to small businesses employing fewer than 20 full time employees who retain an apprentice or trainee. The apprentice or trainee must have been in training with a small business as at 1 March 2020.
Registrations for the subsidy opened in April 2020. Final claims for payment must be lodged by 31 December 2020.
To apply for the subsidy contact an Australian Apprenticeship Support Network provider.
$2,000 cash boost for Incolink members (builders and trades)
Eligible members of Incolink with an available balance are able to access a COVID-19 payment of $2,000 or balance of their account, whichever is lower. A tax rate of 32% will apply to all COVID-19 payments. This became available from 27 March 2020.
To be eligible for this payment the member must not be earning wages or income from any other source. This includes unemployment benefits, insurances, WorkCover and leave entitlements.
Criteria for the payment includes:
- The employer must complete a declaration via EmployerLink to confirm the worker meets the eligibility criteria
- The worker member is not earning an income because of site closures by their employer in direct response to COVID-19; or because the worker member is required by a medical professional to self-isolate due to exposure to COVID-19 for any period prescribed by federal or state governments
- They are not earning wages or income from any other source including without limitation insurance payments, WorkCover, statutory leave entitlement pay (including sick leave) and are not covered by PSLi (Portable Sick Leave Insurance)
Incolink will confirm with employers when this payment is ready to be paid. For full details visit: https://www.incolink.org.au/
Temporary relief for financially distressed businesses
There is a temporary increase to the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive. This includes temporary relief for directors from any personal liability for trading while insolvent, and providing temporary flexibility in the Corporations Act 2001 to provide temporary and targeted relief from provisions of the Act.
The Government is temporarily increasing the current minimum threshold for creditors issuing a statutory demand on a company under the Corporations Act 2001 from $2,000 to $20,000 until 30 September 2020.
Companies are encouraged to continue to trade through the crisis with the aim of returning to viability when it has passed. Directors will be relieved of their duty to prevent insolvent trading and associated personal liability until 30 September 2020. The temporary relief will apply to debts incurred in the ordinary course of business. The debts incurred remain payable.
For full details visit: Temporary relief for financially distressed businesses
Backing Business Investment – Accelerated Depreciation
A time limited investment incentive will be made to support business investment and economic growth over the short term, by accelerating depreciation deductions. This applies to eligible assets acquired from 12 March 2020 and first used or installed by 30 June 2021.
Businesses with a turnover of less than $500 million will be able to deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset cost.
Government program participants and applicants
If you’re an existing Government program grantee and have been impacted by COVID-19, you may be eligible to seek additional time to meet your reporting obligations or to complete your project.
The Government will work closely with you to understand the impact of COVID-19 on businesses and to ensure that high quality service delivery continues.
This includes extending application closing dates, grant project milestones and completion dates so that you can focus on your business and the welfare of yourself and your employees, rather than deadlines.
To discuss how you can be assisted call 13 28 46
Childcare relief package
The Federal Government announced a relief package for the childcare and early childhood education sector which provided free childcare to around one million families. The package aimed to ensure up to 13,000 childcare and early learning services could keep their doors open throughout the COVID-19 pandemic.
The package pays 50% of the childcare sector’s fee revenue up to the existing hourly rate based on a point in time before parents started withdrawing their children in large numbers.
This relief package is ending on 12 July 2020.
This funding is available for centres who remain open (with at least one active enrolment) and do not charge families for care. Centres must continue to record attendance of children and comply with all other provider obligations including National Quality Framework and other relevant conditions of approval under Family Assistance Law.
Centres do not need to apply for the payments, they will be paid automatically on a weekly basis.
Parents currently sending children to child care services should continue to do so (without financial cost), whilst parents who have terminated any child’s enrolment since 17 February 2020 should get in contact with the relevant centre to re-start the child’s enrolment. Re-starting enrolments will not require parents to send children to the service, though it will hold places for that point in time when parents are ready to place children back into care.
** VICTORIAN BUSINESS **
For those based in Victoria, the State Government has released a second economic survival and jobs package which will provide the following:
Additional payments under the JobKeeper program are now exempt from payroll tax
For employers with a payroll of greater than $3 million, it was announced on 5 May that any additional top up payments made to bridge the gap between an employee’s wage and the $1,500 a fortnight required for the JobKeeper program are now exempt from payroll tax.
This means that if an employee earned $500 for the fortnight based on their ordinary hours, the top up payment of $1,000 to bring that employee’s earnings up to $1,500 would not be subject to payroll tax. The $500 from ordinary hours would still be taxable for payroll tax purposes.
