Welcome to the high-level summary of Covid-19 related actions by the Australian Government. The details and links below have been split between “Tax Filings Affected”, “Government Employee Wages Benefits Programs” and “Government Loan and Support Programs”; and are simply extracts from the more detailed information available on the websites of the Australian Praxity Participant firms’ websites, links to which are available at the bottom of this page. Praxity Participant Firms in Australia are Mazars, ShineWing, and William Buck.
Tax Filing Affected
- Deferring by up to six months the payment of tax amounts due through the BAS (including PAYG installments), income tax assessments, FBT assessments and excise by affected businesses
- Allowing affected businesses on a quarterly reporting cycle to opt into monthly GST reporting to get quicker access to any GST refunds
- Allowing affected businesses to vary PAYG installment amounts to zero for the March 2020 quarter. Businesses that vary their PAYG installment to zero can also claim a refund for any installments made for the September 2019 and December 2019 quarters
- Remitting any interest and penalties, incurred by affected businesses on or after 23 January 2020, that have been applied to tax liabilities
- Allowing affected businesses to enter into low-interest payment plans for their existing and ongoing tax liabilities.
- As the Federal Government’s leading incentive program for innovation, the R&D Tax Incentive offers offsets of up to 43.5% of eligible expenditure to businesses who have engaged in eligible R&D activities. For certain eligible entities whose aggregated turnover is less than $20 million, this tax offset can result in significant cash refunds. Eligible expenditure incurred on R&D activities, which may include salary, contractor and certain other expenses, can be claimed through the scheme.
- The ATO have extended income tax payments deadlines for 2019 Income Tax Returns that are due on 15 May 2020, to 5 June 2020.
For Individuals The ATO have extended lodgement deadlines for 2019 Income Tax Returns that are due on 15 May 2020, to 5 June 2020.
Paycheck Protection Program (PPP)
- A deduction of 80 cents per hour for each hour worked can be claimed if the taxpayer is working from home due to COVID-19. The claim can only be made if the taxpayer is:
- Working from home to fulfill employment duties and not carrying out minimal tasks such as checking emails and/or taking calls Incurring additional deductible running expenses as a result of working from home.
- The shortcut method rate covers all deductible running expenses, including:
- Electricity for lighting, cooling or heating and running electronic items used for work (for example your computer), and gas heating expenses
- The decline in value and repair of capital items, such as home office
- furniture and furnishings
- Cleaning expenses
- Phone costs, including the decline in value of the handset
- Internet costs
- Computer consumables, such as printer ink
- The decline in value of a computer, laptop or similar device.
On 21 July 2020 the Federal Government announced the future plans for the Jobkeeper wage subsidy. The current program will conclude at the end of September 2020, and an alternative version of the Jobkeeper wage subsidy will then commence for employers who meet the ongoing eligibility criteria. The most significant changes are the reduction in the monetary value of the wage subsidy and the move to a two-tier system. Employers must now determine which of their employees will receive the new full rate wage subsidy of $1200 from October 2020 and $1000 from January 2021, and who will receive the lower rate subsidy of $750 from October 2020 and $650 from January 2021. The good news is that this is an objective test and employers are not required to make this decision themselves. Employers are required to look back at the 4 weeks prior to 1 March 2020 to determine if, on average over that period, each employee worked more or less than 20 hours per week. On 7 August 2020, the Federal Government announced further proposed changes to the JobKeeper payment. The key changes announced include:
- From 3 August, the employment date has changed from 1 March 2020 to 1 July 2020. An employee needs to be employed at that date before they become eligible (in addition to other criteria). This could mean that businesses may find that more employees could become eligible for the JobKeeper payment.
- GST turnover testing criteria will be referenced to the immediately previous quarter rather than the previous 2 or 3 quarters. The previous announcement required businesses to prove that their actual turnover in the June and September (and December) quarters had fallen by the relevant percentage from the comparison period. The new announcement only requires a business to prove they have suffered a drop in turnover in the immediate prior quarter.
