Date posted: 31/03/2020 10 min read

Coronavirus relief measures in Australia

Sydney-based Raul Valois CA sent his clients this handy summary of the assistance available during the COVID-19 emergency.

In Brief

  • The JobKeeper wage subsidy is the latest COVID-19 business support announced in Australia, available to businesses and sole traders that have suffered a big slump in revenue.
  • Banks are offering loan repayment deferrals and other support, and the ATO is open to payment deferrals and remitting interest and penalties on outstanding payments.
  • State and territory governments are deferring payroll tax payments and other fees.

This document summarises the key measures, eligibility requirements and relevant dates announced for coronavirus-related financial assistance by the Australian government and NSW state government; information about ATO assistance; and details of support from the banking sector.

There are links to information on assistance being offered in other Australian states and territories.

Support from the federal government

As at 30 March 2020, Australia’s federal government has announced three rounds of financial measures to support the economy through the coronavirus pandemic. For SMEs there is a strong focus on providing assistance for maintaining and retaining employees over the next six months and stimulating business investment.

“For SMEs there is a strong focus on providing assistance for maintaining and retaining employees over the next six months and stimulating business investment.”
Raul Valois CA
Here’s a summary:

Support for individuals

Dates

Coronavirus supplement

$550 per fortnight payment.

Eligibility:

Payable to individuals in receipt of, or who become eligible for:

  • JobSeeker Payments
  • Youth Allowance JobSeeker Payments
  • Parenting Payments
  • Farm Household Allowance
  • Special Benefits

 

Payable over the next six months. This is in addition to the eligible income support already paid.

 

 

 

 

 

 

 

Additional stimulus payment

$750 stimulus payment to eligible individuals.

This is in addition to an earlier $750 payment amount that was included in the first Stimulus Package announced on 12 March 2020.

Eligibility:

  • Pensioners
  • Social security recipients
  • Veterans
  • Concession card holders
  • Other income support recipients

 

Mid-April 2020 – first payment Mid-July 2020 – second payment

Note: The July 2020 second payment is not available to recipients of the Coronavirus Supplement.

 

 

 

 

 

 

Superannuation withdrawals

Impacted individuals will be allowed to withdraw up to $20,000 from their superannuation funds.

Eligibility:

  • Unemployed people
  • Those currently eligible for Job Seeker payments, Parenting Payments, a special benefit or Farm Household Allowance

Eligibility on or after 1 January 2020:

  • An employed individual is made redundant
  • Your working hours reduced by 20% or more
  • You are a sole trader whose business has been suspended or there has been a reduction in turnover of at least 20%.

Between April and 30 June 2020, eligible people can access up to $10,000.

During the income year ending 30 June 2021, eligible people can access up to the remaining $10,000.

On or after 1 January 2020.

 

 

 

 

 

 

Coronavirus relief measures in Australia

Support for business and not-for-profits

Dates

Employment support

JobKeeper wage support payment is a flat payment to employers of A$1500 per fortnight for six months for each employee. It is designed to keep staff in the business. (Employers will not have to pay the super guarantee levy on that amount.)

It can be claimed for staff that were on the books at 1 March 2020. Subsidy can be claimed for full-time and part-time employees, and for sole traders and casuals who have been with the employer for 12 months. (New Zealanders in Australia on 444 visas are eligible, but not other foreign workers on temporary visas.)

The self-employed and sole traders with NO employees can also claim the wage support if their revenue has dropped substantially. 

Eligibility

  • Small and medium businesses and not-for-profits that have had a drop in revenue of 30% or more.
  • The self-employed and sole traders that have had a drop in revenue of 30% or more.
  • Businesses with annual turnover of A$1 billion or more that have had a drop in revenue of at least 50%.
  • Charities registered with the Australian Charities and Not-for-profits Commission (ACNC) that have had a turnover decline of 15% or more. 

Early May 2020 – first payment due, but the amount will be backdated to 30 March 2020. Administered through the ATO.

 

 

 

 

 

 

 

 

 

 

 

This is in addition to tax-free payments to eligible businesses that employ people. The benefit is capped at A$100,000 with a minimum payment of A$20,000.

This measure is also available to not-for-profit organisations.

Eligibility:

  • Businesses and not-for-profits with aggregated annual turnovers under A$50M
  • Businesses and not-for-profits who need to employ workers
  • Businesses must be active eligible employers that hold an ABN as at 12 March 2020.

NB: An integrity rule applies designed to deny payments where artificial or contrived arrangements are implemented for the dominant purpose of accessing or increasing these payments. General interest charges may also apply to such payments received and later denied.

