PHONE: 02 4284 8177
f
TAGS
H

COVID-19 Update - Cashflow Boost, Subsidies & More

With the world as we once knew changing daily, and the Government Support Packages changing just as quickly, we thought it might be good time to try and summarize where things currently sit, and the possible effects on your business.

We have listed below, the options that we believe may be options that you can possibly avail yourself of. We do advise that you should discuss with your Accountant, the following measures, and its direct effect on your business.


Cash Flow Boost – Credits for PAYG Withholding up to $100k

From everything that came out of the stimulus packages so far, this is the biggest cash benefit to your business during this time. The good news is, there are no forms to fill out to receive the benefits, the ATO will credit this amount to your integrated client account after the BAS’s have been lodged. The start date for this is the 27th April.

How does it work

The payments will come in 2 allotments. Allotment 1 is paid for this financial year and allotment 2 is made over 4 payments next financial year.

For employers with PAYGW for the January-June 2020 period less than $10,000. You will simply get Allotment 1 in full - $10,000 credited to your integrated client once the BAS for March is lodged (After 27 April 2020).

For Quarterly BAS Lodgers, with PAYGW for the January-June 2020 period of more than $10,000, you will receive 100% of your PAYGW (Up to $50k) paid in the March period but not less than $10,000. In the June BAS, you will receive 100% of your PAYG for the whole January-June 2020 up to $50k, less what you were credited in the March 2020 BAS.

For Monthly BAS Lodgers, with PAYGW for the January-June 2020 period of more than $10,000, you will receive 300% (Up to $50k) of the PAYGW paid for March  2020 but not less than $10,000. In the following BASs, you will receive 100% of your PAYG for the whole period (January-BAS Month) up to $50k, less what you were credited in the previous BASs from March.

Allotment 2 will be the total you received through allotment 1, split over your BAS periods up until September 2020. This means Monthly lodgers will have their allotment 2 split into 4 payments (Due date for June, July, August & September BAS) and Quarterly lodgers will have their payment split into 2 payments (Due date for June & September BAS)


Apprentice & Trainee Subsidy

For employers with Apprentices or Trainees, and less than 20 employees in total, the government is offering a 50% subsidy in the wages of the Apprentices or Trainees for the 9-month period from 1 January 2020 to 30 September 2020. The condition for receiving this subsidy is the Apprentice or Trainee must have been in training as of 1 March 2020.

Should this Apprentice or Trainee depart your business and you replacing the Apprentice or Trainee with another, you will still be entitled to the subsidy for the new Apprentice or Trainee.

This subsidy is administered by the Australian Apprenticeship Support Network Providers. Please speak to your provider in relation to this.

Further Information:

www.dese.gov.au

www.australianapprenticeships.gov.au


Instant Asset Write Off

As a business with a turnover of less than $500m last financial year, you are entitled to an Instant Asset Write Off for assets purchased for $150k or less per asset. The requirements for this are as follows:

1) Purchased after 12th March 2020

2) Installed ready for use before 30 June 2020

3) Cost Less than $150k (GST Exclusive)

4) New or Second Hand

This enables your business a short window of time prior to 30 June 2020, at which time the cost of acquisition for Instant Asset Write Off reduces to $1,000.

The benefit of this is a quicker tax deduction. This measure is only a tax deduction, as it simply reduces the income tax that would otherwise be paid by the business.

For a full understanding of the benefit for your business, we recommend speaking to your accountant, as this is out of our allowable scope as BAS Agents.

Please note, at this point in time, there is no mention of a change to the Motor Vehicle Cost Limit which would normally restrict the total amount of depreciation and GST claimable on the acquisition a motor vehicle.


50% Instant Depreciation

An increased depreciation amount for business for the period 12 March 2020 through to 30 June 2021. The requirements for this are as follows:

1) Purchased after 12th March 2020

2) Installed ready for use before 30 June 2021

3) Dev 40 Assets (normally available for Depreciation)

4) Unlimited value

5) New Items only

6) Does not apply to assets that have been instantly written off.

The benefit of this is a quicker tax deduction. This measure is only a tax deduction, as it simply reduces the income tax that would otherwise be paid by the business.

For a full understanding of the benefit for your business, we recommend speaking to your accountant, as this is out of our allowable scope as BAS Agents.


Deferring of repayments to banks for 6 months

Currently the Australian Government are in negotiations with the banks for the below initiatives:

- Deferring loan Repayments

- Waiving fees and charges

- Helping with debt consolidation

- Waiving penalties for early withdrawal of term deposits

- Deferring credit card payments and increasing emergency limits

We would recommend you speak to your Bank Account Manager, to discuss the potential options that they may have for your business and potentially, you as an individual. This might help improve cashflow or lower interest on your loans. If you never ask, you will never know.


Unsecured Loans

The Australian Government, in co-operation with the banks, have provided a new unsecured loan product up to $250k to be used as working capital. Whilst we have yet to receive information from the banks in relation to this, we understand that the government is guaranteeing repayments of 50% of the loan.

The conditions currently advised by the government are:

- 3 year loan

- Maximum amount of $250k

- Unsecured, meaning no assets required to support

- Subject to banks credit assessment processes

- Must be applied for by 30 September 2020.

We would recommend you speak to your Bank Account Manager, to discuss the potential access to this. As more information in regard to these loans become available, we will do our best to get the information out to you as quickly as possible.


ATO Initiatives

As stated in previous emails, the ATO have updated their policies to allow the following on a case by case basis:

- Up to 6 months deferral of payments

- Convert to Monthly BAS for GST

- PAYG Instalments can be varied to Nil

- Remit penalties and interest imposed since 23 January 2020

- Low interest Payment Plans

Please be aware that all compliance documents (BAS, Income Tax Assessments, FBT Assessments, etc) need to be lodged by their due dates. There will still be penalties for failing to comply.

Whilst we support businesses applying for these to minimise disruptions to cashflow, businesses need to understand the implications of doing these. We believe this biggest cause for concern are the deferral of payments and the varying of PAYG Instalments to NIL. For Businesses with limited disruption caused by COVID-19, varying the PAYG Instalment to Nil will potentially lead to a very large Income Tax Assessment at the end of the financial year. We suggest speaking to your accountant prior to adjusting this.


Superannuation

As we have previously advised, Superannuation obligations for your business has not been affected by COVID-19. As such your superannuation obligations continue as normal.


Payroll Tax

The NSW Government has announced that they will be waiving the Payroll Tax for Business with a payroll up to $10 million for the remainder of the 2019-20 Financial Year.  

No monthly reporting will be required. The Annual Reconciliation will need to be lodged in July 2020, and Annual Payroll figures reported. Your Annual Payroll Tax Liability will be reduced by 25%, and you will only be required this amount, less what has already been paid.

In the 2020-21 Financial Year, the threshold will increase to $1 million.


We understand how overwhelming all this information can be, as quite frankly, it is overwhelming for us to. Thankfully, we have an awesome Bookkeeping Association that is supporting us to help us to support you.

If you have any questions, please let us know.

Remember, we are in this together.

Nicholas