Government’s Stimulus Package

The following is a broad summary of the key aspects of the Federal Government’s stimulus package in response to the Coronavirus, as recently announced and enacted.

These measures were implemented via various Bills introduced into Parliament, which very quickly received Royal Assent on 24 March 2020 (including the Coronavirus Economic Response Package Omnibus Bill 2020), so as to give effect to the Government’s stimulus package.

The ATO have updated its website with essential information about tax and superannuation changes that have now become law following the passage of the Government’s Economic Support Package through the Parliament. The site is www.ato.gov.au/coronavirus

Coronavirus SME Guarantee Scheme

The Coronavirus Small and Medium Enterprises (SME) Guarantee Scheme will support up to $40 billion of lending to SMEs (including sole traders and not-for-profits). Under the Scheme, the Government will guarantee 50 per cent of new loans issued by eligible lenders to SMEs. The Scheme will be available for new loans made by participating lenders until 30 September 2020.

The Government will provide eligible lenders with a guarantee for loans with the following terms:

• SMEs, including sole traders, with a turnover of up to $50 million.
• Maximum total size of loans of $250,000 per borrower.
• Loans will be up to three years, with an initial six month repayment holiday.
• Unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.

Who is eligible for the Scheme?
The Scheme is available to all active Australian businesses with turnover of less than $50 million in the previous financial year, or expected turnover of less than $50 million in the current financial year. Both self-employed individuals and non-profit businesses are eligible.

Access to the loans is ultimately a decision for participating lenders. Credit assessment processes will be undertaken, however lenders are expected to look through the cycle to sensibly take into account the uncertainty of the current economic conditions.

How do you access the Scheme?
Loans backed by the Scheme will be made available via commercial lenders. The Government is not directly participating in the lending process. Businesses wishing to apply should contact their current financial institution or any other participating lender.

If your current financial institution is not participating, loans will be available via other lenders. Participating lenders are required to consider applications from new customers

View the list of participating lenders.

Further Information
https://treasury.gov.au/coronavirus/sme-guarantee-scheme

Rent relief package for commercial tenants

The Government has announced a range of measures to help renters. This includes a temporary hold on evictions and a mandatory code of conduct for commercial tenancies to support small and medium sized enterprises (SMEs) affected by coronavirus.

Hold on evictions for renters
Evictions will be put on hold over the next 6 months for commercial and residential tenants in financial distress, who are unable to meet their commitments due to the impact of the coronavirus.

Code of conduct for commercial tenancies
This code applies to tenants that are:
• a small to medium sized business with an annual turnover of up to $50 million
• eligible for the JobKeeper Payment

Rent reductions will be based on the tenant’s decline in turnover to ensure that the burden is shared between landlords and tenants. The policy will include a mutual obligation requirement on the small and medium sized businesses and not-for-profit tenants to continue to engage their employees through the JobKeeper Payment where eligible, and if applicable, provide rent relief to their subtenants.

Further information – The Code and Commercial leasing principles during COVID-19

NSW Small Business Support Grant Payment

The NSW Government has announced the creation of – NSW COVID-19 Small Business Support Grant of $10,000. This will be available to eligible small business owners across NSW struggling to cope with the COVID-19 shutdown.

The application form will be available on the Service NSW website by 17 April and will remain open until 30 June 2020. This was 1 June 2020 and has now been extended to 30 June 2020.

To be eligible, businesses will need to:
•    have between 1-19 employees and a turnover of more than $75,000
•    a payroll below the NSW Government 2019-20 payroll tax threshold of $900,000
•    have an Australian Business Number as at 1 March 2020, be based in NSW and employ staff as at 1 March 2020
•    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.

Next Steps
To apply for this grant you will need to go to the Service NSW website and submit an application form. The application form will be available by 17 April and will remain open until 1 June 2020. 

