Tag: COVID-19

Victorian Business Survival and Adaption Package

In response to the state’s extended lockdown, the Victorian government on the weekend announced a $3 billion Business Survival and Adaption Package for businesses impacted by the COVID-19 restrictions. The package is a mix of cash grants, tax relief, and cash-flow support featuring three components. 

  1. Business Support 
  • Small and medium sized business ($822 million): The third round of the Business Support Fund will provide up to $20,000 for business with a payroll of up to $10 million. Grant applications open on Friday 18 September 2020. 
  • Licensed Hospitality Business ($251 million): Grants of up to $30,000 for licensed pubs, clubs, hotels, bars, restaurants and reception centres, based on their venue capacity and location. 
  • Business Chambers and Trader Groups ($3 million): A competitive grants program to support metropolitan and regional business chambers and trader groups. 
  • Alpine businesses ($4.3 million): Grants of up to $20,000 to help alpine businesses pay a service charge to Alpine Resort Management Boards. 
  • Sole Trader Support Fund ($100 million): Grants of up to $3,000 to over 30,000 eligible sole traders who operate from a commercial premises or location to which the sole operator is the tenant or licensee. 
  1. Business Adaption 
  • $20 million voucher program to assist sole traders and small businesses in building their digital capability 
  • $15.7 million package to help Victorian exporters get their products to market and establish new trade channels. 
  • $8.5 million expansion to the ‘Click for Vic’ campaign to encourage more Victorians to support local businesses. 
  • $87.5 million Outdoor Eating and Entertainment Package to support hospitality businesses prepare for COVID Normal reopening across Victoria. 
  • $100 million Melbourne City Recovery Fund between the Victorian Government and the City of Melbourne to support Melbourne on the roadmap for reopening to COVID Normal in the lead up to Christmas and during summer. 
  1. Waivers and Deferrals 
  • $1.7 billion to defer payroll tax for businesses with payrolls up to $10 million for the full 2020-21 financial year 
  • $41 million to bring forward the 50% stamp duty discount for commercial and industrial property for all of Regional Victoria 
  • $33 million to defer the planned increase in the landfill levy for six months 
  • $30 million to waive 25% of the Congestion Levy this year, with the outstanding balance deferred. 
  • $27 million in liquor license fee waivers for 2021 
  • $6 million to waive Vacant Residential Land Tax for vacancies in 2020. 


JobKeeper Payment Rules Released 10/4/20

Late on Friday April 10, explanatory materials were released in relation to the JobKeeper payment that has now been passed into law. The explanatory material clarifies one key aspect of the new legislation:

Establishing a downturn

 

By way of background, to qualify for the JobKeeper wage subsidy, one of the eligibility criteria is that:

  • for businesses that have an annual aggregated turnover of less than $1 billion, they estimate their GST turnover has fallen or will likely fall by 30% or more or
  • for businesses that have an annual aggregated turnover of $1 billion or more (or is part of a consolidated group for income tax purposes with turnover of $1 billion or more), they estimate their GST turnover has fallen or will likely fall by 50% or more.

Treasury has revealed that the comparison period is for either (a) any monthly period from April 2020 to the end of September 2020 or (b) any quarterly period from April to June or July to September…compared to the same monthly or quarterly period in 2019.

Importantly, once this test is met for either (a) a monthly period or (b) any quarterly period, there is no requirement to re-test in later months or quarters. For example, if a business assesses that its turnover will fall by 30% in April 2020 compared to April 2019…then it retains its eligibility until the JobKeeper payments stop for all businesses at the end of September 2020. This is irrespective of its turnover in the months subsequent to April 2020. It is not required to estimate or determine turnover for subsequent periods.

Where an entity does not qualify in the month of April 2020, for example, or the April to June quarter, it can re-test in later months or quarters, but will only be eligible for the JobKeeper payments from the period of qualification onwards (the payment won’t be backdated to the commencement of scheme).

