This article is a summary of four main Australian government assistance programs for small business and individuals as a result of COVID-19.
1. Cash Flow Assistance for Business
Under the scheme for small business employers (entities who withhold wages for staff), employers will be credited with an amount equal to 100% of their salary and wages withholding, with the maximum payment being $100,000 over the six months to June 2020 ($50,000 each quarter). The minimum payment will be $20,000 over the six months to June 2020 ($10,000 each quarter).
For example, if the business withholds PAYG for its staff totalling $30,000 for the January to March 2020 quarter, this amount of $30,000 will be refunded in the BAS (as the maximum limit is $50,000 per quarter). If the business withholds PAYG for its staff totalling $5,000 for the quarter, a minimum amount of $10,000 will be refunded in the BAS quarter. The same will apply in the June 2020 quarter.
What is the timing for the payment? – the ATO will deliver the payment as a credit to the entity upon lodgement of its activity statements. Where this places the entity in a refund position, the ATO will deliver the refund within 14 days. Please provide BAS information for the March 2020 quarter to our office as soon as possible to allow for any refund to process as early in April as possible.
Based on the above, we are currently of the assumption that the refund will only be issued in cash to a bank account, once the ATO account is in credit – i.e. we believe that if the entity has an existing debt with the ATO, this refund will be credited against that debt.
Cashflow assistance for business FACT SHEET CLICK HERE.
2. Early Access to Super (Sole Traders)
Eligible individuals (including sole traders) will be able to apply online through MyGov to access up to $10,000 of their superannuation before 30 June 2020. They will also be able to access a further $10,000 from 1 July 2020 for approximately three months. Eligibility as follows:
• You were made redundant
• Your working hours were reduced by 20 hours or more
• If you were a sole trader – your business was suspended or there was a reduction in your turnover by 20% or more.
What is the timing for payment? – Mid April 2020 – applications will be made through MyGov (not your superannuation fund). See attached fact sheet for how to apply through MyGov.
Early Access to Super FACT SHEET CLICK HERE.
3. Supporting the Flow of Credit (Small Business Loans)
Under this scheme the government will provide a 50% guarantee to lenders for new unsecured loans to be issued to small businesses who have been impacted severely by the COVID-19 crisis.
These loans will be under the following terms:
• Maximum of $250,000
• Loans of up to three years, with no repayment required for first six months
• Borrowers will not need to provide security for the loan, as they are unsecured finance
• Loans will be subject to lenders credit assessment processes
What is the timing and how do we apply? – the scheme will commence in April 2020 and will be available for new loans made by participating lenders until 30 September 2020. We expect some further announcements from the government and lenders as to how to apply and which lenders will be offering this assistance.
Supporting Flow of Credit FACT SHEET CLICK HERE.
4. Job Keepers Payment
The JobKeeper payment is a temporary payment available to both companies that employ staff and sole traders. The government will provide eligible entities with a $1,500 fortnightly payment per employee for a period up to 6 months (gross including tax). Note that if you are a sole trader and are eligible to receive this payment, you cannot then claim the Coronavirus Supplement of $550 per fortnight (previously announced).
Who is eligible?
Employers or sole traders will be eligible if the business turnover has reduced by more than 30% relative to a comparable period a year ago (of at least a month). If this does not apply to your business, the following will not apply to you.
How do we apply?
An application will need to be lodged with the ATO, together with supporting information demonstrating a downturn in their business. The number of eligible employees will need to be reported also.
Which employees are covered?
Eligible employers will receive the payment for each eligible employee that was on their books 1 March 2020 and continues to be engaged by the employer – full time, part time and casual (who are employed for more than 12 months on a regular basis). There are special rules if the employee is not an Australian Citizen.
Sole Traders will be eligible if their business has suffered a downturn in turnover of 30% or more.
For employees with multiple jobs, only one employer can claim the payment on their behalf (primary employer).
How much is the payment?
Eligible employers will receive $1,500 (gross, i.e before tax) per fortnight for each eligible employee.
• If an eligible employee earns less than $1,500 per fortnight, the whole of the payment must be paid from the employer to employee
• If an eligible employee earns more than $1,500 per fortnight, the employer will pay the employee their usual payment and the $1,500 will be used by the employer to assist (i.e. effectively paying the difference)
• If an employee has been stood down, the employer must pay the stood down employee $1,500 per fortnight before tax
When will this payment be made?
The first payments will begin to be made by the ATO in the first week of May. These payments will be backdated to 1 March 2020.
What do we do now?
1. If you believe that your business has suffered a 30% or more downturn in turnover as a result of the crisis, please send me an email to register you interest with the ATO.
2. Once you interest with the ATO is registered, we can begin the process of putting together necessary paperwork to prove to the ATO of your business downturn in income.
3. The ATO will check the information and begin making payments from 1 May 2020.
Job keepers FACT SHEET CLICK HERE.
We also must stress that this still needs to be passed by parliament (they are sitting shortly). In addition there will be more information to come as we still have a few unanswered questions of the government regarding the announcement, as will you no doubt!
This article was written by Chris Ayling – Managing Director at Arum Advisory, Accounting firm of choise of many of our Rivkin Clients, Enquiries can be made via chris@arumadvisory.com.au
