** I cannot stress how important it is you read this and take advantage of all the concessions you are being given by the Government **
We hope you, your family and your team are doing well under these trying and confronting circumstances.
Our main focus is assisting clients by providing sensible and practical advice during this time and helping you financially.
Like many, most of us are working from home and a few in the office – we will attempt to provide the same service you are accustomed to, albeit in a slightly different way as all meetings will now be held remotely via phone, Skype or Zoom.
My Skype details are Michael Wunsch michael@wunsch.com.au or ring me on 02 98163111, 0420 219 269 or email. All our managers are available on Skype via their email addresses.
If you have any stimulus package queries please ring us any time as a way of supporting you we are taking calls at NO COST to discuss how the Stimulus Packages affect you. We encourage you to contact us ASAP if you have any worries or questions as we can put together a strategy for a positive financial outcome.
Introduction
The Prime Minister has warned us businesses should prepare plans for 6 months of disruptions – you need to act NOW and have a plan in place.
The Government has just released another second $66.1bn stimulus Package to provide a safety net for those most at risk ie small businesses & individual taxpayers.
At this stage it is critical that clients consider their position and how the rules apply and quickly ensure you are receiving eligible relief to assist you in continuing your business and your daily life. Some structuring and planning advice maybe required to receive the maximum Government benefits.
The first package supported business tax employers & some individuals – see our first stimulus package newsletter here http://wunsch.com.au/the-stimulus-package-what-you-need-to-know/.
This included:
- concessional depreciation rules,
- support payments for PAYGW and
- support payments for trainees and apprenticeships
This second stimulus package provides increased support payments for PAYGW, temporary relief under the Corporations Act for distressed companies and a suite of credit support measures to provide finance for small to medium sized (SME) businesses.
In summary it boosts:
- cash flow support of up to $100,000 for small business employers
- income support payments
- changes to the superannuation rules
- and relaxes corporate insolvency laws
The Stimulus – Part 2
For Business
1. Tax free payments up to $100,000 of PAYG withholding credits from March 2020 BAS – Business Cashflow Boost
The most significant boost is for small business and not-for-profit employers with a turnover of under $50m and who are already registered employers at 12/3/20.
Employers will receive two payments equal to 100 per cent of their salary and wages withheld (PAYGW) up to $100,000.
The maximum for each payment being increased from $25,000 to $50,000 ie $100,000. In addition, the minimum payment will be increased from $2,000 to $10,000. The cash flow payment for employers will be available from 28 April 2020 on your March BAS. The second payment will be made from 28 July 2020.
First payment is available from March BAS’s up to $50,000 credit on PAYG withheld and a second payment available from July to October 2020 of a maximum of $50,000.
These payments will help businesses’ and not-for-profits’ cash flow so they can keep operating, pay their rent, electricity and other bills and most importantly retain retain staff.
The ATO tells us this will only be paid if all your BAS’s are up to date and lodged.
(What you need to do – get your BAS’s up to date & please do not lodge your MARCH BAS until you have contacted us about your tax situation. It is possible to structure your salaries & wages to achieve maximum impact of this concession – review bonuses, directors’ fees and salaries as long as commercial, this is tax free income and can be structured with trust distributions)
2. Relief of repayments on your commercial (& home) loans by Banks
The Australian Banking Association has announced that Australian banks will defer loan (principal & interest) repayments for small businesses affected by COVID-19 for up to 6 months. Each bank is offering a different package.
Some banks are also offering assistance with home loans and credit cards.
(What you need to do – get your financials current and contact your bank)
3. Access to working capital – Banks
Introduction of a Coronavirus SME guarantee scheme to support SMEs to access working capital where it will guarantee 50% of new loans. These loans are new short-term unsecured loans to SMEs. SMEs with a turnover of up to $50 million will be eligible to receive these loans.
The Government will provide eligible lenders with a guarantee for loans with the following terms:
- Maximum total size of loans of $250,000 per borrower.
- The loans will be up to three years, with an initial six month repayment holiday.
- The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.
Again each bank has various packages available please contact your bank.
(What you need to do – get your financials up to date current and contact your bank)
4. Solvency safety net
Temporary 6 month increase to the threshold at which creditors can issue a statutory demand on a company from $2,000 to $20,000, and an increase in the time companies have to respond to a statutory demand from 21 days to 6 months. Directors also are provided with temporary relief from personal liability for trading while insolvent for 6 months.
It will be more important than ever for business to stay on top of their debtors and prepare a projected cash flow.
Debts incurred will still be payable by the business. Only those debts incurred in the ordinary course of the business will be subject to the safety net measures.
