Baker’s dozen summary of government announcements

Please review our summary and contact Carrick Aland to discuss further your options and what may be available for you.

Quick links to assistance covered in this summary:

1. SME Guarantee Scheme
2. Cash Boost
3. Wage Subsidy for apprentices
4. JobKeeper payment subsidy
5. Qld Government Job Support Loans
6. Commercial Rent Reduction
7. ATO Support
8. Instant Asset Write-Off
9. Accelerated Depreciation
10. Qld Payroll Tax
11. Temporary relief for financially distressed businesses
12. Qld Electricity Rebate
13. Super Guarantee Amnesty

SME Guarantee Scheme

• Government will guarantee 50% of borrowing of new unsecured loans to be used for working capital
• Loan limited to $250,000 per borrower
• Loan to be paid in full in 3 years
• First 6 months will be repayment free
• Each financial institution will have its own interest rates that they apply on unsecured loans.

Cash Boost

Small Business Entity – Quarterly lodger

• The First boost period is March 2020; the credit paid is the greater of 100% of the PAYGW for the March quarter or $10,000
• The second boost period is June 2020 and September 2020.

Medium Business Entity – Quarterly lodger

• The First boost period is March 2020; the credit paid is the greater of 100% of the PAYGW for the March quarter or $50,000
• The second boost period is June 2020 and September 2020.

Wage Subsidy for apprentices

• Registrations open from 2 April
• Offered under the Australian Apprenticeships Incentive Program
• 50% of the apprentice wages for nine months (1 January 2020 to 30 September 2020) to a maximum of $21,000
• Legislation hasn’t passed in relation to this and it seems that the amount paid to the employer would be assessable income of the employer (as it is not passed on to the employee)
• An employer will not be eligible to claim Supporting Apprentices and Trainees for any period where they choose to claim the JobKeeper Payment for the same Australian Apprentice

JobKeeper

For Employers

• Applications open online from 20 April – see more information on the Treasury website
• Payment of $1500 per fortnight initially paid to the employer, must go to the employee
• Need to be able to prove that there has been a reduction of more than 30% in the business turnover (in a comparable prior period) to be eligible:

• • Turnover (defined according to the current calculation for GST purposes, it includes all taxable supplies and all GST free supplies but not input taxed supplies) must have reduced by 30% or more relative to a comparable period
  • March 2019 GST turnover compared to March 2020 GST Turnover to be eligible there must be a reduction of 30% or greater
  • For businesses where their turnover a year earlier was not representative of the usual or average turnover (e.g. where turnover is typically highly variable or new startups) the Tax Commissioner will have the discretion to consider additional information that the business can provide to establish that they have been adversely affected by the impacts of the Coronavirus
  • If a business does not meet the turnover test at the start of the JobKeeper scheme on 30 March 2020, the business can start receiving the JobKeeper Payment at a later time once the turnover test has been met, eligibility tested based upon Projected GST Turnover in any monthly period commencing 1 April 2020 and compared to the same month in the prior.

JobKeeper for Sole Traders, Companies, Partnerships and Trusts

• Eligible if you carried on a business in Australia on 1 March 2020 and:

• • satisfied the fall in turnover test
  • had an ABN on 12 March and lodged on or before 12 March either a 2018–19 income tax return, or an activity statement or GST return for any period that started after 1 July 2018 and ended before 12 March 2020
  • Turnover (defined according to the current calculation for GST purposes, it includes all taxable supplies and all GST free supplies but not input taxed supplies) must have reduced by 30% or more relative to a comparable period
  • nominate an eligible business participant who

• • • must not be employed by the entity
    • be actively engaged in the business
    • and be either a sole trader, a partner in a partnership, an adult beneficiary of the trust or a shareholder or director in the company

• • JobKeeper payment received from the ATO forms part of the assessable income of the entity
  • no requirement to pay it out or pay it to the nominated individual.

Qld Government Job Support Loans

• NB: scheme closed 20 April due to overwhelming demand
• Concessional loan available for up to 50% of annual wage expenses up to a maximum of $250,000

• • Annual wages – the average of an entity’s wage expense including superannuation of the 2017/2018 and 2018/2019 financial years and may include the salaries or drawings of business owners if they work in the business
• Loan can be used to meet working capital expenses e.g. wages, creditors & loan repayments, rent & rates or running costs
• Loan can’t be used for refinancing loans or equipment finance or for purchasing new equipment or assets.
• Eligibility:

• • Must have one or more equivalent full-time employee in Qld
  • have an ABN and be GST registered
  • Operated the business since 1 July 2017
  • Suffered a loss of income as a result of COVID-19

• Security

• • up to $100,000 = no security
  • over $100,000 to $250,000 secured by general security agreement.

