- Cash Flow Boost for Employers
- Claim back FY20 tax instalments already paid
- Temporary Relief for Financially Distressed Businesses
- Instant Asset Write-off Threshold
- Accelerated depreciation to 30 June 2021 of 50%
- Administrative Relief
- Wage subsidies to support the retention of apprentices and trainees
- Income support for individuals
- Aged Care Sector
- Payroll Tax – NSW Specific
- Commonwealth Home Support Programme (CHSP)
- Commercial rent relief – Federal
- Relief for renters and landlords – NSW
- NSW Small Business Support Grant
- Tax deductions for working from home
Cash Flow Boost for Employers
These measures passed the Australian Parliament on 23 March 2020.
- Confirmation NFPs are eligible, as are business with aggregated turnover under $50m
- Minimum payment $10,000
- 100% of salaries and wages withheld up to $50,000
- An additional payment July to October 2020. Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments they have received, so the minimum total payment will be $20k and maximum $100k
- These are integrity measures, so this is not the time to ‘play with payroll’.
You can read more in our updated infographic – here.
Claim back FY20 tax instalments already paid
The ATO are not going to apply penalties or interest to varied instalments for FY20.
To assist with cashflow you can vary your March 2020 quarter instalment to $nil and even claim back instalments paid in Q1 and Q2 – even if you expect to have a tax liability in FY20.
Temporary relief for financially distressed businesses
The following will apply for 6 months to assist businesses and individuals to get back on their feet.
- Minimum threshold for creditors to issue a statutory demand to a company now $20,000 (previously $2,000)
- Minimum debt required for a creditor to initiate bankruptcy proceeds $20,000 (previously $5,000)
- Timeframe to respond to statutory demand or bankruptcy notice 6 months (previously 21 days).
- Directors will be temporarily relieved of their duty to prevent insolvent trading with respect to any debts incurred in the ordinary course of the company’s business. This will relieve the director of personal liability who would otherwise be associated with the insolvent trading. 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.
Instant asset write-off threshold
- This has been increased to $150,000 until 30 June 2020 (for businesses with aggregated turnover less than $500m)
Accelerated depreciation to 30 June 2021 of 50%
- With existing depreciation rules applying to the balance of the asset’s cost.
Administrative relief from the ATO for some tax obligations for people affected by the Coronavirus outbreak
We have already spoken to the ATO for a number of clients and have been able to get payment deferrals until at least 13 July 2020 without interest. Please contact us if you believe we can assist you with this measure.
Wage subsidies to support the retention of apprentices and trainees
Employers with less than 20 full-time employees may be entitled to apply for Government-funded wage subsidies amounting to 50% of an apprentice’s or trainee’s wage for up to nine months from 1 January 2020 to 30 September 2020.
The maximum subsidy for each apprentice/trainee is $21,000.
Importantly, where an employer is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.
It is anticipated employers will be able to register for the subsidy from early-April 2020.
Income support for individuals
A new Coronavirus supplement at the rate of $550 per fortnight will be paid to individuals for 6 months who are currently eligible for certain income support payments, including:
Jobseeker Payment, Youth Allowance; and Parenting Payment (Partnered and Single).
For the period that the Coronavirus supplement is paid, the Government will also expand access to certain income support payments (e.g., the Jobseeker Payment, the Youth Allowance Jobseeker and the Parenting Payment) for eligible individuals.
Individuals can access $10,000 from their superannuation before 30 June 2020 and a further $10,000 during year ending 30 June 2021, provided they meet the new criteria for “compassionate grounds” for conditions of release . This incentive is aimed at anyone who has lost their job, or has experienced their working income/hours reduced by at least 20% due to the Coronavirus impact.
There will also be a temporary 50-per-cent reduction in superannuation minimum drawdown requirements for account-based pensions in 2019-20 and 2020-21.
Aged Care sector
- $234.9 million for a COVID-19 ‘retention bonus’ to ensure the continuity
of the workforce for staff in both residential and home care.