JobKeeper Payment

The Federal Government has announced the introduction of a new JobKeeper Payment to assist eligible employers (and self-employed individuals) who have been impacted by the Coronavirus pandemic to continue to pay their workers.

JobKeeper Key dates

What is the JobKeeper Payment?
The JobKeeper payment is a subsidy that will be paid through the tax system (i.e., by applying to the ATO) to eligible employers (and self-employed individuals) impacted by the Coronavirus.

Eligible employers will be able to claim a subsidy of $1,500 per fortnight, per eligible employee, from 30 March 2020 (with payments commencing from the first week of May 2020), for a maximum period of six months. This subsidy will be paid by the ATO monthly in arrears and will ensure that an eligible employee receives a gross payment (i.e., before tax) of at least $1,500 per fortnight.

Self-employed individuals (i.e., businesses without employees) can also qualify to receive the JobKeeper Payment.

When is an employer or business eligible for the JobKeeper Payment?
Employers will be eligible for the JobKeeper subsidy where:

• for a business with a turnover of less than $1 billion – its turnover will be reduced by more than 30% relative to a comparable period a year ago (of at least a month); or

• for a business with a turnover of $1 billion or more – its turnover will be reduced by more than 50% relative to a comparable period a year ago (of at least a month); and

• the business is not subject to the Major Bank Levy.

Self-employed individuals (i.e., businesses without employees) and not-for-profit entities (including charities) that satisfy the above requirements will be eligible to apply for the JobKeeper Payment.

Businesses have until 8 May to pay staff to claim JobKeeper for the first 2 fortnights.

The Australian Taxation Office has given eligible businesses until 8 May to pay staff the first two tranches of payments worth $3000 for the first two fortnights of the JobKeeper scheme.

For the first two fortnights (30 March – 12 April, 13 April – 26 April), the ATO will accept the minimum $1,500 payment for each fortnight that has been paid by you even if it has been paid late, provided it is paid by 8 May. If you do not pay your staff by this date, you will not be able to claim JobKeeper for the first two fortnights.

Enrolment extended until 31 May 2020

Please note the Commissioner has extended the time to enrol for the initial JobKeeper periods from 30 April 2020 until 31 May 2020.

If you enrol by 31 May, you will still be able to claim for the fortnights in April and May provided you meet all the eligibility requirements for each of those fortnights. This includes having paid your employees by the appropriate date for each fortnight.

Enrol for JobKeeper Payment

Download the JobKeeper Employee Nomination Notice here

Further Information

• Imagine Accounting Blog – JobKeeper Payment 
• Australian Government JobKeeper Payment Fact Sheet
• ATO – JobKeeper payment

Boosting cash flow for employers

Small and medium-sized businesses and not-for-profit entities, with an aggregated annual turnover of less than $50 million (usually based on their prior year’s turnover) that employ people, may be eligible to receive a total payment (in the form of a refundable credit) of up to $100,000 (with a minimum total payment of $20,000), based on their PAYG withholding obligations in two stages:

Stage 1 payment (credit)
Commencing with the lodgment of activity statements from 28 April 2020, eligible employers that withhold PAYG tax on their employees’ salary and wages will receive a tax-free payment equal to 100% of the amount withheld, up to a maximum of $50,000.

Eligible employers that pay salary and wages will receive a minimum (tax-free) payment of $10,000, even if they are not required to withhold PAYG tax.

The tax-free payment will broadly be calculated and paid by the ATO as an automatic credit to an employer, upon the lodgment of activity statements from 28 April 2020, with any resulting refund being paid to the employer. This means that:

• quarterly lodgers will be eligible to receive the payment for the quarters ending March 2020 and June 2020; and
• monthly lodgers will be eligible to receive the payment for the March 2020, April 2020, May 2020 and June 2020 lodgments.

Note that, the minimum payment of $10,000 will be applied to an entity’s first activity statement lodgment (whether for the month of March or the March quarter) from 28 April 2020.

