Dear valued clients,
Firstly, I am pleased to advise you that JMp Accountants is operating as usual. We are monitoring the announcements from the government and will notify you of any changes as they occur. As all other service providers, we made the necessary changes to allow our staff to have flexible working arrangements to maintain their safety and to minimise any interruption to our services in these difficult times. In the coming weeks, we will communicate with clients on a regular basis via our newsletters, direct emails and phone calls. We will attempt to only communicate what we believe is currently relevant to your business and value adding. Over the past 25 years or so, we have been servicing hundreds of small to medium sized businesses. Running businesses is a complex task on any day, let alone when times are uncertain, and changes are constant. These are challenging times where many of the decisions affecting businesses are made by politicians and policy makers. It is no doubt disheartening to see businesses struggling to stay afloat to ensure owners and employees can maintain their livelihood.
The question that occupies me the most of these days, is what can one do to survive this financial storm? Unfortunately, hard decisions are required, and they will need to be made sooner rather than later. From staffing issues to radically reducing expenses via various methods such as negotiating more favourable rental agreements, reducing mortgage repayments etc…. The key point to keep in mind is not just the survival of businesses in the coming months but also the re-bouncing once this financial storm is behind us.
On a side note, JMp is aware that your businesses may be changing in the coming weeks and months and hence we acknowledge that fees arrangements will need to be discussed based on the changing needs of your business and the level of service required. Please contact us should you wish to further discuss any of your concerns. Stay tuned as we update our clients in relation to changes that may affect businesses.
COVID-19 STIMULUS MEASURES
COVID – 19 Stimulus Package: What You Need to Know The Government released a second, far reaching $66.1 bn stimulus package that boosts income support payments, introduces targeted changes to the superannuation rules, provides cash flow support of up to $100,000 for small business employers, and relaxes corporate insolvency laws. These stimulus measures were legislated yesterday and are now law. The Prime Minister has warned that there are no “quick solutions” and that business should prepare for 6 months of disruption.
Businesses
Tax-free Payments for Employers
The Government will support employers with a credit equal to 100% of a business’s PAYG withholding amounts from salaries and wages, even for those employers who are not required to withhold tax.
If your business has employees working since 1 January 2020 and your business has an annual turnover of up to $50 million, then upon assessment of your BAS in the next two quarters of the financial period, an entitlement – at least $20,000 and up to $100,000 maximum tax-free.
For a business to qualify for this support it must have been established prior to 12 March 2020.
The cash flow support measures will be provided in the form of a credit in the activity statement system. The support will be provided in two phases.
The first phase ensures that eligible employers receive a credit equal to 100% of the PAYG amounts withheld from salary and wages paid to employees during the relevant period, a minimum of $10,000 up to the maximum amount of $50,000.
The second phase ensures that eligible employers receive another series of credits, equal to the credits that were received under the first phase. For example, if a business received $40,000 of credits in the first phase it will receive a further $40,000 of credits in the second phase.
If a business pays salary and wages to employees but is not required to withhold any tax, then a minimum payment of $10,000 will be made in the first phase and a further payment of $10,000 will be made in the second phase.
The credits are automatically calculated by the ATO and employers will need to lodge an activity statement to trigger the entitlement. If the credit puts the business in a refund position the excess amount will be refunded by the ATO within 14 days.
REMEMBER – IF YOU HAVE AN OUTSTANDING GST LIABILITY AS PART OF YOUR BAS RETURN, OR PREVIOUS OUTSTANDING BALANCES, THEN ANY EXCESS CREDITS WILL BE APPLIED AGAINST THESE IN THE FIRST INSTANCE AND MONIES ONLY BE REFUNDED THEREAFTER
Sole traders and self-employed eligible for Jobseeker payment The eligibility criteria to access income support payments will be relaxed to enable the self-employed and sole traders whose income has been reduced, to access support.
Wage Subsidy for Apprentices/Trainees
The Government will support jobs with a wage subsidy of 50% of an apprentice’s or trainee’s wages during the period of 1 January 2020 to 30 September 2020.
If your business has fewer than 20 employees and has been employing an apprentice/s or a trainee/s prior to and including 1 March 2020, you may be eligible to receive up to $21,000 during this nine-month period.
Claims for this subsidy may be made from 2 April 2020 and must be made no later than 31 December 2020.
