Robert Goodman Accountants Blog

Businesses that received the initial cash flow boosts as a part of the COVID-19 stimulus measures are in line for additional payments for the June to September quarter. Generally, the additional amount businesses will receive will be equal to the total amount that they initially received and will be split evenly between the lodged activity statements. However, if you've made adjustments or revised your activity statements after lodgement, the amount of additional cash flow boost payments you receive may be different.

If your business is one of many that received the initial cash flow boosts as a part of the government's COVID-19 economic stimulus measures, prepare for more help coming your way. When you lodge your monthly or quarterly activity statements for June to September 2020, your business will receive additional cash flow boosts.

The additional amount you receive will be equal to the total amount of initial cash flow boosts that you previously received and will be split evenly between your lodged activity statements. Therefore, quarterly payers will generally receive 50% of their total initial cash flow boost for each activity statement, while monthly payers will generally receive 25% of their total initial cash flow boost for each activity statement.

For example, if your business lodges activity statements quarterly and you received an initial cash flow boost of $10,000, when you lodge your June to September 2020 quarterly activity statements your business will receive $5,000 for the quarter ended June 2020 and $5,000 for the quarter ended September 2020. Although, if your business lodges monthly activity statements, you will receive $2,500 for each month of June, July, August and September 2020.

Beware however if your business has revised activity statements after lodgement, it may affect the amount of cash flow boost you may receive. You can check your statement of account through ATO online services for details on how your account may have been adjusted to work out how it will affect your cash flow boost payment.

Remember, if you have not made payments to employees subject to withholding, you need to report zero for PAYG withholding when lodging your activity statements to ensure that you receive the additional cash flow boost payments for June to September 2020. It is important that you do not cancel PAYG withholding registration until you have received the additional cash flow boosts.

If your business does not automatically receive the cash flow boost, it does not necessarily mean your business is not eligible, it may just mean the ATO requires additional information.

For example, to be eligible for the cash flow boost, your business will need to be a small to medium business with an annual turnover of less than $50m. However, the ATO has discretion to deem a business eligible if:

  • you're a new business that haven't previously lodged an income tax return because you started business on or after 1 July 2019; or
  • you can demonstrate that you expect your business to be a small or medium business entity with a turnover of less than $50m in the 2019-20 year even though your aggregate turnover for prior years was more than $50m.

To take advantage of the additional cash flow boost payments, make sure you lodge your activity statements by the due dates below:

  • For quarterly lodgers, the due dates are:
    • 28 July 2020 for the April-June 2020 quarter; and
    • 28 October 2020 for the July-September 2020 quarter.
  • For monthly lodgers, the due dates are:
    • 21 July 2020 for June 2020;
    • 21 August 2020 for July 2020;
    • 21 September 2020 for August 2020; and
    • 21 October 2020 for September 2020.

Need help?

If you're not sure whether your business will receive the cash flow boost payment, we can help you figure it out. We can also help you lodge your activity statements on time in order to receive the additional payments to help with the cash flow. Contact us today for expert service and advice.

Email us at Robert Goodman Accountants at reception@rgoodman.com.au © Copyright 2020 Thomson Reuters. All rights reserved. Brought to you by Robert Goodman Accountants.

10 things to know this tax time

Tax time is here and the ATO has developed a list of important things you need to know this year. The ATO recognises 2019–20 has been difficult for many. The ATO will provide support where possible and help with information you can use to get things right, to ensure an easier tax time.

