With further announcements made, we’d like to update you with additional ways that the Government are providing support to small businesses, as well as the ways that Carbon can help you through this time if your business is struggling due to the COVID-19 pandemic.
How can Carbon assist?
- Cashflow forecasting and scenario modelling – to help give you a clear view of your short and medium-term cash flow by preparing cash flow forecasts for the coming weeks and months and further cashflow modelling around different scenarios you may be considering for your business;
- What would be the cashflow impact if I closed my business temporarily for a certain period of time – with cashflows for permanent staff, reduced cashflows for casual workers?
- What would be the cashflow impact of reduced trading hours, reduced goods/services offerings?
- Stimulus review and execution servicand from our accounting team. We will look at your current circumstances and provide recommendations to maximise the full entitlement of the ATO stimulus package.
- Balance sheet reviews to help identify potential pain points and potential opportunities to assist with cashflow.
- Assist with obtaining new business finance or refinancing existing business loans through Carbon Finance & Lending.
- Review your current home loan – with the cash rate at a historic low of 0.25%, there’s never been a better time to refinance, and you may even be able to stay with your existing lender.
- Legal structure reviews to ensure appropriate asset protection and to also enable maximum access to current and future government stimulus package initiatives (ie converting director notional salaries to wages, and accessing the ATO 50% PAYGW payment).
- Talk to the ATO on your behalf and get you some much needed breathing room.
- Our financial planners can assist with the support measures around super including the early release of superannuation for those financially affected by the coronavirus and a temporary reduction of minimum pension payment requirements for retirees.
- Advance on your R&D tax incentive – if you’re eligible for a tax refund, our R&D specialists can work with Radium Capital to get you 80% of the refund now.
As a collection of small businesses ourselves, we know how much pressure there is on SMEs across the country. We want you to know that we’re here for you and will do our best to help you through these uncertain and stressful times. We are here to help at any time.
Stimulus stage 3 – JobKeeper
As expected, stimulus stage 3 has been announced with significant implications for businesses who employ staff or are self-employed. JobKeeper is an initiative which will help employers keep staff employed (whether stood down or still working).
The Government have produced this FAQ sheet which contains a thorough rundown on what the JobKeeper payment is and who is eligible.
- The initiative is aimed at employers and those self-employed:
- Full-time and part-time employees (if they were employed before 1 March 2020) are eligible
- Casual employees (if employed for longer than 12 months) are eligible
- Those self-employed (likely this definition extends to running a business as a sole trader or family trust or company) are eligible
- Important to note that this extends to employees that have been eligible as at 1 March 2020, who have been let go and then re-hired.
- Employers will be eligible for the subsidy if they have had or expect to have revenue/turnover fall by more than 30%. More detail will be announced regarding the eligibility and the 30% requirement later this week.
- Under the JobKeeper Payment, businesses impacted by COVID-19 will be able to access a wage subsidy from the Government to continue paying their employees. Affected employers will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum of 6 months. Eligible employees will receive a minimum of $1,500 per fortnight, before tax. It will be up to the employer if they want to pay superannuation on any additional wage paid because of JobKeeper Payments.
- Eligible employers will be paid $1,500 per fortnight per eligible employee. Eligible employees will receive, at a minimum, $1,500 per fortnight, before tax, and employers can top-up the payment. Where employers participate in the scheme, their employees will receive this payment as follows:
- If an employee ordinarily receives $1,500 or more in income per fortnight before tax, they will continue to receive their regular income according to their prevailing workplace arrangements. The JobKeeper Payment will assist their employer to continue operating by subsidising all or part of the income of their employee(s)
- If an employee ordinarily receives less than $1,500 in income per fortnight before tax, their employer must pay their employee, at a minimum, $1,500 per fortnight, before tax
- If an employee has been stood down, their employer must pay their employee, at a minimum, $1,500 per fortnight, before tax
- If an employee was employed on 1 March 2020, subsequently ceased employment with their employer, and then has been re-engaged by the same eligible employer, the employee will receive, at a minimum, $1,500 per, before tax. It will be up to the employer if they want to pay superannuation on any additional wage paid because of the JobKeeper Payment. Payments will be made to the employer monthly in arrears by the ATO.
In the meantime, you must register your business for alerts from the ATO when more information and applications will be available for JobKeeper.
Current assistance from the Federal and State Government, as of Monday 23rd March.
Government/banking sector COVID-19 stimulus packages
- Business Loan Repayment Deferral – Australian banks will defer business loan repayments (principal and interest) for up to 6 months for those small businesses with existing finance struggling with the impacts of Coronavirus. At the end of this 6 month period businesses will not be required to pay the deferred interest in a lump sum, rather either the term of the loan will be extended or repayments over the remaining loan term increased. Please speak to your bank about accessing this deferral on loan repayments should you have issues or concerns around your business’s cash flow as a result of Coronavirus. Some banks are also offering deferral of home loan repayments for up to 6 months for those struggling with the impacts of coronavirus. It may be an option to defer home loan repayments to free up cash to contribute to business cash flow shortfalls. Please speak with your bank should you have any concerns around your family and/or business cash flow and your ability to meet home loan repayments as a result of business impacts due to coronavirus.
