Hello to our valued clients
In light of the Coronavirus uncertainty at present, we wanted to be on the forefront for our clients and colleagues to understand the impacts that may affect your business at this time. The government announced an economic stimulus package in response to the Coronavirus to assist in supporting businesses cash flow, encourage investment and help businesses retain their employees.
We attach a blog that explains in simple terms if this package could assist you and your business.
We also attach a Fact Sheet: Recession Proof your Business – A simple, easy to read Checklist of strategies to help your business stay recession proof!
If you have any further questions in relation to the above, please don’t hesitate to call us on 08 8212 8585
How your business can benefit from the coronavirus stimulus package:
The Australian Government has announced an economic stimulus package in response to the coronavirus.
The key measures designed to support businesses cash flow, encourage investment and help businesses retain their employees include:
Tax-free payment of between $2,000 and $25,000
To be eligible business entities must have aggregated annual turnover of under $50 million (based on the 2018/2019 tax year) and employee staff.
Eligible businesses that withhold PAYGW tax on their employees’ salary and wages will receive a payment equal to 50% of the amount of tax withheld, up to a maximum payment of $25,000.
Eligible businesses that pay salary and wages, but don’t withhold any PAYGW tax (as their employees do not earn enough) will receive a minimum payment of $2,000.
The payment will only be available for a limited time. The payment will be credited to your Quarterly March 2020 and June 2020 activity statements (BAS) when you lodge these (monthly lodgers will be eligible on their March, April, May and June 2020 IAS).
Where the credit places the business into a refund position, the ATO will pay the refund within 14 days.
Example: Sean’s Hairdresser Salon
Sean employs one apprentice who earns $37,970 per year and two stylists who both earn $44,260 per year. In the March and June 2020 quarterly BAS, Sean reports withholding of $4,570 for his employees
Under the Government’s changes, Sean will be eligible to receive the payment on lodgement of his BAS. Sean’s business will receive:
- A payment of $2,285 for the March quarter, equal to 50 per cent of his total withholding.
- A payment of $2,285 for the June quarter, equal to 50 per cent of his total withholding.
Sean’s business will receive a total payment of $4,570. Sean may also benefit from the assistance for existing apprentices and trainees measure.
Apprentice and Trainee Wage Subsidy of up to $21,000
Eligible employers 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 30 September 2020.
Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
To be eligible your business needs to employ fewer than 20 full-time employees who retain an apprentice or trainee. The apprentice or trainee must have been in training with a small business as at 1 March 2020. Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network (AASN) provider
Employers can register for the subsidy from early-April 2020. Final claims for payment must be lodged by 31 December 2020. For further information on how to apply for the subsidy, including information on eligibility, contact an Australian Apprenticeship Support Network (AASN) provider.
Increasing the Instant Asset Write-Off to $150,000
The Government is increasing the instant asset write-off (IAWO) threshold from $30,000 to $150,000 and expanding access to include all businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020, effective immediately.
Accelerated depreciation deduction of 50%
The government is introducing a 15-month Backing Business Investment” (BBI) incentive by accelerating depreciation deductions.
Eligible businesses with aggregated turnover below $500 million and who purchase new plant & equipment (that can be depreciated under Division 40 of the ITAA1997) acquired after the announcement and first used or installed by 30 June 2021 can get a deduction of 50% of the costs in the year acquired, with existing depreciation rules applying to the balance.
Example: Small business benefits from the BBI
Joan and Bruce own a company, NC Transport Solutions Pty Ltd, through which they operate a haulage business on the North Coast of New South Wales. NC Transport Solutions Pty Ltd has an aggregated annual turnover of $8 million for the 2019-20 income year. On 1 May 2020, Joan and Bruce purchase a new truck for $260,000, exclusive of GST, for use in their business.
