Posts tagged with: Economic Stimulus

Your Guide to the Coronavirus Economic Stimulus Package for businesses

Posted on September 17, 2020

A nation of small businesses

If you suddenly have to shut your doors and your business revenue becomes a fraction of what it used to be, maybe even zero, and you have to continue paying rent and your workers, how long will you survive?

When a small business runs out of cash, the business dies. So, we have a real crisis on our hands.

Accounting for 98% of all Australian businesses and employing 2.2 million people, the engine room of our economy is on the brink of disaster. So, the Government has announced a stimulus that will give small business owners some encouragement.

Previously, we brought you part 1 of a 3-part series on how the Government will support individuals and households. In this article, we turn our attention to the backbone of the Australian economy – small businesses.

The numbers

At this moment, we are realising how important small business is in our economic landscape. According to a recent statistics report by the Australian Small Business and Family Enterprise Ombudsman:

  • Small business accounts for nearly 98% of all Australian businesses, employing 2.2 million people
  • Out of a total of 2.3 million businesses, 878,000 employ
  • Of the 878,000 that employ, 823,000 are small businesses (94%)
  • Of the 823,000 small businesses, 628,000 are micro-businesses (76%)
  • 62% of Australian businesses are sole traders with no employees
  • 27% are micro-businesses with 1-4 employees
  • 8.5% are small businesses with 5-19 employees
  • Over 4 years, the survival of non-employing businesses is at 59.6% which is less than the average of 64.5%. In comparison, large businesses have a survival rate of 85.6%
  • The highest proportion of business owners is in the 45-59 age group
  • The greatest barrier to innovation faced by micro and small businesses is access to funds (23%) and lack of skills (22.6%)

Support for businesses

To manage cash flow and keep people employed, the Australian Government has released the following support package.

JobKeeper Payment

We’ve included this in our Part 1, here it is again.

What is it?

This is a wage subsidy of $1,500 per fortnight, per employee, available to businesses and not-for-profits significantly impacted by the Coronavirus, so they can continue paying their employees. Payments will be made to the employer monthly in arrears by the Australian Taxation Office (ATO). The subsidy starts on 30 March 2020, with the first payment to be received by the employer in the first week of May.

Who is eligible to claim?

  • Businesses with an annual turnover of less than $1 billion where their turnover has fallen or will likely fall by 30% or more; or
  • Businesses with an annual turnover of more than $1 billion where their turnover has fallen or will likely fall by 50% or more; or
  • Self-employed individuals, if they meet the turnover tests mentioned above; or
  • Not-for-profits registered with the Australian Charities and Not-for-Profit Commission (ACNC) if their turnover has or will likely fall by 15% or more, relative to a comparative period.

Where you have more than 1 employer, only 1 employer will be eligible to receive the payment.

How do you claim?

Eligible employers must elect to participate by applying to the ATO as, at the time of writing, this can be done by visiting the ATO website and registering for JobKeeper updates.

Cash flow support for small and medium businesses

What is it?

This temporary cash flow boost is done through 2 sets of payments from 28 April 2020 to support employers to retain employees. The payments will be a minimum of $20,000 and up to $100,000, delivered through credits in the activity statement system when the activity statements are lodged.

The first cash flow boost is based on the amount of the business PAYG withholding. The credit will be equal to 100% of the amount withheld, with a minimum of $10,000 even if the amount withheld is zero.

The second cash flow boost is based on the value of the initial cash flow boost at a rate of 50% (for quarterly lodgers) and 25% (for monthly lodgers).

Who is eligible to claim?

  • A small or medium business that:
    • held an ABN on 12 March 2020 and continue to be active;
    • has a turnover under $50 million;
    • made eligible payments (like salary, wages, director fees, retirement/termination payments, compensation payments, voluntary withholding from payments to contractors) that the business is required to withhold from.
    • derived business income in the 2018-19 income year and lodged its 2019 tax return on or before 12 March 2020;
    • made GST taxable, GST-free or input-taxed sales in a previous tax period and lodged the relevant activity statement on or before 12 March 2020.
  • Not-for-profit organisations that:
    • held an active ABN on 12 March 2020;
    • have a turnover of less than $50 million; and
    • made payments to employees.
  • Charities registered with the Australian Charities and Not-for-profits Commission if they meet the eligibility criteria.

