COVID-19: Second Stimulus Package
The Commonwealth Government has released the second stage of its economic plan to cushion the economic impact of the Coronavirus and help build a bridge to recovery on 22/3/2020. A total of $189 billion is being injected into the economy by all arms of Government in order to keep Australians in work and businesses in business.
The Economic Support Package includes:
ATO allow up to 6 months deferral on payments
ATO process is to call them for concessions
Action Plan - further details and references
Sole Traders - Specifically called out in Government support
Please note: This is a summary of concessions that may apply to your business. Please contact your tax agent for specific tax advice where relevant.
Government – Treasury Initiatives
1. Instant Asset Write-Off up to $150,000 per Asset - Only until 30 June 2020
If the business has turnover last year of less than $500m
Purchased after 12th March 2020 and
Installed ready for use before 30 June 2020 and
Cost less than $150k (GST Exclusive)
New or Second Hand
Each individual asset, i.e. 3 purchases at the same time will be considered 3 separate purchases.
2. $1b funding made available for Regional Support (Case by Case Basis)
$1b funding has been made available by our Government to support regions on a case by case basis. We are currently awaiting further information.
3. 50% Instant Depreciation for “Certain” Assets – Until 30 June 2021
Applicable if the business has turnover last year of less than $500m.
Purchased after 12th March 2020 and
Installed ready for use before 30 June 2021 and
Div 40 Assets (normally available for Depreciation)
Not Second Hand
This does not apply to assets that have been instantly written off
4. Credit on BAS for 100% of PAYGW up to $100k
This is the provision badly reported as “Cash for Business”. Please note that it is a Credit (in two or more instalments) that could produce a refund but really it is a reduction in amounts that would otherwise have been paid to the ATO as PAYGW. It does not change payroll nor does it have any consequence on the employee.
It is to be paid in TWO different allotments:
The first in accordance with the BAS lodgements as described below, maximum of $50k
The second will be equal to the total claimed as below but paid later by 28th October to businesses that remain active
Note: The Minimum amount for an employer is $10k. The Maximum amount is $100k over the two allotments.
If the employer has turnover last year of less than $50m:
Maximum credit over the 6 months will be $100,000
Minimum credit of $20,000 but there must still be employment
100% of the PAYG amount that would otherwise be payable reduces the amount due to the ATO. Excess credit can be refunded
5. Subsidy of 50% of Apprentice/ Trainee wages for 9 months to max of $21k
You could apply for a wage subsidy of up to 50% of the apprentice or trainee’s wages if you have less than 20 employees. This payment will cover up to 9 months from 1 January 2020 to 30 September 2020. This will get paid in 3 instalments of up to $7k to a maximum of $21k. The apprentices/ trainees need to be in training as of 1 March 2020.
6. Individuals - two payments of $750 for Social Security, veteran, support recipients and eligible concession card holders
The first payment (announced on 12 March 2020) will be available to people who are eligible payment recipients and concession card holders at any time from 12 March 2020 to 13 April 2020 inclusive
The second payment will be available to people who are eligible payment recipients and concession card holders on 10 July 2020.
7. Unsecured Loans of $250k
For Assetstion with the banks, the Government will provide new unsecured loans up to $250k to be used as working capital with guaranteed repayment of 50%. This includes:
3 year loans
Maximum amount of $250k
Unsecured loans i.e. no assets required to support – it is a cashflow loan
Still subject to the banks (or other lenders) credit assessment processes
Government prefers it be a drawdown facility i.e. sed if needed
Must be applied for by 30 September 2020
*** PLEASE APPLY THROUGH YOUR BANK DIRECTLY ***
8. Directors Personal Liability Relief
There is a temporary increase to the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive. This includes temporary relief for directors from any personal liability for trading while insolvent and providing temporary flexibility in the Corporations Act 2001 to provide temporary and targeted relief from provisions of the Act. There will also be an increase of the threshold before a creditor can instigate liquidation action to $20k for more than 6 months.
9. Sole Traders – Jobseeker entitlement and $550 per fortnight payment when income has dropped (details awaiting)
Further details are required however it looks promising. The Prime Ministers announced that if income drops by 20% or more then these provisions apply. New special payment of $550 per fortnight to new and existing recipients.
Jobseeker Payment (was Newstart)
Youth Allowance Jobseeker
Farm Household and
Special benefit recipients Jobseeker
Payments expanded to include:
Permanent employees who are stood down or lose employment
Contract workers who meet the income tests as a result of the economic turndown
Announcements indicated this would also be available to Sole traders with the drop in income and Employees who have lost their jobs, casual, part time or full time.
If you have any questions or concerns regarding any of the above, please do not hesitate to contact us directly via phone (07 3216 6886) or email (firstname.lastname@example.org). As mentioned previously, we are currently working remotely, so we are here if you need us.
Joanne, Tricia & Therese The Three Bookkeeping & Admin Services