Payroll Taxes A number of payroll tax relief measures have been introduced and amended to alleviate the impacts of coronavirus. Below is a quick snap shot by state. VIC In response to the second wave of COVID-19, the Victorian Government has increased the threshold for payroll tax deferral from $3million – $10million. Under the new rules, an eligible employer whose Victorian taxable wages did not exceed $10 million for the 2019-20 financial year can defer their payroll tax liabilities for the 2020-21 financial year. The payment due dates are as follows:
- July, August and September 2020 payments can be deferred until on or before 7 September 2021
- October, November and December 2020 payments can be deferred until on or before 7 December 2021
- January, February and March 2021 payments can be deferred until on or before 7 March 2022
- April, May and June 2021 payments can be deferred until on or before 7 June 2022. Businesses with annual taxable wages up to $3 million will have their payroll tax waived for the 2019-20 financial year and any amounts already paid are refundable. Note that the above measures require eligible businesses to have lodged the 2019-20 annual reconciliation return by the due date (21 July 2020) and lodge the monthly returns by the 7th day of each following month. Top-up payments made to employees to meet the $1500 per fortnight wage condition under the JobKeeper Payments Scheme are exempt from payroll tax. NSW In NSW, businesses with grouped Australian wages $10 million or less are entitled to a 25% reduction in taxes when they lodge their annual reconciliation for the 2019-20 financial year. The due date for lodgement and payment has been extended to 30 October 2020. All businesses can deter payroll tax for July, August and September 2020 – this is now payable by 30 October 2020. It should be noted that there is an increase in the threshold for the 2020-21 financial year to $1 million from 1 July 2020. Only the top-up payments made to employees to meet the $1500 per fortnight wage condition under the JobKeeper Payments Scheme are exempt from payroll tax. WA In WA, businesses with grouped Australian wages of $7.5 million or less at 30 June 2020 will have their payroll tax waived for the period of March to June 2020. A one-off grant of $17,500 will be paid to business with annual Australian taxable wages of over $1 million and up to $4 million. If you were not previously registered for payroll tax, your 2019-20 Australian taxable wages will be used to determine your eligibility for the grant. Your grant will automatically be paid by cheque at the completion of the annual reconciliation process. The payroll tax threshold increased to $1 million from 1 July 2020. Wages subsidised by the JobKeeper Payment Scheme are exempt from payroll tax (i.e. the full $1500 per fortnight is exempt). Any amounts paid to employees above the $1500 per fortnight is taxable for payroll tax purposes. QLD In QLD, businesses with grouped Australian taxable wages of $6.5 million or less will be eligible for a refund on their payroll tax for July and August 2020. The closing date for refund applications is 30 October 2020. Payroll tax payments for the 2020 calendar year (from March onwards) can be deferred. The deferred due dates will depend on the payroll tax return period and can be found at the Business Queensland website. The closing date for deferral applications is 31 December 2020. The website contains a link that can be used for the deferral. Wages subsidised by the JobKeeper Payment Scheme are exempt from payroll tax (i.e. the full $1500 per fortnight is exempt). Any amounts paid to employees above the $1500 per fortnight is taxable for payroll tax purposes. SA In SA, businesses with Australian wages over $4 million can apply to defer their payroll tax for six months. Eligible employers with Australian wages of up to $4 million will receive a six-month waiver and will not be required to pay payroll tax through April to September 2020 (for the return periods of March to August 2020). Businesses with Australian wages above $4 million can apply to defer their payroll tax payments for the March to August 2020 returns periods until October 2020. This relief does not extend to government organisations. Wages subsidised by the JobKeeper Payment Scheme are exempt from payroll tax (i.e. the full $1500 per fortnight is exempt). Any amounts paid to employees above the $1500 per fortnight is taxable for payroll tax purposes. For more information visit business.gov.au – COVID-19 Tax Relief Measures SA TAS In Tasmania, eligible businesses with wages of up to $5 million annually can apply for a waiver of any payroll tax for the entire financial year of 2019-20. Eligible Tasmanian hospitality, tourism and seafood industry employers will not be required to pay any payroll tax for the entire financial year of 