Following is a high-level summary of the Australian government’s stimulus package, Australian Tax Office administrative concessions, and changes to the Practice Incentives Program and Workforce Incentive Program in response to COVID-19. Some elements of this stimulus package will apply to general practices as small to medium businesses.
The Royal Australian College of General Practitioners (RACGP) recommends seeking individual financial advice from your financial advisor, business manager or accountant on how these measures may support your practice during the coming months.
Cash flow assistance
Intended to support businesses to manage cash flow challenges, help businesses retain employees, and improve business confidence:
- Tax-free payments of between $10,000 and $50,000 for eligible small and medium-sized businesses:
- with a turnover of less than $50 million
- that employ staff between 1 January 2020 and 30 June 2020
- businesses that pay income tax on behalf of employees are likely to be eligible for a payment equal to 100% of employees’ salary withheld
- businesses that pay salary and wages but are not required to withhold tax will receive a minimum payment of $2,000.
- payments are in this financial year and next financial year (up to $100,000 total across the two years).
- see the government factsheet here.
Support for business investment
- The instant asset write off threshold has been expanded from $30,000 to $150,000, and businesses with aggregated annual turnover of less than $500 million (up from $50 million) will now be eligible:
- this is a ‘per asset’ incentive, meaning multiple assets under the $150,000 limit can be purchased, and applies to new or second-hand assets
- this incentive is available until 30 June 2020, after which the threshold reduces.
- For assets over this threshold, or purchased after 30 June 2020, businesses with a turnover of less than $500 million will be able to deduct 50% of the cost of an eligible asset on installation:
- existing depreciation rules apply to the balance of the asset’s cost
- the accelerated depreciation deductions apply for 15 months up to 30 June 2021.
When does this come into effect?
While not yet law, the instant asset write-off measures can be used immediately.
Legislation will be introduced into Parliament in the week commencing 23 March 2020 for urgent consideration and passage.
The Government will then need to make, and register, any supporting instruments.
What do practices need to do?
Payments for cash flow assistance will be issued automatically as a credit through the tax system, based on business activity statements or instalment activity statements from March to June 2020. Funds will be paid within 14 days, triggered by businesses sending their employees’ withholdings to the tax office.
ATO administrative concessions
The Australian Tax Office (ATO) will also consider relief for eligible businesses, these include:
- deferring by up to four months the payment date of amounts due through the business activity statement (including PAYG instalments), income tax assessments, fringe benefits tax 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 Pay As You Go (PAYG) instalment amounts to zero for the March 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
- working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low interest payment plans.
If disruption to your business operations causes you to fall behind with your tax and super obligations, contact the ATO on 1800 806 218 or speak to your tax professional so that they can work with you to find a solution.
Further information is available here.
Australian Banking Association (ABA) has announced that all small businesses hit by the coronavirus pandemic will be able to access a six-month deferral of loan repayments.
Contact your bank to discuss your options.
The Government will guarantee 50% of unsecured loans taken out by small businesses in the six months starting from 1 April 2020 with banks who join the scheme. This will make it easier for small businesses to access credit quickly, with less red tape.
Loans can be taken over a three-year term to a maximum amount of $250,000. In addition, loans will not have any repayment requirements for the first six months, but will not apply to existing customers refinancing.
Support for those unable to work
The Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight.
The Coronavirus supplement:
- will be paid for the next 6 months to those unable to work
- is in addition to the pre-existing JobSeeker payment, bringing the total maximum payment to $1,115 per fortnight
- is available to new and existing recipients of government income assistance payments
- the asset test for JobSeeker payments will be waived for the next 6 months
- more information is available here.
Job Keeper payment
- Eligible businesses will receive $1500 per fortnight, per employee, from the ATO. Each business will then pay each eligible employee the flat payment.
- It will be paid to businesses from 1st May 2020, but will be backdated to the end of March. All eligible employees will receive the same payment.
- Determined by loss of turnover. Business must have seen turnover fall by 30%. If the turnover of a business exceeds $1 billion, the business will have to demonstrate a fall of 50%.
