Tax Partners Australia can help you to understand and navigate the options available to you.
NSW Government SME GRANT: $10,000
On 3 April, the NSW government announced a grant for small businesses affected by COVID-19.
To be eligible, businesses will need to:
• Have between 1-19 employees and a turnover of more than $75,000
• A payroll below the NSW Government FY20 payroll tax threshold of $900,000
• Have an ABN as at 1 March 2020, be based in NSW and employ staff as at 1 March 2020
• Be highly impacted by the Public Health (COVID-19 Restrictions on Gathering and Movement) Order 2020 issued on 30 March 2020
• Use the funding for unavoidable business costs such as utilities, overheads, legal costs and financial advice
• Provide appropriate documentation upon application.
Applications for a small business grant of up to $10,000 are now available through Service NSW and remain open until 1 June 2020.
On 30 March 2020, the Government announced the “Job Keeper Payment” to assist in keeping employees in jobs. Through this payment workers will receive a fortnightly payment of $1,500 (before tax) through their employer.
Employers are eligible if:
• On 1 March 2020 they carried on a business in Australia and had an ABN
• They satisfy the decline in turnover test (see below)
• Your business is not in one of the ineligible categories
Decline in Turnover Test
The business only needs to satisfy the test once – there is no need to retest continuously.
GST Turnover must fall by:
• 30% for entities with turnover of less than $1b
• 50% for entities with turnover of more than $1b
• 15% for not for profit entities (must be registered with ACNC)
The decline can be calculated by comparing one of:
• GST turnover for March 2020 with March 2019
• Projected GST turnover for April 2020 with April 2019
• Projected GST turnover for quarter starting April 2020 with same quarter in 2019
Further alternate tests are to follow (eg for entities that have not been trading for 12 months).
Employees are eligible if:
• they are currently employed by the eligible employer (including those stood down or re-hired);
• were employed by the employer at 1 March 2020;
• are full-time, part-time, or long-term casuals (a casual employed on a regular basis for longer than 12 months as at 1 March 2020);
• are at least 16 years of age;
• were not in receipt of government Paid Parental Leave or Dad and partner pay;
• were not in receipt of workers compensation for total incapacity for work;
• are an Australian citizen, the holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder;
• are not in receipt of a JobKeeper Payment from another employer;
• the employee agrees to be nominated by you – see JobKeeper Employee Nomination Form
• they have been paid the minimum $1,500 per fortnight
If employees are eligible for the JobKeeper payment; this may impact their ability to receive any income support payments from Services Australia. They will need to disclose this income to Services Australia.
Sole Traders will also be eligible if they meet the turnover reduction test, can provide an ABN and can nominate an individual to receive the payment directly. The ATO will release further information on this in the coming weeks. They cannot be a permanent employee of another business.
Business Owners (Shareholder in a Company, Adult Beneficiary of a Trust or Partner in a Partnership) actively engaged in their business (but not as an employee) can also qualify for JobKeeper payments. This is limited to one entitlement for each entity even if there are multiple business owners or participants. The ATO is providing further information soon about the eligibility of these businesses for the JobKeeper payment.
Employers are asked to register their intent to apply on the ATO website
Employees and Employers must sign a JobKeeper Employee Nomination Form. We suggest that you begin to have employees complete these forms now.
From 20 April, we will be able to Enrol clients using our ATO Online Services system.
From 4 May we will be able to Apply to claim the JobKeeper payment on behalf of our clients using our ATO Online Services system.
Business can Enrol (from 20 April) and Apply (from 4 May) themselves using the Business Portal and their MyGovID.
Following this there is a monthly deceleration which must be lodged to the ATO.
The payments will be made by the ATO monthly in arrears to the employers with the first payment expected the first week of May.
Boosting cash flow for employers
- A tax-free payment of 100% (up from 50%) of the PAYG withheld from salary an wages for businesses with less than $50 million turnover
• Businesses will receive a minimum of $20,000 and a maximum of $100,000 ($10,000 minimum for FY20 and $10,000 minimum for FY21; $50,000 maximum for FY20 and $50,000 maximum for FY21)
• You do not need to do anything to receive this payment; aside from lodging your BAS
• The ATO will automatically provide a credit to the Activity Statement upon lodgement, if this creates a refund the ATO will make the payment within 14 days
Supporting apprentices and trainees
- $7,000 each quarter in wage subsidies for employers with apprentices.
• Subsidies will be backdated to 1 January 2020 and will run until 1 September 2020.
• To access this please contact your local apprentice service provider.
Relief for financially distressed businesses
- A temporary increase in the threshold at which creditors can issue a statutory demand on a company from $2,000 to $20,000
• A temporary increase in the time companies have to respond to statutory demands they receive from 21 days to six months. This applies for six months.
• Temporary relief from personal liability for insolvent trading will apply with respect to debts incurred in the ordinary course of the company’s business. 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.
Support for immediate cash flow for SMEs
The Government will provide a guarantee of 50 per cent to SME lenders for new unsecured loans to be used for working capital. This will enhance these lenders’ willingness and ability to provide credit.
The Government will provide eligible lenders with a guarantee for 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
These loans will still be subject to lenders’ normal credit assessment processes.
For businesses with less than $500 million turnover the government has brought in some initiatives to assist businesses with investment. Including:
• Instant Asset Write-Off; the small business instant asset write-off has increased to $150,000, this is effective now until 30 June 2020.
• Accelerated depreciation for eligible business assets
NSW Government Incentives – Payroll & Fees
- Payroll Tax will be waived for business will payrolls of less than $10 million for the next 3 months (March, April and May)
• When lodging the annual reconciliation for FY20, the calculation for the full year payroll tax will discounted by 25%
• The payroll tax threshold has been increased to $1m ahead of schedule for the FY21 year
• A broad range of fees and charges for small businesses including bars, cafes, restaurants and tradies will be waived
Managing your ATO Obligations
The ATO has brought in a number of administrative measures to assist businesses who are experiencing difficulty. These are not automatic to every business so it is important to keep the communication open with both the ATO and your Bookkeeper or Accountant and work with them to ensure the best outcome for your business.
• Deferring by up to four 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
• Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low interest payment plans.
Our advice in this regard is to lodge on time and then communicate with the ATO (or ask us to do this for you) immediately after if you need relief.
Your obligations to your employees
There are many questions around employee issues such as forced shut downs, employees taking leave, employees not able to work from home. Please refer to Fair Work who have put together some fact sheets around what is the employers and employees obligations at this time.
A reminder to be mindful of scams during this time as scammers try to take advantage of the most vulnerable people during these uncertain times.