2019-20. Rebates are available for employers that pay payroll tax and commence employment of youth employees between 1 April and 31 December 2020; and apprentices and trainees in the building, construction, tourism, hospitality and manufacturing industries between 1 July 2019 and 30 June 2021. Wages subsidised by the JobKeeper Payment Scheme are exempt from payroll tax (i.e. the full $1500 per fortnight is exempt). Any amounts paid to employees above the $1500 per fortnight is taxable for payroll tax purposes. ACT All ACT businesses with Australia-wide wages of up to $10 million can defer their 2020-21 payroll tax, interest free until 1 July 2022. A six-month payroll tax waiver, from April to September 2020, is available for businesses whose operations are directly impacted by the prohibited activities list due to COVID-19. ACT businesses in the construction industry can defer their payroll tax liability, interest-free for nine months from April to December 2020. Wages subsidised by the JobKeeper Payment Scheme are exempt from payroll tax (i.e. the full $1500 per fortnight is exempt). Any amounts paid to employees above the $1500 per fortnight is taxable for payroll tax purposes. NT In Northern Territory payroll tax deferrals are available for registered employers until 21 September 2020 with total Australian taxable wages for 2019-20 of over $7.5 million, confirmed listing on the DTBI Business Hardship Register and a reduction in turnover of at least 50 per cent (rather than 30 per cent) due to COVID-19 when compared to the corresponding month or quarter in 2019. Payroll tax waivers are available for the March to August 2020 return periods for employers with total Australian taxable wages for 2019-20 of under $7.5 million and confirmed listing on the DTBI Business Hardship Register.
Government Employee Wages Benefits Programs
Job Keeper Stimulus Package
JobKeeper is an Australian Federal Government stimulus package which will pay eligible businesses and not for profit organizations $1,500 per fortnight, per employee from the time of qualification to the end of September. While this is a stimulus payment to businesses, it will be administered by the Australian Taxation office (ATO). JobKeeper applies from the fortnight commencing on 30 March 2020, until fortnight ending on 27 September 2020 for eligible businesses. To be eligible, businesses must satisfy a number of criteria: Business Test: A business entity must be able to prove it was in business the prior year (by lodging 2019 income tax return showing business income), or have lodged activity statements between 1 July 2019 and 12 March 2020, demonstrating business income) and have had an Australian Business Number (ABN) at 1 March 2020. Reduction in Turnover Test: A business must show that its Projected Turnover for a test period has fallen by a relevant percentage over a comparison period. The rules include anti-avoidance provisions to prevent access to the JobKeeper stimulus if a business artificially creates a situation to gain access to the JobKeeper stimulus. If a business is found to have participated in a scheme to access the stimulus, when it may not otherwise have been entitled, it will be required to repay the stimulus. In addition, significant penalties may apply.
- As the administration of the stimulus payments is being managed by the ATO, we expect audit resources will be devoted to reviewing eligibility. Eligible Employee Test;
- Have been employed by the business on 1 March 2020 (other than a casual employee of < 1-year service);
- Be over 16 years old;
- On 1 March 2020 was an Australian resident, or a New Zealand citizen that was an Australian tax resident holding a Subclass 444 visa ;
- During the relevant fortnight be an employee;
- Not in receipt of paid parental leave or workers compensation; and
- Have agreed to be nominated as an eligible employee and confirm they are not an eligible employee of another employer Wage Test; and, if applicable
- For wages paid less frequently than fortnightly (eg monthly), then the wages will pass the test if the extrapolated wage would exceed the $1,500 per fortnight.
- For employees that normally earn less than $1,500 per fortnight, the employer will need to top up the employee to $1,500 in order to qualify. Business Participant Test Certain closely held businesses might have individuals actively involved that do not draw a wage. These businesses can also nominate one ‘business participant’ to receive a JobKeeper payment in relation to that individual. Business Participants are limited depending on the business structure. Ineligible Businesses:
- Any Government employer (Federal, State, Territory, or Local Government) and companies wholly owned by such Government;
- A business subject to the Major Bank Levy;
- A company in liquidation; and
- An individual that has a trustee in bankruptcy appointed.
