The Government has released the second stage of its economic plan to cushion the economic impact of the coronavirus and help build a bridge to recovery.
Assistance to businesses to keep people in a job
The Government is providing up to $100,000 to eligible small and medium sized businesses, and not‑for-profits (including charities) that employ people, with a minimum payment of $20,000. These payments will help businesses’ and not-for-profits’ cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff.
Under the enhanced scheme from the first package, employers will receive a payment equal to 100 per cent of their salary and wages withheld (up from 50 per cent), with the maximum payment being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000. The payment will be available from 28 April 2020.
By linking the payments to business to staff wage tax withholdings, businesses will be incentivised to hold on to more of their workers.
The payments are tax free, there will be no new forms and payments will flow automatically through the ATO.
Small and medium business entities with aggregated annual turnover under $50 million and that employ workers are eligible. NFPs entities, including charities, with aggregated annual turnover under $50 million and that employ workers will now also be eligible. This will support employment at a time where NFPs are facing increasing demand for services.
An additional payment is also being made from 28 July 2020. Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments received.
Coronavirus SME Guarantee Scheme
The Government will establish the Coronavirus SME Guarantee Scheme which will support small and medium enterprises (SMEs) to get access to working capital to help them get them through the impact of the coronavirus.
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.
The Scheme will commence by early April 2020 and be available for new loans made by participating lenders until 30 September 2020.
Providing temporary relief for financially distressed businesses
The Government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive. The package also includes temporary relief for directors from any personal liability for trading while insolvent. The Corporations Act 2001 will be amended to provide temporary and targeted relief for companies to deal with unforeseen events that arise as a result of the coronavirus.
This builds on the support for business and business investment provided in our first economic support package, which included:
- increasing the instant asset write off
- backing business investment by providing accelerated depreciation deductions
- supporting apprentices and trainees
- targeted support for coronavirus-affected regions and communities
NSW Government Policies
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
A $450 million tax cut by providing a waiver of NSW payroll tax for March, April & May 2020 for businesses with Australian grouped payrolls of under $10 million based on the current June 2020 year payroll level.
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.
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.
An $80 million waiver of a range of fees and charges for small businesses including bars, cafes, restaurants and tradespersons.
If you have any queries about new policies, please feel free to contact our team of experienced accountants by clicking here to submit an online enquiry form, calling us on 1300 QUINNS or alternatively, +61 2 9223 9166 to arrange a teleconference or appointment