How do you claim?

Businesses don’t need to apply. It will automatically be applied to the accounts of eligible businesses when activity statements are lodged for the relevant periods. The cash payments will initially be applied to reduce liabilities to the ATO, however, if the business is in a refund position, the refund will be received within 14 days.

Temporary relief for financially-distressed businesses

What is it?

This package aims to reduce the threat of insolvency and wind up for businesses struggling due to the Coronavirus. They include:

Temporary higher thresholds and more time to respond to demand from creditors

  • For a period of 6 months for companies, there will be a higher threshold from $2,000 to $20,000 and more time to respond to demands from creditors from 21 days to 6 months;
  • For a period of 6 months for individuals, the minimum amount of debt required for a creditor to initiate bankruptcy proceedings will be increased from $5,000 to $20,000 and time to respond to demands will also be increased from 21 days to 6 months; and
  • For debtors who make a declaration of intention to enter voluntary bankruptcy, the period of protection from unsecured creditors will be extended from 21 days to 6 months.

Temporary relief from directors’ personal liability for trading while insolvent

  • For 6 months, directors will be relieved from personal liability for insolvent trading;
  • Cases of dishonesty and fraud will continue to be subject to criminal penalties; and
  • Any debts incurred will still be payable.

Treasurer to be given a temporary instrument-making power under the Corporations Act (the “Act”)

  • For 6 months, power will be granted to the Treasurer to amend provisions of the Act or modify obligations, to provide relief from obligations to enable compliance with legal requirements.

Increasing the instant asset write-off

What is it?

The Instant Asset Write-Off (IAWO) threshold will be increased from $30,000 to $150,000. This means businesses will be able to immediately deduct purchases of eligible assets up to $150,000 for new or second-hand assets. From 1 July 2020, the IAWO for small businesses with a turnover of less than $10 million will revert to $1,000.

Who is eligible to claim?

Business with a turnover threshold of up to $500 million (up from $50 million) can apply.

Backing business investment

What is it?

For 15 months, depreciation deductions will be accelerated so that eligible businesses get a deduction of 50% of the cost of new assets first used or installed by 30 June 2021.

Who is eligible to claim?

Businesses with turnover below $500 million purchasing new assets.

Supporting apprentices and trainees

What is it?

It’s a wage subsidy of 50% of the apprentice’s or trainee’s wage paid between 1 January 2020 and 30 September 2020, up to a maximum of $21,000 per eligible apprentice or trainee.

Who is eligible to claim?

Small businesses employing less than 20 employees who retain an apprentice or trainee.

How do you claim?

Employers can register from early April 2020, with final claims to be lodged by 31 December 2020.

Assistance for severely affected regions and sectors

Support for Coronavirus-affected regions communities and industries

What is it?

The Government has set aside a total of $1 billion to support regions, communities, and industries disproportionately affected by the impact of the Coronavirus, including industries such as tourism, agriculture, and education, through existing or newly-established initiatives or programs. There is no set date at the time of writing. Some of the measures include:

  • Waiving of the Environmental Management Charge for tourism businesses that operate in the Great Barrier Reef Marine Park;
  • Assistance to help businesses identify alternative export markets or those affected by disruptions in the supply chain; and
  • Promotion of tourism.

Who is eligible?

The affected industries and communities will be working with the Deputy Prime Minister to develop the plans.

Support for Australian airlines and airports

What is it?

The package will be in the form of relief from a range of taxes and Government charges to reduce the impact on international and domestic air travel including reimbursement of aviation fuel taxes, relief from Airservices Australia charges, rebate for Domestic Aviation Security, and additional funding for Regional Aviation Security. The package will be in place for 8 months from 1 February 2020 to 30 September 2020.