The ATO has announced that the enrolment deadline for the month of April 2020 JobKeeper Stimulus has been extended from 30 April to 31 May 2020, as well as extending the time in which employers need to pay employees for JobKeeper fortnights 1 and 2 until 8 May 2020. Employers have also been provided with an extension for obtaining the Employee Nomination Form from eligible employees from 30 April 2020 until the date of the lodgement of their enrolment. One of the key requirements of the JobKeeper Scheme is that employers must first pay their employees before they can apply to receive JobKeeper Payments. Originally, a concession was available that allowed employers to make the payments for JobKeeper fortnights 1 and 2 by 26 April 2020 (being the end of fortnight 2). The ATO then extended this to 30 April 2020. However, under this new announcement, a further extension has been granted until 8 May 2020 providing employers with additional time to ensure they have paid each eligible employee $3,000 for JobKeeper covering fortnights 1 and 2. As a warning, employers must be aware that, despite the fact they can now pay their employees as late as 8 May 2020 and still be eligible for JobKeeper Payments for fortnights 1 and 2, they are still required to pay their employees a further $1,500 by 10 May 2020 in relation JobKeeper fortnight 3 (which ends on the same date). At the current time, no extension to this date has been announced, and it would be unwise for employers to anticipate that there will be one.
Government Loan and Support Programs
Early Childhood Education and Care Relief Package
- Starting Monday 6 April 2020, weekly payments will be made directly to early childhood education and care services in lieu of the Child Care Subsidy and the Additional Child Care Subsidy in order to help keep doors open and staff employed.
- These payments will continue until the end of the 2019-2020 financial year and during this time families will not be charged their usual fees.
- In addition to these payments, and up to and including 5 April 2020, services are able to waive gap fees for families as a result of the impacts of COVID-19. This payment backdates as far as 23 March 2020 and is in addition to other changes announced.
Instant Asset Write-Off – for assets up to $150,000
- As part of its economic response to counter the impacts of the escalating Coronavirus pandemic, the Federal Government increased the instant asset write-off threshold from $30,000 to $150,000 and expanded access to include businesses with aggregated annual turnover of less than $500m (up from $50m). The higher thresholds will apply until 30 June 2020.
Backing Business Incentive – 50% accelerated deduction for new assets
- A further part of the Government’s economic response is to allow businesses with turnover of up to $500M to claim a 50% accelerated deduction for the costs of acquiring new assets. This measure will apply until 30 June 2021.
Boosting Cashflow – $100,000 PAYG Withholding rebate
- Another aspect of the Government’s economic response is a rebate on payments of PAYG Withholding. This is designed to assist SME businesses maintain their cash flow and so retain their employees.
Temporary Relief for Financial Distressed Businesses
- A temporary increase in the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond. Increasing the current minimum threshold for creditors issuing a statutory demand on a company under the Corporations Act 2001 from $2,000 to $20,000. This will apply for 6 months.
- A temporary increase in the threshold for a creditor to initiate bankruptcy proceedings, an increase in the time period for debtors to respond to a bankruptcy notice and extending the period of protection a debtor receives after making a declaration of intention to present a debtor’s petition. The statutory time frame for a company to respond to a statutory demand will be extended temporarily from 21 days to 6 months. This will apply for 6 months.
- Temporary relief for directors from any personal liability for trading while insolvent. Directors will be temporarily relieved of their duty to prevent insolvent trading with respect to any debts incurred in the ordinary course of the company’s business. This will relieve the director of personal liability that would otherwise be associated with the insolvent trading. It will apply for six months.
- Providing temporary flexibility to provide targeted relief for companies from provisions of the Act to deal with unforeseen events that arise because of the coronavirus health crisis.
- The Australian Taxation Office (ATO) will tailor solutions for owners or directors of businesses that are currently struggling due to the coronavirus, including temporary reduction of payments or deferrals, or withholding enforcement actions including Director Penalty Notices and wind-ups.
COVID-19 Omnibus Emergency Measures) (Commercial Leases and Licenses) Regulations 2020 The regulations are in effect from 29 March 2020 to 29 September 2020 and stipulate that:
- A tenant is not in breach of the eligible lease for not paying rent if they comply with the rent relief request process, and if this occurs, the landlord must not evict the tenant.
- A landlord must not increase the rent payable during the relevant period.
- A landlord must consider waiving recovery of any outgoings for any part of the relevant period, when the tenant is not able to operate the business at premises.