Alternative tests

The explanatory material acknowledges that comparing monthly or quarterly periods from April 2020 and onwards, to April 2019 and onwards, may not always be possible or made lead to unfair outcomes. To this end, where the ATO is satisfied that there is no such comparison period in 2019, or there is not an appropriate relevant comparison period, the ATO Commissioner may, by legislative instrument, determine an alternative decline in turnover test.

The two alternative test examples cited in the explanatory materials relate to:

  • businesses that were not in existence for the whole of the comparison period in 2019. In the explanatory materials, the business is permitted to average its actual turnover from October 2019 when it came into existence to March 2020, and compare that average it to its estimated turnover in April 2020.
  • businesses that were impacted by a natural disaster during the 2019 comparison period. In the explanatory materials, the business is permitted to go back to 2017 (the most recent year when its turnover was not impacted by drought) and compare its turnover to the same eligible period in 2020.

The Commissioner retains flexibility to apply other alternative tests and take into account other unique circumstances (aside from natural disaster and start-up businesses) confronted by a business, should the 2019 comparison period not be reflective of typical turnover. Treasury, in a separate fact sheet Supporting Business to Retain Jobs, has stated that these alternative tests may include, for example, eligibility being established as soon as a business ceases or where a business significantly curtails its operations.

Businesses and their advisors should contact the ATO where they believe they warrant special consideration in this regard.

 

JobKeeper Payment – Fresh Guidance on Establishing a Downturn

We’ve received many questions from subscribers around how a “downturn of turnover” will be measured for the purposes of eligibility for the coronavirus-related Job Keeper Payment.

Last night there was fresh guidance from Treasury. 

By way of background, one of the eligibility criteria for Job Keeper is that: 

• for businesses that have an annual turnover of less than $1 billion, they estimate their turnover has fallen or will likely fall by 30% or more; or  
• for businesses that have an annual turnover of $1 billion or more (or is part of a consolidated group for income tax purposes with turnover of $1 billion or more) they estimate their turnover has fallen or will likely fall by 50% or more; and  
• the business is not subject to the Major Bank Levy. 

Treasury has indicated that the decline in turnover test is linked to the GST turnover test in particular the projected GST turnover – which will take into account anticipated decline in revenue. The test requires a business to measure its projected GST turnover and compare this to what is termed a relevant comparison period. If this equals or exceeds the following thresholds, the entity satisfied the decline in turnover test: 
• ACNC-registered charities – 15%; 
• entities with turnover less than $1bn – 30%; 
• entities with turnover greater than $1bn – 50%. 
There is scope for the ATO to apply an alternative test to different classes of entities. 
The turnover test period must be a calendar month that ends after 30 March 2020 and before 1 October 2020, or a quarter that starts on 1 April or 1 July 2020. The relevant comparison period must be the period in 2019 that corresponds to this turnover test period. 
Further ATO guidance will be forthcoming 
The turnover numbers must be reported to the ATO before any payments will start, though there is a transitional rule for the first 2 JobKeeper fortnights. 
The key take-away points are while, at this stage, this is Treasury guidance: 

• the test/comparison period vis-à-vis 2019 to 2020– spans from April to the end of September 
• if 2019 is not representative of typical turnover, another comparison period may be considered 
• the ATO is willing to exercise its discretion where there are anomalous cases.

Job Keeper Plan Announced


Prime Minister Scott Morrison, on 30/03/2020, has announced a $130 billion support package to help employers and employees.  

The idea behind these measures is that employers will retain their employees and have them working where they can.  However, if there is no work available due to Coronavirus related downturn or closures, then these employers retain their employees on this payment for up to six months so that employees stay connected to their employers.  

There will be a $1,500 per fortnight Job Keepers Payment. 

