There is significant support available from both state and federal governments in Australia, which aims to help Aussie businesses with their COVID-19 resilience and recovery. Here, we provide the most recent updates, for stimulus packages available as at 6 August 2020, including:
General stimulus updates
VIC Homebuilder grant portal (external link): The Vic SRO is developing an online portal for HomeBuilder Grant applications.
Victorian Lockdown Business Support Program (external link): A one-off $5,000 grant is available for businesses who operate in a postcode affected by the Stage 3 restrictions provided certain eligibility criteria are satisfied (including are an employing business, hold GST and ABN registrations and have payroll less than $3 million p.a.). Applications close 31 July 2020.
New South Wales Small Business Recovery grant (external link): A grant between $500 and $3,000 is available for small businesses/NFPs based in NSW provided certain eligibility criteria are satisfied (including annual turnover > $75,000, NSW ABN registration and at least a 30% decline in turnover from March to July 2020 (compared to equivalent 2019 period)). Applications close 16 August 2020.
Victorian Government announces $534m support package (external link): The new package includes:
- a new $5,000 grant to support businesses through the renewed restrictions. This grant was previously made available to the 12 postcodes linked to outbreaks. It will now apply to all areas under Stage 3 restrictions.
- $30 million dedicated fund for Victoria’s night time economy to support the hardest hit businesses in hospitality.
- $26 millionin mental health support will ensure Victorians dealing with the compounding challenges of running a small business can get the support they need as they navigate their way through the crisis.
- $10 millionbusiness mentoring program, pairing small business owners with experienced professionals who can help them navigate their way through the crisis.
- $40 millioncapped fund for regional tourism businesses to cover the costs of refunds.
- $20 millionfund to support small businesses in Melbourne’s CBD that are faced with a large and sustained shock to their trading environments.
- Businesses will also benefit from an extended and expanded payroll tax deferral. Eligible businesses with payrolls up to $10 million can defer their liabilities for the first half of the 2020/21 financial year.
Child care gap fees waived in Victoria – The Federal Government has announced that childcare operators, located in areas subject to the restrictions, would be permitted to waive the gap fee for parents from July 13 if their children do not attend for COVID-19 related reasons.
Small business grant to improve energy efficiency, reduce costs and lower energy consumption (external link): From the 6 July 2020, small businesses can apply for a grant of up to $20,000 to improve their energy efficiency. There is an estimated $9.06 million available. Grants may be used for equipment and component improvements, energy audits, feasibility studies and/or energy use and emission monitoring. The grant is for small businesses with an annual turnover of less than $10 million per year based on Business Activity Statements from the previous 12 months. Applications close 26 August 2020.
$50m extra tax relief for Queensland pubs and clubs (external link): This includes the deferral of March 2020 gaming taxes and health services levies until February 2021.This is an extension to the initial deferral which was due to expire on 10 July 2020.
Lenders to extend loan repayment deferrals (external link): The Australian Banking Association (ABA) has announced that borrowers with reduced incomes and financial difficulty due to COVID-19 may be eligible to defer repayments for an additional four months. Noting the deferral extension will not be automatic.
Coronavirus Economic Response Package (Payments and Benefits) Amendment Rules (No.6, external link): This amendment allows an Australian government agency to confirm that an entity is participating in the JobKeeper scheme by requesting confirmation from the ATO. This was considered necessary as some assistance programs created by the States relies on the receiving entity participating in JobKeeper as one of their eligibility requirements.
Transfer pricing arrangements and JobKeeper payments (external link): The ATO has released some guidance on how they will treat the interaction between the JobKeeper payment and transfer pricing arrangements. Essentially it will be considered incorrect if the benefit of the JobKeeper is passed on to a non-resident entity. Where an Australian entity is charging a non-resident entity on a cost plus basis, the price of the services to the non-resident entity should not be reduced in line with the reduction in wages expense due to the JobKeeper payment.
JobKeeper key dates and changes for childcare workers (external link): Eligibility for JobKeeper payments ended from 20 July for:
- employees of an approved provider of child care services where those employees whose ordinary duties are that they are engaged principally in the operation of the child care centre; and
- eligible business participants where the business entity is an approved provider of a child care service.
Extension of JobKeeper Payment (Jobkeeper 2.0)
The JobKeeper Payment, which was originally due to run until 27 September 2020, will now continue to be available to eligible businesses (including the self-employed) until 28 March 2021. The payment rate of $1,500 per fortnight for eligible employees and business participants will be reduced to $1,200 per fortnight from 28 September 2020 and to $1,000 per fortnight from 4 January 2021.
From 28 September 2020:
- lower payment rates will apply for employees and business participants that worked fewer than 20 hours per week.
- businesses seeking to claim the JobKeeper Payment will be required to demonstrate that they have suffered an ongoing significant decline in turnover using actual GST turnover (rather than projected GST turnover).
