Federal Budget delayed to October
The annual Federal Budget will be postponed to Tuesday, 6 October 2020, to give the Government time to assess the impact of the coronavirus outbreak, the Prime Minister has confirmed. It was originally planned to be handed down on 12 May 2020.
The Federal Parliament will meet on Monday, 23 March 2020, with the sole purpose of passing urgent legislation to implement measures in the stimulus package.
SUMMARY – BOOSTING CASH FLOW
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. These payments will help businesses’ and not-for-profits’ cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff.
On 12 March 2020, the Government announced the Boosting Cash Flow for Employers measure. The measure initially provided up to $25,000 to business, with a minimum payment of $2,000 for eligible businesses. Small and medium sized business entities with aggregated annual turnover under $50 million and that employ workers are eligible.
Under the enhanced scheme, employers will receive a payment equal to 100 per cent of their salary and wages 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.
An additional payment is also being introduced in the July – October 2020 period. Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments they have received. This means that eligible entities will receive at least $20,000 up to a total of $100,000 under both payments.
The cash flow boost provides a tax free payment to employers and is automatically calculated by the Australian Taxation Office (ATO). There are no new forms required. The payment will be delivered by the ATO as an automatic credit in the activity statement system from 28 April 2020 upon employers lodging eligible upcoming activity statements. The payments will only be available to active eligible employers established prior to 12 March 2020.
Eligibility – Additional payment – To qualify for the additional payment, the entity must continue to be active.
SUMMARY – SUPPORTING APPRENTICES AND TRAINEES
Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage paid during the 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.
The subsidy will be available to small businesses employing fewer than 20 full-time employees who retain an apprentice or trainee. The apprentice or trainee must have been in training with a small business as at 1 March 2020.
SUMMARY – SUPPORT FOR BUSINESS INVESTMENT
The instant asset write-off threshold is increased 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 from 12 March 2020.
There is a 15 month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, 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.
Government underwritten, Cash flow loans for SMEs
• The Government will provide a guarantee of 50% of new loans written by banks and SME lenders to support new short-term unsecured loans to SMEs.
Important clarification – this does not mean the Federal Government is issuing loans directly. It means that the Government is providing a guarantee to banks and SME lenders to reduce their risk to provide unsecured loans to SMEs that need the cash for working capital.
We are expecting a new type of loan product issued by the banks and lenders, tailored for SMEs that have been directly disrupted by COVID-19
How to apply?
– Contact your bank/lending institution about this package.
– Refer to the ‘Coronavirus SME Guarantee Scheme’ and ask what new loan products are available to assist.
NSW Government Announcement
This package has two key components — $700 million in extra health funding and $1.6 billion in tax cuts to support jobs. Key elements of the NSW COVID-19 package includes:
• $700 million extra funding for NSW Health. This will assist in doubling ICU capacity, preparing for additional COVID-19 testing, purchasing additional ventilators and medical equipment, establishing acute respiratory clinics and bringing forward elective surgeries to private hospitals.
Business support and jobs
• $450 million for the waiver of payroll tax for businesses with payrolls of up to $10 million for three months (the rest of 2019-20). This means these businesses will save a quarter of their annual payroll tax bill in 2019-20
• $56 million to bring forward the next round of payroll tax cuts by raising the threshold limit to $1 million in 2020-21
• $80 million to waive a range of fees and charges for small businesses including bars, cafes, restaurants and tradies
• $250 million to employ additional cleaners of public infrastructure such as transport assets, schools and other public buildings
• more than $250 million to bring forward maintenance on public assets including social housing and crown land fencing
• $500 million to bring forward capital works and maintenance.
Payroll Tax Concessions
For businesses whose total grouped Australian wages for the 2019/20 financial year is less than $10M:
• Will have their annual tax liability reduced by 25% when they lodge their annual reconciliation, which is due on 28 July.
• For those customers who lodge and pay monthly will have no payment required for the months of March, April or May 2020 will be required. ie. the payroll tax is completely waived
• When lodging your annual reconciliation, you will still need to provide wage details paid in these months and will receive the benefit of a 25% reduction in the amount of tax you would have had to pay for 2019-20.
How to apply?
This will be automatically applied for the payroll tax returns covering above mentioned periods.
Federal Budget delayed to October