Business Owners Strategy Forum Government COVID-19 Stimulus - Prime Financial

Matthew Smith
Partner – Prime Accounting & Business Advisory

March 2020

                                                 Business Owners Strategy Forum
                                                  Government COVID-19 Stimulus

Federal Stimulus

    ➢ Business                                                  ➢ Individuals
       •   Cashflow Boost                                          •   Centrelink – Coronavirus supplement

       •   SME Guarantee Scheme – new unsecured loans              •   Household Payment
           up to $250k
                                                                   •   Early release of Superannuation
       •   Instant Asset Write Off / Accelerated Depreciation
                                                                   •   Reduction in Superannuation Minimum Pension
       •   ATO Relief                                                  Drawdowns

       •   Apprentices & Trainees / Targeted Support               •   Deeming Rates

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Cashflow Boost

    •   Up to $100k for SMEs & NFPs that employ

    •   Enhanced from original package

    •   100% of PAYGW up to maximum of $50k

    •   Based on BASs / IASs lodged for Mar 20 – Jun 20 period
        inclusive

    •   Minimum payment of $10k

    •   Payment available from April 28

    •   Additional payment equal to the total of the above PAYG
        boost will be made from July 28

    •   Aggregated Annual Turnover under $50m

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Cashflow Boost - Example
Sean’s Hairdresser Salon
Sean owns a hairdresser’s salon on the Gold Coast. He employs 12 hairdressers, with average salary of $50,000 per year.
Sean reports withholding of $8,788 for his employees in each of his monthly BAS.

Under the Government’s changes, Sean will be eligible to receive the payments on lodgement of his relevant BAS.
Sean’s business will receive:
    • A credit of $26,364 for the March period, equal to 300 per cent of his total withholding.
    • A credit of $8,788 for the April period.
    • A credit of $8,788 for the May period.
    • A credit of $6,060 for the June period, before he reaches the $50,000 cap. Sean will also receive an additional payment
    of $12,500 for the June period, equal to 25 per cent of his total Boosting Cash Flow for Employers payments.
    • An additional payment of $12,500 for the July period, equal to 25 per cent of his total Boosting Cash Flow for
    Employers payments.
    • An additional payment of $12,500 for the August period, equal to 25 per cent of his total Boosting Cash Flow for
    Employers payments.
    • An additional payment of $12,500 for the September period, equal to 25 per cent of his total Boosting Cash Flow for
    Employers payments.

Under the Government’s enhanced Boosting Cash Flow for Employers measure, Sean’s business will receive $100,000.
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Federal Stimulus - Business
    •   SME Guarantee Scheme – new unsecured loans up to $250k. Covered in next week’s session as banks are still
        finalising their policies.

    •   Instant Asset Write Off - Allowing businesses to immediately write off eligible assets with the threshold increasing
        from $30,000 to $150,000 for businesses with an annual turnover of less than $500 million.
        The instant asset write-off scheme will operate from 12 March 2020 until 30 June 2020.

    •   Accelerated Depreciation – Doubling the depreciation rates until 30 June 2021.

    •   ATO Relief - The Government is also offering administrative relief for certain tax obligations, including deferring tax
        payments up to four months.

    •   Apprentices & Trainees / Targeted Support

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Federal Stimulus - Individuals
    ➢ Centrelink – Coronavirus supplement
    A new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight. This will be paid to both
    existing and new recipients of the JobSeeker Payment, Youth Allowance jobseeker, Parenting Payment, Farm
    Household Allowance and Special Benefit.
          The Coronavirus supplement will be paid for the next 6 months. Eligible income support recipients will receive
    the full amount of the $550 Coronavirus supplement on top of their payment each fortnight.

    ➢ Household Payment

    In addition to the $750 stimulus payment announced on 12 March 2020, the Government will provide a further $750
    payment to social security and veteran income support recipients and eligible concession card holders. Those
    eligible for the above mentioned Coronavirus supplement will not be eligible for this payment. The first payment will
    be made from 31 March 2020 and the second payment will be made from 13 July 2020.

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Federal Stimulus – Individuals

    ➢ Early release of Superannuation The Government will allow individuals in financial stress as a result of
       the Coronavirus to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21.
       Eligible individuals will be able to apply online through myGov for access of up to $10,000 of their
       superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020 for
       another three months. They will not need to pay tax on amounts released and the money they withdraw will not
       affect Centrelink or Veterans’ Affairs payments.

    ➢ Reduction in Superannuation Minimum Pension Drawdowns The Government is temporarily
       reducing superannuation minimum drawdown requirements for account based pensions and similar products by
       50 per cent for 2019-20 and 2020-21. This measure will benefit retirees by providing them with more flexibility as
       to how they manage their superannuation assets.

    ➢ Deeming Rates On top of the deeming rate changes made at the time of the first package, the Government
       is reducing the deeming rates by a further 0.25 percentage points to reflect the latest rate reductions by the RBA.
       As of 1 May 2020, the lower deeming rate will be 0.25 per cent and the upper deeming rate will be 2.25 per cent.

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State Stimulus

    Queensland               NSW                   Victoria
    • Payroll Tax            • Payroll Tax         • Payroll Tax

    • Jobs Support Loans –   • Capital Works and   • Business Support
      Up to $250k              Maintenance           Fund

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QUESTIONS

      Matthew Smith
      matts@primefinancial.com.au

      07 3010 8588

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