  • This will be paid to the employer, who will then pay their employee; 
  • An individual cannot received the Job Seekers Payment as well as the Job Keepers Payment; 
  • This is a flat rate for everyone; 
  • This applies to full time workers, part time workers, sole traders and casual employees that have been with their employer for more than 12 months; 
  • Any employee that has been stood down from 1 March 2020 can be eligible for these payments; 
  • Payments will be made from 1 May 2020 onwards, however, they will be backdated to today, 30 March 2020; 
  • Employers can start making these payments as of today from their own funds, and they will be reimbursed back to today’s date; 
  • Every business will be eligible where they have seen a decrease in turnover of 30% of more (50% if your business turnover is more than $1.1 billion); 
  • Employers must register with the Tax Office to receive these payments (businesses can do this themselves directly on the ATO website, alternatively your bookkeeper can provide assistance, if you do not utilise the services of a bookkeeper, your accountant can provide this assistance); 
  • The ATO will have a registration button on their website ato.gov.au very soon; 
  • The Single Touch Payroll system will be used to process payments to employees; 
  • New Zealander’s on a 444 Visa will be eligible for these payments; 
  • This is intended to be a scheme that lasts for up to six months; 
  • Employers can top up their employees wages; 
  • There is no Super Guarantee paid on this payment. 

More Coronavirus Relief for Business

Over the weekend (29/03/2020), more relief was announced for business including:  

  1. Deferral of Loan Repayments 

A little over a week ago, the Australian Banking Association announced a six-month deferral of all loan repayments for small businesses hit by the coronavirus pandemic. 

On the weekend, this relief has now been extended to all businesses that have loans of up to $10 million. That accounts for just on 98% of all Australian businesses that have loans with Australian banks 

  1. Commercial Tenancies 

National Cabinet agreed to a moratorium on evictions over the next six months for commercial and residential tenancies in financial distress who are unable to meet their commitments due to the impact of coronavirus. 

Commercial tenants, landlords and financial institutions are encouraged to sit down together to find a way through to ensure that businesses can survive and be there on the other side. As part of this, National Cabinet agreed to a common set of principles, endorsed by Treasurers, to underpin and govern intervention to aid commercial tenancies as follows: 

  • a short term, temporary moratorium on eviction for non-payment of rent to be applied across commercial tenancies impacted by severe rental distress due to coronavirus;
  • 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; 
  • 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 coronavirus; 
  • landlords and tenants not significantly affected by coronavirus are expected to honour their lease and rental agreements; and 
  • cost-sharing or deferral of losses between landlords and tenants, with Commonwealth, state and territory governments, local government and financial institutions to consider mechanisms to provide assistance. 

 

COVID-19 Business Support Summary

Support from the Federal Government 

For Sole Traders: 

▪️Increased & accelerated income support: you’re able to access the $550 per fortnight Coronavirus supplement payment through JobSeeker, Youth Allowance Jobseeker or Parenting Payment with the waiting period and asset testing waived 

▪️The increased instant asset write-off: The Government has lifted the threshold for instant asset write-off from $30,000 to $150,000 

▪️Backing Business Investment: A time limited 15 month investment incentive (through to ‪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 

▪️Early access to superannuation: You can access $10,000 of your superannuation in 2019-20 and a further $10,000 in 2020-21. You can apply for early release of your super from mid-April 2020 

▪️Find out more here: https://business.gov.au/…/support-available-for-sole-traders 

For Employers and Companies: 

▪️Temporary cash flow support: employers will receive a payment equal to 100% of their salary and wages withheld, with a maximum payment of $50,000 and minimum payment of $10,000. Not for profits are also eligible. An additional payment is being introduced which means eligible businesses will receive at least $20,000 up to a total of $100,000 under the two payments 

▪️Help to pay the wages of apprentices or trainees: eligible employers can get a wage subsidy of 50% of the apprentice’s or trainee’s wage paid during the 9 months ‪from 1 January to 30 September 2020‬ 

▪️There is also relief for companies and directors by lifting the threshold of payments to creditors, and for personal liability for directors for trading while insolvent 