The payments will be equal to the lesser of 100% of the PAYG withheld on the employee’s salary and wages or A$50,000 for both the year ended 30 June 2020 and the next financial year from 1 July 2020 to 30 September 2020. As already noted, a minimum payment of A$20,000 applies under this measure for eligible parties.

The payments will be provided by the ATO as a credit via the quarterly or monthly Activity Statements as follows:

  • Quarterly lodgers – March 20 and June 20 quarter BAS
  • Monthly lodgers – March 20, April 20, May 20, June 20 Activity statements
    The bulk of the 2020 financial year entitlement is paid in the earlier March 20 quarter BAS.

NB: Eligible businesses that are not required to withhold tax from employees’ salary and wages will receive a minimum payment of A$20,000 – 50% or A$10,000 is paid in the March 20 quarter. The other 50% is paid as A$5000 in June 20 quarter and A$5,000 in September 20 quarter.

Instant asset write-off

Eligible businesses will be able to deduct in full the cost of acquiring eligible assets costing less than A$150,000 (on a “per asset basis”).

Eligibility:

  • All businesses with aggregated turnover of less than
    A$500M until 30 June 2020
  • Assets can be new or used

Assets need to be installed ready for use or first used before 30 June 2020.

Deduction claimed in the businesses 2020 Financial Year Income Tax Return.

 

 

 

 

Business investment allowance

Eligible businesses will be allowed to claim a business investment allowance comprising the normal depreciation permitted on the asset item and a bonus 50% depreciation deduction.

Eligibility:

  • All businesses with aggregated turnover of less than
    A$500M
  • New assets only
  • No limit to the cost of acquiring the individual asset

Only for assets acquired after 12 March 2020.

Assets need to be installed ready for use or first used on or before 30 June 2021.

 

 

 

 

 

Insolvency and directors’ personal liability relief

A raft of measures designed to provide extended protection to financially distressed businesses arising from the economic impacts of the COVID-19 health crisis. These include:

  • A temporary increase in the threshold for a creditor to initiate bankruptcy proceedings
  • A temporary increase in the threshold (from A$2000 to
    A$20,000) that creditors can issue a statutory demand
  • A temporary increase in the time the debtor has to respond to both statutory demands and to initiated bankruptcy proceedings
  • Temporary relief for directors of companies from any personal liability for trading while insolvent

These measures extend the debtor response periods to six months (previously 21 days).They provide time extension and increased $ trigger points to protect and shield impacted businesses and company directors from any Insolvency and personal liability actions.

 

 

 

 

 

Support from the New South Wales government

The NSW government has announced the following business assistance measures.

Support for business 

Dates

Employment support – NSW Payroll Tax

Payroll tax is waived for Apr 20, May 20 and Jun 20 for businesses with a payroll of less than A$10M, and a deferral of payment of payroll tax for an additional three months. 

Eligibility:

  • Businesses with payrolls of up to A$10M for the three months to 30 Jun 20
  • Need to employ workers and/or eligible contractors

 

 

Apr 20, May 20 and Jun 20 Payroll Tax.

 

 

 

 

 

 

 

 

Deferral of payment of payroll tax for six months for businesses with payroll over A$10M (up to A$4 billion deferred).

Eligibility:

  • Businesses with taxable payrolls of over A$10M

Expected to apply from next monthly reporting.

 

 

Employment support – NSW Payroll Tax

Payroll tax threshold is increased to A$1M from 1 July 2020 (previously A$900,000).

 From 1 July 2020

 

Waiver of a range of fees and charges

Applies to small businesses including bars, cafes, restaurants and tradies. Includes:

  • deferral of the parking space levy for six months
  • deferral of rents for six months for commercial tenants with less than 20 employees in all NSW government-owned properties.
 

Small Business Support Grant

The NSW COVID-19 Small Business Support Grant of A$10,000 will be available to eligible NSW small business owners.

Eligibility:

  • If the business operates in an industry highly impacted by the Public Health Order 2020 issued 30 March (listed below) and has suffered a decline in turnover of 75%
  • It has between 1-19 employees and an annual payroll below A$900,000 (the NSW payroll tax threshold)
  • It has an annual turnover of more than A$75,000
  • Was registered with an Australian Business Number (ABN) at 1 March 2020
  • Has an ABN and employs staff in NSW at 1 March 2020
  • Has unavoidable fixed costs not otherwise the subject of other NSW and federal government financial assistance measures.

Highly impacted industries

Eligible industries are those that have been subject to closure or are highly impacted by NSW government health directions in relation to COVID-19 and include:

  • Retail trade
  • Accommodation and food service
  • Rental, hiring and real estate services
  • Administrative and support services
  • Arts and recreation services.