(What you need to do – get your financials current and contact us)
5. Sole traders and self-employed eligible forCorona Virus supplement $550
The eligibility criteria to access income support has been relaxed for the self-employed and sole traders. Waiting periods and assets tests are also temporarily waived.
This is an extra payment for permanent employees who are stood down or lose their employment; this includes sole traders; the self-employed; casual workers; and contract workers who meet the income tests as a result of the economic downturn due to the Coronavirus. This could also include a person required to care for someone who is affected by the Coronavirus. (This is in addition to Jobseeker payment).
(What you need to do – you will documentation plus check if you are eligible and log on to https://www.dss.gov.au/benefits-payments/jobseeker-payment then set up myGov to claim – you will have to go to Centrelink to verify your ID)
6. Temporary relief from some Corporations Act requirements to avoid entering into insolvency
(What you need to do – please ring us for more detail)
7. Payroll Tax relief
Payroll tax customers whose total grouped Australian wages for the 2019/20 financial year are less than $10 million will have their annual tax liability reduced by 25% when they lodge their annual reconciliation, which is due on 28 July. For those customers who lodge and pay monthly no payment for the months of March, April or May 2020 will be required. When lodging your annual reconciliation, you still need to provide wage details paid and you will receive the benefit of a 25% reduction in the amount of tax you would have had to pay for 2019-20. The tax-free threshold will increase from $900,000 to $1 million for the financial year commencing on 1 July 2020.
(What you need to do – complete your payroll tax return)
For Individuals
1. Early release of superannuation up to $20k
Individuals in financial distress are able to access up to $10,000 of their superannuation in 2019-20, and a further $10,000 in 2020-21. The withdrawals will be tax-free and will not affect Centrelink or Veterans’ Affairs payments.
To be eligible to access your superannuation you need to meet the following requirements:
- you are unemployed; or
- you are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or on or after 1 January 2020;
- you were made redundant; or
- your working hours were reduced by 20% or more; or
- if you are a sole trader – your business was suspended or there was a reduction in your turnover of 20% or more.
(What you need to do – check your cashflow and apply directly to myGOV or us to discuss)
2. Supplements increased, access extended and eased – for 6 months from 27 April 20201.
1. $550 – the Coronavirus Supplement
A temporary Coronavirus supplement of $550 will be paid to existing income support recipients (people will receive their normal payment plus $550 each fortnight for 6 months). Will be available to new recipients as well.
The payment will be made to those receiving:
- Jobseeker payment (and those transitioning to the Jobseeker payment)
- Youth allowance Jobseeker
- Parenting payment
- Farm household allowance
- Special benefits recipients
** This was extended to full time students last night to include students on youth allowance, Austudy and Abstudy in the legislation that passed.
Eligibility to income support payments will be expanded to:
- Permanent employees who are stood down or lose their job
- Casual workers
- Sole traders
- Self-employed
- Contract workers who meet the income test
(What you need to do – check if you are eligible as Centrelink as concessions are very complex and log on to https://www.dss.gov.au/benefits-payments/jobseeker-payment then myGov to claim)
2. Second $750 payment to households – Economic Support Payments
The Government is now providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders residing in Australia.
The payment will be exempt from taxation and will not count as income for the purposes of Social Security, Farm Household Allowance and Veteran payments.
- Payment 1 $750 from 31 March 2020 (previously announced on 12 March): Available to people who are eligible payment recipients registered between 12 March 2020 to 13 April 2020
- Payment 2 $750 from 13 July 2020: Available to people who are eligible payment recipients on 10 July 2020.
The payments will be made automatically to those that meet the criteria.
3. Temporary reduction in minimum superannuation draw down rates
Superannuation minimum drawdown requirements for account based pensions and similar products reduced by 50% in 2019-20 and 2020-21.
(What to do – check your pension requirements & cash flow potential to reduce your pension)
4. Rent Assistance TBA
No announcement yet, but we believe this will happen.
Next steps for businesses
As many businesses navigate the ongoing impacts of Coronavirus, it’s critical to focus on the following areas to maintain business continuity:
Personnel: Communicate with staff. Support and protect the health and well being of your employees.
Staff will be critical to your long-term success.
Customers: Communicate with customers. Know your customer and their needs this must include a credit risk assessment and consider different payment arrangements
Supply chain: Communicate with suppliers. Know their capacity to fulfill your orders and monitor their place in the market. Have contingency plans and backups for disruptions.
Financiers: Communicate with your bank. Take advantage of any concessions by your banks, banks are currently offering reduces rates & terms. We can approach your bank on your behalf if needed.
Cash flow: Communicate with your internal accountant or us. Short term cash flow planning is essential right now. Decisions need to be made to keep business running in particular staffing and overheads.