- Access to unsecured business financing to provide needed working capital – the Commonwealth Government are securing business loans (from eligible lenders) for small and medium sized businesses with a turnover up to $50 million, with eligible businesses able to access unsecured loans of up to $250,000. The unsecured loans will be for up to 3 years, with an initial period of 6 months where repayments will not be required, and in some instances, lenders are offering reduced interest rates. Being unsecured loans, businesses will not be required to provide an asset/s as security for the loan. Loans will be subject to lenders’ credit assessment processes with the expectation that lenders will look through the cycle to sensibly take into account the uncertainty of the current economic conditions.
PAYGW cashflow assistance
- Under the enhanced cash flow assistance for small business, measures announced this weekend, small and medium sized businesses with aggregated annual turnover under $50 million who employ workers are now eligible to receive a tax-free payment equal to 100% of their PAYGW liability up to a total value of $50,000, with a minimum payment of $10,000. This will apply between 1 January 2020 and 30 June 2020. The minimum payment of $10,000 will be paid to eligible businesses that pay salary and wages, even if they are not required to withhold tax.
An additional payment is also now being introduced in the July – October 2020 period. Eligible businesses will receive an additional payment equal to the total of all of the PAYGW relief payments they have received for the above measure. This means that eligible entities will receive at least $20,000 up to a total of $100,000 under both payments. To qualify for the additional payment, a business must be continuing to operate.
- The ATO will administer the PAYGW relief as a credit upon lodgement of the monthly/quarterly activity statements, starting from the 31st March 2020 through to 28th October 2020. Where the PAYGW credit places a business in a refund position, the ATO will pay the refund within 14 days, starting from 28th April 2020.
Payroll tax (Western Australia)
- A one-off grant of $17,500 where taxable wages for payroll tax purposes are between $1 million and $4 million, with grants to be paid in July 2020 and be paid to Aspermont as the designated employer group.
- WA payroll tax – the payroll tax threshold will increase from $950,000 to $1,000,000 from July 2020 (bought forward from 1 Jan 2021), resulting in a reduction of payroll tax payable via an increase in the deductible amount.
- Employers, or groups of employers, whose businesses are directly or indirectly impacted by the Coronavirus, and where they have Australia wide taxable wages less than $7.5 million, can apply to have their payroll tax payments deferred until 21 July 2020.
Payroll tax relief is also available for businesses that pay payroll tax in other states outside of Western Australia. Please contact us should you require further information in regards to Payroll Tax changes in other states.
Instant asset write-off and business investment incentive
- The instant asset write-off threshold is increased from $30,000 to $150,000 and access is expanded to include businesses with an aggregated annual turnover below $500m (up from $50m).
- This measure applies from 12 March 2020 to 30 June 2020 to new or second-hand assets first used, or installed to be ready for use in this timeframe.
- Small businesses employing less than 20 full-time employees who retain an apprentice or trainee, who was employed as at 1 March 2020, are eligible for a wage subsidy of 50% of the apprentice/trainee’s wage for the 9 months from 1 January 2020 to 30 September 2020.
- Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
- Employers can register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020.
Temporary early access to superannuation – eligible individuals affected by coronavirus will be able to access up to $10,000 of their superannuation tax-free in 2019-2020 and a further $10,000 in 2020-21 tax. Applications can be made online directly through myGov, where eligible individuals will be able to apply for early release of their superannuation from mid-April 2020.
Eligible individuals will include –
- the unemployed,
- individuals made redundant on or after 1 January 2020 as a result of coronavirus,
- individuals whose hours or income have been reduced by 20% as a result of coronavirus,
- sole traders whose businesses have been suspended or where there has been a reduction in turnover of 20% or more as a result of coronavirus
ATO relief options
To be assessed on a case by case basis by the ATO, for businesses impacted by the coronavirus the following may be accessed:
- Remission of any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities.
- Putting in place payment plans for current and on-going tax liabilities with low or no general interest charges.
Potential strategies to help manage and mitigate cash flow issues
- Reduce any non-essential spend.
- Speak to suppliers about the possibility of them providing credit accounts, and extended payment terms on existing credit accounts.
- Speak to customers/clients who are on trade credit accounts about the possibility of reduced payment terms and potentially offering discounts for early payments (this may assist short-term cashflow strain and worth the discount offered).
- Discuss with landlords the possibility of reducing or deferring ret payments.
- Discuss with financiers for existing debt the possibility of reducing or deferring loan/hire purchase payments, or consider refinancing.
- Consider taking out financing to assist with short to medium term cash flow shortfalls (Carbon can assist should you require assistance with obtaining business finance).
- Depending on staffing requirements, where reductions may be required, discuss with staff alternate employment options such as dropping to part-time hours, accepting a temporary remuneration reduction, in order to retain staff for when conditions improve and to enable continued employment for your personnel.
- Speak to the ATO around deferring payment of tax obligations, and if required put in place a payment arrangement.
- For further information, please read this fact sheet on cash flow assistance for businesses.
Most important of all is that we are here to support your businesses, yourself and your families, so we encourage you to reach out and contact us to further discuss any queries, concerns or issues you may have.