  1. The ATO has produced Tax Time Toolkits for various industries and occupations including rental properties and small business.  
  2. To reduce the risk of mistakes and amendments to tax returns, we will wait until your your income statements are 'Tax ready' before lodging your tax return. Pre-fill information should be finalised for most of our clients by the end of July.
  3. Employers no longer need to give their employees payment summaries or lodge a payment summary annual report to the ATO for information reported and finalised through Single Touch Payroll (STP). Instead, employees' income statements will be available to them in ATO online services through myGov. We can review your income statements on the tax agent portal. 
  4. After the last pay event for the financial year, employers need to make a finalisation declaration. They must do this by:
    • 14 July if they have 20 or more employees
    • 31 July if they have 19 or fewer employees.
  5. If you receives JobKeeper payments, these are treated as assessable income and will be included in the pre-fill data. If you are a sole trader, you need to include the payments as business income in your tax return.
  6. Funds received through the COVID-19 early access to superannuation measure are not assessable income and do not need to be included in your tax return.
  7. The cash flow boost amounts are non-assessable non-exempt (NANE) income. Employers are still entitled to a deduction for the pay as you go withholding paid. 
  8. The ATO has introduced an optional shortcut method for employees working from home during COVID-19. Employees can claim 80 cents for each hour they worked from home between 1 March 2020 and 30 June 2020, to cover all deductible expenses.
  9. The instant asset write-off threshold increased to $150,000 and eligibility was expanded to cover businesses with an aggregated turnover of less than $500 million from 12 March 2020 until 31 December 2020. To claim this tax time, assets must be first used or installed ready for use by 30 June 2020.
  10. If you are unable to make a payment by the due date, we can submit a payment-only deferral request form on your behalf until 14 September 2020 for eligible obligations. Please contact us for assistance. 
Email us at Robert Goodman Accountants at reception@rgoodman.com.au Source: ATO. All rights reserved. Brought to you by Robert Goodman Accountants.

With Tax Time 2020 just around the corner, many individuals on reduced income or have increased deductions may be eager to lodge their income tax returns early to get their hands on a refund. However, the ATO has issued a warning against lodging too early, before all your income information becomes available. It notes that employers will have until the end of July to electronically finalise their employees' income statements. This timeframe similarly applies to other information from banks, health funds and government agencies.

If you're a retail or hospitality worker, 2020 has perhaps not been the best year. However, as with everything, there is a silver lining, with tax time just around the corner, you may be able to get a larger refund than usual. This is due to either being on reduced incomes or having the ability to claim a wider range of deductions, such as deductions for protective equipment (eg gloves, face masks, sanitiser or anti-bacterial spray), or for some, a combination of both.

"This tax time the ATO expects to see a substantial increase in people claiming deductions for working from home or for protective items required for work" – Assistant Commissioner Karen Foat.

With so many different types of incomes and expenses affecting tax obligations this income year, the ATO is taking a range of different approaches to support taxpayers and the community through tax time. In addition to updating published information on the website, the ATO is also encouraging taxpayers to search its online "ATO community" for any information that is not listed on its website. The community forum operates 24 hours a day and contains "ATO-endorsed" responses.

Remember also, for most people, income statements have replaced payment summaries. So, instead of receiving a payment summary from your employer, the income statements will be finalised electronically with the information provided directly to the ATO. The income statement can be accessed through myGov and the information is automatically included in your tax return if you use myTax. Tax agents will also have access to this information.

Although you may be eager to lodge as soon as possible, the ATO has warned against lodging your return too early (ie as soon as the new income year rolls around), as much of the individual information on income may not be confirmed until later. For example, the income statements which show year-to-date salary and wages, PAYG withholding tax, and employer super contributions may not be finalised by employers until 31 July.

According to the ATO, it is important to wait until the income statement is finalised before lodging a tax return to avoid either delays in processing or a tax bill later on. You income statement will be marked "tax ready" if it is finalised. Other information from banks, health funds and government agencies are also expected to be ready by the end of July and will be automatically inserted into your tax return.

If you still choose to lodge early, the ATO advises that you review any information that is pre-filled and confirm that it is correct and that you wish to use it. You will also be required to acknowledge that your employer may finalise your income statement with different amounts and that you may need to amend your tax return and additional tax may be payable.

If you would like to…

Lodge early? We can help you work out the best estimate of your income for the year from the various sources to minimise the chance of paying additional tax. If you're not sure about the amount of deductions you can claim this year, we can help you work that out, contact us for expert advice.

Email us at Robert Goodman Accountants at reception@rgoodman.com.au © Copyright 2020 Thomson Reuters. All rights reserved. Brought to you by Robert Goodman Accountants.

Due Date for SBSCH Payments

If you use the Small Business Superannuation Clearing House (SBSCH), for 2019–20, super payments need to be accepted by the SBSCH by 23 June 2020 to allow time for the employees' super funds to receive the payments by 30 June. It is important to meet this timeframe as the timing of the payments may impact the individual tax position of employees.