▪️Find out more here: https://business.gov.au/…/coronavirus-information…/employers

You can get the full details of all the support available here: https://business.gov.au/…/coronavirus-information-and-suppo…

 

COVID-19 Additional Help for Business

As the anticipated economic impact from the Coronavirus worsens, the Government on the weekend beefed up its assistance package that was originally announced last week as follows:

PAYG cash credits to SME employers and charities up to $100k (minimum $20k) 

The Government announced on the weekend that it will boost last week’s cash credit to employers. It will now provide a tax-free credit up to $100,000 for eligible small and medium sized entities (SMEs), and not-for-profits (including charities) that employ people, with a minimum credit of $20,000. These tax-free credits seek to help businesses’ and NFPs’ cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff. 

Under the enhanced scheme from last week’s first stimulus package, employers will receive a credit equal to 100% PAYG withholding from employee salary and wages (up from 50%), with the maximum credit being increased from $25,000 to $50,000. In addition, the minimum credit will be increased from $2,000 to $10,000. 

SMEs with aggregated annual turnover under $50m and that employ workers are eligible. NFPs entities, including charities, with aggregated annual turnover under $50m and that employ workers will now also be eligible. This will support employment at a time where NFPs are facing increasing demand for services. 

The cash flow credit for employers will be available from 28 April 2020. 

For example, if an employer lodging their quarterly March Activity Statement was ordinarily due to withhold $40,000 in PAYG withholding from their employee’s salaries in that quarterly period, then they would just keep this money themselves (being 100% of the withholding that was due) rather than sending it to the ATO and it would be tax-free. The rest of that Activity Statement would be dealt with normally, for instance it may be the case that GST may be owed for that quarter. 

We can see from this example, that the benefit is by way of the withholding that would normally be owed to the ATO, and that withholding amount is tax-free to the employer. Therefore, it is not a cash payment from the ATO as such, but rather retaining the withholding which would otherwise be payable. 

An additional credit is also being made from 28 July 2020. Eligible entities will receive an additional credit equal to the total of all of the Boosting Cash Flow for Employers payments received. The credits are tax-free, there will be no new forms and payments will flow automatically from the ATO. 

Temporary Relief for Financially Distressed Businesses  

The Government is temporarily increasing the threshold to $20,000 (up from $2,000) at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive (21 days to 6 months). Temporary relief will also be provided for directors from any personal liability for trading while insolvent. The Corporations Act 2001 will also be amended to provide temporary and targeted relief for companies to deal with unforeseen events that arise as a result of the Coronavirus. 

 

Coronavirus stimulus package worth $84 billion passed without objection by Parliament

23/03/20 The Federal Parliament has rushed through $84 billion in financial support for workers, students and businesses affected by the coronavirus outbreak, before wrapping up for a five-month-long break. 

A bare minimum of MPs and Senators came to Canberra for a single day to vote on legislation for the Government’s two rounds of stimulus measures. 

The bills were passed late Monday night without objection in both the House of Representatives and the Senate after some amendments were made. 

“The measures that have been passed by the Parliament today represent the most significant support for the Australian economy and community since the war,” said Treasurer Josh Frydenberg. 

The legislation supports both the first coronavirus economic stimulus package, worth $17.6 billion, and the $66 billion in direct financial support announced in the second package on the weekend

It also includes a raft of other measures to support the economy more broadly, as well as giving the Government flexibility to respond to changing circumstances without needing further legislation. 

Under pressure from Labor and the Greens, the Coalition amended its own legislation to give the social services minister the power to make changes to the stimulus payments, including rates, means testing, eligibility and residency requirements. 

The Government will immediately use those powers to extend the $550 coronavirus supplement to students receiving Youth Allowance, Austudy and Abstudy payments. 

Other than the income test, “there are really very few other requirements” students will have to meet to get support, said Social Services Minister Anne Ruston. 