Who is eligible?

Businesses conducting commercial and aeromedical aircraft operations who are subject to taxes and charges, covered by the package.

Australian Tax Office (ATO) Administrative Relief

What is it?

Similar to the relief provided following the bushfires, the ATO will provide relief for taxpayers affected by the pandemic, on an individual basis. This includes deferring tax payment for up to 6 months, allowing variation to PAYG instalment amounts to zero for the March 2020 quarter, and setting up temporary shop fronts to assist small businesses. Also, the ATO will look to enhance its presence in other regions to allow people to learn more about the relief options.

Who is eligible?

All taxpayers affected by the outbreak can contact the ATO on 1800 806 218 or visit the website on www.ato.gov.au.

Final Word

In the wake of the Coronavirus outbreak, some small businesses are closing their doors, maybe permanently, but there’s hope. What our Government wants to do is to ensure that small businesses have a cash lifeline to last them until they can open up again.

Most businesses are not well-prepared to come into this crisis. What’s important is knowing what is available and then understanding how to access support.

Just like family, employees need to be taken care of by business owners. Stay safe, stay healthy. Let’s look out for each other.

Are you suffering from overwhelm knowing what steps you should be taking? Reach out to the HCG Team and let’s review what you should be doing now here.

Here are links to some useful resources:

https://hallconsulting.com.au/wp-content/uploads/2020-COVID-19-Stimulus-Support-Guide-HCG-Revision-03.pdf

https://www.ruok.org.au/

https://www.health.gov.au/

https://headspace.org.au/

https://mindspot.org.au/

https://www.ato.gov.au/

Small Business Counts report (2019) https://www.asbfeo.gov.au/sites/default/files/documents/ASBFEO-small-business-counts2019.pdf

Australian Small Business and Family Enterprise Ombudsman: https://www.asbfeo.gov.au

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Your Guide to the Coronavirus Economic Stimulus Package for individuals and households

Posted on September 17, 2020

It’s a different world

The Coronavirus pandemic has disrupted every aspect of our daily lives from workplace closures to schooling children at home, from lockdowns to panic buying.

Globally, as of 9 April 2020, there have been 1,395,136 confirmed cases, including 81,580 deaths reported to the World Health Organisation. In Australia, from Jan 26 to 9 Apr 2020, there have been 6,052 confirmed cases with 50 deaths.

Costing more than $320 billion, the Government has released economic relief to support affected workers, businesses and the broader community.

This is part 1 of a 3-part series on how the Government will support individuals and households, businesses, and the flow of credit in the Australian economy. We’ll explain what’s been announced, how it may affect you, and what to do next.

Here are the key measures released:

  1. Support for individuals and households. Financial assistance in the form of wage subsidy, income support payments for the unemployed and pensioners, and temporary early release of superannuation.
  2. Support for businesses. This includes measures for a temporary cash flow boost, a safety net for financially-distressed businesses, investment incentives, and wage subsidies for apprentices and trainees.
  3. Supporting the flow of credit. To better manage the impact of the Coronavirus and help support activity, these reforms are designed to encourage lending to businesses through low-cost funding and cutting red tape.  

How the pandemic affected our economy and the rest of the world

These are challenging times – for everyone. The outbreak of the Coronavirus poses significant health impacts, but also major economic consequences.

A decline in economic activity and financial markets

While the initial effect was felt in the Chinese economy, lockdowns announced in major economies in Europe, the Americas, and Asia to contain the outbreak meant economic activity has declined.

China recorded the largest fall in industrial production and manufacturing in its history.

Demand for goods and services has declined in the tourism, hospitality and retail industries due to restrictions on large gatherings, availability of imported goods and travel bans.

Stock markets around the world have fallen substantially and the Australian dollar is 11% lower than it was in early January.