The Victorian Government will provide full payroll tax refunds for the 2019-20 financial year to small and medium sized businesses with payroll of less than $3 million.
The same businesses will also be able to defer any payroll tax for the first three months of the 2020/21 financial year until 1 January 2021.
Refunds started rolling in since 23 March 2020.
Rent and land tax relief
Commercial tenants in government buildings can apply for rent relief, a move private landlords are also being encouraged to undertake.
Landlords who provide tenants impacted by coronavirus with rent relief may be eligible for a 25% reduction on the property’s 2020 land tax. This relief is also available to land owners who are unable to secure a tenant because of the coronavirus pandemic.
Landlords can also defer the remainder of their 2020 land tax to 31 March 2021.
This relief is available for residential and commercial properties, however, for commercial landlords to be eligible, the property must be rented to a tenant with an annual turnover of up to $50 million, and the tenant must be eligible for the Commonwealth Government’s JobKeeper Payment.
Ask us how to claim for tax relief.
$10,000 small business cash boost (CLOSED)
The Victorian Government established a Business Support Fund to support the hardest hit sectors, including hospitality, tourism, accommodation, arts and entertainment, and retail.
Funding of $10,000 per business was available and allocated through a grant process. Small businesses were eligible if they:
- employ staff
- were impacted by Victoria’s shutdown restrictions
- have a turnover of more than $75,000
- have payroll of less than $650,000.
Applications for this grant are now closed.
Additional Victorian Government assistance
The Victorian Government will assist with the following:
- payment of all outstanding supplier invoices within five business days
- Support to the hospitality sector by waiving liquor licensing fees for 2020 for affected venues and small businesses
- Establish a Working for Victoria Fund. The Government will establish a $500 million a Working for Victoria Fund in consultation with the Victorian Council of Social Services and Victorian Trades Hall Council. The Fund will help workers who have lost their jobs find new opportunities, including cleaning public infrastructure or delivering food. The Government will also facilitate job matching to help Victorians find short term or casual roles.
The ATO will tailor solutions for businesses that are currently struggling due to COVID-19. There will be administrative relief for certain tax obligations (similar to relief provided following the bushfires) for taxpayers affected by the outbreak, on a case-by-case basis.
If you have been affected by COVID-19, the ATO can work with you to defer some payments and vary instalments you have due.
Monthly GST credits
Businesses on a quarterly reporting cycle may elect to change their GST reporting and payment from quarterly to monthly to get quicker access to GST refunds you may be entitled to. You can only change from the start of a quarter.
It may be beneficial for a business to move from quarterly to monthly reporting to assist in their calculations on the turnover assessment for JobKeeper Payment.
Pay As You Go instalments
If you’re a quarterly Pay As You Go (PAYG) instalments payer you can vary your PAYG instalments on your activity statement for the March 2020 quarter. You can do this by lodging a revised activity statement before your instalment is due and before you lodge your income tax return for the year. Businesses that vary their PAYG instalment rate or amount can also claim a refund for any instalments made for the September 2019 and December 2019 quarters.
Remitting interest and penalties
Where your business is affected by COVID-19, the ATO will consider remitting interest and penalties applied to tax liabilities incurred after 23 January 2020.
Low interest payment plans
If your business has been affected by COVID-19 and you need help to pay your existing and ongoing tax liabilities, you can contact the ATO to discuss entering a low interest payment plan.
Income support from Centrelink for impacted individuals
People may be eligible for income support payments if they can’t work because they become sick or need to self isolate, or their income has been otherwise impacted by the economic downturn caused by COVID-19.
There is expanded eligibility to income support payments and a new, time‑limited Coronavirus supplement to be paid at a rate of $550 per fortnight on top of the regular payment. This supplement will be paid to both existing and new recipients of the eligible payment categories. These changes will apply up until September 2020 with reduced means testing and waiting period.
The JobSeeker Payment is subject to a partner income test, therefore the Government is temporarily relaxing the partner income test to ensure that an eligible person can receive the JobSeeker Payment, and associated Coronavirus supplement, providing their partner earns less than $3,068 per fortnight, around $79,762 per annum (up from $48,000 previously).
Applicants for JobSeeker Payment and Youth Allowance Jobseeker will:
- Make an initial declaration about their identity, residency status, income and that they have been made redundant, or had their hours reduced (including to zero) as a result of the economic downturn due to COVID-19.
- In the case of sole traders and the self‑employed, applicants will make a declaration that their business has been suspended or had turnover reduced significantly.
