COVID-19 Stimulus – Six Advantages For Business

Has your business been affected by the Coronavirus pandemic? If so, there is some good news.

The Federal government has provided a fiscal support package of $189 billion for economic support against coronavirus; or ‘coronomics’ as some call it.

Some of the advantages of this stimulus package include:

• Cash-flow for businesses hiring staff:

During economic uncertainty, many organisations experience cash-flow problems: both when engaging staff and when paying salaries. The stimulus package is designed to help such employers maintain their cash-flow so they can retain their manpower and staff.

To be eligible for the package, you must meet the following criteria:

• Have a business turnover of less than $50 million

• Be incorporated before 12 March 2020.

All eligible employers will receive a minimum of $20,000, to a maximum of $100,000, cashback. To be eligible, you need to withhold tax on the salary and wages of your employees from January 1, 2020 to June 30, 2020.

The cash-back payments are paid to eligible employers automatically, and with no further paperwork, in two parts:

• The first is credited in your activity statement system between April and June 2020,
• The second is made between July and October 2020. This cash-back payment is totally tax-free.

• Jobkeeper Payments

Businesses with a turnover that has dropped by between 30 and 50 percent from March 1, 2020 are eligible to receive an additional cash injection of $1500 per employee per fortnight. Employers with a turnover of less than $1 billion and a reduction in turnover of 30 percent, are also eligible. If you have a turnover of more than $1 billion your turnover should have reduced by at least 50 percent.

The money is paid only to employees who are Australian citizens, permanent residents, or NZ sub-class ‘444 Visa’ holders. Temporary and part-time employees are also eligible, but casuals must have been employed continuously in a business for one year. An employee can receive the ‘Jobkeeper’ payment for one employer only.

If the employee receives less than $1500 per fortnight then the employer must pass the difference on to the employee. As for superannuation, you can decide whether or not to pay super on the difference, but you will still have to deduct PAYG on the full amount paid to the eligible employee.

• Wages subsidy when employing apprentices:

If your business employs apprentices, you may be eligible for a 50 percent wage subsidy of the trainee’s wage for a maximum nine months from January 1, 2020 to September 30, 2020. If you are a small business and cannot retain apprentices, the new employer who takes on the apprentice may be eligible for the subsidy. The maximum reimbursement available to each employer per eligible apprentice is $21,000; or $7,000 per quarter.

Any small business with less than 20 full-time working employees and able to retain apprentices is eligible for this wage subsidy, as long as the apprentice was enrolled into training with the business on March 1, 2020.

This subsidy is available only to those employers who register for the scheme by April 2020, and all claims must be lodged by December 31, 2020.

• Early superannuation access:

Eligible applicants must apply for early superannuation access before July 1, 2020 to receive a maximum sum of $10,000. Further superannuation amounts of $10,000 can be accessed after July 1, 2020 for approximately three months, with exact dates still to be determined.

Applicants must meet at least one of the following criteria:

• Be eligible for Centrelink payments

• Be declared redundant on or after January 1, 2020

• Have experienced a reduction in working hours by at least 20 per cent

• Be a sole trader, a suspended business, or have a reduction in turnover of at least 20 percent.

There is no exit tax in these cases and payments will also not affect Veterans’ Affairs or other Centrelink payments.

• Tax obligations relief:

The Australian Tax Office (ATO) is providing taxpaying relief for people experiencing difficulty in paying their taxes.

This includes:

• Those businesses with quarterly, GST-reporting tax-paying cycles may change their cycle to monthly; to enable quicker GST-refund access

• Special plans for low interest payments

• Provision of penalty and interest remission on tax liabilities incurred after January 23, 2020

• Lastly, keeping your Business Activity Statements (BAS) and tax returns up to date will help the ATO consider your tax deferment request more favourably.

• Supporting business investment through tax breaks:

The Federal government is offering limited, generous tax breaks by increment in the limit of instant depreciation and asset write-off, along with expansion of the small business eligibility, for any eligible business.

The scheme provides an immediate deduction on asset purchases up to $150,000 (the initial limit was $30,000). Small business turnover has also been increased 10-fold; from $50 million to $500 million, until June 30, 2020. This limit applies to every single asset and not just for the aggregate basis. This initiative also provides increased depreciation for back business investment. Eligible businesses can now deduct 50 percent of their asset costs to the eligible asset installation, while the balance cost can be treated as an asset cost. This 15-month initiative is designed to help small businesses grow through accelerated depreciation deductions.