Business as we know it is changing around us at this time.
The impact of COVID-19 is serious for businesses and there may be a need for a lockdown for a period of time. With new information and direction from our leaders daily, I think it is safe to say we cannot rule out anything at this time. The reality is that a lockdown may happen.
You, our clients are our biggest priority now and always.
The Stimulus Package Part 1 and 2 put forward by Scott Morrison is pending formal approval and we are required to submit your Business Activity Statements for January to March 2020 to ensure anyone eligible for rebates gets their entitlements as soon as possible.
There is now a new ‘normal’ to our business lives and daily routines and we want you to know that we are here for you.
At this stage, we have made plans within our office to comply with the social distancing recommendations advised for indoor places of gathering. At this time of writing, our team is working in the office as usual with a few changes.
We also have plans in place in the event of a state-wide lockdown. If or when this happens our team is ready and prepared to work from home. What this means for you; – we can all be contacted on email or by calling our office on (02) 4962 2022.
We are continuing to help with all your bookkeeping and payroll needs, accounting and taxation compliance and preparing Business Activity Statements to ensure you receive the rebates you are entitled to.
We can assist with reviewing cash flow, loan applications and support you as a small business operator during this time.
If you are feeling stressed or worried about your financial situation at this time, please reach out to us for support. We are all in this together and we are here to support you.
Now, the good news….
The Economic Stimulus Package is designed to support Australian Workers and Businesses. In Australia, there are over 3 million small to medium businesses operating that our Government identifies as the engine room of our economy.
Help is coming our way!
The below are relevant government assistance for small and medium businesses;
Support for Business
Boosting cash flow for employers
The Government is providing up to $100,000 to eligible small and medium-sized businesses (aggregated annual turnover under $50,000,000 and have employees) and not-for-profits that employ people, with a minimum payment of $20,000.
Employers will receive a payment equal to 100% of their salary and wages withheld. Note that this was to be 50%, but has been increased under the second Stimulus announcement. Additionally, the maximum payment also increased from $50,000 to $100,000. Eligible businesses that pay salaries and wages will receive $10,000 (increase from $2,000), even if they are not required to withhold tax. Payment is available from 28 April 2020 and will be tax-free with no new forms required and will flow automatically from the Australian Taxation Office.
An additional payment is also being made from 28 July 2020. Eligible entities will receive an additional payment equal to the total of the Boosting Cash Flow for all employers’ payments received.
“MARCH 2020 BAS IS STEP 1 IN ACCESSING THE CASH FLOW BOOST”
Note that monthly BAS lodgers will receive the first payment for the March 2020, April 2020, May 2020 and June 2020 lodgements, with a 300% calculation in the March 2020 Activity Statement to provide the same treatment as quarterly lodgers.
Instant Asset Write Off Increased
The Instant Asset Write-Off Scheme has increased from $30,000 per asset to $150,000 per asset effective immediately until 30 June 2020. Any assets purchased up to $150,000 will be fully deductible in the year ending 30 June 2020. This applies to both new and second hand depreciating assets. Car write-offs are still subject to the luxury car tax limit ($57,581).
There are also accelerated depreciation deductions over and above existing deductions.
Access to Credit
The Government Coronavirus SME Guarantee Scheme will enhance the willingness of banks and lenders to provide additional credit to businesses.
These loans are for a maximum of $250,000 per borrower for 3 years with no repayments required in the initial 6 months. From early April the loans can be applied for and they will be unsecured. You will not need to provide an asset as security.
Small Business Loan Repayments Deferral
Australian Banks will allow you to defer repayments on existing Business Loans for 6 months.
This is not a loan repayment holiday as interests will continue to accrue and be capitalised. This means your loan balance will be higher after the deferral period.
Contact your bank for more details and check the fine print.
The Australian Taxation Office is assisting businesses that are affected. They will work with you to defer some payments and vary instalments you have due including; Income Tax, Activity Statement, Pay As You Go Instalments (PAYG) and FBT’s.
There are a range of other support offers that we can discuss with you regarding your individual circumstances.
You MUST still stay up to date with lodgements AND you MUST still keep up to date with Compulsory Super Contributions for your employees, the next being payable on the 28 July 2020.
Payroll Tax relief
For NSW Tax Employers; no payroll tax is payable for employers with annual payroll below $10,000,000. At this stage, this is for the months of March, April and May 2020. You will still need to lodge your Annual Payroll Tax reconciliation in July 2020.
All states have implemented various forms of payroll tax relief.
50% wage subsidy for apprentices
This will be available to businesses that currently employ and retain an apprentice or trainee and have less than 20 full-time employees.
This includes a 50% wage subsidy. Employers may receive up to $21,000 per eligible apprentice or trainee, $7,000 per quarter. This covers March, June and September 2020 quarters.