The Government estimates up to 236,000 students could benefit from the change. 

https://www.abc.net.au/news/2020-03-23/coronavirus-economic-stimulus-passes-parliament/12080388

Key Points
Changes to the Government’s stimulus package include:

Extending the $550 per fornight coronavirus payment to students
New powers to increase or expand payments as needed, including for pensioners, those on disability support payments and carers, jobseekers and people who fall through the cracks
Making it easier for people who lose their job to get support by relaxing the test on their partner’s income

PRESS CONFERENCE – AUSTRALIAN PARLIAMENT HOUSE, ACT – 22/03/2020

THE HON. JOSH FRYDENBERG MP, TREASURER:  Since the government announced its first stimulus package just over a week ago, the global and the domestic economic environment has deteriorated. We now expect the economic shock to be deeper, wider, and longer. Every arm of government and industry is working to keep Australians in jobs and businesses in business, and to build a bridge to recovery on the other side.

Today, the government is announcing a second package, $66 billion dollars to cushion the blow to households as a result of the coronavirus and to support businesses, and we are enhancing in an unprecedented way Australia’s safety net. This package is consistent with our principles. The initiatives are targeted, are temporary, are proportionate, are scalable, and are using our existing systems. Today, this package, together with the other initiatives that have been announced, sees the government’s support for our Australian economy, announced over the last 10 days, at $189 billion dollars or as the Prime Minister said, around 10 per cent of GDP.

Today’s package has three parts involving 10 separate initiatives. The package will support households, including casuals, sole traders, retirees and those on income support. It will provide assistance for businesses to keep people in a job and it will provide regulatory protection and financial support for businesses to stay in business.

Today, the government is announcing:-

The doubling of the Jobseeker Allowance, formerly known as Newstart, through the introduction of a temporary coronavirus supplement.
The government will also waive the assets test and waiting periods for the Jobseeker Allowance, allowing more Australians to more quickly access the support that they need. The coronavirus supplement will provide an additional $550 a fortnight on top of the existing jobseeker or Newstart payment and will be available to sole traders and casual workers who meet the income test. This means anyone eligible for the maximum jobseeker payment will now receive more than $1,100 a fortnight, effectively doubling the jobseeker allowance.

In the first package on the 12th of March, we announced a $750 payment for Australians on income support. Today, we announce that from July 13, a further $750 payment to those on income support that are not eligible for the coronavirus supplement. This includes those receiving the age pension, the carer’s allowance, family tax benefits and the Commonwealth Seniors Health Card. In total, 5.2 million Australians. We are also reducing the deeming rates by a further quarter of a per cent to reflect the recent Reserve Bank interest rate cut. Over 900,000 thousand social security recipients on income tested support will now benefit.

Our economic response will allow those Australians who are in financial stress as a result of the Corona virus to access more of their own money in superannuation. From April, those affected will gain access to their superannuation capped at $10,000 this financial year, and a further $10,000 next financial year. These withdrawals will be tax free. I repeat, these withdrawals will be tax free and available to those who are eligible for the coronavirus supplement, as well as sole traders who have seen their hours worked or income fall by 20 per cent or more as a result of the coronavirus. So if you’re a sole trader or you’re a casual and you’ve seen your income or your hours worked fall by 20 per cent or more as a result of the coronavirus, you will be able to get early access to your superannuation. Applications will be made online through a simple declaration to the tax office. This initiative builds on existing provisions that allow early access to super in the event of hardship or on compassionate grounds, and it is estimated to put up to $27 billion dollars of superannuation back into the pockets of hardworking Australians. This comprises less than 1 per cent of the 3 trillion dollars in superannuation today. APRA, the prudential regulator, has advised the government that they do not expect this initiative to have a significant impact on the industry overall.

The government is also giving retirees more flexibility over their superannuation. Currently, retirees are required to draw down a minimum of 4 percent a year from their superannuation, a number that increases with their age. The government is halving this requirement to 2 per cent for this year and for next year, to give retirees more discretion over the management of their assets.

