COVID-19 & Financial Hardship - What your bank can do to help.
Timing of Cash Flow Stimulus - Lodgement of March BAS
Important note: you will not get your cash flow boost before 28 April 2020 even if you lodge your March BAS earlier.
Federal Government Stimulus
No formal assistance or relief is yet in place. The Prime Minister has implored landlords and tenants to negotiate outcomes for the long-term interest of parties affected. He also commented that there may be announcements made by State Governments in this regard going forward.
There may be some grounds for rental suspension or a discount for businesses renting premises from Self-managed Super Funds. The ATO have stated;
“Some landlords are giving their tenants a reduction in or waiver of rent because of the financial impacts of the COVID-19 and we understand that you may wish to do so as well. Our compliance approach for the 2019–20 and 2020–21 financial years is that we will not take action where an SMSF gives a tenant – who is also a related party – a temporary rent reduction during this period.”
Prudent application of this approach would see a document evidencing the financial hardship suffered by any tenant available to be tabled for an SMSF auditor.
NSW State Taxes
Payroll tax relief for businesses with grouped Australian wages of no more than $10 million
Payroll tax customers whose total grouped Australian wages for the 2019/20 financial year or no more than AUD10 million will have their annual tax liability reduced by 25% when they lodge their annual reconciliation, which is due on 28 July 2020.
For those customers who lodge and pay monthly and whose total Australian wages will be no more than AUD10 million for the current financial year, no payment for the months of March, April or May 2020 will be required. You will then lodge the annual reconciliation in July, and they will then reduce the annual bill by 25%. You will then pay the difference that will include the June amount.
When lodging your annual reconciliation, you will still need to provide wage details paid in these months and will receive the benefit of a 25% reduction in the amount of tax you would have had to pay for 2019-20.
Threshold increase – 2020-2021 financial year
The tax-free threshold will increase from AUD900,000 to AUD1 million for the financial year commencing on 1 July 2020.
Revenue NSW are offering to defer payments until 1 July 2020 (making payments 1/7, 1/8 and 1/9) for clients who say they are experiencing financial difficulty as a result of COVID-19. This is only available for 2020 Land Tax.
Note: each State is offering differing support and relief packages so those with Payroll Tax and Land Tax exposure in other States please contact us to discuss.
Of note is the proactive assistance offered by the Queensland Government;
Queensland Government Support Loan
$500 million COVID-19 Jobs Support Loans – Applications Open
Applications are now open for the Queensland Government’s $500 million COVID-19 Jobs Support Loans
Eligible business types include sole traders, partnerships, private and public companies and Trusts that have one or more full-time employees in Queensland. Loans may be used to help meet a business’s working capital expenses such as paying employee wages, sundry creditors, rent and rates and other eligible carry-on expenses.
$500 million loan scheme
Maximum loan up to $250,000
No repayments or interest charged for the first year
Plus two years interest only
2.5% fixed interest rate
10-year term of loan
Open until 25 September 2020 or when funding is fully committed