New applicants are encouraged to claim through online and mobile channels. If applicants do not have internet access, they can claim over the phone.
To claim online, people who do not already deal with Services Australia will need to set up their myGov account, call to verify their identity, and get a link to their Centrelink online account.
Temporary early release of superannuation
The Government will allow people to access up to $10,000 from their superannuation this financial year and in 2020-21.
People will not pay tax on the money they access and withdrawals will not affect Centrelink or veterans’ payments.
To apply for early release you must satisfy any one or more of the following requirements:
- you are unemployed
- you are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment, special benefit or farm household allowance
- or on or after 1 January 2020:
- you were made redundant
- your working hours were reduced by 20% or more
- you are a sole trader – your business was suspended or there was a reduction in your turnover of 20% or more.
If you are eligible for this new ground of early release, you can apply directly to the ATO through the myGov website. You will need to certify that you meet the above eligibility criteria.
Temporary reduction of minimum drawdown rates
The Government has temporarily reduced superannuation minimum drawdown requirements for account based pensions and similar products by 50% for 2019-20 and 2020-21. This measure will benefit retirees by providing them with more flexibility as to how they manage their superannuation assets.
Self Managed Superannuation Fund rental relief
The ATO has confirmed they will not take action where a Self Managed Superannuation Fund (SMSF) landlord gives a tenant, who is also a related party, a temporary rent reduction during this period for the 2019-20 and 2020-21 financial years. The agreed rental reduction should be properly documented, as this is an amendment to the lease terms.
PRIVATE HEALTH INSURANCE
Health insurance rebate:
Further financial relief could be on the way, provided by your private health insurer. Health fund members could receive hundreds of dollars in cash payments or premium reductions as insurers reimburse windfall profits from the COVID-19 pandemic. Funds are considering a number of options for members which include substantial rebates, premium reductions or extended free health insurance cover.
It has previously been announced that this year’s scheduled premium rise will be delayed. Health funds are offering premium relief for people who have lost their jobs due to COVID-19 and many funds have extended premium cover to all COVID-19 related treatment, even if the patient has silver or bronze level cover.
For more information contact your private health insurer to see their specific support available.
Australia’s banks will extend the six month deferral of loans, building on the Australian Banking Association’s (ABA) Small Business Relief Package, to 30,000 more businesses across the country. This support now extends to 98% of all businesses with a loan from an Australian bank.
Businesses with total business loan facilities of up to $10 million (up from the $3 million small business threshold) will now be able to defer repayments for loans attached to their business for six months. These businesses are generally much larger and employ a greater number of people. More details here.
The Small Business Relief Package, announced by the Australian Banking Association on Friday 20 March, allows customers financially affected by COVID-19 to defer principal and interest repayments for six months.
Australia’s participating lenders will also start offering loans up to $250,000 to small and medium sized businesses, where no repayments will be required for six months. The unsecured loans are 50% guaranteed by the Federal Government and no interest will be charged unless the money is actually used.
In addition to these, many banks are offering further assistance. The move applies to all banks who agree to participate. Here’s what to do for the five major banks:
Bendigo and Adelaide Bank Limited
Customers have access to the deferral support package since Monday 23 March. Further assistance includes:
- The waiver of fees for the restructuring or consolidation of loans
- The waiver of interest rate reductions for early withdrawals on term deposits prior to maturity
- The waiver or deferral of a range of fees and charges
- The deferral of interest payments or term extensions
- Discounted interest rates on new personal loans (existing customers)
- Deferral of payments and extensions for equipment finance on a case by case basis.
Business banking customers, large and small, should speak to their relationship manager or call 1300 236 344.
Support measures have been in place since Friday 27 March. These include:
- Decrease variable interest small business loan rates by 0.25%p.a.
- interest capitalised on all deferred loan repayments for term loans
- temporary increases in overdraft facilities for 12 months
- A reduction by 0.80%p.a. to a new two and three year fixed rate of 2.59%p.a. for secured small business loans up to $1 million (effective since 3 April 2020).
Home loan customers:
- Decrease variable interest home loan rates by 0.15%p.a. across all variable rate indices
- Introduction of a two year fixed rate of 2.19%p.a. for owner occupiers paying principal & interest
- interest capitalised on all deferred home loan repayments.