- businesses and not-for-profits will be required to reassess their eligibility with reference to their actual GST turnover in the June and September quarters 2020. They will need to demonstrate that they have met the relevant decline in turnover test in both of those quarters to be eligible for the JobKeeper Payment from 28 September 2020 to 3 January 2021.
From 4 January 2021, businesses will need to further reassess their turnover to be eligible for the JobKeeper Payment. They will need to demonstrate that they have met the relevant decline in turnover test with reference to their actual GST turnover in each of the June, September and December quarters 2020 to remain eligible for the JobKeeper Payment from 4 January 2021 to 28 March 2021. Alternative tests should be available.
To be eligible for JobKeeper Payments under the extension, businesses will still need to demonstrate that they have experienced a decline in turnover of:
- 50 per cent for those with an aggregated turnover of more than $1 billion;
- 30 per cent for those with an aggregated turnover of $1 billion or less;
- 15 per cent for Australian Charities and Not for profits Commission-registered charities (excluding schools and universities).
If a business does not meet the additional turnover tests for the extension period, this does not affect their eligibility prior to 28 September 2020. The JobKeeper Payment will continue to remain open to new recipients, provided they meet the existing eligibility requirements and the additional turnover tests during the extension period. Other eligibility rules for businesses and their employees remain unchanged.
Further information on those rules can be found at the Bentleys knowledge Centre www.bentleys.com.au/knowledge-centre/jobkeeper-2-0-explained/ and the ATO website: www.ato.gov.au/General/JobKeeper-Payment/.
Extension of income support
The Federal government announced an extension to the temporary Coronavirus Supplement from 25 September 2020 to 31 December 2020. Eligible income support recipients will continue to receive the payment at a rate of $550 per fortnight up to and including the period ending 24 September 2020. The payment rate will be reduced to $250 per fortnight for the period from 25 September 2020 to 31 December 2020. The supplement will remain outside income testing, meaning anyone eligible will receive the full rate of the supplement. Further information can be found at the Treasury Fact Sheet.
Other measures in response to COVID-19
The Treasurer released the Economic and Fiscal Update – July 2020 on 23 July 2020. The majority of the tax and superannuation measures announced in the update had been previously announced or implemented. Those not previously announced are listed below.
Application period extended for temporary early access to superannuation
The Government has allowed individuals affected by the financial impacts of COVID-19 to access up to $10,000 of their superannuation in the 2019/20 income year and a further $10,000 in the 2020/21 income year on a tax-free basis. The application period for the 2020/21 income year will be extended from 24 September 2020 to 31 December 2020.
COVID-19 SME Guarantee Scheme extended
The Government announced that the scheme, which was due to end on the 30th of September 2020, will be extended until the 30th of June 2021. It will also be expanded to apply to loans other than just for working capital purposes. Other changes include:
- permitting secured lending (excluding commercial or residential property)
- increasing the maximum loan size to $1m (from $250,000) per borrower
- increasing the maximum loan term to 5 years (from 3 years); and
- allowing lenders, the discretion to offer a repayment holiday period.
Apprentice and trainee wage subsidy expanded
The Supporting Apprentices and Trainees wage subsidy established to support continuity of training will be expanded. The initial wage subsidy provided small business employers with 50% of an apprentice or trainee’s wages for nine months, capped at $7,000 per quarter. The subsidy, due to end on 30 September 2020, will be extended for a further six months to 31 March 2021 and will be expanded to include medium-sized businesses from 1 July 2020.
(Film) Location Incentive extended until 2027
The Location Incentive is extending. It is a grant of up to 13.5% of qualifying Australian production expenditure for eligible productions. It was due to end in 2022/23 but has now been extended for four more years to 2026/27. It complements the Location Offset, providing an effective increase in the tax offset rate from 16.5% to 30% for eligible large budget international productions that film in Australia and are successful through the application process.
TD 2020/D1: Notional deductions for R&D subsidised by Jobkeeper: The ATO in this determination state that wages subsidised by Jobkeeper are not eligible for the R&D tax concession. However, this does not extend to Jobkeeper paid for an ‘eligible business participant’ or the Cashflow Boost concession. This will be relevant in calculating your 2020 and 2021 R&D tax concession claims. We note the same reasoning in the ruling may not apply to other grants received (e.g. State emergency grants) where the grant is not linked directly or indirectly to expenditure incurred. However, this will need to be reviewed on a case by case basis.
Tax consequences of Cashflow Boost: the ATO has updated its information to include views on the tax consequences of the Cashflow Boost. In particular:
- The amount can be passed through a Unit Trust without tax consequences for a unitholder (however, it does not specifically address the application of CGT event E4)
- The amount may be treated as a dividend if distributed from a company, and
- The amount does not affect an R&D claim.