(UPDATED) Crucial business and taxation advice
By Sam Stringer - Director at Murchisons
We know that everyone is anxious about the current situation and how it will impact them, and for business owners, it is important to be aware of what is being offered to businesses and what steps you should be taking to get through this uncertain period.
It is also crucial that you have a plan in place on how you are going to deal with this current dilemma and are ready to make the tough decisions quickly when they are required. Delaying these tough decisions can have a devastating impact to your business. I don’t want to be entirely doom and gloom focused! There will be opportunities that arise throughout this period, so it is important to continue to pursue new business and stay positive during this time also!
As you have likely heard, there are federal and state government packages being offered to business, which have been updated and added to today and in short, provide the following (please note that there are differing criteria that must be met for each of the below measures, and we can provide further guidance here):
1) Up to $100,000 back in PAYG withholding (now 100% of PAYG withholding, previously only 50%), which is credited on the lodgement of BAS' from March to October 2020. Minimum payments of $20,000 will be provided to all businesses with a turnover under $50 million that employ staff. These payments will be automatic and will be available to both businesses and NFP's. The maximum benefit will be $50,000 for the period from now until 30 June 2020 (minimum $10,000), with the same amount being repeated for the period July to October to a maximum of $100,000 in total (minimum of $20,000).
2) ‘Job-Keeper Payments’ to encourage affected businesses to keep paying salaries to their employees. Affected employers, including those self-employed, may be able to claim a fortnightly payment of $1,500 (before tax) per eligible employee from 30 March 2020, for a maximum period of 6 months if:
a. They have a turnover of less than $1 billion and turnover will be reduced by more than 30 per cent relative to a comparable period a year ago (of at least a month); or
b. Their business has a turnover of $1 billion or more and their turnover will be reduced by more than 50 per cent relative to a comparable period a year ago (of at least a month).
c. There are other criteria which must be met in order to be able to access these payments, and we will provide further clarity on this in a more detailed paper to come.
3) Loans of up to $250,000 for businesses with a turnover of up to $50 million - these loans will have a repayment period of 3 years, and an initial 6 month repayment holiday will be provided. Under the Scheme, the Government will provide a guarantee of 50% to SME lenders for new unsecured loans to be used for working capital. This will enhance these lenders’ willingness and ability to provide credit, which will result in SMEs being able to access additional funding to help support them through the upcoming months. As part of the loan products available, the Government has said that they will encourage lenders to provide facilities to SMEs that only have to be drawn if needed by the SME. This will mean that the SME will only incur interest on the amount they draw down. If they do not draw down any funds from the facility, no interest will be charged, but they will retain the flexibility to draw down in the future should they need to.
4) The government is also removing the responsible lending requirements regarding loans to small and medium business to remove the red tape and allow for lenders to lend to business.
5) An increase in the instant asset write off to $150,000 until 30 June 2020 for businesses up to $500 million turnover.
6) Increased depreciation rates on larger assets for all businesses up to $500 million turnover – The ability to write off 50% of the cost of any asset on installation from now until 30 June 2021.
7) Payments of 50% of eligible apprentice’s or trainee’s wages paid during the 9 months from 1 January 2020 to 30 September 2020 up to a maximum of $21,000 per apprentice or trainee.
8) Payroll tax deferrals and rebates, which vary from state to state.
9) Deferral of the payment of existing and future ATO debts until July 2020. There will also be no interest applied during this period. This has to be negotiated with the ATO and does not automatically apply.
10) Temporary relaxation of director penalties where a company is found to be trading in insolvency - This will relieve the director of personal liability that would otherwise be associated with the insolvent trading. It will apply for six months.
11) Early access to superannuation for sole traders, individuals who have become unemployed or had their pay reduced significantly, and welfare recipients who have seen a reduction in income as a result of the virus.
There will be further measures to come, and we will keep you updated as they are announced. We also have a detailed summary of all of the above measures, so please let us know if you would like this emailed to you.
Please call us any time on 02 9959 5599 if you would like to discuss how you can take advantage of the above incentives and maximise the benefit for your business during these challenging times.