Loan Guarantee Scheme For all businesses with an annual turnover of up to $50 million and affected by COVID-19, an eligible loan through participating banks/lenders will be guaranteed to 50% of the loan by the Commonwealth.
A loan up to $250,000 for a term of up to three years may only be used for working capital and no repayments will be required for the first six months. Loans must be granted by a bank/lender within six months of 1 April 2020.
Instant Asset Write-Off (IAWO) From 12 March 2020 until 30 June 2020, the Government:
is increasing the IAWO from $30,000 to $150,000 for each qualifying asset – used or installed for use during this time period;
is expanding the eligibility of the new IAWO limit to businesses with an annual turnover of up to $500 million; and
will continue to apply the luxury car limit to car purchases.
These new criteria, applicable to 2020 tax returns, will enable eligible businesses to immediately write off the full purchase price of multiple qualifying assets.
Insolvency A moratorium on insolvency laws for trading businesses will be introduced and changes made to attempt to mitigate the number of businesses collapses. Changes will include:
a temporary increase of the debt thresholds at which creditors can a) issue a demand and b) initiate bankruptcy proceedings – both will increase to $20,000.
a temporary increase in the time in which affected companies will have to respond to demands – an increase to six months.
a temporary relief for directors from personal liability during insolvent trading.
These measures will last for six months only.
VIC Government – SMEs / Employers
The Victorian Government’s stimulus package includes:
Payroll tax refunds Victorian businesses with less than $3m in Australian taxable wages will effectively pay $0 in payroll tax for the 2019/20 income year. Also, their payroll tax obligations for the September 2020 quarter will also be waived.
Where a business has already made payments of payroll tax during the year, they will be entitled to a refund. The Victorian State Revenue Office will directly contact a business who is eligible to receive the refund to discuss the payment method. It is expected that refunds will begin being paid from 27 March 2020.
All business must, however, continue to keep lodging monthly payroll tax returns despite the balance of tax payable being $0. Land tax deferral A 12-month deferral of land tax is available for certain owners who have less than $1m in total taxable landholdings. The criteria for eligibility are that the owner must have at least one taxable non-residential property, which includes: • Commercial property • Industrial property, or • Vacant land (which is not residential vacant land) The Victorian State Revenue Office will contact eligible taxpayers for this deferral. However, all taxpayers may check their total taxable landholdings via My Land Tax at the SRO website. Taxpayers who have already paid instalments of land tax for the 2020 year will not be entitled to any refund of land tax already paid. However, the amount owing is still eligible for a deferral.
ATO Support Measures for Employers and Individuals
The ATO is offering, on a case-by-case basis, administrative relief for some tax obligations, such as:
Significantly affected taxpayers may be able to defer tax payments by up to four months.
Payment dates for activity statements and income tax may be deferred.
GST refunds may be accessed sooner with a change from quarterly to monthly reporting.
PAYG instalments may be varied to NIL for the March quarter BAS with a refund for any instalments paid for the previous two quarters.
Interest and penalties incurred on or after 23 January 2020 may be remitted.
Low interest payment plans may be entered.
Early release of superannuation From mid-April, individuals in financial distress will be 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.
For those eligible to access their superannuation, you can apply directly to the ATO through the myGov website from mid-April. Temporary reduction in minimum superannuation draw down rates Superannuation minimum drawdown requirements for account-based pensions and similar products will be reduced by 50% in 2019-20 and 2020-21.
Jobseeker Payment for Sole Traders / Individuals
Those individuals who work as a sole trader or who are self-employed may become eligible for Centrelink’s Jobseeker Payment (formerly Newstart Allowance), a payment being increased by the Government by up to $550 extra per fortnight for all current and newly-eligible recipients.
The extra $550 maximum extra amount, paid by Centrelink, will be in effect for up to six months only.
New applicants for the Jobseeker Payment must make an online declaration to Centrelink about any reduction in income or suspension of work. One-off $750 Cash Payment + Extra $750 Cash Payment
To help boost the household economy, from 31 March 2020, the Government will provide $750 as a one-off payment to all eligible welfare, income support, veteran affairs and concession card holders to help boost the economy.
From 13 July 2020, the Government will provide an extra $750 payment to all eligible welfare, income support, veteran affairs and concession card holders. This second round will only be available to those people not receiving the up to $550 extra per fortnight in their Jobseeker Payment.
The ATO will automatically make these payments via Centrelink to eligible recipients.
If you have any queries please feel free to contact us.