Under existing tax arrangements, NC Transport Solutions Pty Ltd would depreciate the truck using their small business simplified depreciation pool. Under the pooling rules, NC Transport Solutions Pty Ltd 4 would deduct 15 per cent of the asset’s value upon entry to the pool, leading to a tax deduction of $39,000 for the 2019-20 income year.
Under the new BBI, NC Transport Solutions Pty Ltd would instead claim an up-front deduction of 50 per cent of the truck’s value ($130,000) before placing the asset in their small business simplified depreciation pool. Joan and Bruce would then claim a further 15 per cent deduction on the depreciated value of the truck ($19,500). As a result of the two deductions, Joan and Bruce are able to claim a deduction totalling $149,500 in the 2019-20 income year, $110,500 more than under existing arrangements. At the company tax rate of 27.5 per cent, Joan and Bruce will pay $30,387.50 less tax in the 2019-20 income year.
The following measures are designed to assist lower income Australians and severely affected regions and communities
- One-off $750 cash payment from 31 March – to aged pensioners and people on Newstart, the disability support pension, carers’ allowance, youth allowance, veterans support payments and family tax benefits. The payment will be tax-free and will not count as income.
- $1 billion fund – to assist regional business and industries directly affected including trade and tourism businesses.
ATO administrative relief – the ATO will provide relief for certain tax obligations for taxpayers affect by the coronavirus outbreak on a case-by-case basis. Taxpayers can contact the ATO on 1800 806 218 for further information.
Recession Proof Your Business
Fact Sheet: Recession Proof Your Business
With that in mind here are some strategies to assist with recession proofing your business in this coronavirus environment.
Advise your staff of your “Coronavirus” Policy
– Clear and honest communication with all staff
– Update travel rules and arrangements limiting non-essential business travel
– Consider if employees can work from home or take time off
– Implement a home quarantine regime for anyone that has travelled to an infected country or been in contact with someone infected
– For further information about coronavirus and Australian workplace laws visit the Fair Work websitehttps://www.fairwork.gov.au/about-us/news-and-mediareleases/website-news/coronavirus-and-australian-workplacelaws
-If you have any enquiries about your obligations as an employer contact Fair Work Australia on 13 13 94
Plan for staff absences due to Coronavirus
– Workers may need to take leave if they are their family members are sick
– Some workers may have to self-quarantine
– Have a plan if schools / daycare centres are closed and/or school holidays are extended
Build cash reserves
– Cut back on any unnecessary or discretionary spend
– Review amounts owing from customers and change any amounts owing now
– Talk to your suppliers and negotiate discount for early/ontime payment or extending their due dates
Review your supply chain
– Talk to your key suppliers and understand how they are impacted / likely to be impacted
– Can you source alternative suppliers and how will that impact your price?
– Review your stock levels and make sure you have enough / aren’t holding the wrong type and / or in the wrong location
Keep your customers/clients informed
– Look after your loyal customers
– Facebook / Internet updates if your business needs to close, reduce staff, limits on quantities available
– Practice good hygiene in face-to-face meetings with customers/clients
– Ask customers/clients to have phone / skype meetings/ zoom meetings
Government Assistance / Grants
– Can you access any government grants?
– Do some research online and see what you can find out for now.
Bank debt / ATO payments
– Talk to your bank if you need help with your repayments
– Talk to the Tax Office if you need help with your tax debts or extending your payment terms
Review business continuity insurance
-Check with your broker or insurance company if you can make a claim, however generally there is no insurance protection for disruptions to business arising from coronavirus
Plan for a complete business shutdown
– Have a business continuity plan for how your business will get running again after a shutdown.
The coming weeks and months could present real challenges for families. So here are five things you can do to minimise conflict and get through this time.
Talk to your partner about work schedules
Now is the time to talk through what it will look like if you both have to stay home.
Discuss how you will fund things and whether either of you will still get paid. Will this period be classified as sick leave, enforced leave or leave without pay? How is this going to impact your finances?
