Coronavirus: Guiding you through the crisis

Further to the second Stimulus Package announced 22 March by the Federal Government, here is an update on selected initiatives that target Altus clients.

While the Stimulus Package has not been legislated, it is expected to be passed shortly and we will have more detail about the specifics. However, the following is a summary of Federal and State initiatives along with non-legislated, administrative assistance.

Cash flow

Bank Funding

SMEs with a turnover of up to $50 million may be eligible to receive loans under an SME Guarantee Scheme. The Government will provide eligible lenders with a 50% guarantee for unsecured loans with the following terms:

• Maximum total size of loans of $250,000 per borrower.
• The loans will be up to three years, with an initial six month repayment holiday.
• The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.
• Is a drawdown facility so no interest is charged until funds are actually accessed and drawn down

The Scheme will commence by early April 2020 and be available for new loans made by participating lenders until 30 September 2020.

Bank Payments

Australian banks have undertaken to defer loan repayments, mortgages and lease repayments for up to 6 months. Deferrals require contacting the banks directly to negotiate deferrals.

Queensland

• Up to $250,000 in low-interest loans (interest free for first 12 months) for funding to retain staff.

Victoria

• Establishment of a $500 million business support fund to target hard hit sectors such as hospitality, tourism, accommodation, arts and entertainment, and retail.

ATO

• Deferring by up to six months the payment date of amounts due through the business activity statement (including PAYG instalments), income tax assessments, fringe benefits tax assessments and excise.
• Allow 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 businesses to vary Pay As You Go (PAYG) 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.
• Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities.

Employers will still need to meet their ongoing super guarantee obligations for their employees.

Employee Payments

Tranche 1

• Equal to 100% of withholding on salary and wages up to a maximum $50,000 to 30 June 2020.
• Made as an automatic credit to activity statements.
• Where this results in a refund (after netting off against other activity statement liabilities – GST, FBT instalments, etc) a cash payment will be made within 14 days.
• A minimum credit of $10,000 will apply.
• Available to employers established prior to 12 March 2020.

Tranche 2

• From 1 July, an additional credit equal to the FY 2020 payment will be applied.
• The second tranche will be applied over 4 months commencing with the June period to the end of September.
• The total credit will be based on the amount received under the first tranche credited as 25% of tranche 1 over a 4 month period.

Over the two periods a minimum of $20,000 can be received up to a maximum of $100,000.

• The ATO will automatically calculate the payment.
• The payment will be tax-free.

Payroll tax

New South Wales

• For businesses with wages $10m and less:
  • No payments for March, April or May;
  • 25% reduction in FY 2020 liability when lodging annual reconciliation.

Queensland

• Defer lodging and reporting payroll tax until 31 July 2020.

Victoria

• For businesses with wages $3m and less:
  • Payroll tax waived for FY 2020;
  • Reimbursement for payroll tax already paid;
  • Deferral on September 2020 quarter payment.

Land tax

Victoria

• Commercial tenants in government buildings can apply for rent relief
• 2020 land tax payments will be deferred for small businesses

Creditor Action Curtailment

• A temporary increase in the threshold at which creditors can issue a statutory demand from $5,000 to $20,000 on a company and the time companies have to respond to statutory demands they receive extended from 21 days to 6 months;
• A temporary increase in the threshold for a creditor to initiate bankruptcy proceedings from $5,000 to $20,000, an increase in the time period for debtors to respond to a bankruptcy notice extended from 21 days to 6 months, and extending from 21 days to 6 months the period of protection a debtor receives after making a declaration of intention to present a debtor’s petition;
• Temporary relief for 6 months for directors from any personal liability for trading while insolvent.

Personal

Ability to access up to $20,000 in superannuation through:

• a maximum payment of $10,000 before 1 July 2020; and
• up to a further $10,000 from 1 July 2020. The second payment will likely need to be before 30 September but is to be confirmed through legislation.

To apply for early release you must satisfy any one or more of the following requirements:

• you are unemployed; or
• you are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or
• on or after 1 January 2020:
  • you were made redundant; or
  • your working hours were reduced by 20 per cent or more; or
  • if you are a sole trader — your business was suspended or there was a reduction in your turnover of 20 per cent or more.

Applications can be made through the myGov website.

Immediate Action Points

• Prepare a cash flow forecast based on projected overheads and ability to defer some of these (eg rent reductions, moratorium on bank payments, etc)
• Contact State Authorities where access to cash support or participation in loan programs is available.
• Contact ATO re deferral of payments. This may be up to 6 months
• Contact banks to discuss your situation and look for payment moratorium. Some banks are offering up to 6 months on business and personal loans
• Contact landlord to discuss rent reductions or rent-free period
• March Activity Statement variation of PAYG company income tax instalment and refund September and December instalments. Note, this may just reduce your March quarter net liability
• Review your staffing needs during the crisis and consider in conjunction with Fair Work Act, Unfair Dismissal and other requirements/obligations
• Look to access super where hours have been reduced and you are eligible to access superannuation for a tax-free payment

Stay tuned. As this is a quickly evolving event the Federal and State governments are reassessing and updating stimulus/relief efforts. We will up date you as new initiatives are announced.

Links for Further Detail

QLD

https://www.ditid.qld.gov.au/covid-19/business-support

Victoria

https://www.sro.vic.gov.au/news/new-tax-measures-support-businesses

https://www.premier.vic.gov.au/economic-survival-package-to-support-businesses-and-jobs/

NSW

https://www.revenue.nsw.gov.au/taxes-duties-levies-royalties/payroll-tax

Federal

https://treasury.gov.au/coronavirus

ATO

https://www.ato.gov.au/Media-centre/Media-releases/Support-measures-to-assist-those-affected-by-COVID-19/

Banks

https://www.ausbanking.org.au/campaigns/financial-hardship/