What the Federal and Victorian Governments are doing to support small business out there. Many businesses are doing it tough and you should be in full defensive mode as there is no end date to COVID-19 at present. Make sure you have all the barn doors locked and find out exactly what you are entitled to. Let’s take a look…
FEDERAL GOVERNMENT ASSISTANCE
PAYG Cash Boost
The cash boost for eligible small business is PAYG withholding tax. Eligible small businesses will receive a cash boost of between $20,000 and $100,000 from wages and PAYG withholding tax and payments are made from 1 January until 30 September 2020.
Supporting Apprentices and Trainees
Eligible businesses can claim a wage subsidy of 50% of their wage paid from 1 January to 30 September 2020. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter). This works in with the JobKeeper Payment, however if your business is eligible for both, then it is up to you choose which one is best for your circumstances – you cannot claim both at the same time.
Depreciation 100% Write off $150,000
There may not be too many people out there spending up really big at the moment, nonetheless, it’s deductible until the 30 June 2020. If your business is going well or looks like heading in that direction before the end of June, then it is well worth considering this incentive, it’s a great cash boost in that anything spent on an asset up to $150,000 can be written off in the 2020 year. Previously it was $30,000.
The government announced the JobSeeker incentive a number of weeks ago for people who have lost their jobs. JobSeeker provides people with a $1,100 per fortnight – this may well be relevant for your employee(s) who have now lost their jobs but your business revenue has not dropped by 30% or more.
$130 Billion has been allocated to the JobKeeper package to try and keep people employed within your business. Basically, the government will subsidise their wage by $1,500 per fortnight, per employee to help keep people employed – this is a fantastic connected safety net for eligible small businesses and employees.
Defer your Tax Payments
Small business people can defer tax payments, ie. PAYG withholding tax, income tax. It can be deferred, but you must pick up the phone and put these arrangements in place with the ATO. They are currently deferring payments out to July and they have also started to defer other taxes out to September. There is a precedence, when we went through the GFC they deferred income tax and also gave small business people 12 months to pay their tax. Of, course our current situation with COVID-19 is much worse for the economy, so I would be advising small business people to defer their tax payments and go very defensive.
Vary Your PAYG Instalments
This really follows on from the previous point. Small business people will be receiving quarterly PAYG Instalment Statements from the ATO through the 2020 year. The next PAYG Instalment that is due is for the March Quarter for individuals and companies of your business. We would advise that you go quite defensive and vary them to NIL.
Superannuation Withdrawals of $10,000
You have the ability to access up to $10,000 from your super now for 2020, and a further $10,000 in 2021. This is another good one folks if you have been financially affected by COVID-19, but only if you really need to.
50% Off Minimum Pensions
This is a really good one for retirees who have been affected by COVID-19. To assist, the government has reduced the minimum annual payment required for account-based pensions, allocated pensions and annuities, and market-linked pensions and annuities by 50% in the 2019-20 and the 2020-21 financial years. It’s a great feature for retirees who don’t have to draw as much cash and allows for some flexibility while the markets are down due to COVID-19.
VICTORIAN GOVERNMENT ASSISTANCE
The Victorian Government announced $420 million in land tax relief available for commercial and residential landlords who provide rent relief to their tenants. It’s not a huge incentive but those who are eligible may be able to claim a 25% reduction on the property’s 2020 land tax.
Payroll Tax <$3 Million
This one is huge for small business. Any businesses with annual taxable wages up to $3 million will have their payroll tax waived for the 2019-20 financial year. That’s a full refund in Victoria! Usually when you go above $650,000 you start payment payroll tax in Victoria, so anywhere from $650,000 to $3 million paid payroll tax – you will get a full refund for the 2020 year.
$10,000 Grant Support
There is a $10,000 Victorian Government Grant available for eligible businesses but you will need to go and apply for this in on the Business Victoria website.
There are commercial rent relief guidelines out there for businesses. Tenants and Landlords should be aware of these guidelines and they are related to the drop in a business’ activity similar to Job-Keeper. Best talk to your Commercial Real Estate Agent about these.
Loans on Hold
Lots of us have debt, if your business is impacted by COVID-19, put your loans on hold. The banks have been good so far, at present they seem to be capitalizing interest as more and more people put their loans on hold and go defensive. If you do put your loans on hold it’s important to budget for their repayment once we’re through this difficult period.
As always seek professional tax advice, this is general advice only.