Stage 2 payment (credit)
For employers that continue to be active, an additional (tax-free) payment will be available in respect of the June to October 2020 period, basically as follows:

• Quarterly lodgers will be eligible to receive the additional payment for the quarters ending June 2020 and September 2020, with each payment being equal to 50% of their total initial (or Stage 1) payment (up to a maximum of $50,000).
• Monthly lodgers will be eligible to receive the additional payment for the June 2020, July 2020, August 2020 and September 2020 activity statement lodgements, with each additional payment being equal to a quarter of their total initial (or Stage 1) payment (up to a maximum of $50,000).

Again, the ATO will automatically calculate and pay the additional (tax-free) payment as a credit to an employer upon the lodgment of their activity statements from July 2020, with any resulting refund being paid to the employer.

See: Cash flow assistance for businesses

Wages subsidies for apprentices and trainees

Employers with less than 20 full-time employees, who retain an apprentice or trainee (who was in training with the employer as at 1 March 2020) may be entitled to Government funded wage subsidies.

These will be equal to 50% of the apprentice’s or trainee’s wage paid during the nine months from 1 January 2020 to 30 September 2020. The maximum wage subsidy over the nine-month period will be $21,000 per eligible apprentice or trainee. Employers can register for the subsidy from early April 2020.

Increasing the instant write-off threshold for business assets

Broadly, the depreciating asset instant asset write-off threshold will be increased from $30,000 (for businesses with an aggregated turnover of less than $50 million) to $150,000 (for businesses with an aggregated turnover of less than $500 million) until 30 June 2020.

The measure applies to both new and second-hand assets first used or installed ready for use in the period beginning on 12 March 2020 (i.e., the date on which this measure was announced) and ending on 30 June 2020.

Accelerating depreciation deductions for new assets

A time-limited 15-month investment incentive (through to 30 June 2021) which will operate to accelerate certain depreciation deductions.

This measure will also be available to businesses with a turnover of less than $500 million, which will be able to immediately deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost. As announced, this measure is proposed to only apply to new depreciating assets first used, or installed ready for use, by 30 June 2021.

See – Backing business investment – accelerated depreciation

Solvency safety net

Temporary 6 month increase to the threshold at which creditors can issue a statutory demand on a company from $2,000 to $20,000, and an increase in the time companies have to respond from 21 days to 6 months. Directors also are provided with temporary relief from personal liability for trading while insolvent for 6 months.

See: Temporary relief for financially distressed businesses

Access to working capital

Introduction of a Coronavirus SME guarantee scheme protecting financial institutions by guaranteeing 50% of new loans to SMEs.

Sole traders and self-employed eligible for Jobseeker payment

The eligibility criteria to access income support relaxed for the self-employed and sole traders.
More: Income support for individuals

More financial support for coronavirus affected job seekers

ATO administrative relief

Options available to assist businesses impacted by COVID-19 include:

• Deferring by up to six 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 March 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.

 

Payroll Tax Relief

NSW Government has announced a series of economic stimulus measures to protect jobs at risk. The centrepiece of the measures is the reduction in the 2019/20 payroll tax liability by 25% and the waiver of payroll tax payments for three months for employers with grouped Australian wages of no more than $10 million.

• Eligibility
  Employers whose total grouped Australian wages for the 2019-20 financial year are no more than $10 million.
• Payroll Tax Reduction
  Eligible employers will have their 2019/20 financial year payroll tax liability reduced by 25%.  The reduction in the liability will be received when the annual reconciliation for the year is lodged, which is due on 28 July 2020.
• Payroll Tax Payment Waiver
  Eligible employers will not be required to make payroll tax payments in NSW for the months of March, April and May 2020.  It is currently unclear whether the monthly returns will still need to be lodged.

In this manner, the measures provide almost immediate effect by relieving eligible employers from the March 2020 payroll tax payment which would have been due on 7 April 2020. Eligible employers will still be required to report wages paid during those months in their annual reconciliation.

