Australian Stimulus Package: What You Should Know
The Australian Government and banking institutions have united to assist
small businesses weather economic uncertainty.
This page is a list of the concessions and help available to businesses.
Federal Government
On 12 March, the Government has announced a $17.6 billion economic plan
to deal with the significant challenges posed by the spread of the coronavirus.
This initial package has been expanded with a further announcement on 22
March that brings the consolidated assistance provided by the Federal
Government to $189 Billion.
The stimulus packages are focused on keeping Australians in jobs and
helping small and medium sized businesses to stay in business and has four
parts:
- Supporting business investment
- Providing cash flow assistance to help small
and medium sized business to stay in business and keep their employees in
jobs
- Targeted support for the most severely
affected sectors, regions and communities;
- Household stimulus payments that will benefit
the wider economy
The Government plans to introduce the package of Bills for the relief
measures into Parliament on 23 March. What has been announced is set out below.
REAL, CASH MONEY FOR SMALL BUSINESS
OWNERS
i) 100% Cashback on PAYG Withholding,
up to $100,000
Business entities with annual aggregated turnover of less than $50
million that withhold tax to the ATO on their employees’ salary and wages will
receive a payment equal to 100% of the amount withheld, up to a maximum payment
of $100,000.
Eligible businesses that pay salary and wages will receive a minimum
payment of $20,000, even if they are not required to withhold tax.
The ATO will deliver the payment as a credit to the business upon
lodgment of their activity statements. Where this places the business in a
refund position, the ATO will deliver the refund within 14 days. The payment
will be a tax-free refund or credit.
The payment will be tax free and delivered by the
ATO as a credit in your Business Activity Statement (BAS) from 28 April 2020. Quarterly BAS
lodgers will get the credit in the June-20 quarter BAS. Monthly IAS lodgers
will get a credit of 100% from the March-20 IAS up to the June-20 IAS. Any
existing debt with the ATO this will be offset against your existing liability.
The Government has also announced that there will be an additional
payment in the July – October 2020 period equal to the total of all the
payments made in the period prior to June – limited to the maximum threshold of
$100,000.
The benefit is for limited time only and applies to the PAYG Withholding
on wages between 1 January 2020 and 30 June 2020.
If for example you have spent more than $100,000 in PAYGW for the 6
month period between 1 January and 30 June 2020, you should receive $100,000
from the Government. If you have spent $30,000 in PAYGW for the same period,
you will get $30,000. These credit will be applied by the ATO as from 28 April.
Any employer that has received the maximum $100k payment will not be
entitled to a further payment in the July – October quarter. The employer that,
for example, received a $30,000 refund will receive a further $30,000 refund in
the July – October quarter.
How to apply?
This credit will automatically be processed upon lodgement for your BAS and IAS
by iKeep.
ii) 50% subsidy on apprentice wages,
up to $21,000
Eligible employers can apply for a wage subsidy of 50% of apprentice or
trainee wages for up to 9 months from 1 January 2020 to 30 September 2020 (up
to a maximum of $21,000 per eligible apprentice or trainee).
If a small business is not able to retain an apprentice, the subsidy
will be available to a new employer that employs that apprentice.
How to apply?
Employers can register for the subsidy from early April 2020 with final claims
for payment due by 31 December 2020.
iii) Instant asset write-off increase
For new or second-hand assets first used or installed ready for use from
12 March until 30 June 2020, the instant asset write-off threshold will be
increased from $30,000 to $150,000 for businesses with aggregated annual
turnover of less than $500 million (up from the current $50 million threshold).
The threshold applies on a per asset basis, so eligible businesses can
immediately write-off multiple assets.
The threshold will revert to $1,000 for small businesses (for businesses
with a turnover less than $10 million) from 1 July 2020.
iv) 50% investment incentive
The Government is introducing a time limited 15 month investment
incentive (to 30 June 2021). Businesses with aggregated annual turnover of less
than $500 million per annum will be entitled to accelerated depreciation
deductions. Eligible businesses will be able to deduct 50% of the cost of an
eligible asset upon installation. Assets must be acquired after 12 March 2020
and first used or installed by 30 June 2021.