Sole Trader Support
A new $550 fortnightly coronavirus supplement payment has been established.
Permanent Employees who are stood down or lose their employment, sole traders, the self-employed, casual workers, and contract workers will be able to access the new supplement under expanded access to the Jobseeker payment, formerly known as New Start. It will also be paid to both existing and new recipients of the Jobseeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefits.
Support for Individuals and Households
$750 payments are being made to income support recipients from 31 March 2020 and 13 July 2020.
Centrelink payments for employees stood down or lose their employment, sole traders, self-employed, casual workers and contract workers impacted by COVID-19 will receive a Coronavirus Supplement of $550 per fortnight. This is in addition to existing benefits.
Access to Superannuation
Employees who are made redundant or had working hours reduced by 20% or more, or sole traders whose businesses have been suspended or see a reduction of turnover by 20% or more will be allowed to access up to $20,000 of their superannuation funds. $10,000 before 1 July 2020 and $10,000 after 1 July 2020.
Applications are to be completed online through MyGov (my.gov.au).
In the superannuation arena, minimum drawdown requirements for account-based pensions and similar products by 5% for the 19/20 and the 20/21 income years. This reduces the need for retiree’s to sell assets to fund minimum drawdown requirements.
Deeming rates for pensioners will also be reduced by another 0.25%.
Deferral of existing Home Loan Payments
Australian Banks will defer home loan payments for homeowners affected.
Be aware that this is not a mortgage payment holiday and interest will continue to accrue and be capitalised on these loans i.e. your loan balance will be higher after the deferral period.
Talk to your bank for more details.
We are all in this together, call us; we are here for you……
If you would like to book in a 30-minute phone conference with us to discuss your situation please contact our office on (02) 4962 2022. If you would like to join a client Facebook group to help navigate through this time please advise one of our team members.
Some words from Ross………
Newcastle – Australia in March 2019 was a modern first-world country. We live in a democracy with elected Federal & State Governments, a strong and regulated Banking System as well as an excellent public Health System.
Newcastle – Australia in March 2020 is still a modern first-world country. We still have a strong democracy, our Banking System is a robust and regulated Banking System and our public Health System remains one of the best in the world.
Events over the past 3 months in the world aka “CORANAVIRUS PANDEMIC” has created an atmosphere of panic within Australian including my home town of Newcastle. This panic has caused us to question our Government, the Financial System and wonder if our Health System is adequate to cope with this Pandemic.
I am positive these strong pillars of our society will remain intact during this crisis and that our Australian society we will survive 2020 and beyond.
The 24-hour news cycle, as well as unending social media posts about the “CORANAVIRUS PANDEMIC”, has meant that even level headed Novocastrian’s have been caught up in the panic of the buying frenzy. Sad but true – Mob Mentality has taken over Australia and even my beloved Newcastle.
Now that I have gotten my rant about social issues off my chest, I would like to share with you my thoughts on how this “CORANAVIRUS PANDEMIC” will impact small businesses during the remainder of 2020. I base my advice on Australia’s last recession in 1990 when I was younger, a 30-year-old accountant in business with my late father Alan.
My summary of the 1990 Australian Recession:
- Home loan interest rates peaked at 18%. These high-interest rates meant many people lost their homes due to crippling interest and loan repayments.
- Small businesses’ interest rates were over 20% so businesses with large debt had to quickly sell assets to reduce debt or go out of business.
- There was NO Federal or State Government support to small businesses during the 1990 recession.
Fast forward to March 2020:
- Interest rates in Australia are at a record low. Bank’s home loan interest rates are less than 3% and might go under 2% with the recent rate cut.
- House prices are substantially higher in 2020 than in 1990, but low-interest rates will cushion borrowers if (or when) Australia is forced into a recession.
- The Federal Government is committed to spending billions of dollars to support the Australian economy including helping out big and small businesses. All levels of Government and both political parties understand the need to spend money so individuals and businesses can survive this difficult economic time.
No economic downturn is pleasant to go through, but at least this time, the Government will be supporting individuals and businesses and borrowing interest rates that are at record low levels.
Some business tips for small business owners:
- Staff to stay safe and seek the support of family and friends during this difficult time;
- Support your staff;
- The money will be tight due to the loss of consumer confidence and potential community travel restrictions. You need to remain focused on cash flow on a daily basis;
- Review Spending;
- Be upfront and honest with your customers concerning the payment of your accounts. If you do not have the cash to pay someone, tell them so that they understand your current financial position. Do not avoid them and stop taking their phone calls; and
- Ensure that you are positive about what is happening in your business. You might not be able to maintain business as usual, but it is essential that you let people know that you are still in business.