Payroll Tax Threshold Increased from 1 July 2020

• The NSW Government has also announced the payroll tax free threshold will increase from $900,000 to $1,000,000 with effect from 1 July 2020. This increase is a general increase and will apply to all employers. This replaces the previously scheduled increase in the threshold to $950,000.
• The increase in the threshold will result in annual savings of up to $5,450 in payroll tax based on the standard rates.

New 80-cents-per-hour ‘tax-shortcut’ for those working from home

The Australian Taxation Office (ATO) is introducing a new method which will allow people to claim 80 cents per hour for all their running expenses, rather than needing to calculate costs for specific running expenses.

The change will apply from March 1 to June 30, after which the ATO will review the arrangement for the next financial year as the COVID-19 situation progresses. “If you choose to use this shortcut method, all you need to do is keep a record of the hours you worked from home as evidence of your claim,” Assistant Commissioner Karen Foat said.

The new method is optional and taxpayers opting to use the old claiming method will need to properly apportion their expenses between private and business use.

Further Information – Employees Working from Home

The new Coronavirus supplement

A new six-month ‘Coronavirus supplement’ of $550 per fortnight will be paid to individuals who are currently eligible for certain income support payments, including the:

• Jobseeker Payment;
• Youth Allowance; and
• Parenting Payment (Partnered and Single).

Furthermore, it appears that this new (additional) supplement will be paid to eligible individuals as part of their existing income support payments (e.g., Jobseeker Payment and Youth Allowance).

Expanding access (and eligibility) to certain income support payments

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.

For example, a new category of Jobseeker Payment and Youth Allowance Jobseeker will become available for eligible individuals financially impacted by the Coronavirus.

According to the Government, this could include, for example, permanent employees who are stood down or lose their employment; sole traders; the self-employed; casual workers; and contract workers who meet the income tests, as a result of the economic downturn due to the Coronavirus.

Additionally, asset testing for the JobSeeker Payment, the Youth Allowance Jobseeker and the Parenting Payment will be waived for the period of the Coronavirus supplement. Income testing will still apply to the person’s other payments, consistent with current arrangements.

Tax-free payments of $750 to eligible recipients

The Government will be providing two separate $750 tax-free payments (referred to as ‘economic support payments’) to social security, veteran and other income support recipients and to eligible concession cardholders.

The first $750 payment will be available to individuals who are residing in Australia and are receiving an eligible Government payment, or are the holders of an eligible concession card, at any time from 12 March 2020 to 13 April 2020 (inclusive). This payment will be made automatically to eligible individuals from 31 March 2020.

The second $750 payment will be available to individuals who are residing in Australia and are receiving one of the eligible Government payments or are the holders of one of the eligible concession cards on 10 July 2020 (except for those receiving an income support payment that qualifies them to receive the $550 fortnightly Coronavirus supplement). This payment will be made automatically to eligible individuals from 13 July 2020.

Each of the $750 payments will be exempt from income tax and will not count as income for the purposes of Social Security, the Farm Household Allowance and Veteran payments.

ATO administrative relief

The ATO will be provide administrative relief for certain tax obligations for taxpayers affected by the Coronavirus outbreak, on a case-by-case basis.

See also Government payments to individuals – visit Services Australia’s Affected by coronavirus (COVID-19)

Reducing social security deeming rates

From 1 May 2020, the Government will be reducing both the upper and lower social security deeming rates by a further 0.25 percentage points. This is in addition to the recent 0.5 percentage point reduction, resulting in an overall reduction to the social security deeming rates of 0.75 percentage points.

On this basis, as of 1 May 2020, the upper deeming rate will be reduced from 3% to 2.25%, and the lower deeming rate will be reduced from 1% to 0.25%.