For the purpose of claiming a tax deduction, superannuation payments are only considered to be paid once they have been processed and received by the employees' super funds, not the date the SBSCH accepts the payments.

However, in late 2019 a draft Practical Compliance Guide (PCG) was issued for consultation, which has now been finalised and published as PCG 2020/6.

With the finalisation of PCG 2020/6, where the conditions in the Guideline are satisfied, the Commissioner will not apply compliance resources to determine which income year employers are entitled to claim income tax deductions for super contributions made through the SBSCH provided your client makes the payment to the SBSCH before close of business on the last business day on or before 30 June.

Before you make super payments, you should confirm with your employees that their super fund details are correct in their SBSCH account, and make necessary updates as soon as possible. Please refer to the conditions in the PCG in regards to providing all relevant information to allow the SBSCH to process the payments.

Incorrect details may have an impact on the applicability of the PCG to your employers' circumstances.

The due date for quarterly super guarantee (SG) payments has not changed. The next quarterly due date is 28 July 2020.

Updated Office Opening Hours

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Samford Office 2/32 Main St Samford

- Monday to Friday: Open 8:30am-5pm 

Telephone/Zoom appointments:

- Monday to Saturday 8am - 5pm

If you need to get in touch or send in your work, we ask that you do so by telephone, email, fax or mail to PO Box 35 Samford Qld 4520 or call the office to book an appointment on 3289 1700. You can also use a free iOS or Android PDF Scanner App on your phone to scan and email documents to us. For larger files, please get in touch with us and we can arrange a secure dropbox connection. Please call 3289 1700 or email reception@rgoodman.com.au .

Instant Asset Write Off Extended

The Federal Government has announced the extension to the instant asset write off for six months to 31 December 2020.

If your business is in relatively good shape and have been contemplating an asset purchase, now is the time. Not only will you be helping the Australian economy get back on its feet, you'll be doing your business a favour by taking advantage of the instant asset write-off threshold of $150,000. Which is the highest it has ever been or will likely to be for a while. 

With businesses all around the country starting back up after the COVID-19 pandemic, many, including the federal government are hoping to trade their way out of a potentially prolonged recession. Businesses that are in relatively good shape can help the economy and themselves at the same time by purchasing any needed capital assets and taking advantage of the instant asset write-off now.

From 12 March 2020 until 31 December 2020, the instant asset write-off threshold amount for each asset has been increased from $30,000 to $150,000. Which means that businesses are able to purchase an asset up to the value of $150,000 and claim the entire amount (or the business-use portion) as a tax deduction provided it is first used or installed ready for use between those dates. Any businesses with an aggregated turnover of less than $500m is eligible.

The timing of whether you get the instant asset write-off threshold of $150,000 will largely depend on when the asset was purchased and when it was first used or installed ready for use. Generally, if the asset was first used or installed ready for use between 12 March 2020 and 30 June 2020, the instant asset write-off threshold applies for the 2020 financial year. If the asset is first used or installed ready for use between 1 July 2020 and 31 December 2020, the instant asset write-off threshold applies for the 2021 financial year

However, not all assets are included in the instant asset write-off, a small number of assets are excluded and there are special rules for the purchase of a car.

For example, if your business purchases a luxury passenger car costing $100,000 on 5 June 2020, while the instant asset write-off threshold is $150,000, you are not able to deduct the entire cost of the car. The cost of car for depreciation is limited to the car limit for the year. For the year ending 30 June 2020, the car cost limit for depreciation is $57,581, therefore, you will only be able to deduct $57,581 under instant asset write-off and cannot claim the excess cost under any other depreciation rules.

If, in the above example, your business instead purchases a work ute which isn't designed to carry passengers and has been set up with all the trade tools in the tray for use in your business, the car cost limit for depreciation would not apply. So, if the ute was purchased for $70,000 on 5 June 2020, your business is able to claim the full deduction of $70,000.

It is also important to note that your business can claim the instant asset write-off on multiple assets, as long as the cost of each asset is less than the threshold. Whether or not GST is included or excluded from the threshold largely depends on if your business is registered for the GST. It will be crucial to get this right, particularly for those assets that are close to the threshold.

For any assets that cost the same or more than the relevant instant asset write-off threshold, it will usually need to be depreciated according to either simplified depreciation rules or general depreciation rules, depending on which one the business uses and the type of asset.