- $78.3 million in additional funding for residential care to support
continuity of workforce supply.
- $26.9 million to increase the residential and home care Viability Supplements
and the Homeless Supplement (including increased viability payments for
National Aboriginal and Torres Strait Islander Flexible Aged Care Program
providers and Multi-Purpose Services).
- $92.2 million in additional support to home care providers and organisations
that deliver the Commonwealth Home Support Programme, including for services
such as Meals on Wheels.
- An extra $12.3 million to support the My Aged Care call centre to respond to the needs of older Australia.
Payroll tax – NSW specific
Payroll tax customers whose total grouped Australian wages for the 2019/20 financial year are no more than $10 million will have their annual tax liability reduced by 25% when they lodge their annual reconciliation, which is due on 28 July.
For those customers who lodge and pay monthly and whose total Australian wages will be no more than $10 million for the current financial year, no payment for the months of March, April or May 2020 will be required.
When lodging your annual reconciliation, you will still need to provide wage details paid in these months and will receive the benefit of a 25% reduction in the amount of tax you would have had to pay for 2019–20.
Threshold increase for the 2020/2021 financial year.
The tax-free threshold will increase from $1 million for the financial year commencing on 1 July 2020.
Australian banks have hardship teams ready to help, depending on your circumstances. Issues that can be discussed with them include:
- deferring loan payments
- waiving fees and charges
- helping with debt consolidation
- waiving penalties for early withdrawal of a term deposit or
- deferring upcoming credit card payments and increasing emergency limits
Contact your bank’s financial hardship team on the web or on the phone.
Go to the Australian Banking Association website, for a directory of links for each bank and related media releases, here: https://www.ausbanking.org.au/campaigns/financial-hardship/
Under a new SME coronavirus guarantee scheme, the government has pledged to guarantee 50% of new short-term, unsecured loans to small and medium businesses.
The SME Guarantee Scheme, which allows for further funds to be injected into small business, as business loans will complement the announcement of a six month deferment of all loan repayments attached to a small business financially affected by COVID-19,
The government will guarantee up to $40 billion in new lending, in a bid to further encourage new credit to SMEs.
In addition, the government is providing a temporary exemption for lenders, providing credit to existing SME customers facilitating access to cash more quickly and efficiently. It is expected that these loans will still require a Director’s personal guarantee.
Banks will set their own rules for lending. It is advisable to see the advice of your bank or broker to determine the best option for your individual circumstances.
If we can assist with these conversations, please let us know.
Commonwealth Home Support Programme (CHSP)
For those with funding direct from The Department of Health they have announced:
flexibility provisions for FY20 and FY21 are being relaxed, allowing existing
CHSP providers to transfer up to 100 % of their allocated funding between
or immediate CHSP services can be put in place for up to six weeks, for clients
affected by COVID-19 or in self-isolation, without requiring an assessment.
- Penalties will not be applied unreasonably and discretion will be used if service delivery targets are not met due to COVID-19.
- Registered NDIS providers may receive a one-month advance payment based on a monthly average supports delivered in the previous 3 month period to provide immediate cash flow relief.
- A 10% COVID-19 loading will be added
to price limits for certain supports for up to six months:
Assistance with Daily Life (excluding Supported Independent Living) and Assistance with Social and Community Participation)
Improved Daily Living
- Cancellations can now be charged at 100% of cancelled service and definition of “short notice” will be broadened.
- Providers can also continue to claim for the increased use of cleaning and personal protective equipment associated with COVID-19.
Commercial rent relief – Federal
On 8 April 2020 the government announced rental relief for tenants, linking the eligibility of an employer for JobKeeper to the new code of conduct.
The following information has been extracted from the National Cabinet Mandatory Code of Conduct – SME Commercial Leasing Principles during COVID-19.
See link below to read the full document.
