UPDATES: The Government Economic Stimulus Package
Monday 30th March 2020:
Scott Morrison today (30/03/2020) announced and pledged a A$130 billion to further save up to six million jobs.
The incentive is known as “Job Keeper” incentive, which eligible employers will have access to $1,500 per fortnight for each full-time or part-time staff on their payroll.
Casuals and sole traders who have been under employment or operation for more than 12 months will also be eligible for the payments.
Prove a reduction in turnover of at least 30% from a comparable period a year ago (of at least a month)
Ha a registered and genuine payroll system in place as at 1st of March 2020.
Payments are to be backdated from March 30th and are expected to be run for a total of 6 months in duration, but will not be paid until May.
Application & Monitoring:
To register for the Job Keeper incentive, head to www.ato.gov.au to register your interest.
The incentive will be reviewed on an ongoing basis by the ATO via the STP program, which requires employers to use the funds to pay their staff or face fines/penalties for breaking for law.
Notify all eligible employees that they are receiving the JobKeeper Payment
Ensure that each eligible employee receives at least $1,500 per fortnight (before tax)
Continue to provide information to the ATO on a monthly basis, including the number of eligible employees employed by the business.
Monday 23rd March 2020:
- Pubs, licensed clubs and hotels (excluding accommodation), places of worship, gyms, indoor sporting venues, cinemas, casinos to close from midday Monday, March 23. Restaurants and cafes to offer takeaway only. Schools and supermarkets can remain open. Read more.
- To help stop the spread of coronavirus, stay 1.5 metres away from others where possible, wash your hands regularly for at least 20 seconds with soap and water, avoid touching your face and if sick, stay home. Read more.
- Non-essential mass gatherings are banned for groups of more than 500 people outdoors, or more than 100 indoors. Read more.
- There are restrictions on visitors to Residential Aged Care Facilities to protect older Australians. Please check with individual facilities for further information.
- From 9pm AEDT 20 March 2020, our borders are closed except for Australian citizens, residents and immediate family members. All arrivals into Australia are required to self-isolate for 14 days, either at home or in a hotel. Read more.
- A second set of economic responses has been announced, bringing the total package to $189 billion to support workers, businesses and broader community in response to the Coronavirus. Read more.
Further amendment to the previously released $17.6 billion economic plan has increased funding responses to $189 billion.
Amendments to Cash flow assistance for businesses
Eligible employers may now be entitled to a tax free payment of $20,000 up to a maximum of $100,000 with payments expected to commence as early as the 28th of April 2020. This incentive is to help alleviate cash flow concerns and constraints for businesses with a turnover of less than $50 million who employ staff between March – June 2020. The amended amount each business receives will be calculated automatically upon lodgement of your IAS or BAS and will be now be 100% of the amount of PAYGW that is withheld from employees during that period, with a maximum payment of $50,000.
Further supplementary payments are being introduced during the July – October 2020 period whereby eligible entities will receive an additional payment equal to the total of the payments received during the March – June 2020 period. For example, if you receive $25,000 during March-June 2020 period and you remain eligible, you will receive a further $25,000 during July-October 2020 period.
Statutory Demands & Director Penalty Notices (DPN)
There will be a temporary increase in protection against statutory demands and the time allowed to respond. This relief also extends to directors from potential liabilities that may arise while trading insolvent. This is not to be mistaken with trading negligently but under the assumption that the issues arisen were directly related to the Coronavirus.
The ATO has commented that there is no “one size fits all” approach and each director and business will be treated individually on their own merit. If genuine circumstances are evident, the ATO is happy to accommodate reduction of payment, deferrals and further actions including Director Penalty Notices.
The key changes: Statutory minimum debt required to commence a claim increase to $20,000 from $2,000. Timeframe to respond to Statutory Demands increased to 6 months from 21 days. These changes also apply to Bankruptcy Notices.
Concessions to come into effect as at 1 July 2020 the WA payroll tax threshold to be increased to $1 million. This adjustment will come into effect 6 months earlier than first anticipated.
Payroll Tax Deferrals are available to small & medium sized businesses that have been directly affected by COVID-19 and can request deferral of their 2019/2020 monthly payroll tax payments until the 21st of July 2020. To be eligible, Australian Taxable wages must not be over $7.5million and that the entity in some way, shape or form has been directly affected. i.e. Reduced turnover, profit, supply contracts, operating hours etc.
Incentives available include a one-off $17,500 grant that will be paid to eligible business with Australian taxable wages between $1 million and $4 million. Grants will be paid from July 2020. You do not need to apply for this.
Affected individuals may be able to access up to $10,000 of their superannuation, tax free and will not affect any other means tested payments. This is expected to be available for both 2019/2020 and 2020/2021. Eligibility will require you to be unemployed, you were made redundant after 1st of January 2020, your working hours reduced by 20% or more or if you’re a sole trader and subsequently had to cancel your business operations or turnover fell by 20%.
Additionally, the government has announced a reduction in the minimum drawdown requirements by 50% for both 2019/2020 and 2020/2021 financial years. This will allow retirees time for the market to correct itself by leaving a larger amount of capital in an account based pension
Further to this, deeming for income testing purposes have been reduced by another 0.25 percentage points as lead by the RBA reducing interest rates.
12 March 2020
Optima Partners Review
The Government Economic Stimulus Package
It comes as no surprise that The Morrison Government has announced measures to try and stabilise the Australian economy. It was announced a $17.6 billion economic plan would be a starting point to keep Australians in jobs, and support small business and households alike.
Changes to the instant asset write-off threshold
It has been announced that instead of the instant asset write-off threshold reverting back to $1,000 for small business as at 1st of July 2020. It is now proposed that as at the 12th of March 2020 the threshold has been increased to $150,000. It is further proposed that this concession will be available to businesses with turnover of less than $500 million until 30 June 2020.
Further concessions are available on the acceleration on certain depreciating assets. It will be available to businesses with a turnover of less than $500 million which will allow the business to immediately deduct 50% of the cost on installation, while existing depreciation rules apply to the balance of the assets cost. This concession will only be available to new depreciating assets first installed or ready for use by 30 June 2021.
Cash flow assistance for businesses
Eligible employers may be entitled to a tax free payment of $2,000 up to a maximum of $25,000 with payments expected to commence as early as the 28th of April 2020. This incentive is to help alleviate cash flow concerns and constraints for businesses with a turnover of less than $50 million who employ staff between 1st of January 2020 and 30 June 2020. The amount each business receives will be calculated automatically upon lodgement of your IAS or BAS and will be 50% of the amount of PAYGW that is withheld from employees during that period, up to a maximum if $25,000.
Further support will be provided to assist small businesses with ongoing employment and training of approximately 120,000 apprentices and trainees. Employers who are eligible (less than 20 full-time employees) may be able to request a government subsidy of up to 50% of any wages paid to apprentices and trainees for up to nine months back dated to 1st of January 2020 and to end on 30 September 2020. Registration for the subsidy will be open early April 2020 with a maximum subsidy of $21,000 per apprentice/trainee.
Stimulus payments to households to support growth
$750 support payment to pensioners, other income support recipients, including eligible concession card holders. This payment will also be tax free and not counted for income testing purposes. These payments are expected to start rolling out as early as 31 March 2020.
If you have any questions about the Stimulus Package please feel free to contact our office on 6267 2200
Adam Kitching – OP Accountant