There is no asset value threshold for this 50% investment incentive and
the existing depreciation rules will continue to apply to the remaining balance
of the asset’s cost over its effective life. Therefore, an eligible asset will
generate the immediate deduction of 50%, plus in the same year will generate a
Division 40 depreciation deduction calculated in accordance with the normal
depreciation rules.
How to apply?
This credit will be processed on the preparation and lodgement of your 2020
income tax return.
Tax Payment Deferrals
The ATO has announced a series of payment deferral concessions for
businesses directly impacted by COVD-19. These concessions are:
- Deferring by up to 4 months the payment date
of amounts due through the business activity statement (including PAYG
instalments), income tax assessments, fringe benefits tax assessments and
excise duty.
- Allowing businesses on a quarterly reporting
cycle to opt into monthly GST reporting in order to get faster 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;
and
- Allowing affected businesses to enter into
low-interest payment plans for their existing and ongoing tax liabilities
How to apply?
The ATO assistance is not automatic, contact your iKeep team, who will
approach the ATO to request assistance, and if eligible, the ATO will ‘tailor’
the assistance package for you.
Non-iKeep clients can call the ATO’s Emergency Support Infoline on 1800
806 218 to discuss relief options based on their needs and circumstances.
Temporary relief for financially
distressed businesses
The Government has also announced a series of measures that are aimed at
lessening the threat of legal action against businesses that could cause them
to become insolvent and force them into liquidation.
These measures include:
- An increase to the threshold at which
creditors can issue a statutory demand on a company and initiate bankrupt
proceedings against an individual. The new threshold limit has not been
released yet.
- The time companies and individuals have to
respond to statutory demands they receive will be increased. Now 6 months,
previously 21 days.
- Directors are temporarily relieved from any
personal liability for trading while insolvent.
- New measures that introduce some flexibility
to the Corporations Act 2001 targeted at providing relief from the provisions
of the Act to deal with the unforeseen events that arise as a result of
the Coronavirus health crisis have been announced. No further detail is
available as to what these amendments are.
The Government also announced that the ATO will tailor solutions for
owners and directors that are currently struggling due to the Coronavirus. The
assistance offered by the ATO to business will including a temporary reduction
of payments or deferrals of tax liabilities, or withholding enforcement of
liabilities by not proceeding with actions such as Director Penalty Notices and
the wind-up of a business.
How to apply?
The ATO assistance is not automatic, contact your Kelly Partners client
director, who will approach the ATO to request assistance, and if eligible, the
ATO will ‘tailor’ the assistance package for you.
Non-iKeep clients can call the ATO’s Emergency Support Infoline on 1800
806 218 to discuss relief options based on their needs and circumstances.
Supporting the flow of credit
The Government, the Reserve Bank of Australia and the Australian
Prudential Regulatory Authority have taken coordinated action to ensure the
flow of credit in the Australian economy. These measures include:
- Support for immediate cash flow needs for
SMEs: Under the Coronavirus SME Guarantee Scheme, the Government will
provide a guarantee of 50% to SME lenders to support new short-term
unsecured loans to SMEs. The Scheme will guarantee up to $40 billion of
new lending.
- Quick and efficient access to credit for small
business: The Government is cutting red tape by providing a temporary
exemption from responsible lending obligations for lenders providing
credit to existing small business customers.
Reserve Bank of Australia — Supporting the flow and reducing the cost of
credit
The Reserve Bank of Australia (RBA) announced a package on 19 March 2020 that
will put downward pressure on borrowing costs for households and businesses.