Want to do your bit to help the economy?

If your business has been contemplating an asset purchase under $150,000, now is the time to act. You will have until 30 June 2020 to first use it or have it installed ready for use to take advantage of a big deduction in the current 2020 financial year, or between 1 July 2020 and 31 December 2020 for the deduction in the 2021 financial year. Contact us today if you're not sure whether the asset you're planning to purchase would qualify.

Email us at Robert Goodman Accountants at reception@rgoodman.com.au .All rights reserved. Brought to you by Robert Goodman Accountants. 

Yellow Flowers

$1,500 JobKeeper subsidy to keep staff employed

 

Date

· From 30 March 2020 for six months

· For employees employed at and from 1 March 2020

· First payments in first week of May 2020

Applies to

Based on comparable periods:

· Employers <$1 bn that have experienced a downturn of more than 30%

· Employers >$1bn that have experienced a downturn of more than 50%

 

A subsidy of $1,500 per fortnight per employee, administered by the ATO, will be paid to businesses that have experienced a downturn of more than 30% (50% for businesses over $1bn).

 

To be a part of the subsidy, employers will need to ensure that their employees receive at least $1,500 per fortnight (before tax). See the example below.

 

Eligibility

There are two levels of eligibility; for employers and employees.

 

Eligible employers are those with:

 

·         Turnover below $1bn that have experienced a reduction in turnover of more than 30% relative to a comparable period 12 months ago (of at least a month); or

·         Turnover of $1bn or more that have experienced a reduction in turnover of more than 50% relative to a comparable period 12 months ago (of at least a month); and

·         Are not subject to the Major Bank Levy.

 

Sole traders and the self-employed with an ABN, and not-for-profits (including charities) that meet the turnover tests are eligible for the JobKeeper payment.

 

Eligible employees are those who:

 

·         Were employed by the relevant employer at 1 March 2020; and

·         Are currently employed by the employer (including those who have been stood down or re-hired); and

·         Are full time, part-time, or long term casuals (a casual employee employed on a regular basis for 12 months as at 1 March); and

·         Are at least 16 years of age; and

·         Are an Australian citizen, hold a permanent visa, are a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder; and

·         Are not in receipt of a JobKeeper Payment from another employer.

 

While it appears that businesses without employees can potentially qualify for JobKeeper Payments, it is not clear at this stage what conditions will need to be satisfied.

 

How the support is calculated

The ATO will administer this program and will make the $1,500 payments based on payroll information. The payments will be made monthly in arrears, so it is essential that you ensure your business and your employees continually meet the eligibility criteria.

 

The business will continue to receive the payments for eligible employees while they are eligible for the payments. While the program is expected to run for 6 months, payments will stop if the employee is no longer employed by the relevant employer.

 

How the support is provided

To access the JobKeeper subsidy, talk to us to assist you with the registration process and calculations.

 

If you want to manage the process yourself, you must:

 

·         Register

o    Applications are not yet open. However, you should register your intent to apply for the JobKeeper subsidy with the ATO (here). The ATO will provide you with regular updates and advise you when you can lodge your application

·         Assess turnover

o    Ensure you have an accurate record of your revenue for the 2018-19 income year and for the 2019-20 year to date

o    Ensure you keep an accurate record of revenue from March 2020 onwards

o    Compare your revenue for the whole of March 2019 with the whole of March 2020

o    Measure the % decline in your revenue and ensure it has declined by more than 30%

o    If you are not eligible in March, you may become eligible in another month

·         Identify eligible employees

o    Nominate the employees eligible for the JobKeeper payments – you will need to provide this information to the ATO and keep that information up to date each month. The ATO will use Single Touch Payroll to prepopulate the information in most cases.

o    Notify all eligible employees that they are receiving a JobKeeper payment. Employees can only be registered with one employer.

o    Pay eligible employees at least $1,500 per fortnight (before tax). If an employee normally receives $1,500 or more per fortnight before tax the employee should continue to receive their regular income.

o    Pay superannuation guarantee on normal salary and wages amounts paid to employees. If the employee normally receives less than $1,500 per fortnight before tax, the employer can decide whether to pay superannuation on the additional amount that is paid as a result of the JobKeeper program.