On the upside, falls in global demand have pushed oil prices down 65% lower but consumers tend to benefit from lower petrol and gas prices.

Protecting the community but at a cost

The Government has now put in place strong measures to protect Australians to limit the spread by activating the National Incident Room, releasing masks and other personal protective equipment, enhancing border controls and imposing strict travel restrictions and promoting social distancing. Is it enough? Can our health system manage the outbreak?

Ironically, by restricting the movement of people, some businesses have been forced to close and jobs are being lost.

The good news?

There is good news and it largely relates to support for individuals, households, and businesses to minimise the significant economic consequences from this pandemic.

Let’s take a look at what’s available, what it means for you and what you can do to get it.

Support for individuals and households

In response to the crisis, Prime Minister Scott Morrison has announced measures at an estimated total cost of $320 billion, to support workers, households, and businesses. In this article, we discuss what’s available for individuals and households.   

JobKeeper Payment

What is it?

This is a wage subsidy of $1,500 per fortnight, per employee, available to businesses and not-for-profits significantly impacted by the Coronavirus, so they can continue paying their employees. Payments will be made to the employer monthly in arrears by the Australian Taxation Office (ATO). The subsidy starts on 30 March 2020, with the first payment to be received by the employer in the first week of May.

Who is eligible to claim?

  • Businesses with an annual turnover of less than $1 billion where their turnover has fallen or will likely fall by 30% or more; or
  • Businesses with an annual turnover of more than $1 billion where their turnover has fallen or will likely fall by 50% or more; or
  • Self-employed individuals, if they meet the turnover tests mentioned above; or
  • Not-for-profits registered with the Australian Charities and Not-for-Profit Commission (ACNC) if their turnover has or will likely fall by 15% or more, relative to a comparative period.

Where you have more than 1 employer, only 1 employer will be eligible to receive the payment.

How do you claim?

Eligible employers must elect to participate by applying to the ATO as, at the time of writing, this can be done by visiting the ATO website and registering for JobKeeper updates.

Income support payments for the unemployed

What is it?

This measure comprises temporary expanded access to the JobSeeker payment and a new time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight on top of the existing income support payment.

The expanded access includes payment access to permanent employees who are stood down or lost employment; sole traders; self-employed; casual workers; and contract workers who meet the income tests. In addition, there will be reduced means testing and reduced waiting times.

It’s important to note that you will not be able to access employer entitlements or income protection insurance at the same time as receiving the JobSeeker Payment and Youth Allowance Jobseeker under these arrangements.

The Coronavirus supplement will commence from 27 April 2020 and the expanded access will commence from 25 March 2020.

Who is eligible to claim?

Existing and new recipients of JobSeeker Payment, Youth Allowance, Parenting Payment, Austudy, ABSTUDY Living Allowance, Farm Household Allowance, and Special Benefit.

How do you claim?

You can claim online or over the phone.

Payments to pensioners and concession cardholders

What is it?

These are 2 separate payments of $750 to assist to lower-income Australians such as pensioners, social security and veteran income support payments, and eligible concession cardholders. The purpose is to manage the impact of the recent volatility in financial markets and the impact of low-interest rates on retirement savings.

The payments will be exempt from tax and will not count as income for social security purposes.

Who is eligible to claim?

  • For the first payment:
    • You must be an Australian resident and be receiving one of the eligible payments or hold one of the eligible concession cards at any time from 12 March 2020 to 13 April 2020, inclusive.
  • For the second payment on 10 July 2020:
    • You must be an Australian resident and receiving one of the eligible payments or hold one of the acceptable concession cards that we’re entitled to the first payment, except those who are receiving an income support payment that is eligible to receive the Coronavirus supplement.

How do you claim?

The first payment will be paid automatically from 31 March 2020 and the second payment from 13 July 2020 by Services Australia or the Department of Veterans’ Affairs (DVA).

Temporary early release of superannuation

What is it?

