The stimulus measures keep improving as the government learns what will help and what will not.
Over the past weeks I have been talking to clients daily about;
- The Stimulus – what they will get and how it will help.
- Their businesses and how to Pivot and survive these unprecedented times.
MY OPINION ON THE STIMULUS. Only the measures that provide actual cash support will help the majority of SME’s (small and medium businesses).
The measures that target business survival are more valuable because they reach more of the people I see, butthey all help ease the pain in some way.
Cash Flow assistance for Business – Love it! This helps the very large majority of SME businesses.
- The payments of PAYGW in Q3 and Q4 FY20 are amazing support and well targeted.
- The extra payment in Q1 FY21 is the same, this payment gives you an idea of how long we will be affected by these changed conditions.
- Minimum amount you get is $20K and the maximum is $100K, this will help every recipient business.
- Payment for apprentices, if you have them this is great assistance.
Income Support for individuals – Love it! This will help many people in need to live and survive.
- A lifeline of money to those in need, seems it’s at least $500 a week from the examples, the $550 boost is great.
https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Income_Support_for_Individuals.pdf
Rent Moratorium for both businesses and individuals – Needed!
- A Rent moratorium has been spoken about, a freeze on paying rent and evictions is probably going to be needed for some.
- Landlords not having to pay mortgage repayments in conjunction with this, already you can access 6 months no repayments with interest capitalised from most banks.
Temporary Relief for Financially Distressed Business – Love it! This will help many businesses stay afloat until the uncertainty ends (hopefully).
- Slowing down creditors actions and reducing the threat of insolvent trading and directors being held liable will directly help businesses.
Early access to super – Okay! There are genuine cases where people need this but it is a 2 edged sword.
- YES this is a $10K cash flow assistance, twice, but reducing your super is not ideal in the long run.
- A SHAME that you can only put this money back via the existing contribution caps.
https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Early_Access_to_Super_1.pdf
Temporary reduction in the superannuation minimum drawdown – Love it! Ability to reduce mandatory drawdown by 50 per cent for 2019/20 and 2020/21,
- Sensible measure given the market has fallen so much, this provides retirees with more flexibility as to how they manage their superannuation assets.
NSW State Government
Payroll Tax reductions – Love it! Payroll tax relief for businesses with grouped Australian wages of no more than $10 million has been announced.
- Payroll tax customers whose total grouped Australian wages for the 2019/20 financial year are no more than $10 million will have their annual tax liability reduced by 25% when they lodge their annual reconciliation, which is due on 28 July.
- For those customers who lodge and pay monthly and whose total Australian wages will be no more than $10 million for the current financial year, no payment for the months of March, April or May 2020 will be required.
- 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 – Okay! The tax-free threshold will increase from $900,000 to $1 million for the financial year commencing on 1 July 2020.
- This will definitely help some businesses, many SME will not benefit from the change but it is still welcome and helpful for eligible SME’s.
The following measures only suit businesses that can see a future and can trade through this difficult period –
- Enhancing the instant asset write-off – You need money to spend money! Lifting the threshold to $150,000 (from $30,000) per asset until 30 June 2020.
- This is a massive tax saving if your business is in profit and you can afford to buy assets. Obviously this is not helpful for a lot of the smaller SME’s.
Backing business investment – You need money to spend money! Accelerating depreciation deductions for businesses with 50 per cent of the cost of an asset on top of the existing depreciation applying to the balance of the asset’s cost for the next 15 months if purchasing certain new depreciable assets.
Various lending incentives – You need confidence to borrow! Cheap unsecured loans, 6 month payment moratorium that capitalises the interest, federal and local governments providing loan programs with low/no interest and long repayment terms
https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Supporting_the_flow_of_credit_1.pdf
Information is rapidly changing, to see more detail try the following link
https://www.business.gov.au/risk-management/emergency-management/coronavirus-information-and-support-for-business/coronavirus-state-and-territory-assistance-and-events
Please call if you would like to discuss any of the measures and/or any business or personal matters.
Adrian and the VJC team