 

Sole traders and the self-employed can register their interest in applying for the JobKeeper payment with the ATO. These businesses will need to provide an ABN for the business, nominate an individual to receive the payment, provide the individual's TFN and declare their continued eligibility for the payments. Payments will be monthly to the individual's bank account.

 

Example

Adam owns a real estate business with two employees. The business is still operating at this stage but Adam expects that turnover will decline by more than 30% in in the coming months. The employees are:

 

Employee

Employment type

Salary per fortnight (before tax)

Anne

Full-time

$3,000

Nick

Part-time

$1,000

 

Both Anne and Nick are still working in the business.

 

Adam registers his interest in the JobKeeper scheme (from 30 March 2020), then applies to the ATO providing details of his eligible employees. Adam also advises Anne and Nick that he has nominated them as eligible employees to receive the payment. Adam will provide information to the ATO on a monthly basis and receive the payment monthly in arrears.

 

Adam's business is eligible to receive the JobKeeper Payment for each employee.

 

For Anne, the business will:

· Continue to pay Anne her full-time salary of $3,000 per fortnight before tax,

· Receive $1,500 per fortnight from the JobKeeper Payment

· Pay superannuation guarantee on Anne's salary

 

For Nick, the business will:

· Continue to pay Nick $1,000 per fortnight before tax salary

· Pay Nick an additional $500 per fortnight before tax (totalling $1,500)

· Receive $1,500 per fortnight from the JobKeeper Payment

· Pay superannuation guarantee on Nick's wage of $1,000 per fortnight (but can choose to pay SG on the full $1,500)

 

Adapted from Treasury fact sheet: JobKeeper payment - information for employers

Email us at Robert Goodman Accountants at reception@rgoodman.com.au .All rights reserved. Brought to you by Robert Goodman Accountants.

COVID-19 OFFICE UPDATE

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Coronavirus (COVID-19) is causing significant disruption to businesses and households throughout Australia and the world. Robert Goodman Accountants are maintaining a close watch on developments.  We have activated our contingency planning that would allow us to continue our service delivery with minimal disruption.  We have no reported cases of illness relating to COVID-19 within Robert Goodman Accountants or persons who have come into contact with our team. In the meantime, we are seeking to minimise the chance of exposure and spread of COVID-19 by limiting meetings to telephone or video-call technology.

Opening Hours: 

From 8:30am Tuesday 31 March our office will be closed to receiving face to face appointments and dropping off/picking up documentation. However, it will be 'business as usual' as we will continue to be working remotely with the highest level of security and technology. 

Open for phone/Zoom appointments as follows: 
Monday:   8:30am - 5:00pm 
Tuesday:  8:30am - 5:00pm 
Wednesday: 8:30am - 5:00pm 
Thursday: 8:30am - 5:00pm 
Friday: 8:30am - 5:00pm 
Saturday: 10:00am - 5:00pm by Appointment
Sunday: Closed
8am and 6pm weekday appointments available.  Contact reception for details.

Whilst our offices are closed, we remain fully operational and are 100% committed to helping our clients through this worldwide emergency. Arrangements will be made to ensure that planned meetings will proceed using telephone or video-call technology such as Zoom. If you need to get in touch or send in your work, we ask that you do so by telephone, email, fax or mail. You can also use a free iOS or Android PDF Scanner App on your phone to scan and email documents to us. For larger files, please get in touch with us and we can arrange a secure dropbox connection.  Please note, if you mail documents to us we have a 24 hour policy before opening documentation. We request that any cheques be made payable to RGA Accounting Pty Ltd and direct deposited to our bank account rather than mailed.  

We have reached out to a significant number of clients over the last few weeks and will continue to reach out and try and assist in any way that we can.  If you have not yet heard from us, or need urgent assistance, we urge you to get in touch.  We can assure you that we will be available to support you and your business throughout this challenging period.

Stay healthy and positive! 

Call us on 07 3289 1700 or email us at Robert Goodman Accountants at reception@rgoodman.com.au .  

The Second $66.1 bn Stimulus Package: What You Need To Know

The Government released on 22 March 2020 a second, far reaching $66.1 bn stimulus package that boosts income support payments, introduces targeted changes to the superannuation rules, provides cash flow support of up to $100,000 for small business employers, and relaxes corporate insolvency laws. 