For details on modifying a loan payment with ANZ visit https://www.anz.com.au/support/internet-banking/accounts/loans/direct-payments/modify/
Business customers will be able to:
- Defer principal and interest for up to six months on a range of business loans, including floating and variable rates, and equipment finance loans
- Receive a 200-basis point rate cut on new loans and all overdrafts on QuickBiz, effective since 30 March
- Receive an additional 100-basis point reduction on variable rates for small business loans, effective 30 March. This is on top of a 25-bps reduction earlier this month
- Access up to $65 billion of additional secured limits to pre-assessed customers, with $7 billion currently available for fast assessment process
- Access up to $9 billion in additional limits for unsecured lending for existing customers via QuickBiz
- Defer business credit card repayments.
Personal customers will be able to:
- Pause home loan repayments for up to six months, including a three month checkpoint. For a customer with a typical home loan of $400,000, this will mean access to an additional $11,006 over six months, or $1,834 per month.
- Access a 10 month term deposit rate of 1.75%p.a. for 10 months, effective since 24 March. This is for personal customers only, with deposits of $5,000 to $2 million.
- Access fixed home loan rates of 2.39% p.a. for one year, 2.29%p.a. for two and three year, and 2.79%p.a. for five year (owner-occupier P&I), effective since 25 March. First home buyers will have access to a rate of 2.19%p.a., fixed for two years. This delivers reductions of between 10 and 60bps
- Access over $20 billion in redraw and more than $30 billion in offset. Note: Around 1 in 2 accounts are at least six months ahead based on redraw and offset balance; and 4 in 10 are 12 months ahead.
- Reduce repayments on variable rate loans. Over the past 12 months, reductions of 84bps to owner-occupier variable rates have provide a potential benefit of $3,360 per year to customers with a $400,000 loan. Most customers have not yet taken the option to reduce their payments.
Customers can submit a request for support online. Alternatively, you can contact NAB on 13 22 65 for support.
Commonwealth Bank of Australia
Customers have access to a number of support measures, including all mortgage holders and small businesses customers, since Monday 23 March.
- All home loan customer will be able to defer their repayments for up to six months
- Fixed package rates have been reduced, including 2.29%p.a. (3.99%p.a. comparison rate) for new one, two and three year Fixed Rate home loan Owner Occupied customers paying Principal and Interest repayments with Wealth Package. The rates are effective from 30 March 2020, however, will be available to:
- existing requests to switch and split
- all applications that fund between Friday 20 March and Monday 30 March, where Rate Lock has not been chosen.
- Automatically deferring BetterBusiness Loan and Asset Finance repayments for eligible small business and community group customers with total lending limits up to $3 million in April, May and June 2020. From July, customers will be able to opt-in to receive a further three month deferral if needed in line with the ABA loan deferral arrangements
- Reducing rates on BetterBusiness Loans, Business Overdrafts and other products by 25 basis points, effective since 24 March 2020.
There is also support for small and medium business, and community group customers who may be facing financial difficulty by providing financial assistance, including:
- Deferring repayments on overdraft products, for 90 days
- Waiving merchant terminal fees for impacted customers with CommBank merchant terminals, 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
If you have a Relationship Manager, they will be able to assist you. Otherwise, you can contact the Business Financial Assistance team on 13 26 07.
Support measures have been in place since Friday 27 March.
Home loan customers:
- Reduced Fixed Home Loan Rates. A 2.29%p.a. fixed rate home loan for one, two and three years for owner occupied customers on principal and interest repayments with a Premier Advantage Package
- Repayment relief for home loan customers. Customers who have lost their job or suffered loss of income as a result of COVID-19 should contact Westpac for three month deferrals on their home loan mortgage repayments with extension for a further three months available after review. Apply here
- Westpac pledges to play its part to keep the property market and economy moving with $10 billion available to support more Australians into their next home.
Deposit and transaction account customers
- Term Deposit special offer of 1.7%p.a. interest for 12 months for all Australians: special rate with interest paid monthly to provide customers with a higher return on their savings (up to $500,000 per customer). Available online and in-branch. For Australians aged 65 years and over the rate will be 2%p.a. for eight months (up to $500,000 per customer). Effective Friday 27 March. Customers can choose to have interest paid monthly to provide them with regular income
- Nationwide plan to help elderly customers access telephone and internet banking: specialist call centre available to help people register for and use online banking
- No establishment fees for equipment finance loans until the end of June 2020.
Additional help is available to small business customers who are impacted by recent disasters and are experiencing hardship, including:
- Deferred payments for Business credit cards for a period of at least three months
- Fee free redraw
- Restructuring and consolidating loans
- Termination of a term deposit without the interest rate adjustment
To defer your loan visit:
Any small business who has not already been contacted is being advised to contact their bank to apply.