Commercial Rent Reduction

• Tenant must be eligible for JobKeeper
• Negotiation of rent reduction to be offered in proportion to the loss of turnover experienced due to COVID-19.

Australian Tax Office – support

•  Debt

• • ATO is offering remission of General Interest Charges and penalties
  • Low rate interest payment plans
  • Payment deferrals
  • Early contact with ATO is recommended

• Variation of March Quarter PAYG Instalments

• • Can be varied to NIL
  • Able to claim a refund for instalments already paid in 2019-2020

• Option to change GST reporting cycle from quarterly to monthly for cash flow purposes

• • Temporary change will be considered on a case-by-case basis. Before making the change be aware that:

• • • Changes can be made from the start of a quarter and so will take effect from 1 April 2020
    • PAYG withholding cycle doesn’t have to align with the GST cycle
    • Fuel tax credits do align with the GST cycle, so you will need to calculate and claim monthly
    • Once you choose to report and pay month, you must keep reporting on a monthly basis for 12  months before you can elect to revert to quarterly reporting.

Instant Asset Write-off and Accelerated Depreciation

Instant Asset Write-Off

• Available for business with an aggregated turnover less than $500 million
• From 12 March 2020 to 30 June 2020 the instant asset write-off threshold is $150,000 (to from ($30,000)
• From 1 July 2020 the instant asset write-off will only be available for small business with a turnover of less than $10 million and the threshold will be $1,

Accelerated Depreciation

• Available for business with an aggregated turnover less than $500 million
• The amount your entity can deduct in the income year the asset is first used or installed ready for use is:

• • 50% of the cost (or adjustable value where applicable) of the depreciating asset
  • plus the amount of the usual depreciation deduction that would otherwise apply but calculated as if the cost or adjustable value of the asset were reduced by 50%.

• Effectively, together with the instant asset write-off rules, the accelerated depreciation deduction applies to assets with a cost (or adjustable value if applicable) of:

• • $150,000 or more in the 2019–20 income year
  • $1,000 or more in the 2020–21 income year.

• This applies to eligible assets acquired and first used or installed ready for use from 12 March 2020 until 30 June 2021.

Qld Payroll Tax

• Relief measures:

• • refunds of payroll tax for 2 months
  • payroll tax holiday for 3 months
  • deferral of paying payroll tax for the 2020 calendar year

• Refund and payroll tax holiday do not have to be repaid
• Eligibility:

• • employer pays $6.5 million or less in Australian taxable wages:

• • • should have already received an email regarding refund of November and December 2019 payroll tax
    • should have already received an email regarding the holiday
    • if email not received complete the application online

• • employer pays more than $6.5 million in Australian taxable wages and negatively affected by COVID-19:

• • • Apply for a deferral of payroll tax for the 2020 calendar year
    • Apply for a refund of 2 months payroll tax (January and February 2020).

Temporary relief for financial distressed businesses

Temporary increase to the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive. This includes temporary relief for directors from any personal liability for trading while insolvent, and providing temporary flexibility in the Corporations Act 2001 to provide temporary and targeted relief from provisions of the Act:

• temporarily increasing the current minimum threshold for creditors issuing a statutory demand on a company under the Corporations Act 2001 from $2,000 to $20,000. This will apply for 6 months
• the statutory time frame for a company to respond to a statutory demand will be extended temporarily from 21 days to 6 months. This will apply for 6 months.
• threshold for the minimum amount of debt required for a creditor to initiate bankruptcy proceedings against a debtor will temporarily increase from its current level of $5,000 to $20,000. This will apply for 6 months.
• the time a debtor has to respond to a bankruptcy notice will be temporarily increased from 21 days to 6 months. The extension will give a debtor more time to consider repayment arrangements before they could be forced into bankruptcy. This will apply for 6 months.

Qld Electricity Rebate

Sole traders, small and medium businesses that consume less than 100,000 kilowatt hours will get a $500 rebate on their power bill, as part of the Queensland Government’s COVID-19 economic relief package for businesses. The rebate will be automatically applied on business electricity bills.

SG Amnesty

• The super guarantee (SG) amnesty is a one-off opportunity to correct past unpaid SG amounts
• Employers have a six-month window, until 7 September 2020, to disclose, lodge and pay unpaid SG amounts for their employees
• Employers can claim deductions and not incur administration charges or penalties during this amnesty:

• • Applications close at 11:59pm on 7 September 2020.  Only payments made before this time will be tax deductible
  • the law does not allow for a variation of the due date for lodgement.

Please let us know if we can assist you in any way by calling our team in Dalby and Toowoomba on 07 4669 9800 (includes Chinchilla). We will continue to communicate with all our clients as updates are announced and have individual discussions around practical implementation. Keep safe and well.

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