 

The stimulus measures are not yet legislated. Parliament will reconvene on Monday 23 March.

 

The Prime Minister has warned that there are no "quick solutions" and that business should prepare for 6 months of disruption.

 

In Summary

Business

·         Tax-free payments up to $100,000 for small business and not-for-profit employers. An increase in the previously announced initial tax-free payments for employers to a maximum of $50,000. In addition to this, a second round of payments will be made up to a maximum of $50,000, accessible from July 2020. 

·         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.

·         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.

·         Temporary relief from some Corporations Act requirements

Individuals

·         Early release of superannuation – individuals in financial distress able to access up to $10,000 of their superannuation in 2019-20, and a further $10,000 in 2020-21. The withdrawals will be tax-free and will not affect Centrelink or Veterans' Affairs payments.

·         Temporary reduction in minimum superannuation draw down rates – superannuation minimum drawdown requirements for account based pensions and similar products reduced by 50% in 2019-20 and 2020-21.

·         Deeming rates reduced – from 1 May, superannuation deeming rates reduced further to a lower rate of 0.25% and upper rate of 2.25%.

·         Supplements increased, access extended and eased – for 6 months from 27 April 2020:

o    A temporary coronavirus supplement of $550 will be paid to existing income support recipients (people will receive their normal payment plus $550 each fortnight for 6 months).

o    A second one-off stimulus payment of $750 will be paid automatically from 13 June 2020 to certain income support recipients (in addition to the payment made from 31 March 2020).

o    Eligibility for access to income support eased to include sole traders and the self-employed, and to those caring for someone infected or in isolation.

o    Waiting periods and assets tests temporarily waived.  

·         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.

 

The Government has flagged that additional stimulus packages will be required.

 

In detail

Support for business

Tax-free payments up to $100,000 for employers

·         From: 28 April 2020

·         Eligibility: Small and medium business entity employers and not-for-profit entities, with an aggregated annual turnover under $50 million.

 

The Government has increased the previously announced measures to provide cash flow support to business.

 

Now, eligible businesses with a turnover of less than $50 million will initially be able to access tax-free cash flow support, with the minimum amount being increased to $10,000 and the maximum amount increased to $50,000 (previously $2,000 to $25,000). However, additional support will be provided in the July – October 2020 period so that eligible entities will receive total minimum support of $20,000 and up to $100,000.

 

In order for a business to qualify for this support it must have been established prior to 12 March 2020. The rules are more flexible for charities because the Government recognises that new charities might be established in response to the pandemic.

 

The cash flow support measures will be provided in the form of a credit in the activity statement system. The support will be provided in two phases.

 

·         The first phase ensures that eligible employers receive a credit equal to 100% of the PAYG amounts withheld from salary and wages paid to employees during the relevant period, up to the maximum amount of $50,000.

·         The second phase ensures that eligible employers receive another series of credits, equal to the credits that were received under the first phase. For example, if a business received $40,000 of credits in the first phase it will receive a further $40,000 of credits in the second phase. These additional credits will be spread over two or four activity statement periods, depending on whether the employer lodges on a quarterly or monthly basis.

 

If a business pays salary and wages to employees but is not required to withhold any tax then a minimum payment of $10,000 will be made in the first phase and a further payment of $10,000 will be made in the second phase.

 

The credits are automatically calculated by the ATO and employers will need to lodge an activity statement to trigger the entitlement. If the credit puts the business in a refund position the excess amount will be refunded by the ATO within 14 days.

 

Businesses that lodge activity statements on a quarterly basis will be eligible to receive credits in the first phase for the quarters ending March 2020 and June 2020. Credits in the second phase will be available for the quarters ending June 2020 and September 2020. The minimum $10,000 payment will be applied to the first lodgement.

 

Business that lodge on a monthly basis will be eligible for the credits in the first phase for the March 2020, April 2020, May 2020 and June 2020 lodgements. Credits in the second phase will be available for the June 2020, July 2020, August 2020 and September lodgments. The minimum $10,000 payment will be applied to the first lodgement.

 

Eligibility for the measure will be based on prior year turnover. We will have to wait for the legislation for the finer details.

