Federal & State Government Economic Stimulus Update

The Treasury has announced the Federal Government’s second stimulus package. This package builds on existing measures announced previously, as well as implementing new concessions to assist the economy. Below we have outlined individual State Government concessions that have been announced at the time of publication.

Our Business and Tax Team have reviewed the second round of economic stimulus and aim to bring you some clarity on what this means for you. We encourage you to touch base with your adviser to ensure the maximum benefit is received.

1. Cash Payment for Employers

Eligibility:

• Businesses that pay wages to staff and withhold tax on these wages
• An annual turnover of less than $50 million
• Active employers prior to 12 March 2020

Concession:

• In the first stimulus package, the Federal Government announced a cash payment of $2,000 to $25,000 for employers who pay wages and withhold tax. This payment has been increased to between $20,000 to $100,000
• The payment is calculated such that employers receive a payment of 100% of the amount withheld (up from 50% announced in first package), up to a cap of $50,000
• The payment is credited when lodging Business Activity Statements for the third and fourth quarters for quarterly lodgers, (1 January 2020 to 30 June 2020), or final fourth months for monthly lodgers (1 March 2020 to 30 June 2020) of the 2020 Financial Year
• Monthly lodgers will receive a payment calculated at three times the rate for the March 2020 BAS lodgement, to ensure similar treatment to quarterly lodgers for the March quarter
• Employers that pay salary and wages but are not required to withhold will receive $10,000
• Where an employer has received the above payments, an additional payment will be applied. This additional payment is equal to the original payment (an employer who receives $50,000 will therefore receive another $50,000 credit on their BAS)
• This additional payment will be applied for quarterly lodgers in the June 2020 and September 2020 quarters, and for monthly lodgers in the June, July, August, and September 2020 months
• This second payment will be made in equal instalments (i.e. 50% per quarter or 25% per month)
• All payments will be a credit to the business’ integrated client account, enhancing a refund or reducing a debt
• This cash payment will be tax free income for the business, and will be calculated automatically on the relevant BAS lodgement

Morrows Business and Tax division is up to date with the details of the announcements and is available to assist your business.

2. Temporary Coronavirus Supplement

Eligibility:

• Existing and new eligible income support recipients
• Eligible income support recipients include Jobseeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance, and Special Benefit recipient

Concession:

• A fortnightly payment of $550 will be paid to eligible individuals, for the next six months, commencing 27 April 2020
• The process to apply and claim will be streamlined, and can be done entirely on-line or over telephone
• There will be flexibility in job-seeking arrangements, acknowledging people’s caring requirements or self-isolation requirements
• There will be reduced means testing, the Asset testing will not apply for Jobseeker, Youth Allowance Jobseeker, and Parenting Payments. Income testing will still apply
• The waiting time period will be waived

3. Payment for Income Support Recipients

Eligibility:

• Income support recipients, including pension, social security, veteran, jobseeker, youth allowance, carer, and disability support recipients
• Must have applied for income support by 12 March 2020

Concession:

• In the first stimulus package, the Federal Government announced a cash payment of $750 for all eligible income support recipients to be paid on 31 March 2020
• This will now be supplemented with a second $750 payment to be made on 13 July 2020

4. Social Security Deeming Rates

Eligibility:

• Affected income support recipients

Concession:

• As at 1 May 2020, the upper deeming rate will be 2.25% and the lower deeming rate will be 0.25%
• The Federal Government has estimated that Age Pension recipients will receive on average an additional $105 in the first year the reduced rates apply

5. Early Release of Superannuation

Eligibility:

• Unemployed; or
• Eligible for a Jobseeker, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance, or Special Benefit payment; or
• On or after 1 January 2020 you were made redundant, or working hours reduced by 20% or more, or your sole trader business was suspended/experienced a reduction of 20% or more in your turnover

Concession:

• Individuals can access up to $10,000 of their superannuation in 2019-20, and a further $10,000 in 2020-21
• The superannuation withdrawal will be tax free, and will not affect other income support payments

6. Reduced Superannuation Minimum Drawdown Rates

Eligibility:

• Retirees with account-based pensions

Concession:

• Minimum drawdown requirement has been reduced by 50% for the 2019-20 and 2020-21 Income Years

Those members wishing to utilise this concession should take into account the impact of recent markets on their assets in super.

Morrows Private Wealth & Super Teams can provide further information and qualitative comment on the various Social Security and Superannuation initiatives noted above.

7. State Government Assistance Packages

Victoria:

• Payroll Tax: Businesses with a payroll of less than $3 million will receive a full refund of payroll tax paid for the 2019-20 Financial Year. These businesses will also be eligible to defer any payroll tax liability for the first three months of the 2020-21 Financial Year until 1 January 2021
• Business Support Fund: $500 million has been announced to support “hard hit” sectors including hospitality, tourism, accommodation, arts and entertainment, and retail
• Working for Victoria Fund: $500 million has been allocated to Government employment opportunities, job-matching and retraining for those who have lost their jobs
• Government Building Rent: Rent will be waived for tenants in government buildings
• Liquor Licensing: Fees waived for 2020 Financial Year
• State Government invoices: Victorian Government invoices will be paid within 5 days

New South Wales:

• Payroll Tax: Businesses with a payroll of less than $10 million will have their payroll tax waived for the months April to June 2020. Additionally, the threshold for payroll tax has been raised to $1 million in 2020-21.
• Fees & Charges: A range of fees and charges will be waived for small businesses including bars, cafes, restaurants and tradies

Queensland:

• Payroll Tax: Payroll tax returns for all businesses have been deferred until 31 July 2020

Western Australia:

• Payroll Tax: Businesses with a payroll of between $1 million and $4 million will receive a one-off grant of $17,500. Eligible businesses will be able to apply to defer their 2019-2020 payroll tax payment
• Household Fees and Charges: All increases, fees and charges will be frozen until at least July 2021. This includes utilities, public transport fares, motor vehicle charges

Tasmania:

• Payroll Tax: Payroll tax returns for all businesses have been deferred until 31 July 2020
• Interest Free Business Loans: Available to businesses with a turnover of less than $5 million, interest free for three years
• State Government invoices: Tasmanian Government invoices will be paid within 14 days. Small business will have their payment terms to Government extended to 90 days
• Grant for Apprenticeships: $5,000 grant for businesses that hire an apprentice or trainee in the tourism, hospitality, building and construction, or manufacturing industries

Economic Assistance packages from state governments are expected to continue to expand and be released as time goes on. If you have any queries regarding individual state incentives, please contact your Business and Tax Advisor contact at Morrows to discuss in detail.

How Morrows can assist you during the crisis:

Strategic Advice:

Beyond Government incentives, there are broader considerations for our business owners.

Morrows have developed and continue to refine strategic advice that will be of interest to many who want to do a deep dive into how to best cope with the potentially disastrous financial impacts of the crisis.  Strategies include scenario planning analysis, waste audits, review of cashflow budgets and opportunities to improve net cashflow.

HR Advice:

Critical to our employers is guidance to the observance of obligations to employees including their entitlements should they have to be stood down or have reduced hours.  Information is being drawn from Government announcements and sources such as the Fair Work Act.

Our Human Resources team is developing advice in this area and will be available to answer queries and provide advice going forward.

Next Steps:

We encourage you to reach out to your Morrows Advisor to discuss applicability of the above initiatives and assistance in implementation.

As new announcements are made by government and financial institutions, we will continue to keep you abreast of developments.