Bankruptcy safety net

Temporary 6 month increase to the threshold for the minimum amount of debt required for a creditor to initiate bankruptcy proceedings against a debtor from $5,000 to $20,000.

More: Temporary relief for financially distressed businesses

Early access to superannuation benefits

The Government will introduce a new compassionate ground of release that will allow individuals to access their superannuation entitlements where those benefits are required to assist them to deal with the adverse economic effects of the Coronavirus, but only where one or more of the following requirements are satisfied

• The individual is unemployed.
• The individual is eligible to receive the Jobseeker Payment, Youth Allowance for jobseekers, Parenting Payment (which includes the single and partnered payments), Special Benefit or Farm Household Allowance.
• On or after 1 January 2020 either:
  – the individual was made redundant; or
  – the individual’s working hours were reduced by at least 20%; or
  – if the individual is a sole trader – their business was suspended or there was a reduction in the business’s turnover of at least 20%.

Under this new compassionate ground of release, eligible individuals will be able to access (as a lump sum) up to $10,000 of their superannuation entitlements before 1 July 2020, and a further $10,000 from 1 July 2020 (subject to a six-month time frame).

Eligible individuals who are looking to access their superannuation entitlements under the above new ground of release will be able to apply directly to the ATO through the myGov website (at www.my.gov.au) and certify that the relevant eligibility criteria is satisfied.

More: Early access to superannuation

Reducing the minimum drawdown amounts for superannuation pensions

The Government will be temporarily reducing the superannuation minimum drawdown amounts for account-based pensions and similar products by 50% for the 2020 and 2021 income years.

More: Providing support for retirees

Banks and Lending Institutions

Specific COVID-19 concessions have been announced by the following banks:

i) CBA

• Reducing commercial interest rates by 0.25
• Deferring repayments on a variety of business loan and overdraft products, for 90 days.
• Waiving merchant terminal fees for impacted customers with CBA payment terminals, for 90 days.
• Waiving early redraw fees on business term deposit accounts (including Farm Management Deposit accounts).
• Waiving establishment fees and excess interest on Temporary Excess products.
• Deferring repayments on vehicle and equipment finance loans, and providing tailored restructuring options that meet individual customer needs.

? How to apply?

• More information can be found here

ii) ANZ

• Suspending interest repayments
• Providing early access to term deposits without incurring break fees
• Providing access to additional credit subject to approval

? How to apply?

• Contact ANZ or your relationship manager.

iii) NAB

• Deferral of business loan repayments for up to 6 months, assessed on a case-by-case basis
• Extension of a business loan term by a period of up to three months, where individual circumstances warrant
• Support to restructure existing business loans, including equipment finance
• Business credit card deferred repayments.

? How to apply?

• Contact NAB or your relationship manager
• 1300 769 650 (Monday to Friday 8am-6pm AEST/AEDT)

iv) Westpac

• Continuing it’s hardship assistance program
• Deferring repayments for 3 months

? How to apply?

• Contact Westpac or your relationship manager

v) Bendigo

• Home Loan and Business Loan customers can apply for relief on loans for up to three months
• Waiver of fees for the restructuring or consolidation of loans
• Credit card customers can apply for an emergency credit card limit increase
• Discounted interest rates on new personal loans taken out by existing Bendigo Bank customers
• Waiver of interest rate reduction for early withdrawals on term deposits prior to maturity
• Deferral of payments and extensions for Equipment Finance on a case by case basis

? How to apply?

• Contact Westpac or your relationship manager

HR Issues Arising from COVID-19 – What to Do?

With many businesses experiencing a sudden down-turn as a result of the COVID-19 virus, an immediate concern is how to manage staffing levels without falling foul of Australia’s employment laws. The reality is that in many industries, for a number of months ahead, companies will need to reduce staffing levels to manage their wages burden. Employers cannot afford to put their head in the sand regarding this issue, and difficult decisions will need to be made by most employers at some stage.