 

Not-for-profit employers, including charities, with an aggregated turnover under $50 million will also be able to access the cash flow support.

 

·       See: Cash flow assistance for businesses

 

Solvency safety net

A safety net has been put in place to protect businesses in temporary financial distress as a result of the pandemic by lessening the threat of actions that could unnecessarily push them into insolvency and force the winding up of the business. These include:

 

·         A temporary 6 month increase to the threshold at which creditors can issue a statutory demand on a company from $2,000 to $20,000.

·         The time a company has to respond to statutory demands will increase from 21 days to 6 months.

·         For 6 months, directors will be provided with temporary relief from personal liability for trading while insolvent.

·         See also bankruptcy safety net below

 

It will be more important than ever for business to stay on top of their debtors.

 

Debts incurred will still be payable by the business. Only those debts incurred in the ordinary course of the business will be subject to the safety net measures.

 

·       See: Temporary relief for financially distressed businesses

 

Access to working capital for SMEs – supporting lenders

The Government has announced a Coronavirus SME guarantee scheme that will guarantee 50% of new loans to SMEs up to $20 billion. These loans are new short-term unsecured loans to SMEs.

 

SMEs with a turnover of up to $50 million will be eligible to receive these loans.

 

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

·       Maximum total size of loans of $250,000 per borrower.

·       The loans will be up to three years, with an initial six month repayment holiday.

·       The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.

 

Loans will be subject to lenders' credit assessment processes with the expectation that lenders will look

through the cycle to sensibly take into account the uncertainty of the current economic conditions.

 

This latest measure builds on the previous initiatives to ensure small business can access capital, including:

·       An exemption to the responsible lending obligations to enable financial institutions to provide new credit, credit limit increases, and credit variations and restructures,

·       $15bn to the Australian Office of Financial Management to invest in wholesale funding markets used by small banks and non-banks to enable these lenders to support SMEs, and

·       Australian Banking Association members will defer loan repayments for 6 months for small businesses (affected small businesses will need to apply for relief).

 

Sole traders and self-employed eligible for Jobseeker payment

The eligibility criteria to access income support payments will be relaxed to enable the self-employed and sole traders whose income has been reduced, to access support.

 

More:

·       Income support for individuals

·       More financial support for coronavirus affected job seekers

 

Temporary relief from Corporations Act requirements

The Treasurer has been given a temporary instrument-making power to amend the Corporations Act to provide relief or modifications to specific compliance obligations.

 

ASIC has announced measures for those companies with a 31 December financial year that need to hold their AGMs by 31 May 2020, providing a two month no action period and enabling hybrid virtual AGMs.

Individuals

Early release of superannuation

From mid-April, individuals in financial distress will be able to access up to $10,000 of their superannuation in 2019-20, and a further $10,000 in 2020-21. The withdrawals will be tax free and will not affect Centrelink or Veterans' Affairs payments.

 

To be eligible to access your superannuation you need to meet the following requirements:

·       you are unemployed; or

·       you are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or

·       on or after 1 January 2020:

o    you were made redundant; or

o    your working hours were reduced by 20% or more; or

o    if you are a sole trader - your business was suspended or there was a reduction in your turnover of 20% or more.

 

For those eligible to access their superannuation, you can apply directly to the ATO through the myGov website from mid-April.

 

More:

·       Early access to superannuation

 

Temporary reduction in minimum superannuation draw down rates

Superannuation minimum drawdown requirements for account-based pensions and similar products will be reduced by 50% in 2019-20 and 2020-21.

 

Age

Default minimum drawdown rates (%)

Reduced rates by 50 per cent for the 2019-20 and 2020-21 income years (%)

Under 65

4

2

65-74

5

2.5

75-79

6

3

80-84

7

3.5

85-89

9

4.5

90-94

11

5.5

95 or more

14

7

 

The upper and lower social security deeming rates will be reduced further. As of 1 May 2020, the upper deeming rate will be 2.25% and the lower deeming rate 0.25%.

 

More: Providing support for retirees

 

Time limited fortnightly $550 'coronavirus supplement'

For the next 6 months, the Government is introducing a new Coronavirus supplement to be paid at a rate of $550 per fortnight. This supplement will be paid to both existing and new recipients in the eligible payment categories.