- Includes businesses structured through companies, partnerships, trusts and sole traders, not-for-profit entities, and charities.
- Applies to full time and part time workers, sole traders, those on fixed-term contracts, any casual worker who has been employed by the same employer for over 12 months
- Will apply to all employees who were on the books as of 1st March 2020
- The payment will be paid to the business by ATO, using the single touch payroll system.
- Apply for the payment online via www.ato.gov.au/.
- Businesses are encouraged to begin paying their staff immediately and will be reimbursed from the first week of May.
- An employee is only eligible to receive the payment from one employer
- Recipients cannot be on both the JobSeeker payment and the JobKeeper payment
- There is no superannuation guarantee levy on the JobKeeper payment
- Excludes people on temporary work visas, but includes New Zealanders who possess a subclass 444 visa.
The mandatory commercial tenancy code sets out how landlords and tenants should share the financial risk and cashflow impact of COVID-19. This includes:
- Landlords must not terminate leases for non-payment of rent.Tenants must continue to comply with their lease obligations.
- Landlords must offer tenants reduction in rent (eg waivers or deferrals) proportionate to the reduction in the tenant’s trade. Rental waivers must constitute at least 50% of the total rent reduction.
- Landlords to pass on statutory benefits they receive (eg reduced land tax, council rates) and any other benefit they receive due to deferral of loan payments.
- Landlords must not charge fees or interest on rent or payments deferred, nor can they draw on a tenant’s security (bond, bank guarantee or personal guarantee).
- Landlords to allow tenants to extend their lease equal to any rent deferral period.
- Landlords to freeze rent increases for the duration of the COVID-19 pandemic period and a reasonable recovery period after it passes.
To be eligible under the Code a tenant must:
- have an annual turnover of less than $50 million; and
- be eligible for the JobKeeper program
- The annual turnover threshold applies to franchises at the franchisee level, and at a group level for tenants who are corporate groups. This may mean some corporate groups will not be eligible.
More information is available here
Updates regarding Practice Incentives Program (PIP) and Workforce Incentive Program (WIP):
Updates regarding Practice Incentives Program (PIP) and Workforce Incentive Program (WIP):The Department of Health has temporarily changed requirements and processes to account for the impacts of COVID-19 on practices. Changes affect:
- PIP Quality Improvement (QI) Incentive
- PIP Electronic Health (eHealth) Incentive
- PIP Teaching Payment
- WIP – Practice Stream
More detail is provided here - please familiarise yourself with any changes mentioned within and requirements stipulated elsewhere to ensure that participation and payments proceed smoothly.
State-based assistance packages
The following States and Territories have announced packages to provide relief for those affected by the coronavirus.
This list will be regularly updated.
- Payroll tax waived for four months to June 30 for businesses with annual wages less than $7.5 million.
- Interest-free repayments and no late payment penalties for payroll tax for businesses affected by COVID-19 (on application)
- No late payment fees or disconnections for power or water bills
- a one-off $2,500 credit available for Synergy and Horizon Power small business customers that consume less than 50 MWh per annum.
- Small and medium businesses whose annual Australian Taxable Wages are between $1 million and $4 million will receive a one-off grant of $17,500 to assist them to manage the impacts of COVID-19. No applications are required. Grants will automatically be paid from July 2020.
- The payroll tax threshold will be increased to $1 million from 1 July 2020, six months earlier than originally planned.
- waive payroll tax for businesses with payrolls up to $10 million for six months.
- waive payroll tax for large businesses with payrolls over $10 million for six months.
- bring forward the next round of payroll tax cuts by raising the threshold limit to $1 million in 2020-21
- interest free deferrals of payroll tax commencing 1 July 2020 for all businesses up to a payroll threshold of $10 million. Interest will be applied to any outstanding deferred amounts from 1 July 2022.
Businesses will need to apply to confirm their eligibility at: www.revenue.act.gov.au
- rebate on the fixed charge for 2019-20 on commercial rates for properties with an AUV below $2 million. Commercial rate payers will receive a credit of $2,622 (equivalent to the annual fixed charge) to their 2019-20 general rates, in quarter four. This will be applied automatically.