Individuals affected by the coronavirus will be allowed to access up to $10,000 of their superannuation this financial year and a further $10,000 next financial year. Payment will be tax-free and will not affect any Centrelink or DVA payments. When the ATO has processed your application, it will make a determination and then notify your superannuation fund to release the payment to you.

Who is eligible to claim?

  • You must satisfy one or more of the following:
    • You are unemployed; or
    • You are eligible to receive the JobSeeker payment, Youth Allowance, Parenting Payment, Special Benefit or Farm Household Allowance; or
    • On or after 1 January 2020:
      • Redundant; or
      • Working hours 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

How do you claim?

You can apply directly to the ATO through the mygov website (www.my.gov.au) and certify that you meet the criteria, from 20 April 2020.

Temporarily reducing superannuation minimum drawdown rates

What is it?

It’s a 50% reduction in minimum pension drawings for 2019-20 and 2020-21 for account-based pensions and similar products, to reduce the need to sell investment assets to fund minimum drawdown requirements.

Who is eligible to claim?

Retirees with Account-Based Pensions and similar products.

How do you claim?

Retirees should contact their Financial Planner if they want to make the reduction. If you have already withdrawn the current minimum drawdown requirements, you can’t put the amount back into your superannuation.

Reducing social security deeming rates

What is it?

From 1 May 2020, the upper deeming rate will be 2.25% and the lower deeming rate will be 0.25% to reflect the low-interest-rate environment and its impact on the income from savings. On average, those on the Age Pension will receive around $324 more in the first full year that the reduced rates apply.

Who is eligible to claim?

If you are an income support recipient, including Age Pensioners.

How do you claim?

It will be automatically calculated by Services Australia.

Let’s recap what’s available for individuals and households

The Government has announced financial assistance in the form of wage subsidy, income support payments for the unemployed and pensioners, and temporary early release of superannuation. If you are an affected worker, individual or household, help is available.  Some payments can be claimed online, over the phone or automatically paid. Call your trusted Financial Planner or accountant, if you have one.

The world is healing

A pandemic is spreading. People are in quarantine. Some businesses and schools are closed. The whole world is in crisis mode and no one knows how long it will last. These are scary times.

It’s ok to feel scared, confused and overwhelmed. As we’re all forced to deal with the new reality of a pandemic, let’s look at some positives and a small reason to celebrate.

  • Fast food replaced by home-cooked meals;
  • Children are home with their families;
  • Parents are home taking care of their children;
  • People are health and hygiene conscious again;
  • Less traffic on the road;
  • Petrol is affordable; and
  • The air is cleaner.

Our environment has shifted radically in the space of a few weeks. Let’s do our bit to slow the spread of the virus.  

Let’s check in on each other.

We’re in this together. If you aren’t sure what the next step is for you please reach out to the HCG Team here and we will book a meeting to discuss your situation.

Here are links to some useful resources:

https://www.ruok.org.au/

https://www.health.gov.au/

https://headspace.org.au/

https://mindspot.org.au/

https://www.ato.gov.au/

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The COVID 19 Stimulus & Support Measures

Posted on September 17, 2020

What you can access now

We’ve designed this guide as a quick reference to the COVID-19 related tax and financial support that might be available to you.

The Government has flagged that more support is coming and we will keep you updated of changes that are likely to impact on you.

You can Download the latest guide below and this will be updated as new support measures and stimulus packages are released.

What changed in the guide since the first release.

  • Jobkeeper has been rewritten to add clarity
  • Jobkeeper subsidy following passage of legislation, release of the Treasury rules, release of ATO guidance
  • State and territory residential rental prohibition on evictions
  • Addition of child care
  • Addition of Northern Territory stimulus package
  • Addition of information on code of conduct for commercial tenancy
  • Tasmania added in state and territory round up
  • Disclaimer and contact page added
  • Reference to full time employees removed in apprentice (remove from Treasury fact sheet).
  • WA, NSW & QLD state based incentives updated for new releases

Last updated 17 April 2020

You can contact us at admin@hallconsulting.com.au

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