Now is also the time to discuss household chores and childcare. If you are both home, who is cooking, cleaning, washing and changing nappies? In a lot of cases, women will automatically take on these tasks but that’s going to get old, really fast, if the woman in question is also trying to keep up with her regular workload.
Allocate tasks, do up a roster, or alternate days. Whatever you do, don’t try to do it all yourself.
Get your prescriptions and medicine cabinet in order
Refill all your scripts for your regular medications, stock up on paracetamol (children’s and adult), ibuprofen, allergy treatments and other first aid essentials. Make sure you have plenty of soap and tissues in the house, as well as things like hydrating icy poles and stock to make soups. Buy things as you go, don’t get to the supermarket and load up with items all at once.
Teach the kids to wash their hands with soap and water for at least 20 seconds, to avoid touching their mouth, nose and eyes, and to cover their cough or sneeze with a tissue or your sleeve. For younger kids, turn it into a game that you repeat daily so by the time they need to do it, they are already familiar with the concept.
Talk to your support network about possible childcare options
Have you spoken to your daycare centre, school or extended family about what will happen if COVID-19 disrupts normal operations? Do they have a plan? Will daycare payments still continue? I would assume they are in constant communication with you at the moment if they aren’t follow them up.
Arrangements involving grandparents will need to be reviewed as older people are more susceptible to the virus. Now is the time to consider alternatives.
Prepare a strategy for your clients and customers to implement if you need to shut down your business
In the event of a complete shutdown wherein you can’t work at all, ensure you have a plan for how you will notify your clients and customers and who can possibly take over from you if there are urgent tasks that need to be completed.
Do you have a business partner who can assist? Are there trusted people in your network who you could hand over to while you’re offline? Is anyone across what you’re working on and trained in your process and systems?
How will you cope if you can’t work for 14 days? And how will your clients and customers cope without you? Now is the time to do some planning around this.
Get your finances in order
Do you have enough money saved to cover your mortgage or rent if you don’t have any money coming in?
Many Australian households are two weeks away from the threat of homelessness if they lose their regular income. Speak to a trusted family member, your bank or your creditors now if you think you could lose income in the coming months. It could simply be a matter of credit extension or a loan from a family member.
Having a financial plan will significantly reduce the stress of two weeks off work for both parents. It’s a potentially volatile year ahead. Get organised now.
ATO announces relief to deal with COVID -19:
Following the government’s stimulus package announcement, aimed to help keep “Australians in jobs and businesses in business”, the ATO has announced a series of administrative measures to assist those experiencing financial difficulty as a result of the COVID-19 outbreak.
Commissioner of Taxation Chris Jordan is encouraging businesses impacted by the coronavirus to get in touch with the ATO to discuss relief options, including deferral of some payments, quicker access to GST refunds and options to enter low-interest payment plans for existing or future tax debts.
“We know that many businesses and communities are being heavily affected by the challenging economic conditions created by the outbreak of COVID-19,” Mr Jordan said.
“The ATO will work shoulder to shoulder with businesses to assist them through this difficult period and do what we can to ease the pressure. Once you contact us, we’ll tailor a support plan for your needs and circumstances.”
Options available to assist businesses impacted by COVID-19
Options available to businesses include:
- 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 April 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.
Employers are being advised that they will still need to meet their ongoing super guarantee obligations for their employees.
Outside of business, the ATO confirmed it will work with individuals experiencing financial hardship, and their tax agents, and will apply appropriate tax relief measures for serious and exceptional circumstances, such as where people cannot pay for food or accommodation.
The Tax Office explained that unlike the bushfire relief measures, which applied automatically to particular geographic areas, assistance measures for those impacted by the COVID-19 will not be automatically implemented. Businesses and individuals impacted by the COVID-19 are being advised to contact the ATO to request assistance on 1800 806 218, when they are ready, to discuss their situation.
Further information on developing a plan speak to us and we can help.Back to News Page