The RBA announced a term funding facility for the banking system. Banks
will have access to at least $90 billion in funding at a fixed interest rate of
0.25 per cent. This will reinforce the benefits of a lower cash rate by
reducing funding costs for banks, which in turn will help reduce interest rates
for borrowers. To encourage lending to businesses, the facility offers
additional low-cost funding to banks if they expand their business lending,
with particular incentives applying to new loans to SMEs.
In addition, the RBA announced a further easing in monetary policy by
reducing the cash rate to 0.25 per cent. It is also extending and complementing
the interest rate cut by taking active steps to target a 0.25 per cent yield on
3-year Australian Government Securities.
Support for Non-ADI and smaller ADI lenders in the securitisation
market.
The Government is providing the Australian Office of Financial
Management (AOFM) with $15 billion to invest in structured finance markets used
by smaller lenders, including non-Authorised Deposit-Taking Institutions
(non-ADI) and smaller Authorised Deposit-Taking Institutions (ADI). This
support will be provided by making direct investments in primary market
securitisations by these lenders and in warehouse facilities.
Australian Prudential Regulatory Authority — Ensuring banks are well
placed to lend
The Australian Prudential Regulatory Authority has announced temporary
changes to its expectations regarding bank capital ratios. The changes will
support banks’ lending to customers, particularly if they wish to take
advantage of the new facility being offered by the RBA.
2) State Government NSW
Payroll Tax Concessions
For businesses whose total grouped Australian wages for the 2019/20
financial year is less than $10M:
- will have their annual tax liability reduced
by 25% when they lodge their annual reconciliation, which is due on 28
July.
- For those taxpayers who lodge and pay monthly,
no payment is required for the months of March, April or May 2020; ie. the
payroll tax is completely waived
- 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.
How to apply?
This will be automatically applied for the payroll tax returns covering
above mentioned periods.
Other Concessions
The NSW government has also announced the following concessions:
The raising of the NSW payroll tax threshold to $1 million as from July
2020; and
a waiver of a range of fees and charges for small businesses including bars,
cafes, restaurants and tradies.
VIC
The Victorian government has announced a $1.7 billion “economic survival
and jobs” package that includes the following assistance to SME businesses:
- SME businesses with payrolls of less than $3
million will be refunded their payroll tax. Payments to eligible
businesses will commence from 23 March.
- SME businesses with payrolls of less than $3
million will also be able to defer any payroll tax for the first three
months of the 2020/21 financial year until 1 January 2021.
- Commercial tenants in government buildings can
apply for rent relief.
- A Business Support Fund will be established to
support the hardest hit sectors, including hospitality, tourism,
accommodation, arts and entertainment, and retail.
How to apply?
Vic businesses can now access information on the support services being
provided on dealing with COVID-19, including how to access financial support
available through the national stimulus package, by calling the Business
Victoria hotline on 13 22 15. A coronavirus business support page has also been
created. Find it here.
QLD
Interest Free State Government Loans
The QLD Government will offer $500m in loans to eligible businesses to retain
employees and maintain operations. Details are:
Loans up to $250,000
First 12 months interest free
Currently taking expressions of interest before rolling out the
concessional loans
How to apply?
Expressions of interest application is here
Payroll Tax Concessions
Deferred payroll tax returns until 31 July 2020
Payroll Tax Concession Summary
How to apply?
Complete the online payroll tax deferral application form
3) Banks and Lending Institutions
Specific COVID-19 concessions have
been announced by the following banks:
i) Commonwealth Bank (CBA)
- Deferring repayments on a variety of business
loan and overdraft products, for 6-months.
- Reducing commercial interest rates by 0.25
- 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?
Speak with your CBA Bank Manager.
ii) ANZ
- Suspending interest repayments
- Deferral of business loan repayments for up to
6 months, assessed on a case-by-case basis
- 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
iv) Westpac
- Continuing it’s hardship assistance program
- Deferral of business loan repayments for up to
6 months, assessed on a case-by-case basis
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 Bendigo Bank or your relationship manager
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