The application form will be on the Service NSW website by 17 April 2020. Applications may be made up to 1 June 2020.

 

 

 

 

 

 

 

 

 

 

 

 

 

Reduction of NSW land tax

Eligible landlords can apply for a land tax concession of up to 25% of their 2020 (calendar year) liability on relevant properties and a further three-month deferral on outstanding amounts. That saving must be passed on to tenants (commercial or residential) as rent relief. There is a freeze on rent rises, lease terminations and evictions due to non-payment of rent.

Eligibility:

  • For commercial landlords, it can be claimed where business tenants with a turnover of less than A$50 million have had a 30 per cent or more reduction in revenue as a result of the COVID-19 pandemic.
  • For residential landlords, it can be claimed where tenants have had an income loss of 25% or more and are struggling to pay rent.

 

Announced on 13 Apr 2020 and to take effect as soon as possible.

 

 

 

 

 

 

ATO assistance during COVID-19

The Australian Taxation Office (ATO) will provide support to taxpayers affected by COVID-19.

For individuals and businesses that may be having financial difficulties due to the current business conditions, the ATO is providing assistance in the form of payment deferrals, tax variations, interest and penalty remissions, etc as follows:

1. Payment deferrals

If you have been impacted by COVID-19, the ATO has undertaken to work with taxpayers and their tax agent to facilitate deferral of a range of tax payments, including tax instalments, FBT, GST, etc.

2. PAYG (Pay-as-you-go) instalment variations

The ATO is loosening the rules regarding variations. Businesses that vary their PAYG instalment rate or amount for the March 2020 quarter can also claim a refund for any instalments made for the earlier September 2019 and December 2019 quarters.

3. Remitting interest and penalties charged

Where you or your business is affected by COVID-19, the ATO will consider remitting interest and penalties incurred after 23 January 2020 that have been applied to tax liabilities that remain unpaid during this disruptive period.

4. GST payments

The ATO is easing the ability for businesses to change their reporting cycle (between quarterly and monthly) in order to enhance their cash flow with respect to either receiving BAS refunds sooner or deferring BAS payments to a later date.

5. Superannuation guarantee payments

The ATO has advised that employers still need to meet their superannuation guarantee obligations, and that the ATO cannot vary the contribution date or waive the superannuation guarantee charge where super guarantee payments are late or unpaid

Banking sector support

The Australian government, Reserve Bank of Australia and Australian Prudential Regulation Authority are working with Australia’s large banks to facilitate the flow of credit. The following are some of the key measures as they primarily apply to SMEs:

1. SME Guarantee scheme

  • Eligible lenders will provide unsecured working capital loans up to a maximum of A$250,000
  • The Australian government will guarantee 50% of the loan issued by the eligible lenders
  • The loans will be for periods up to three years with an initial six-month repayment holiday
  • Application periods run from early April 2020 to 30 September 2020
  • Proposed drawdown facility with interest only paid on the amount drawn down
  • Simpler and faster application processes
  • Loans subject to lenders’ credit assessment process, with consideration made for business disruption associated with COVID-19

2. Reducing the cost of credit

The Reserve Bank of Australia has introduced a number of measures into finance and credit markets designed to put downward pressure on borrowing costs for both households and businesses. These measures have facilitated the ability of major lenders to provide most (if not all) the following credit concessions:

  • Interest rate reductions for both small businesses and households
  • Additional interest rate reductions on SME business loans, most commencing during March 2020
  • Relief from fees for Merchant Facility customers that are either facing financial hardship or seek to temporarily suspend a facility until they recommence trading or wish to permanently close the facility

3. Loan repayment deferrals

The introduced measures noted above have also assisted with the provision of loan repayment deferrals as follows:

  • Defer loan repayments (principal and interest) for up to six months for both SMEs and home loan customers
  • Pause business credit card repayments for up to six months
  • Commercial landlords with loans up to A$10M can delay loan repayments for up to six months on the condition that they do not evict tenants or terminate a lease due to rent arrears during that six months.

Please note that your respective lender should be contacted with the specific concessions being provided which may include others not noted above.

Assistance in Australian states and territories

To find out the latest details of assistance being offered by each Australian state and territory government, click on the following links:

New South Wales: COVID-19 updates for businesses and employees

Victoria: Economic Survival Package fact sheet

Queensland: Qld government COVID-19 business support

South Australia: COVID-19 business information and support

Western Australia: WA coronavirus relief package

Northern Territory: Jobs Rescue and Recovery

Australian Capital Territory: COVID-19 Economic Survival Package

Tasmania: Business Tasmania COVID-19 Business Support, Grants and Loans

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