- freeze on government fees and charges
- electricity rebates for small businesses with usage below 100 megawatts per year. The rebate of $750 will be automatically applied to bills in June/July 2020
- More information is available
- hereA business liaison phone line has been created to assist businesses understand the support available to them through the ACT Economic Survival Package. Call 02 6205 0900
- full payroll tax refunds for the 2019-20 financial year to small and medium-sized businesses with payroll of less than $3 million.
- payments will start immediately and are a refund, not a loan
- these businesses will also be able to defer any payroll tax for the first three months of the 2020/21 financial year until 1 January 2021
- 2020 land tax payments will be deferred for eligible small businesses
- More information is available here
- businesses can access information on dealing with COVID-19 by calling the Business Victoria hotline on 13 22 15
- the hotline will provide the latest information on the response to COVID-19 and how this affects businesses, including how to access financial support available through the national stimulus package.
- information is also available at Business Victoria.
- Small and medium businesses impacted by COVID-19 will be refunded two months’ worth of payroll tax.
- Small and medium business will have a 3-month payroll tax holiday, and a further 6 month payroll tax deferral
- Employers can also apply (before 31 May 2020) for a deferral of payroll tax for the 2020 calendar year.
- More information on how to apply is available here.
- Small and medium businesses will receive a $500 rebate on their power bill
- Small businesses may be eligible for a loan to retain employees and maintain operations.
- A new concessional loan facility will include low interest loans of up to $250,000 for carry on finance with an initial 12-month interest free period for businesses to retain staff.
- Register your interest through the Queensland Rural and Industry Development Authority or phone 1800 623 946.
- Businesses with annual wages up to $4 million will receive a six month payroll tax waiver.
- Businesses with annual wages over $4 million that can demonstrate they have been significantly impacted by COVID-19 can also apply for the six month payroll tax waiver.
- Six month deferral of land tax payments
- Further information here
- Increased funding for the state’s Economic and Business Growth Fund
- Projects to be funded under the Government’s economic stimulus package must meet certain criteria, including the ability to start works within a short period of time, they must be labour-intensive and/or require significant local purchasing of materials, services and supplies.
- Under the Business Improvement Scheme, all eligible businesses will receive $10,000 and can receive a further $10,000 if they spend $10,000 of their own cash, on business upgrades. This creates a total $30,000 to be spent on improvements, with purchases to be from another Territory business.
- Electricity prices for small and medium businesses (paying regulated tariffs) will be frozen from 1 July 2020 to 1 July 2021.
- $2 million for additional support for primary health care providers, including GPs.
- $1 million for accommodation for frontline workers if they need to stay away from home, in circumstances where their family members are ill.
- businesses with payrolls of up to $5 million will be able to apply, based on the impact of virus, to have their payroll tax waived for April to June 2020.
- For more information on the payroll tax waiver please contact the State Revenue Office on (03) 6166 4400 or firstname.lastname@example.org or visit Payroll Tax.
The Tasmanian Government has outlined support measures to keep the Tasmanian economy functional and people in work. The package has 4 main elements - Health, Business, Households and Individuals and the Community.
The main message to health is that they may spend whatever is required to save Tasmanian lives. Funding to public health GPs and public health services will be increased to $3 million, bringing total assistance to $5 million. This will assist GPs, pharmacists and dentists to obtain the necessary supplies and take the necessary measures to protect themselves and the wider community. An additional $3 million will be added to the initial $1 million in the first Stimulus Package, including support to establish a dedicated 1800 number to allow the Tasmanian community to call in and receive psychological support. Mental health services will also be expanded for Tasmanian's living in rural areas, the migrant community and vulnerable groups.
Small business will receive quarterly relief on electricity bills, capped prices for electricity, sewage and water for 12 months.
Interest free loans will be extended from the $50 million interest free loan scheme to $150 million.
Businesses shut down or severely impacted as a result of recent restrictive directions will have fees, charges and taxes including land tax for 2020-21 waived. Estimated to be in the order of $20 million.
