The Australian Government announced a $66.1 billion support package, just 10 days after announcing an initial $17.6 billion to help protect the Australian economy from arising implications caused by the Coronavirus epidemic.
The following is a summary of the economic stimulus package:
|Boosting cash flow assistance for employers||Boosting cash flow for employers
Helping small and medium-sized businesses and now not for-profits (NFP) to cover the costs of employee wages and salaries (100% of PAYG withheld with a minimum $20,000 payment and up to a cap of $100,000)
|Covers amounts withheld between 1 January and 30 September 2020|
|Supporting apprentices and trainees
Wage assistance to help small businesses to keep their apprentices and trainees
|1 January 2020 to 30 September 2020|
|Support for Sole trader and employees who have been made redundant||Support for Sole Traders
Financial support by establishing a new $550 fortnightly coronavirus supplement payment.
|Commence from 27 April 2020|
|Access to Superannuation
Employees and sole traders who have been made redundant, or those who have their working hours reduced by 20 per cent or more, will now be allowed to access up to $20,000 of their superannuation
|As soon as possible|
|Temporary relief for financially distressed businesses||Temporary relief for insolvent trading
Temporarily increase the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive. Temporary relief for directors from any personal liability for trading while insolvent as a result of the Coronavirus health crisis.
|For 6 months|
A detailed explanation of business assistance offered:
Cashflow Assistance for Employers
The Government has enhanced this measure as part of the second economic response package. Under the enhanced scheme, employers will receive a payment equal to 100% of the tax withheld from salary and wages (up from 50%), 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. This additional payment continues cash flow support over a longer period, increasing confidence, helping employers to retain staff and helping entities to keep operating. 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.
If you’re reporting wages to the ATO on a quarterly basis (quarterly BAS): you will receive a 100% credit towards the PAYGW payable on wages for the March quarter (up to a total of $50,000). For the June and September quarters a credit equal to 50% of the total initial Boosting Cash Flow for Employers payment (up to a total of $50,000).
If you’re reporting wages to the ATO on monthly basis (monthly IAS): you will receive a 300% credit towards the PAYGW payable on wages for March and then use up the remaining $50,000 cap credit on April and May monthly IASs. For the June, July, August, September activity statements a credit equal to 25% of their total initial Boosting Cash Flow for Employers payment (up to a total of $50,000).
Example for Quarterly BASs:
March quarterly BAS lodged
W1 Wages: $60,000
W2 PAYG withholding: $20,000
Amount payable: $0 and Government credits $20,000
June quarterly BAS lodged
W1 Wages: $50,000
W2 PAYG withholding: $15,000
Amount Payable: $5,000 and Government credits $10,000 (equal to 50% of the total ‘Boosting for Cash Flow for Employers’ payments received in March quarter)
September quarterly BAS lodged
W1 Wages: $70,000
W2 PAYG withholding: $30,000
Amount Payable: $20,000 and Government credits $10,000 (equal to 50% of the total ‘Boosting for Cash Flow for Employers’ payments received in March quarter)
Supporting Apprentices and Trainees
Small businesses employing fewer than 20 full-time employees, who retain an apprentice or trainee, can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage paid during the 9 months from 1 January 2020 to September 2020. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter). Employers can register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020.
Further information is available at:
Temporary Insolvency Relief
Directors will now be temporarily relieved of their duty to prevent insolvent trading with respect to any debts incurred in the ordinary course of the company’s business, with the measure set to run for six months.
According to Treasury, egregious cases of dishonesty and fraud will still be subject to criminal penalties. Any debts incurred by the company will still be payable by the company.
Further, the government will increase the current minimum threshold for creditors issuing a statutory demand on a company under the Corporations Act 2001 from $2,000 to $20,000 for six months. The statutory timeframe for a company to respond to a statutory demand will also be extended temporarily from 21 days to six months.
Likewise, the threshold for the minimum amount of debt required for a creditor to initiate bankruptcy proceedings against a debtor will temporarily increase from its current level of $5,000 to $20,000. The time a debtor must respond to a bankruptcy notice will be temporarily increased from 21 days to six months.
Sole trader support
Permanent employees who are stood down or lost their employment; sole traders; the self-employed; casual workers; and contract workers will be able to access the new coronavirus supplement of $550 a fortnight under expanded access to the Jobseeker Payment, formerly known as Newstart. Payments are set to commence from 27 April.
The supplement will also be paid to both existing and new recipients of the JobSeeker Payment, Youth Allowance jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
Access to superannuation
Employees who have been made redundant, or those who have their working hours reduced by 20 per cent or more, or sole traders whose businesses have been suspended or see a reduction in turnover by 20 per cent or more will also now be allowed to access up to $20,000 of their superannuation.
Eligible individuals will be able to apply online through myGov to access up to $10,000 of their superannuation before 1 July 2020 and be able to access up to a further $10,000 from 1 July 2020 for approximately three months.
The government will also reduce the minimum drawdown requirements for account-based pensions and similar products by 50 per cent for the 2020 and 2021 financial years.
A package of bills will be introduced into Parliament in the final Autumn sitting week in March 2020 for Parliament’s urgent consideration and passage.
BAS and IAS Processing
We’ve had a large number of enquiries regarding the stimulus packages announced. We will prioritise completing BASs and IASs in order to help businesses secure the PAYGW credits, however, we rely on the business’ internal bookkeepers to code all the transactions to enable us to complete the BAS/IAS. Please note that BAS for the March 2020 quarter is due for lodgement and payment on 26 May (if lodging through a tax agent).
Tradies Accountant Team.