UPDATE: Coronavirus COVID-19 – individuals & business

Dear clients,

The novel Coronavirus COVID-19 is continuing to have an increasing effect on our community. Like all Australian businesses we have been doing everything we can to keep our team and clients safe. At this stage we are working at our offices during regular business hours, but we will continue to take guidance from the Federal and State Governments.

The way we will be working and available in the coming days, weeks, and potentially months, will change. We will continue to keep you up to date as our situation changes.

If you have a small business with employees, your cash flow can be bolstered by stimulus measures (listed below under Federal Government Support Package) which rely on the lodgement of your March 2020 BAS. We encourage early lodgement as the COVID-19 Support Package refunds will be made available to employers from April 28th. There is no need to apply for this assistance it will be applied by the ATO automatically.

For businesses, please ensure that in the coming months your financials are kept up to date so that we can assist you with monitoring profitability, overheads and debtor/creditor balances.

For individuals who are expecting an income tax refund and have not yet lodged their 2019 returns, we can work with you by email and/or phone to ensure your returns are lodged as soon as possible.

 

ATO Support Measures

A series of administrative measures have been implemented by the ATO to assist with financial difficulty as a result of COVID-19. The options available to assist businesses include:

  • Deferring, by up to six months, the payment date of amounts due on lodgement of Business Activity Statements (including PAYG Instalments), income tax assessments, Fringe Benefits Tax (FBT) assessments and excise.
  • Allowing businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get quicker access to GST refunds they may be entitled to.
  • Allowing variation of PAYG Income Tax Instalment amounts to zero for the March 2020 quarter. Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters.
  • Remittance of any interest and penalties, incurred on or after January 23rd 2020 that have been applied for tax liabilities.
  • Allowing affected businesses to pay their existing tax liabilities by entering into low interest payment plans.

Please note that employers will still need to meet their ongoing superannuation guarantee obligations for all of their employees. The ATO will also work with individuals experiencing financial hardship as a result of the impacts of COVID-19 and where necessary will apply appropriate tax relief for serious circumstances, such as not being able to pay for food or accommodation.

 

State Government Support Package

On Saturday 21st March 2020, the state Government announced the “Economic Survival Package to Support Businesses and Jobs”. As part of the Package the Government will provide the following:

  • Full payroll tax refunds for the 2019/20 income year to small and medium sized businesses with a payroll of less than $3 million. Payments will start being received this week. Please note that these payments are a refund not a loan.
  • The same businesses will also be able to defer any payroll tax for the first three months of the 2020/21 income year. The payments will be deferred until 1st January 2021.
  • An email will be sent to your business from the State Revenue Office outlying application instructions for this refund, please look out for it.
  • Commercial tenants in government buildings will be able to apply for rent relief and private landlords are being encouraged to provide the same relief.
  • 2020-year land tax payments will be deferred for eligible small businesses. This relief measure is only available where total taxable value of land is under $1,000,000.

Other measures include establishing a $500 million Business Support Fund and $500 million Working for Victoria Fund, and facilitating job matching to help Victorians find short-term or casual roles.

 

Federal Government Support Package

Business

  • Tax-free payments up to $100,000 for small business and not-for-profit employers. An increase in the previously announced initial tax-free payments for employers to a maximum of $50,000. In addition to this, a second round of payments will be made up to a maximum of $50,000, accessible from July 2020.

(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. Please be aware that the business must have been registered for PAYG withholding from 12 March, 2020 to be eligible.)

  • Solvency safety net – temporary six month increase to the threshold at which creditors can issue a statutory demand on a company from $2,000 to $20,000, and an increase in the time companies have to respond from 21 days to six months. Directors also are provided with temporary relief from personal liability for trading while insolvent for six months.
  • Access to working capital – Introduction of a Coronavirus SME guarantee scheme protecting financial institutions by guaranteeing 50% of new loans to SMEs.
  • Sole traders and self-employed eligible for Jobseeker payment – the eligibility criteria to access income support relaxed for the self-employed and sole traders.
  • Temporary relief from some Corporations Act requirements

 

Individuals

  • Early release of superannuation – individuals in financial distress 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.
  • Temporary reduction in minimum superannuation draw down rates – superannuation minimum drawdown requirements for account based pensions and similar products reduced by 50% in 2019-20 and 2020-21.
  • Deeming rates reduced – from 1 May, superannuation deeming rates reduced further to a lower rate of 0.25% and upper rate of 2.25%.
  • Supplements increased, access extended and eased – for 6 months from 27 April 2020:

A temporary Coronavirus supplement of $550 will be paid to existing income support recipients (people will receive their normal payment plus $550 each fortnight for six months.)
A second one-off stimulus payment of $750 will be paid automatically from 13 June 2020 to certain income support recipients (in addition to the payment made from 31 March 2020)
Eligibility for access to income support eased to include sole traders and the self-employed, and to those caring for someone infected or in isolation.
Waiting periods and assets test temporarily waived.

  • Bankruptcy safety net – temporary six month increase to the threshold for the minimum amount of debt required for a creditor to initiate bankruptcy proceedings against a debtor from $5,000 to $20,000.

 

Managing Employees

If employee tests positive with COVID-19

  • The employee must notify the workplace immediately and take sick leave.
  • All other employees must leave the business premise and self-quarantine for 14 days.
  • Employees who are not sick but in self-isolation will be required to take annual leave, long service leave or unpaid leave.

Reduced workflow

There are a range of options available in order to lawfully secure business continuity during the current economic climate. Options could include:

  • Standing down employees if work stoppages are required
  • Directing employees to perform alternate duties or work at alternate locations
  • Entering into agreements with employees to work reduced hours, have temporary salary reductions, take accrued personal, annual and/or long service leave, or other flexible options
  • Reducing the non-permanent workforce

As the situation is changing so quickly, keep yourself updated using government websites and read the material that is being issued by business groups and organisations.

 

More Information – Fact Sheets

Cash flow assistance for business

Early access to super

Support for retirees to manage market volatility

Payments to support households

Temporary relief for financially distressed businesses

Support for individuals

Support measures to assist those affected by COVID-19