Interest free loans will be available to all businesses with an annual turnover of less than $10 million per annum.
$40 million grants program - $20 million emergency grants;
$750,000 to provide business continuity and accounting advice to small business.
$200,000 provided to the Rural Financial Counselling Service for financial counselling and guidance esp in rural areas.
$150,000 to boost the Digital ready for business program to help small business go online via targeted one-on-one coaching.
$200,000 to Tasmanian Hospitality Association to help with accountancy advice to tourism and hospitality.
$20 million to the taxi industry.
Waiver of payroll tax to hospitality, tourism and seafood sectors for all of 2019-20 year. Three month waiver of payroll tax for all Tasmanian businesses with a payroll of up to $5 million.
Households and individuals
Capped electricity, water, sewage prices for 12 months $5 million fund for bill relief.
The help available for bushfire affected small businesses has been boosted, to provide extra help and make it easier to apply.
The RACGP recommends calling your state hotline to check what’s available to support your practice.
- New South Wales - 13 77 88
- Victoria - 1800 560 760
- South Australia - 1800 302 787
New $10,000 grants for small businesses
This new grant was announced 11 March 2020, funded by the Australian Government. The aim is to help small businesses cover the costs associated with recovery following the recent fires. The grants can be spent on expenses such as salaries, wages, utilities, fuel and/or financial advice.
Applications opened the week commencing 16 March 2020.
Who is eligible?
To be eligible, your revenue must have dropped by 40% over a three-month period, compared to the previous year, as a result of the bushfires. You can be directly or indirectly affected by the bushfires.
Your practice must be located in selected fire-affected Local Government Areas, as determined by state governments.
East Gippsland, Towong, Alpine
New South Wales
Snowy Valleys, Snowy Monaro, Eurobodalla, Shoalhaven. Bega Valley, Blue Mountains, Lithgow, Wingecarribee, Port Macquarie, Clarence Valley, Queanbeyan, Mid Coast, Wollondilly, Kempsey, Richmond Valley, Nambucca
What do practices need to do?
You apply through your state government, by calling your state hotline on the number above.
You can get help filling in application forms for bushfire support from Recovery Centres.
Recovery Centres are established by state governments in fire affected regions, with support from the Australian Government. The centres provide a one-stop-shop for small business owners to ensure they have access to expert support.
Recovery grants for small businesses directly affected by the fires
Grants of up to $50,000 available for small businesses in category C fire affected areas. Grants can assist with the direct impacts such as fire or smoke damage.
Apply for recovery grants through your state government.
Concessional loans for small businesses directly and indirectly affected by the fires
Low cost finance is available for small businesses in Category B fire affected areas to spend on restoration and replacement of damaged assets. Loans amounts can be up to $500,000. No repayments or interest for the first 2 years, and a concessional rate for the remaining term of the loan.
ATO administrative concessions
Businesses in bushfire-impacted postcodes are eligible for support and assistance through the Australian Taxation Office (ATO), including:
- deferring the due date to lodge and pay money owed as a result of business activity statements, income tax returns, fringe benefits tax returns and excise returns to 28 May 2020
- allowing businesses that pay their Pay As You Go (PAYG) instalments quarterly to vary their instalments without penalty, and also claim credits for instalment amounts already paid
- allowing businesses to opt in to monthly GST reporting from the start of a quarter (such as 1 April 2020), in order to get quicker access to GST refunds.
Call the ATO Emergency Support Infoline on 1800 806 218 (8am-6pm Monday-Friday) to discuss your circumstances.
Individuals and businesses impacted by the bushfires are not required to pay tax on any relief and recovery payments or benefits provided by the Australian Government in relation to the 2019-20 bushfires.
The Rural Financial Counselling Service can provide free, confidential financial counselling to small rural businesses, who are suffering financial hardship.
Check your eligibility and be referred to your nearest RFSC office by calling on 1800 686 175.
The Small Business Financial Support Line is on 1800 413 828. It is staffed by specialist financial counsellors. They can provide advice on the assistance available in bushfire affected areas.