COVID 19 – Australian Government, New South Wales & Victorian Government Responses

At this stage, the COVID 19 situation is incredibly fluid. The Australian Government has launched a second stimulus package today that, unfortunately, is not strong on detail. Within the next 24 hours, I will have more detail for you so that we can make appropriate decisions about your business.

FEDERAL GOVERNMENT STIMULUS PACKAGE #1 – A RECAP

Apprentice Wage Subsidy

  • If you employ an Apprentice or Trainee, and employ less than 20 full time employees in total, your business will be entitled to apply for Australian Government funded wage subsidies as follows:
  1. Equal to 50% of an apprentice or trainee’s wage.
  2. For wages paid during the period 1st January 2020 to 30th September, 2020.
  3. To a maximum subsidy of $21 000 per employee.
  4. Registration for the subsidy is to commence in early April 2020.
  5. This is a cash subsidy – so will be paid to your business by the Australian Government.
  • When registration details become available, I will be working with each client this measure applies to and ensure we make application as soon as possible.

FEDERAL GOVERNMENT STIMULUS PACKAGE #2

Boosting Cashflow for Employers

  • This is an enhancement to the measures originally announced by the Australian Government in Stimulus Package #1 on 12th March, 2020.
  • If your business turnover is less than $50 million, you can apply for this measure.
  • It is important to note – this will not be a cash payment to your business by the Australian Government.
  • Instead, the amount that you can claim will be offset against your BAS & IAS liabilities over the period March 2020 to June 2020.
  • If, after the amount is offset against your BAS or IAS, your business will be entitled to a refund, the ATO have committed to processing that refund within 14 days.
  • If, after the amount is offset against your BAS or IAS, your business will still have an amount payable to the ATO, at this stage, I believe the normal BAS or IAS payment terms would apply.
  • My recommendation to you is, at this stage, we will apply for ATO Payment Arrangements during the period of any shutdown of the Australian economy.
  • The details are as follows:
  1. The offset amount is equal to 100% of the PAYG Withholding from salary and wages.
  2. The minimum offset is $20 000 in total – the maximum offset is $100 000 in total.
  3. For monthly activity statement lodgers:
  1. 300% of your March 2020 PAYG withholding will qualify as an offset.
  2. 100% of your April 2020 PAYG withholding will qualify as an offset.
  3. 100% of your May 2020 PAYG withholding will qualify as an offset.
  4. 100% of your June 2020 PAYG withholding will quality as an offset.
  5. The maximum offset amount is $50 000 for the period March to June 2020.
  6. Whatever the total of that total offset is during that period, will be doubled and a second offset will then apply in 4 instalments over the months of July to October 2020.
  7. For quarterly activity statement lodgers:
  1. 100% of your March 2020 PAYG Withholding will qualify as an offset.
  2. 100% of your June 2020 PAYG Withholding will qualify as an offset.
  3. The maximum offset amount is $50 000 for the period March to June 2020.
  4. Whatever the total of that total offset is during that period, will be doubled and a second offset will then apply in 4 instalments over the months of July to October 2020.

NEW SOUTH WALES GOVERNMENT STIMULUS PACKAGE

  • A Payroll Tax waiver for all businesses with payrolls of up to $10 million for three months – between April 2020 and June 2020.
  • The Payroll Tax Threshold will increase to $1million from 1st July, 2020 – up from the current threshold of $900 000.

VICTORIAN GOVERNMENT STIMULUS PACKAGE

  • A full Payroll Tax refund will be paid for the 2019-2020 financial year for businesses with payroll of less than $3 million.
  • Deferment of any Payroll Tax for the first three months of the 2020-2021 financial year until 1st January, 2021.

AUSTRALIAN BANKER’S ASSOCIATION ANNOUNCEMENT

  • The Banks will allow deferral of loan payments for a period of 6 months.
  • Interest will continue to accrue on deferred loan payments.
  • The deferred loan payments will be added to the loan term – meaning if, for example, your loan was due to finish in June 2023, it will automatically be extended to December 2023.
  • The banks have further agreed to provide additional lending to small and medium businesses following the Reserve Bank of Australia granting a line of credit to the banks of $90 billion only for this purpose.
  • At this stage, individual conversations will need to take place with your banks to determine how they are approaching these measures. I will be working with each of my clients to ensure we achieve the result that each of you needs at this time.

NEW SOUTH WALES & VICTORIA – IMPENDING SHUTDOWN

  • Based on news reports throughout the day, the newly convened National Cabinet will be advised, tonight, that both NSW and Victoria will be looking to lockdown each state, except for essential services.
  • The lockdown is likely to occur within 48 hours.
  • What is considered an essential service is not yet defined. More information is expected to be released in relation to this measure on Monday 23rd March, 2020.

CASHFLOW FORECAST

  • The potential lockdown of New South Wales and Victoria creates, in my opinion, the largest possible disruption to small and family businesses.
  • I will be working with each of my clients to:
  1. Assess their current cashflow position.
  2. Assess their current accessible cash position which includes:
  1. Available business cash reserves.
  2. Available overdraft facilities.
  3. Available loan facilities that can be re-drawn.
  4. Available personal funds that may be loaned to your business.
  5. Determine cashflow forecasts for the next 4 to 8 weeks.
  • You should expect to hear from me in the next 24 hours to accelerate this process.
  • It is my intention to review these with each of my clients weekly to ensure that we are aware, with a high degree of certainty, as to what the rolling 4 to 8 week period looks like.

COMMUNICATION

  • At this time, it is important to keep all lines of communication open. As always, you may contact me as follows:

Office Phone – 02 4654 5000

Mobile Phone – 0409 207 969

Email – dean@deanrobinson.com.au

  • I will endeavour to return all calls, texts and emails as quickly as possible – and in less than 2 hours.
  • Similarly, I would ask that:
  1. You return all calls, texts and emails to me as quickly as possible.
  2. That you respond to me with any information I may request of you, as a matter of urgency.
  3. That, in the event we are meeting (whether in person, or virtually), that you do not interrupt our time together with other appointments or phone calls.

FINALLY

  • Let’s keep our conversations to:
  1. The facts at hand.
  2. Your particular circumstances.
  3. What we need to do together at this time to get through this situation.
  4. How we can build on this for the future of your business.
  • Let’s not waste time on:
  1. Whose fault this all is.
  2. Any opinions as to the inadequacies or otherwise of any measures announced by any Government.
  3. Any pontificating on what might happen next.

This is an unprecedented situation that we are all facing. I am here for you, your families and your family businesses at this time. We will get through this and you can be assured of my total commitment to helping you weather this storm and emerge from it.

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