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Covid 19 Government Incentives

Australian Government’s Economic response to the Coronavirus

We provide accounting and bookkeeping services to small and mid-sized businesses and we understand the challenges faced by businesses due to COVID -19 pandemic. The Australian Government has been working in the national interest to support the businesses with the economic consequences of Coronavirus. Domestic and international Governments have been taking stringent actions to slow the speed of spread of Coronavirus to avoid the impact on economy of Australia.

How Covid-19 affects the Australian and global economies?

The outbreak of virus has expanded and is rapidly evolving challenges in more than 190 countries worldwide reporting the infections. The Government has taken proper measures to manage the outbreak and protect Australians. The Australian Government has committed to $3.6 billion to manage the current situation to strengthen the health system and protect vulnerable Australians.

Working with you for growth

Major economies in several countries including Italy, Spain, the UK, India, and others have already announced they’re in “lockdown” due to the Coronavirus threat. Even the Chinese economy has been adversely affected with the largest fall in the manufacturing sector in February. China’s interconnections with other countries are likely to impact several countries and decline the flow on the economic impacts all around the world.

How the Government is responding to improve Australian economy?

Support for businesses
  • Boosting cashflows for employers
  • Supporting trainees
  • JobKeeper Payment
  • Backing business investment
  • Temporary relief for financially distressed businesses

Boosting Cashflow for Employers

The Government is providing temporary cash flow to support small and mid-sized businesses and non-profit organisations to help employers retain their employees. The Australian Government will offer a payment equal to 100% of their salary and wages (up from 50%). The maximum payment is increased from $25,000 to $100,000 and the minimum payment has been increased from $2,000 to $10,000.

The Boosting cash flow for employers will be delivered in two sets from 28 April 2020 to eligible businesses. Additional payments will be made from 21 July 2020. Sole traders, companies, not-for-profit organisations, partnership firms and other financially distressed businesses, who employee staff, will be eligible to receive the cash flow boost.

Eligibility

  • Employers who have held an ABN on 12 March 2020 and continue to be active
  • Businesses having an aggregated annual turnover less than $50 million
  • Businesses that have made eligible payments that they are required to withhold from (even if the amount required to withhold is NIL).

First Tranche $10K – $50K Tax free payment

  • <$50m aggregated turnover
  • Held an ABN on 12 Mar 2020
  • Conducted business and earned assessable income in FY 2019 OR made supplies in course or further of an enterprise starting 1 July 2018 and ending before 12 March 2020
  • The higher of $10K or 100% PAYGW amount in activity statement for the period Jan to Jan 2020
  • Based on 100% of PAYGW amount in activity statement from Jan to June 2020 but capped at $50K

Second Tranche (July to October 2020)

  • <$50m turnover
  • Amount same as received in Tranche 1

Supporting Trainees

50% Subsidy apprentice wages
  • Wage subsidy of 50% of apprentice or trainee wages for up to 9 months
  • Maximum benefit $21K per apprentice or trainee

JobKeeper Payment

With the announcement of $130 billion JobKeeper payment to save the shockwaves from the Coronavirus pandemic, businesses would be able to access a wage subsidy from the Australian Government to continue paying their employees. The scheme focuses on protecting the lives and livelihoods of the employees and employers.

  • Fortnightly payment of $1500 per eligible employee from 30 March 2020, for maximum of 6 months
  • Businesses with a turnover <$1BN and decline in turnover >30%
  • Businesses with a turnover <$1BN and decline in turnover >50%
  • Maximum period 6 Months.

Eligibility – Employer

  • Carried on a business in Australia on 1 March 2020
  • It met the decline in turnover test as per above, before the end of the fortnight
  • It is not a Government body
  • It is not subject to the levy imposed by the Major Banks Levy Act 2017
  • It is not in liquidation or a provisional liquidator or liquidator has not been appointed to the the business or a trustee in bankruptcy had been appointed to the individual’s property.

Eligibility – Employee

  • Aged 16 years or over and Australian Resident or Australian Resident for the Income Tax Assessment Act 1936 and was the holder of a Subclass 444 (Special Category) Visa
  • Employed other than a casual employee
  • If casual employee – long term casual employee of the employer (minimum 12 months)
  • Not on parental leave pay and dad and partner pay and specified recipients of workers’ compensation.

Eligible employees must provide a notice to their employer agreeing:

  • to be nominated by the employer as an eligible employee under the JobKeeper scheme
  • that they confirm they have not agreed to be nominated by another employer; and
  • that they do not have permanent employment with another employer if they are employed as a casual employee with this employer.

Backing business investment

Instant Asset Write Off $150K

  • <$500M turnover
  • Asset must be installed and ready for use by 30th June 2020

Government Backed Loans – SME Guarantee Scheme

The Coronavirus SME Guarantee Scheme will provide small and medium sized business with timely access to working capital to help them get through the impact of the Coronavirus.

  • The Government will provide eligible lenders with a guarantee for loans with the following terms:

    • SMEs, including sole traders, with a turnover of up to $50 million.
    • Maximum total size of loans of $250,000 per borrower.
    • Loans will be up to three years, with an initial six month repayment holiday.
    • Unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.