- The period during which the rent is deferred will equate to the amount of time that the lease must be extended
- On August 20, 2020, The Victorian Government confirmed that they will extend the application of the Victorian commercial rent relief regulations (“the Regulations”) until 31 December 2020. In addition to extending the period that the rent relief will be available, the Regulations will be updated to include a specific requirement that rent relief be proportionate to the reduction in the tenant’s turnover. This change will be effective on a prospective basis. This should ensure that any pre-existing arrangements between landlords and tenants which is not calculated with reference to the tenant’s turnover should not be subject to the new requirement.
Land Tax Relief increased for eligible landlords and owner-occupiers According to Victorian Government State Revenue Office’s latest update, some landlords will be eligible for a waiver fo 50% provided that they meet the eligibility criteria. The 50% waiver will apply to the property’s 2020 land tax and a deferral will be available for the balance until 31 March 2021. To qualify for the 50% waiver, landlords will need to provide eligible tenants with a 50% or of more outright rent waiver for at least 3 months. This requirement may be quite difficult to satisfy. Under the Regulations, landlords must provide rent relief in proportion to the tenant’s reduction in turnover and of the rent relief provided, only 50% needs to be a waived (the remaining 50% can be deferred). We hope the SRO will provide further clarification regarding the 50% waiver requirement.
QLD Small Business $10,000 Adaption Grant The Queensland Government announced a Small Business Adaption Grant Program on 19 May to assist small businesses with payroll of less than $1,300,000 who have experienced significant business disruption as a result of the pandemic.. The Queensland Government announced a second round of funding for the $10,000 Business Adaption Grant Program with applications opening on 1 July 2020, funding will be approved on a first come first served basis until the $100 million pool is allocated. Business Eligibility
- Be a Queensland headquartered micro or small business
- Have turnover of at least $75,000 p.a. and be registered for GST
- Employ 1 – 20 staff at the time of applying for the grant
- Have a payroll of less than $1,300,000
- Have a valid ABN active as at 23 March 2020
- Not be insolvent
Eligible Expenditure Grant funds can be used towards the following activities which may have been incurred from 23 March onwards and need to be complete within 6 months from grant approval:
- financial, legal or other professional advice to support business sustainability and diversification;
- strategic planning, financial counselling or business coaching aligned to business sustainability and diversification;
- building the business through marketing and communications activities
- digital/technological strategy development or training;
- capital costs associated with meeting COVID-19 safe requirements;
- specialised digital equipment or business specific software to move business;
- meeting business costs, including utilities, rent (noting these would be for the period from 23/3/20); and review details for ineligible expenditure.
Application Process The application must be completed by the business owner directly, not a third party, via the online application which should include:
- a statement describing how the funding will contribute to your small business during the COVID-19 crisis;
- evidence to demonstrate that business revenue has experienced a minimum 30 per cent decline since 23 March 2020 over a minimum one-month period (e.g. BAS statement, dated accountant letter on letterhead);
- invoice and/or receipt of purchase if related to the purchase of specialised digital equipment or business specific software on or after 23 March 2020;
- declaration of employee head count;
- evidence of annual turnover; and
- evidence of annual payroll. The application will be assessed against funding availability, completeness of application with supporting documentation and on a value for money consideration.
Federal Economic Stimulus Package Payments to support households - $4 billion
- A further $750 payment to social security and veteran income support recipients and eligible concession card holders (excludes those who are receiving an income support payment that is eligible to receive the Coronavirus supplement).
