Central Coast Accountants

The Coronavirus Economic Stimulus Package for Businesses

Published on April 30, 2020 at 12:00 AM


Coronavirus – Covid-19, what does this all mean to people in business, companies, trusts, sole traders and partnerships?

There have been a lot of changes announced by the Government. I will try and summarise what may be important in the business world.

  • Increase in instant write-off threshold from $30,000 to $150,000 until 30/06/2020.
    Only question is, if a business now has zero income, any instant write-off will not assist you.
  • Provision of a new investment incentive by providing an extra 50% depreciation deduction for purchases of equipment through to 30/06/2021 (this is effectively only for a value of > $150,000).
  • A 50% wage subsidy of up to $21,000 ($7,000 per quarter), for apprentices and trainee wages for the 9 months from January to September 2020.
  • Cashflow for employers (up to $100,000 depending on your PAYG withholding liabilities). A minimum of $10,000 and maximum of $50,000 is available from 28 April 2020. It is equal to 100% of your PAYG Withholding obligation up to the maximum limit of course.
    These payments are tax free.
    An additional payment will be made from 28 July 2020 for the same amount subject to certain conditions.
    You must be a registered employer as of 12 March 2020. Payments vary depending whether you are a monthly or quarterly remitter.
  • The ATO will defer current or upcoming tax obligations for future months.
  • PAYG instalments can be varied off your March 2020 quarterly Activity Statement. Varied PAYG instalments may result in refunds from September 2019 and December 2019 quarters, depending on your circumstances. The ATO won’t apply penalties or charge interest to varied instalments for the 2019/2020 financial year.
  • Banks will defer loan repayments for six months for small businesses.
  • Banks can lend up to $250,000 for small businesses (which will be guaranteed up to 50% by the Government) for up to 3 years. There will be an initial 6 month repayment holiday.
    To borrow the money, the lender will have to have the ability to repay the loan after the 3 year period and have a good banking record.

JobKeeper Payment

  • The JobKeeper payment is a payment made to eligible businesses and not for profits affected by the Coronavirus.
  • Eligible businesses have to register to participate and will receive a payment of $1,500 per fortnight for eligible employees to support the people they employed as at 1 March 2020 who are retained in employment.
  • Self employed individuals will also be eligible to receive the JobKeeper payment.
  • The JobKeeper payment will be available from 30 March 2020 and will be available until 27 September 2020.
  • If a business has a turnover less than $1 billion, the business has to demonstrate that turnover has fallen or likely to fall by 30% or more.
  • If a business has a turnover of over $1 billion, the rate changes to 50% or more.
  • For charities registered with the Australian Charities and Not-For-Profit Commission (ACNC), the rate is 15% or more.
  • Certain businesses are unable to participate, mainly Government agencies, both Federal and State.

Eligible employees include the following:-

  • Currently employed (including those stood down or re-hired)
  • Full time, part-time employees or casuals employed for longer than 12 monthsas at 1 March 2020
  • must be aged 16 or over as at 1 March 2020
  • Australian Citizen, hold a permanent visa or special category visa holder as at1 March 2020
  • Resident for Australian Tax purposes on 1 March 2020
  • Not in receipt of a JobKeeper payment from another employer.

Before an employer is entitled to the JobKeeper payment, wages of at least $1,500 per fortnight (before tax), must be paid by the employer. For the first JobKeeper entitlement, wages must be paid prior to the end of April 2020.

Each employee must be paid at least $1,500 per fortnight (before tax)

The first payment will be paid by the ATO monthly in arrears.

The first period starts on Monday 30 March 2020 and ends oi Sunday 12 April 2020.

The JobKeeper payment has numerous rules and details that must be adhered to enable entitlement to the payments.