The purpose of this article is to set out some of the practical legal principles that employers should take into account so as to protect themselves from disputes and claims.

Working from home – tips to stay safe from a cyber-virus

If you’re a worker who has been advised to self-isolate or work from home due to COVID-19, you might think you’re safeguarded from risk.

However, you might not be as safe from viruses as you may think. Companies around the world, including the likes of Twitter, Amazon, Microsoft and Facebook are advising employees to work from home as pandemic fears intensify. While the risk of contagion decreases with remote work, the threat of exposure to cyber-viruses spread by savvy scammers is simultaneously growing.

Online predators are well aware of the spike in telecommuting due to COVID-19 and are in their element capitalising on the chaos and unusual business practises being implemented across the country. From fake login portals and invitations to meetings that don’t exist to email scams containing malware, Australian employees are encountering a range of new cyber hoaxes, and they are more deceiving than ever.

Stay safe from contracting a cyber-virus when working from home by following just a few simple tips and tricks.

Outsmart the email scams

Predators will prey on the heightened concern and interest around the virus.  If you don’t expect an email, ignore it or report it to your security team. Don’t click on a link in an email you are suspicious of as a fraudulent email link can take you to a phishing site that will look so real it will fool you into entering your login information.

Ditch non-secure websites

This simply means looking for HTTPS in the URL rather than HTTP. The added S means the information being sent is secure and encrypted, so that only the intended recipient – in this case, the organisation – can see it.

Avoid using public Wi-Fi for work

Anytime you enter sensitive information using a public network, you’re making yourself vulnerable to identity theft and sensitive data being compromised. Most Wi-Fi hotspots don’t encrypt your data, meaning that your information – and worse yet, your company’s information – could be accessed by strangers.

Always update your device and apps and never download apps from third party app stores

Regular updates as well as purchasing from legitimate app stores such as iTunes or Google Play Store will protect your device against spam-based malware infections. ‘Fake’ apps can serve up spam messages, compromise your device and spread spam to your contacts from your email account.

Work via a VPN

A VPN enables workers to send and receive data across shared or public networks, as if their computing devices were directly connected to the private network in the office itself. Alternatively, a multi-step verification process confirms that confidential business information is being retrieved only by the trusted recipient.

Keep internal communication channels open

With remote work, scammers have more opportunity to prey upon the ambition of employees who are keen to impress their managers. Be cautious of unusual communications you receive from a colleague, especially if they’re inviting you to perform irregular tasks or requesting your secrecy. Maintaining regular communication with other members of staff will ensure workflow efficiency, but also raise the alarm should any threat occur.

Create backups

Bad things can and do happen; regularly backup important data so that you can recover these if your computer gets infected by ransomware spread through spam emails.  Never pay the ransom as there is no guarantee that you will get your data back.

Trust your gut instinct

If at any time you feel as though something is a little off – perhaps a login process is asking for too much information or an email address doesn’t look right – simply leave the site.

Don’t let yourself become frenzied in the midst of coronavirus. As organisations continue to encourage their employees to work from home, it’s important to remain alert and aware, yet not alarmed. Take a little extra time to check your trusted sources and continue to exercise the same precautionary measures as you would in a regular office environment.

This article was provided by Ashwin Pal, Director of Cyber Security at Unisys APAC.

OUR RESPONSE TO CORONAVIRUS

Our team will continue to be accessible.
Given the NSW Government shut down of non-essential services – as of Monday 23rd March the entire Imagine Accounting team will be working from home. We want to play our part in stopping the spread. Our team will continue to be accessible via email, telephone (02 9884 7100) or by video conferencing. Please be assured that we are here to support and assist our clients during this unprecedented time.

We are here to support you
The Imagine Accounting time are committed to helping you. These are times when we need to stay calm and rely on reliable news sources and information from State and Australian Government websites. What you see on social media may be panicky and unreliable information – stay away from this.

Please Note: Many of the comments in this blog are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.