The purpose of this Code of Conduct is to impose a set of good faith leasing principles for application to commercial tenancies (including retail, office and industrial) between owners/operators/other landlords and tenants, where the tenant is an eligible business for the purpose of the Commonwealth Government’s JobKeeper programme.
The code appears to favour tenants on the basis that landlords would have opportunity to defer loan payments with their lender. We are concerned how landlords will cover the other holding and running costs of property during the relief period.
Hopscotch Accounting recommends landlords and tenants seek legal advice in respect of the new Code of Conduct. We can put you in touch with a good commercial property lawyer if you don’t have one.
Relief for renters and landlords – NSW
The State Government has announced $440 million in relief for renters and landlords affected by Government-enforced COVID-19 restrictions.
- The NSW State Government is allocating $220 million to residential renters and landlords
- A further $220 million will go towards shops, gyms, hairdressers and offices affected by COVID-19
- A two-month moratorium is in place on forced evictions for those suffering financial hardship due to coronavirus
- A six-month moratorium on new forced evictions if the tenant is in rental arrears because they are suffering financial hardship due to coronavirus.
- This applies to tenants who have lost 25 per cent or more of their income.
- Under the scheme, a landlord or managing agent must enter into negotiations with a tenant who is struggling to make rental payments.
- New measures were not optional, an interim 60-day moratorium would be in place for new applications to the NSW Civil and Administrative Tribunal for forced evictions over COVID-19-related rent arrears.
- Tenants will be protected from eviction until the tribunal is satisfied that negotiations have been finalised. Tenants will repay the rent eventually, as anything unpaid will accrue as arrears during this period.
- The NSW Government is waiving land tax or providing a rebate of up to 25 per cent if landlords are accommodating tenants under financial stress
- Landlords that have already filed to evict their tenants will have to wait 60 days for their applications to be processed.
- Landlords are eligible for a land tax concession of up to 25 per cent for the rest of this calendar year.
- A further land tax deferral is applicable for any outstanding amounts for a three-month period will also be offered to landlords who claim the land tax concession.
- Commercial landlords will be offered the land tax concession if they pass the savings on to tenants through a rent reduction.
- These new arrangements act on the Code of Conduct agreed to by the National Cabinet earlier this month.
NSW Small Business Support Grant
$10,000 grants will be available to businesses that meet the following eligibility criteria:
- Between 1-19 employees
- Turnover of more than $75,000
- Not required to pay payroll tax (annual payroll cost below $900,000)
- As at 1 March 2020 have an ABN and be based in NSW
- 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.
The application form will be available on the Service NSW website by 17 April.
Tax deductions for working from home
Good news for your employee is working from home as they can now claim a rate of 80 cents per work hour for all additional running expenses.
You can claim a deduction of 80 cents for each hour you work from home due to COVID-19 as long as you are:
- working from home to fulfil your employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls,
- incurring additional deductible running expenses as a result of working from home.
You do not have to have a separate or dedicated area of your home set aside for working, such as a private study.
The shortcut method rate covers all deductible running expenses, including:
- electricity for lighting, cooling or heating and running electronic items used for work (for example your computer), and gas heating expenses
- the decline in value and repair of capital items, such as home office furniture and furnishings
- cleaning expenses
- your phone costs, including the decline in value of the handset
- your internet costs
- computer consumables, such as printer ink
- the decline in value of a computer, laptop or similar device.
You do not have to incur all of these expenses, but you must have incurred additional expenses in some of those categories as a result of working from home due to COVID-19.
If you use the shortcut method to claim a deduction for your additional running expenses, you cannot claim a further deduction for any of the expenses listed above.
You must keep a record of the number of hours you have worked from home as a result of COVID-19. Examples are timesheets, diary notes or rosters.
If you use the shortcut method to claim a deduction and you lodge your 2019-20 tax return through myGov or a tax agent, you must include the note ‘COVID-hourly rate’ in your tax return.
You can share information from the ATO with your employees via this link.