Change is happening at a rapid rate as we try to navigate the COVID-19 pandemic and what it means for us financially as well as personally.
Every day brings with it more information to digest, more rules to consider and more support measures to look at accessing to try and lessen the economic impact currently being experienced.
The latest round of support measures have been summarised below for your information. For further information or assistance on these measures please contact us on 03 5221 6399 or at firstname.lastname@example.org.
Deferral of Bank Loan Repayments
The Australian Banking Associated announced on Friday that small businesses can apply to their banks to have their loan repayments deferred for 6 months. Whilst this announcement was limited to small business loans, subsequent to this announcement many banks have announced further support to families in relation to private home loans. Should you wish to access these deferral measures we recommend that you contact your bank directly to explore your eligibility.
Victorian Payroll Tax Waived
The Victorian Government has announced a range of tax measures, one of them being a waiver of payroll tax for the 2020 financial year. This waiver of payroll tax will be for businesses with annual wages of less than $3 million.
Eligible businesses will be required to continue to lodge their payroll tax returns on time but will receive a refund for the payroll tax paid year to date and will not be expected to pay any further taxes for this current financial year.
There is no need for businesses to contact the SRO as they have advised that they will be making contact with all eligible businesses in the coming weeks.
Land Tax Deferral
A land tax deferral will exist for some taxpayers where their total land holdings are less than $1m and they own at least one non-residential property. It is understood that the 2020 land tax payment can be deferred until after 31 December 2020. The SRO will be making contact with eligible taxpayers.
Extension of Cashflow for Employers
The Federal Government announced today an extra boost to the stimulus package offering cash payments to employers. The payment employers are to receive as part of their March BAS will be equivalent to 100% of their salary and wages withheld (up from 50% originally announced) capped at a maximum payment of $50,000 (up from $25,000). Further, the original minimum payment of $2,000 offered to employers that are not required to withhold will be increased to $20,000.
The payments are tax free and will be paid as a result of lodgement of March through to June 2020 activity statements. The first round of payments should be expected from 28 April 2020.
Businesses with an aggregated annual turnover of less than $50 million that employ workers are eligible. Not for Profit entities, including charities, with aggregated annual turnover of less than $50 million that employ workers will now also be eligible.
Financial Support – SME Guarantee Scheme
The Government have announced the establishment of the Coronavirus SME Guarantee Scheme which will support small and medium enterprises to get access to working capital to help them get them through the impact of the coronavirus.
Under the Scheme, the Government will guarantee 50% of new loans issued by eligible lenders to SMEs. These loans will be unsecured and are capped at $250,000.
Reducing Personal Risks during Financial Distress
The Government have announced that they will temporarily increase the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive.
The package will also include temporary relief for directors from any personal liability for trading while insolvent. The Corporations Act 2001 will be amended to provide temporary and targeted relief for companies to deal with unforeseen events that arise as a result of the Coronavirus. This will be an important addition to protect Directors from incurring personal liabilities if faced with trading insolvent as a result of these unforeseen events.
Reduction in superannuation minimum pensions
Superannuation minimum pension drawdowns have been reduced by half for the 2019/20 and 2020/21 financial years.
As part of the COVID-19 economic stimulus, the government has announced temporary relief to superannuation minimum pension drawdown requirements (which includes SMSFs).
This measure aims to reduce the need for retirees to sell investment assets in the current volatile financial markets to fund minimum pensions.
Temporary early release of superannuation
The Government has announced plans to allow individuals whose income has been reduced by 20% or more (due to the current Coronavirus pandemic) to access up to $10,000 of their superannuation in both the 2019-20 and 2020-21 years.
It is important to note that this measure will have strict eligibility criteria which the ATO will provide more information on this shortly.
Individuals who are eligible for early release of their superannuation will be able to apply directly to the ATO through myGov.
The government recognises that for those significantly affected by COVID-19, accessing superannuation today may outweigh the benefits of maintaining those savings until retirement.
The information that provided in this article is factual in nature and objectively ascertainable and, therefore, does not constitute financial product advice. Importantly, the factual information that has been supplied does not take into account your personal circumstances, objectives or goals.
Davidsons is not licensed to provide any financial product advice nor make any recommendations in respect of any financial product. If you require such advice, you will need to consult a financial adviser who is licensed to provide financial product advice before you make a decision on a financial product.