 

The payment will be made to those receiving:

·       Jobseeker payment (and those transitioning to the jobseeker payment)

·       Youth allowance jobseeker

·       Parenting payment

·       Farm household allowance

·       Special benefits recipients

 

In addition, eligibility to income support payments will be expanded to:

·       Permanent employees who are stood down or lose their job

·       Casual workers

·       Sole traders

·       The self-employed

·       Contract workers who meet the income test

 

The Government notes that these criteria could include those required to care for someone affected by the Coronavirus.

 

Asset testing has also been reduced and will be waived for 6 months. Income testing will still apply.

 

The payment is not available if you have access to any employer entitlements such as annual or sick leave or income protection insurance.

 

More:

·       Income support for individuals

 

Second $750 payment to households

The Government is now providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders residing in Australia (see the full list here). The payment will be exempt from taxation and will not count as income for the purposes of Social Security, Farm Household Allowance and Veteran payments.

 

·       Payment 1 from 31 March 2020 (previously announced on 12 March): Available to people who are eligible payment recipients and concession card holders at any time between 12 March 2020 to 13 April 2020;

·       Payment 2 from 13 July 2020: Available to people who are eligible payment recipients and concession card holders on 10 July 2020.

 

The payments will be made automatically to those that meet the criteria.

 

More:

Payments to support households

 

Bankruptcy safety net

A temporary 6 month increase to the threshold for the minimum amount of debt required for a creditor to initiate bankruptcy proceedings against a debtor will increase from $5,000 to $20,000. In addition, the time a debtor has to respond to a bankruptcy notice will be temporarily increased from 21 days to six months.

 

Where someone declares their intention to enter voluntary bankruptcy, the period of protection from unsecured creditors will be extended from 21 days to 6 months.

 

More:

·       Temporary relief for financially distressed businesses

 

More information:

·       Joint media release with The Hon. Scott Morrison MP Prime Minister

·       Treasury: Support for Businesses

·       Treasury: Supporting Individuals and Households

Email us at Robert Goodman Accountants at reception@rgoodman.com.au . All rights reserved. Brought to you by Robert Goodman Accountants. 

The Government is supporting small business to retain their apprentices and trainees. Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice's or trainee's wage paid during the 9 months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer.

Employers will be reimbursed up to a maximum of $21,000, per eligible apprentice or trainee ($7,000 per quarter).

Support will also be provided to the National Apprentice Employment Network, who are responsible for coordinating the re-employment of displaced apprentices and trainees throughout their network of host employers across Australia.

Eligibility

The subsidy will be available to small businesses employing fewer than 20 full-time employees who retain an apprentice or trainee. 

Employers of any size and Group Training Organisations that re-engage an eligible out-of-trade apprentice or trainee will be eligible for the subsidy. The apprentice or trainee must have been in training with a small business as at 1 March 2020.

Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network (AASN) provider.

This measure will support up to 70,000 small businesses, employing around 117,000 apprentices.

Timing

Employers can register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020.

For further information on how to apply for the subsidy, including information on eligibility, contact an Australian Apprenticeship Support Network (AASN) provider.

An example of how this support can help your business

David's Plumbing is a small business that employs 10 people, including two full-time Australian Apprentices.

Taylor is a first year Australian Apprentice, aged 20, undertaking a Certificate III qualification.  She commenced her apprenticeship with David's Plumbing on 6 February 2020. Taylor receives a weekly wage of $532.89.

Lisa is a third year Australian Apprentice, aged 29, undertaking a Certificate IV qualification. She commenced her apprenticeship with David's Plumbing on 18 November 2017. She receives a weekly wage of $772.71.

David's Plumbing are eligible for Supporting Apprentices and Trainees which pays 50 per cent of the apprentices' wages that have been paid by David's Plumbing since 1 January 2020.

David's Plumbing will receive:

  • $9,059 subsidy for employing Taylor for 6 February 2020 to 30 September 2020
  • $15,068 subsidy for employing Lisa for 1 January 2020 to 30 September 2020

For more info https://bit.ly/2WHoKSu 

Email us at Robert Goodman Accountants at reception@rgoodman.com.au .All rights reserved. Brought to you by Robert Goodman Accountants.