Covid-19 Federal Government assistance package – part 2

Craig Byron CPA

24 March 2020

Here’s an update on the new package.  Please note that this passed both houses of parliament on March 23 and only required Royal Assent to become law.  This means that there is now some certainly about what measures have been adopted.

There is a lot to take in, which we’ll try to cover below, but here is a quick summary.

Businesses:

  • Your super for this quarter (March 2020) needs to be paid on time as normal.  There are penalties for late super which will still apply.
  • There are different rules for the different taxes you pay on your BAS:
    • PAYG withholding (tax on employee wages) will be nil as it will be offset by a stimulus package payment.
    • PAYG tax instalments (tax on business profit) can be varied to nil and you can apply for a refund for tax instalments you paid in September and December 2019.
    • GST is payable as normal (in May 2020) but the ATO are being more flexible on payment plans and remitting any interest that applies.
  • The depreciation rules have changes so that the asset write off limit is now $150,000.
  • Assistance is available for employers with apprentice or trainees

Individuals:

  • You may be able to access a tax free payment of $10,000 from your super fund.  See below for eligibility criteria.
  • Centrelink payments have been boosted and the conditions have been relaxed.  If you have lost your job or you are a sole trader whose business is on hold you could be eligible for the Jobseeker payment.
  • Those on government payments or who hold certain concession cards will now received two payments of $750, instead of one.

Below is some more detail on the measures.

An upfront deduction for asset purchases costing up to $150,000

This has passed without amendment please refer to the previous blog post HERE (LINK) for more details.

An upfront deduction for 50% of the cost of an asset purchased

This has passed without amendment please refer to the previous blog post HERE (LINK) for more details.

Cash flow assistance for employers (PAYG withholding reduction)

A tax-free payment between $10,000 (was $2,000) and $50,000 (was $25,000) for businesses that employ staff will be made available for the March and June periods. 

An additional payment is being introduced in the July – October period.  Eligible entities will receive an additional payment equal to the total of all the cash flow assistance they have already received in the March – June period. 

Both payments are eligible to be paid in the June quarter BAS.

This means that the minimum each business that employs staff will receive is $20,000 and the maximum received will be $100,000. 

To be eligible, business annual turnover for the prior year must be less than $50 million.

If you employ, but do not withhold OR withhold below $10,000 then a business will receive a credit of $10,000 in their March quarter BAS, a $5,000 credit in the June quarter BAS (being 50% of the initial cash boost) and $5,000 in the September quarter BAS (being the other 50% of the initial cash boost). 

There is an adjustment if you pay PAYG withholding monthly so you don’t lose benefits compared to quarterly lodgers.

ATO concession on tax instalments and tax debts

In addition, the ATO have announced the following measures to assist with cash flow for the remainder of the 2019/20 financial year:

  • You can apply to vary pay as you go tax instalments to nil for the March 2020 quarter
  • You can claim a refund of tax instalments paid in the September and December quarters

You can vary your PAYG instalments on your March quarter BAS.

If your business has been impacted by the coronavirus, the ATO will consider remitting all interest and penalties incurred after 23 January 2020

You can ask for a low interest payment plan for existing and ongoing liabilities

You can find further information on the ATO website.

If you need help in dealing with the ATO in relation to any of these matters, contact us to discuss.

Early access to superannuation

Note:   We are going to explain under what conditions early access to super will be available to you but suggest you consider the large hole this will put into your retirement income.  Please consult with your financial advisor about the long term cost before going ahead with this.

The proposal will allow eligible people to apply online through myGov to withdraw up to $20,000 in the following manner: $10,000 from their super before June 30 and another $10,000 in the first quarter of the 2020/21 financial year (up to September 30.

To be eligible to apply for the early release of super you need to be in at least one of the following categories:

  • 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:
    • You were made redundant; or
    • Your working hours were reduced by 20% or more; or
    • If you were a sole trader – your business was suspended or there was a reduction in your turnover of 20% or more.

The amounts received will all be tax free.

You will be able to apply for early release for super through an application on myGov from early April for industry and retail funds.  The ATO will process your application and issue you with a determination which they will also send to your super fund for processing and payment.

The ATO are still working on the early release method to apply for taking funds out of a self-managed super fund.  This will be made available on the ATO website in the future.

Support for businesses employing Apprentices and Trainees

To help businesses retain apprentices and trainees, employers can apply for a wage subsidy of 50% of the applicable wages paid during the 9 months from 1 January 2020 to 30 September 2020.

The maximum payment per apprentice/trainee will be $21,000 or $7,000 per quarter.

For more information, see the government fact sheet here (page 5 and 6).

Don’t forget to pay your super for the March quarter!!

As mentioned in our previous blog, there will be no relief from paying superannuation guarantee for your employees.  By law, the ATO cannot grant extensions or waive penalties in relation to super payments. 

This does not affect the recently legislated amnesty for unpaid super entitlements accrued before 31 March 2018.  You still have 6 months to rectify these payments and receive a tax deduction without penalty.

Additional assistance is being discussed and we will update our information when the Prime Minister and Treasurer announce it. 

Please make an appointment if you would like any further information or to discuss your personal circumstances at https://beyondaccountancy.gettimely.com/book