Commonwealth support during COVID-19


Commonwealth government assistance during COVID-19

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.

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.
 

Support for business investment

Announced in the Federal Budget (subject to passage of legislation):

  • Extension of the instant asset write-off deduction (now called “full expensing”) for capital assets acquired by small businesses.
  • From 6 October 2020 until 30 June 2022, businesses with a turnover up to $5 billion will be able to deduct the full cost of eligible capital assets of any value in the year they are installed.
  • The cost of improvements to existing eligible depreciable assets made during this period can also be fully deducted.
  • The $150,000 limit has been removed
  • For businesses with aggregated turnover of less than $50 million, full expensing also applies to second-hand assets.
  • Businesses with aggregated annual turnover of less than $10 million can deduct the balance of their simplified depreciation pool at the end of the income year while full expensing applies.
  • Read more here.
  • 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.

For more information see ATO website.


ATO administrative concessions

Announced in the Federal Budget (subject to passage of legislation):

  • Companies with turnover up to $5 billion will be able to offset losses against previous profits on which tax has been paid, to generate a refund.
  • Losses incurred up to 2021 22 can be carried back against profits made in or after 2018 19.
  • Companies may elect to receive a tax refund from the ATO for the tax they paid in earlier years back to 2018-19 when they lodge their 2020 21 and 2021 22 tax returns.
  • Read more here.

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.

Increase to the small business entity turnover

Announced in the Federal Budget (subject to passage of legislation):

  • The small business entity turnover threshold for these concessions will be increased from $10 million to $50 million.

This includes up to 10 small business tax concessions in three phases:

  • From 1 July 2020, eligible businesses will be able to deduct certain start-up expenses and certain prepaid expenditure.
  • From 1 April 2021, eligible businesses will be exempt from the 47% fringe benefits tax on car parking and multiple work-related portable electronic devices (such as phones or laptops) provided to employees. This concession already exists in the FBT law but now multiple work-related items can benefit from the concession.
  • From 1 July 2021, eligible businesses will be able to access the simplified trading stock rules, remit pay as you go (PAYG) instalments based on GDP adjusted notional tax, and settle excise duty and excise-equivalent customs duty monthly on eligible goods under the small business entity concession.
  • Eligible businesses will also have a two-year amendment period apply to income tax assessments for income years starting from 1 July 2021.
  • The eligibility turnover thresholds for other small business tax concessions will remain at their current levels.
  • Read more here.


Loan deferrals

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.


Loan guarantees

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 (JobSeeker coronavirus supplement)

Updated 21 July 2020

  • The Coronavirus Supplement has been extended to 31 December 2020
  • The amount of the Coronavirus Supplement will be adjusted. From 25 September 2020 to 31 December 2020, the Supplement amount will be $250 per fortnight
  • The Government is also improving incentives and gradually reintroducing obligations for payment recipients to seek work

Further information is on the Services Australia website.

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

Updated 7 August 2020:

  • All businesses and employers currently on JobKeeper will need to re-apply for the extension post 28 September (extension 1) and then again for the extension from 4 January 2021 (extension 2)
  • businesses will only need to show that their GST turnover has fallen
    • over the September quarter, compared to the same period in 2019, to requalify for the subsidy after 28 September
    • and over the December quarter, compared to the same period in 2019, to requalify for the subsidy after 4 January
  • Workers will qualify if they were employed on July 1, (previously March 1).
  • Changes apply in all States and Territories

Updated 21 July 2020:

  • JobKeeper Payment has been extended to 28 March 2021
  • Support will be targeted to businesses and not-for-profits that continue to be significantly impacted by the Coronavirus.
    • The JobKeeper payment is open to new applicants
    • From 28 September 2020, businesses will be required to reassess their eligibility with reference to their actual GST turnover in the June and September quarters 2020. They will need to demonstrate they have met the relevant decline in turnover test in both of those quarters to be eligible for the JobKeeper Payment from 28 September 2020 to 3 January 2021.
    • From 4 January 2021, businesses will need to further reassess their turnover to be eligible for the JobKeeper Payment. They will need to demonstrate they have met the relevant decline in turnover test with reference to their actual GST turnover in each of the June, September and December quarters 2020 to remain eligible for the JobKeeper Payment from 4 January 2021 to 28 March 2021.
  • The payment rate will be reduced and a lower payment rate will be introduced for those who work fewer hours.
    • From 28 September 2020 to 3 January 2021, the JobKeeper Payment rates will be:
      • $1,200 per fortnight for all eligible employees who, in the four weeks of pay periods before 1 March 2020, were working in the business for 20 hours or more a week on average, and for eligible business participants who were actively engaged in the business for 20 hours or more per week on average in the month of February 2020; and
      • $750 per fortnight for other eligible employees and business participants.
    • From 4 January 2021 to 28 March 2021, the JobKeeper Payment rates will be:
      • $1,000 per fortnight for all eligible employees who, in the four weeks of pay periods before 1 March 2020, were working in the business for 20 hours or more a week on average and for business participants who were actively engaged in the business for 20 hours or more per week on average in the month of February 2020; and
      • $650 per fortnight for other eligible employees and business participants.
  • Other eligibility rules remain unchanged.
  • See JobKeeper Payment. For further information

Previously announced funding

  • 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.

Restrictions

  • 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.

Further Information


Rent relief

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.