Temporary relief for financially distressed businesses

Western Australia Payroll Tax
  • Threshold increased to $1m from 1 July 2020
  • Taxable wages <$7.5m apply to defer monthly tax payments until 21 July 2020 if affected by Covid-19
  • Taxable wages >$1m and <$4m grant of $17,500

TAS Payroll Tax

  • Hospitality, tourism and seafood businesses – Waived for the last 4 months of FY 2019-20
  • Other businesses with payrolls ≤ $5 million – able to apply for waiver for April to June 2020

Queensland Payroll Tax

  • Deferred Payroll Tax until 31 July 2020
  • Deferred date 3rd Aug 2020

NSW Payroll Tax

  • Taxable wages <$10m
  • Annual liability reduced by 25%
  • Tax-free threshold increased from $900k to $1 million from 1st July 2020

Victorian Payroll Tax

  • Taxable wages <$3m
  • Payroll tax refund of first 3 quarters
  • Last quarter – No payment required

Support for individuals

  • JobKeeper Payment
  • Payments to support households
  • Early release of superannuation
  • Reducing social security deeming rates

JobKeeper Payment Update

Further to our previous email regarding the Government announcement on JobKeeper payment, the legislation passed through the Parliament on 8 April. Yesterday we have received more details on the practical implementation of the JobKeeper payment from the Australian Taxation Office.

As you are aware the JobKeeper wages subsidy of $1,500.00 per fortnight is available to eligible employers passed on to eligible employees. Below is the summary for your reference only and it is general nature. More detailed information can be found on the ATO website.

1 – Check if your business is eligible

Please refer below for the eligibility test. With regards to the turnover test, please note that the turnover calculation is based on GST turnover. We are still awaiting confirmed details from the the ATO about applying the turnover test. We will update you as soon as it is confirmed by the ATO.

Per the ATO

‘if you work out that you qualify for the JobKeeper payments for the first fortnight because your turnover has declined by the relevant amount, you remain eligible and do not need to keep testing turnover in following months. However, you will have ongoing monthly reporting requirements. More information will be provided soon’.

Extension of JobKeeper Payment Program for Other Eligible Businesses

Other eligible businesses in the form of a company, trust or partnership, that do not employ staff, can also qualify for JobKeeper payments. JobKeeper payment can be made for only one nominated person for each entity even if there are multiple business owners. For example for a company – one shareholder or one director, for a trust – one adult beneficiary and partnership – one partner. We still awaiting details on the eligibility of such businesses from the ATO. We will provide more information as soon as it is available.

2 – Check employees eligibility and Employee Nomination Form

Please refer below for the employee eligibility test.

As an employer you will need to fill out the attached employee nomination form and provide it to your eligible employees to complete and sign and return it to you. Please note that this form does not need to be filed with the ATO. Please provide this form to us so that we can help you with the next steps.

Please note that you will need to continue to pay $1,500.00 to each eligible employee for the JobKeeper fortnight (first fortnight being 30 March to 12 April)

3 – Enrol for JobKepeer payments

The enrolment form for JobKeeper will be available from 20 April. This must be done by end of April. Please let us know if you require our assistance for the enrolment. In this form you will be required to provide you bank details and notify if you are claiming based on business participation (Eg sole trader).

4 – Apply for JobKeeper Payment

Application for JobKeeper payment will be available from 4 May. Please let us know if you require our assistance for the application. In this form you will need to either select eligible employees (prefilled by the ATO from the STP) or manually enter the details if you are not registered for STP.

Tips

– You should pay the minimum $1,500 before tax to each eligible employee each fortnight (starting with the fortnight 30 March – 12 April) to claim the JobKeeper payment for that fortnight. You need to continue to pay employees you are claiming

– For the first two fortnights (30 March – 12 April and 13 April – 26 April), the ATO will accept the minimum $1,500 payment before tax has been paid for each fortnight, provided it is paid by the end of April.

– If your eligible employees earn less than $1,500.00 per fortnight before tax, you still need to pay them $1,500.00 per for each fortnight (before tax) to claim the JobKeeper payment i.e. you cannot pay less than $1,500 before tax per fortnight and keep the difference.

– If the eligible employees earn more than $1,500.00 per fortnight, you will need to pay any additional balance after the JobKeeper payment.

– As JobKeeper payment is a reimbursement from the ATO it cannot be paid in advance.

– You are not required to pay super guarantee on additional payments that are made to employees as a result of JobKeeper payments. We will update this information once legislation is in place for superannuation.

Eligibility Test

Eligible Employers

– on 1 March 2020, they carried on a business in Australia or were a not-for-profit organisation that operated in Australia

– Employed at least one eligible employee on 1 March 2020. There are specific rules for self employed that are yet to be provided by the ATO

– Eligible employees are currently employed by their business (including those who are stood down or re-hired) for the fortnights they start to claim for, and continue to claim for

– Business has faced a decline in turnover by 30% (if their aggregated turnover is $1 billion or less) and 50% (if their aggregated turnover is $1 billion or more)

– Pay their eligible employees at least $1,500 before tax for the fortnights they start to claim for, and continue to claim for.

With regards to the turnover test, please note that the turnover calculation is based on GST turnover. with some changes We are still awaiting confirmed details from the the ATO about applying the turnover test. We will update you as soon as it is confirmed by the ATO.

Per the ATO

‘If you work out that you qualify for the JobKeeper payments for the first fortnight because your turnover has declined by the relevant amount, you remain eligible and do not need to keep testing turnover in following months. However, you will have ongoing monthly reporting requirements. More information will be provided soon’.

Eligible Employees

– Currently employed by an eligible employer on permanent part-time or full-time or casually employed for atleast 12 months;

– 16 years or over and Australia resident as at 1 March 2020 (within the meaning of the Social Security Act 1991, which requires that they reside in Australia, and are one of an Australian citizen, the holder of a permanent visa, or a Protected Special Category Visa Holder. Employee can also be an Australian tax resident who is a Special Category (Subclass 444) Visa Holder.

– Not in receipt of Parental Leave or Dad and partner pay from the Government

– Not in receipt of Workers Compensation for total incapacity for work

You cannot claim for any employees who:

– Were first employed by you after 1 March 2020, or

– Left your employment before 1 March 2020, or

– Have been, or have agreed to be, nominated by another employer.

Please contact us if you need assistance with any of the above, as we are here to help our clients and their businesses.

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