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Stimulus Package (Covid-19)
Anthony Van-Eyk • March 30, 2020
GOVERNMENT STIMULUS PACKAGE
Victorian Government offering grants to small business employers participating in JobKeeper
The Victorian Government are offering grants of $10,000 to small business employers that are participating in the JobKeeper program. The grant can be used for meeting operational costs including seeking financial advice to support business continuity planning. Applications close 1 June 2020. Click here
for more information on the grant. If you are after information on other support the Victorian Government is providing businesses impacted by COVID-19, go to www.business.vic.gov.au .
The Government is providing up to $100,000 to eligible small and medium sized businesses, and not-for-profits (including charities) that employ people, with a minimum payment of $20,000. Under the enhanced scheme from the first package, employers will receive a payment equal to 100 per cent of their PAYG withheld (up from 50 per cent), with the maximum payment being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to
$10,000. The payment will be available from 28 April 2020. The payments are tax free, there will be no new forms and payments will flow automatically through
the ATO. Small and medium business entities with aggregated annual turnover under $50 million and that employ workers are eligible. An additional payment is also being made from 28 July 2020. Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments
received.
Increasing the instant asset write-off
From 12 March 2020, the Government is increasing the instant asset write-off threshold from $30,000 to $150,000 and expanding access to include businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.
Accelerated Depreciation
The Government is introducing a time limited 15 month investment incentive (through to 30 June 2021) by accelerating depreciation deductions. Businesses with a turnover of less than $500 million will be able to deduct 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.
Apprentice Wage Subsidy
Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for up to 9 months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.
Household Stimulus Payments
On 12 March 2020, the Government announced it will provide a one-off $750 payment to social security, veteran and other income support recipients and eligible concession card holders. In addition to the $750 stimulus payment announced on 12 March 2020, the Government will provide a further $750 payment to social security and veteran income support recipients and eligible concession card holders, except for those who are receiving an income support payment that is eligible to receive the Coronavirus supplement. This second payment will be made automatically from 13 July 2020 to around 5 million social security, veteran and other income support recipients and eligible concession card holders. Around half of those that benefit are pensioners. The first payment will be made from 31 March 2020 to people who will have been on one of the eligible payments any time between 12 March 2020 and 13 April 2020.
Increased & Accelerated income Support
For the period of the Coronavirus supplement, there will be expanded access to the income
support payments listed above.
- Expanded access: Jobseeker Payment and Youth Allowance Jobseeker criteria will provide payment access for permanent employees who are stood down or lose their employment. The expanded eligibility applies to:
- sole traders
- the self-employed
- casual workers
- Contract workers who meet the income tests as a result of the economic downturn due to the Coronavirus. This could also include a person required to care for someone who is affected by the Coronavirus.
- Reduced means testing: Asset testing for Jobseeker Payment, Youth Allowance Jobseeker and Parenting Payment will be waived for the period of the Coronavirus supplement. Income testing will still apply to the person’s other payments, consistent with current arrangements.
- Reduced waiting times:
- The one week Ordinary Waiting Period has already been waived.
- To further accelerate access to payments, the Liquid Asset test Waiting Period (LAWP) and the Seasonal Work Preclusion Period (SWPP) will also be waived for recipients eligible for the Coronavirus supplement. People currently serving a LAWP will no longer need to serve that waiting period.
Loans
The second stimulus package also announced the Coronavirus SME Guarantee Scheme where the Government will guarantee 50% of new loans issued by eligible lenders to SME’s to get access to working capital to help them get through the impact of the Coronavirus.
Some parameters to be provided to these lenders are:
- Maximum total size of loans of $250,000 per borrower,
- Loans will be up to 3 years, with initial 6 months repayment holiday, and
- Loans will be unsecured.
Lenders still need to go through their normal credit assessment processes, and applications
need to be made directly with the bank.
DISTRESSED BUSINESS & INSOLVENCY
The Government will introduce amendments to temporarily relieve financially distressed businesses
by increasing the threshold at which creditors can issue a statutory demand and the time a company
has to respond to that demand. They will also provide temporary relief for directors from any
personal liability for trading while insolvent (to help companies deal with unforeseen events arising
from COVID-19). This is from the second stimulus package.
The City of Ballarat is offering Ballarat businesses and community groups some financial relief under the “Community and Business Support Package” Business may be eligible to receive a one-off grant of $500 and community groups receive $250. To qualify, the applicant must evidence a turnover reduction of at least 30% over a four-week period since 27 May 2021, have an ABN and a payroll of less than $1m. In addition, the business must operate within the City of Ballarat municipal boundary. Applications are now open and can be accessed here https://www.ballarat.vic.gov.au/supportpackage
Following on from the 2020 financial year when a simplified calculation for working from home expenses could be claimed as a tax deduction, the 2021 financial year will see similar deductions. As a reminder, the taxpayer has three options to claim working from home costs as follows: claim a rate of 80 cents per work hour for all additional running expenses. This is known as the “short cut method”. claim a rate of 52 cents per work hour for heating, cooling, lighting, cleaning, and the decline in value of office furniture, plus calculate the work-related portion of phone and internet expenses, computer consumables, stationery, and the decline in value of a computer, laptop, or similar device. claim the actual work-related portion of all running expenses, which taxpayers need to calculate on a reasonable basis. Expenses include the following: electricity expenses associated with heating, cooling, and lighting the area from which they are working and running items they are using for work. cleaning costs for a dedicated work area. phone and internet expenses. computer consumables (for example, printer paper and ink) and stationery. home office equipment, including computers, printers, phones, furniture, and furnishings; you can claim either the: - full cost of items up to $300 - decline in value (depreciation) for items over $300 It is important that the taxpayer has incurred the expense themselves for work purposes, they have not been reimbursed by their employer and that they are able to substantiate the expenses with a receipt.
The Federal Government is establishing a new Australian Business Registry Services (ABRS) to unify ASIC’s 31 business registers to be administered by the Australian Taxation Office. Director Identification Numbers will be the first new function of the ABRS, and this requirement will be a new requirement for all company directors. The director DIN will be a unique identifier which will identify the director forever, and the director will retain it even if they cease to be a director, change names or move overseas or interstate. The practice if Illegal phoenixing, i.e. moving a company’s business from one entity to another without paying outstanding liabilities, will be a major focus of the new DIN process, and will assist to identify those dishonest directors who are doing the wrong thing. According to the ATO website, directors don’t currently need to do anything, but the ATO said it will soon begin testing the new application process to deliver the registrations. When it’s time to apply, the ATO said directors will be able to use ABRS online services and will sign in using the myGovID app.
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