Coronavirus: Business stimulus package update and more

Coronavirus is impacting Australian businesses

It cannot be ignored that the coronavirus is impacting Australian businesses, as well as the widely reported impacts on health, travel, food shortages, cancellation of events, education and much more. The effects of the coronavirus will likely take a significant time to recover from as it has had such a wide and deep impact on everything we do.

As business owners, you cannot escape the impact. The Australian Government has announced the stimulus package on 12 March 2020. Legislation to give effect to these measures will be introduced into Parliament, which resumes on 23 March 2020. It is expected that it will be passed urgently.

There is quite a lot of information available. We have summarised some of the key information relating to what you as a business owner need to know regarding employees, stimulus, and planning for recovery.

Inside this summary:

1. What do Chartered Accountants recommend?
2. Tax measures responding to coronavirus outbreak — government stimulus package and ATO admin support
3. Guidance from Fairwork – What happens if an employee or their family member is sick with coronavirus?

Chartered Accountants have identified 10 emerging business and tax impacts from coronavirus

There are some specific issues Australian business owners should bear in mind during this time.

Cash flow is key – business resilience has as much to do with recovering after coronavirus as it is about managing temporary setbacks

There are some specific issues to bear in mind. The ten issues are:

1. Your workforce
2. Managing a downturn
3. Supply chain
4. Travel restrictions
5. Your online strategy
6. Compensation receipts
7. Financing commitments
8. PAYG instalment (PAYG-I) variations
9. Tax payment problems
10. Government support

Find out how coronavirus is impacting Australian businesses – and what to do about it. Read the full article here: https://www.charteredaccountantsanz.com/news-and-analysis/news/ten-emerging-business-and-tax-impacts-from-coronavirus

Tax measures responding to coronavirus outbreak — government stimulus package and ATO admin support

The government’s economic response to the coronavirus (COVID-19) outbreak contains temporary tax measures to support business investment, including increasing and extending the instant asset write-off and accelerating depreciation deductions, as well as the ATO providing administrative relief.

The measures form part of the government’s economic response totalling $17.6b (or 0.9% of annual GDP) to address four key areas including:

• two tax measures to deliver support for business investment (see below)

• cash flow assistance for employers, including

• boosting cash flow for employers: providing employers with an aggregated annual turnover below $50m a tax-free payment equal to 50% of Pay As You Go (PAYG) amounts withheld, with a minimum payment of $2,000 and a cap of $25,000 to be delivered as a credit upon lodgment of the employer’s activity statements with the ATO from 28 April 2020. Eligible businesses that pay salary and wages will receive a $2,000 minimum payment even if they are not required to withhold tax. The ATO will refund monies if this measure places the business in a refund position, and
• apprentice and trainee wage subsidy: providing eligible small businesses a wage subsidy of 50% of an apprentice or trainee’s wage from 1 January to 30 September 2020, capped at $21,000

• a one-off stimulus payment of $750 to social security, veteran and other income support recipients and eligible concession card holders, and

• assistance for severely affected regions and communities (including ATO administrative relief discussed below).

The government will introduce a package of Bills into Parliament in the final Autumn sitting week of 22 to 26 March 2020 for urgent consideration and implementation of the measures.

Tax measures to support business investment

The government announced the following two temporary measures to support business investment.

• Increasing the instant asset write-off: the instant asset write-off threshold is increased from $30,000 to $150,000 and access is expanded to include businesses with an aggregated annual turnover below $500m (up from $50m). This measure applies from 12 March 2020 to 30 June 2020 to new or second-hand assets first used,  or installed to be ready for use in this timeframe.

• A 15-month investment incentive to accelerate depreciation deductions : businesses with an aggregated turnover below $500m will be able to deduct 50% of the cost of an eligible asset on installation, with existing depreciation (or capital allowance) rules applying to the balance of the asset’s cost. The measure applies from 12 March 2020 to 30 June 2021 to new assets that can be depreciated under Div 40 of ITAA 1997 (ie. plant, equipment and specified intangible assets, such as patents). It does not apply to second-hand Div 40 assets, or buildings and other capital works depreciable under Div 43 of ITAA 1997.

ATO administrative relief

The ATO will provide administrative relief for some tax obligations for people affected by the coronavirus outbreak, on a case-by-case basis.

Businesses impacted by the coronavirus should contact the ATO to discuss relief options. Options include:

• deferring by up to four months the payment date of amounts due through the business activity statements (BAS, including PAYG instalments), income tax assessments, FBT assessments and excise
• allowing businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get quicker access to GST refunds they may be entitled to
• allowing businesses to vary PAYG instalment amounts to zero for the April 2020 quarter; businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters
• remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities, and
• working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low-interest payment plans.

Employers will still need to meet their ongoing super guarantee obligations for their employees.

Thanks to CCH for their summary of the Governments Stimulus Package.

What happens if an employee or their family member is sick with coronavirus?

Employees who are sick with the coronavirus cannot attend the workplace for a period due to the workplace health and safety legal obligations that both employers and employees have.

Employers can direct employees who are sick with the coronavirus not to come to work and to get medical clearance from a doctor before returning to work. Employers can do this if they’re acting reasonably and based on factual information about health and safety risks, which includes relying on the Australian Government’s health and quarantine guidelines.

Full-time and part-time employees who cannot come to work because they are sick with coronavirus can take paid sick leave. If an employee needs to look after a family member or a member of their household who is sick with coronavirus, or suffering an unexpected emergency, they are entitled to take paid carer’s leave. An employer cannot require an employee to take sick or carer’s leave. However, in these circumstances the employee is not entitled to be paid unless they use their paid leave entitlements.

Under the Fair Work Act, casual employees are entitled to 2 days of unpaid carer’s leave per occasion. Full-time and part-time employees can take unpaid carer’s leave if they have no paid sick or carer’s leave left. Employers should consider their obligations under any applicable enterprise agreement, award, employees’ employment contracts or workplace policies, which may be more generous.

An employee must give their employer evidence of the illness or unexpected emergency if their employer asks for it. This will also apply to situations relating to coronavirus.

Under the Fair Work Act, an employee is protected from being dismissed because of their temporary absence due to illness or injury.

For more information and to stay updated please refer to the Fairwork website here https://www.fairwork.gov.au/about-us/news-and-media-releases/website-news/coronavirus-and-australian-workplace-laws

Business support – announcement by the NSW Government on 17 March 2020

• $450 million for the waiver of payroll tax for businesses with payrolls of up to $10 million for three months (the rest of 2019-20). This means these businesses will save a quarter of their annual payroll tax bill in 2019-20
• $56 million to bring forward the next round of payroll tax cuts by raising the threshold limit to $1 million in 2020-21
• $80 million to waive a range of fees and charges for small businesses including bars, cafes, restaurants and tradies

To see the full announcement from the NSW Government, click here.

At times like this, we need to come together as a community and support each other, both in businesses and personally (while maintaining ‘social distance’ of course). If you would like to discuss your particular situation, please contact our office here.