- Payment will be made automatically from 13 July 2020 to around 5 million social security, veteran and other income support recipients and eligible concession card holders. Boosting Cash Flow for Employers - $31.9 billion
- The Government is providing up to $100,000 to eligible small and medium sized businesses, and not for-profits that employ people, with a minimum payment of $20,000
- The payment will be delivered over two tranches in 2019-20 and 2020-21
- No application for the payments will be required as these will flow automatically through the ATO
- ‘Payments’ will be delivered as an automatic credit in the activity statement system
- If the entity is in a refund position, the ATO will deliver the refund within 14 days of processing
- The payments will be tax free Coronavirus SME Guarantee Scheme
- The Government will establish the Coronavirus SME Guarantee Scheme to support small and medium enterprises (SMEs) to get access to working capital
- Under the Scheme, the Government will guarantee 50 per cent of new loans issued by eligible lenders and will guarantee up to $20 billion to support $40 billion in SME loans made to Australia businesses
- The new loans under the Scheme: can be up to $250,000 over a three-year term; won't have repayments on them for the first six months; will be unsecured; will be subject to lenders’ credit assessment processes
- The Scheme will commence by early April 2020 and be available for new loans made by participating lenders until 30 September 2020 Businesses with an aggregated turnover of less than $500 million will benefit from two tax concessions announced by the Morrison Government:
- Assets costing up to $150,000 purchased between:12 March 2020 and 31 December 2020 will attract an immediate tax write off; 1 January 2021 and 30 June 2021 will attract a 50% tax write off, with the balance depreciated over the effective life of the asset
- Assets costing more than $150,000, purchased between now and 30 June 2021 will attract a 50% tax write off with the balance depreciated over the effective life of the asset.
Business Survival Package o For eligible businesses – a third round of Business Support Fund grants between $10,000 and $20,000. The eligibility criteria appear to remain unchanged from the second round of grants earlier this year. Applications open on Friday 18 September 2020. o Grants between $10,000 and $30,000 for licensed venues such as pubs, clubs, hotels, bars, restaurants and reception centres based on their capacity and location. o Competitive grants program to assist business chamber and trader groups in providing support to their member groups. o For Alpine businesses – a grant up to $20,000 to assist these businesses meeting service charges of Alpine Resort Management Boards. o Sole traders: Grants of up to $3,000 will be available to eligible sole traders who operate from a commercial premises or location to which the sole operator is the tenant or licensee. Business Adaptation Package
- For sole traders and small businesses – a voucher program to assist these businesses in going digital and adapting to a digital marketplace.
- For small and local businesses – expansion of the ‘Click For Vic’ campaign.
- For Victorian exporters – assistance in solving export supply chain issues and opening new trade channels. Outdoor Eating and Entertainment Package
- Hospitality businesses: Grants of up to $5,000 for licensed and unlicensed cafés, restaurants, takeaway food businesses, pubs, taverns, bars and clubs with a payroll of less than $3 million to pay for outdoor entertainment equipment (such as umbrellas, outdoor furniture, screens and other equipment).
- Reactivating Melbourne City: The City of Melbourne and the Victorian Government will establish a Melbourne City Recovery Fund to finance infrastructure works to make the city more COVID-safe, help small businesses in the city adapt their operations to be more COVID-safe, to fund COVID-safe events and cultural activities within the city. $30 million of the Fund has been allocated to provide grants for small and medium businesses to assist with paying for equipment and to convert spaces into hospitality areas.
- Businesses outside Melbourne CBD: Funding to be provided to councils and eligible businesses outside of Melbourne’s CBD to make widespread outdoor dining COVID-safe and practical Waivers, Discounts and Deferrals
- For acquisitions of commercial or industrial property in regional Victoria from 1 January 2021, a discount of 50% on any Stamp Duty liability.
- For businesses with annual payrolls up to $10 million – deferral of Payroll Tax for the full 2021 financial year. *Note: this is a deferral only and the payroll tax will still need to be paid at some point in the future.
- Waiver of Vacant Residential Land Tax in respect of 2020.
- Waiver of Liquor License fees for 2021.
- Deferral of the Landfill Levy for six months.
- A 25% discount (waiver) on the Congestion Levy, and a payment deferral for any amounts outstanding. Further $290 million Business Support Package On 14 September 2020 the Victorian Government announced additional measures to support Victorian businesses. These measures aim to support the entertainment and hospitality industries, Melbourne’s CBD and non-CBD businesses and Sole Trader businesses. As a number of these relief measures are only announcements thus far, we expect more information to be released regarding conditions and eligibility in the coming days.
Links to Our Member Firms
Further Covid-19 advice
The information contained herein on Covid-19 government measures within the G8, consists solely of information that can be found on the websites of one or more Praxity Participant firms, and has not been written, modified or verified by Praxity, it’s staff, officers or directors.