The second part of our package sees a massive scaling up of support for small and medium sized businesses across the country. We are increasing cash payments to SME’s to boost their cash flow and to keep their workers employed. All employing businesses will receive at least $20,000. All employing small businesses will receive at least $20,000 and some of the larger SME’s will receive up to one hundred thousand dollars. And we are extending this measure to around 30,000 not for profit organisations, which have an annual turnover of less than $50 million dollars. This will be a lifeline for hundreds of thousands of employers like the local hairdresser, the local cafe, the local mechanic whose income has been significantly reduced over this difficult period. This is the single largest measure in this second package, and together with the first initiative in the first package for small businesses is worth $31.9 billion dollars in total. This payment will be automatically paid through the tax system largely over the next six months with the first payment after 28 of April. No new forms will be required from Australian small and medium sized businesses.

Over the course of the last week, $105 billion dollars is being injected into the financial system by the government and the Reserve Bank of Australia, the purpose of which was to lower the cost and increase the availability of credit, particularly to smaller, medium sized businesses. Today, the government is going one step further and is guaranteeing in a 50/50 partnership with the banks and other lenders, more lending to Australia’s small and medium sized businesses. This $40 billion scheme, which will start in early April, will provide loans of up to $250,000 for up to 3 years for a business with a turnover of less than $50 million dollars. No repayments will be required for the first six months. These will be unsecured loans and they will help build a bridge for small and medium sized businesses to the other side of the coronavirus, and I urge small businesses to go and talk to their bank about these new opportunities that are available. These funds will provide hope and confidence to a vitally important sector and together with the red tape reduction for SME lending announced on Friday, more credit will be coming their way.

The third part of our package will provide a regulatory shield for what are otherwise profitable and viable businesses that find themselves under severe financial pressure as a result of the coronavirus. Now is the time for more flexibility in insolvency and bankruptcy laws to keep these businesses alive and to trade through this period. The government is proposing to increase the threshold at which a creditor can take action to initiate insolvency or bankruptcy from as low as $2,000 today to $20,000 and giving companies and individuals 6 months instead of 21 days to respond. We will also provide relief from directors, from personal liability, where the company is trading while insolvent. This relief will be provided over the next 6 months and will be vital to helping companies get through this period. As a result of the health related restrictions being put in place to reduce the impact of the coronavirus, it will not be possible for many companies to comply with their obligations under the Corporations Act, for example, holding general meetings in person. A temporary 6 month power will be provided to me as the Treasurer to deal with these situations as they arise

These extraordinary times require extraordinary measures and we face a global challenge like we have never faced before. But by working together, we will get to the other side and we will bounce back stronger. Today’s announcement will provide hope and support for millions of Australians at a time when they need it most. We know that there is more to do and we will continue to do what it takes.

https://www.pm.gov.au/media/press-conference-australian-parliament-house-act-22march

COVID-19 Banking Relief Package

In response to the expected impact of the coronavirus (COVID – 19), the Government last week announced a range of measures that it and the banks are putting in place to support businesses over the coming months. For further details, and how to apply, you should contact your lender:  

Loan Repayment Relief 

  • Banks will defer loan repayments for six months for small businesses who need assistance because of the impacts of the coronavirus. 

SME Loan Guarantee Scheme 

  • The Government will establish the Coronavirus SME Guarantee Scheme which will support small and medium enterprises (SMEs) to get access to working capital to help them get them through the impact of the coronavirus. Under the Scheme, the Government will guarantee 50 per cent of new loans issued by eligible lenders to SMEs. The Government’s support will enhance lenders’ willingness and ability to provide credit to SMEs with the Scheme able to support $40 billion of lending to SMEs.  

Low Cost Loans from Smaller Lenders 

  • $15 billion in stimulus investment to enable small banks and non-banks to supply low-cost loans to customers and small business. This will enable customers of smaller lenders to continue to access affordable credit.