Suntax COVID-19 STIMULUS INFORMATION UPDATE

As we enter another uncertain week ahead, we are pleased to provide you with further detail in relation to the State Government Stimulus package and the 2nd round of stimulus from the Federal Government announced over the weekend.Suntax COVID-19 STIMULUS INFORMATION UPDATE

While we have been impressed with the Federal and State Government actions, we are disappointed at their disjointed and out of sync press conferences and advice in relation to the operation of our small and medium businesses. This newsletter is focused on the impacts the packages will have on small to medium businesses.

Before we start with the stimulus packages, we would like to assure you that Suntax will be fully operational at all times during these periods of self-isolation and shutdown. Every member of our team has been set up to work from home, with full 2 Step Authentication for added security. Our mobile phones will work exactly the same as our office desk phones (using some internet magic) and we are using google meetings to share our screens with you as we work in virtual meetings. As we are 100% cloud based, we can access everything you may need from us while being able to perform everything you need as your accountants and financial advisors.

State (Victoria) Government Stimulus Package

Premier Daniel Andrews announced a $1.7 billion economic and jobs package over the weekend that included:

Second Round of Federal Government Stimulus

In the second round of Federal Government stimulus announcements, the Morrison Government announced an additional $66 billion in COVID-19 economic support. The Small Business stimulus announcements include:

Tax Credits For Small Business Employers (Also known as “Boosting Cash Flow for Employers”)

IMPORTANT NOTE: This stimulus is only available to employers that were registered before 12th of March 2020.

Government Guaranteed Loan Scheme

Financially Distressed Businesses Will Receive Extra Protection Under The Corporations Act

In a move that reduces the rights of suppliers, the Government has temporary increased the threshold at which a creditor can take action to initiate insolvency or bankruptcy from $2,000 to $20,000 while also giving companies and individuals six months instead of 21 days to respond to a demand for payment.

There will also be relief for directors for personal liability when the company is trading while insolvent.

We are not great fans of this change as it reduces the rights of those businesses that have sold goods or provided services in good faith of being paid. Businesses withholding payments are likely to have negative flow on effects throughout the business community.
 

Early release of superannuation for Individuals Impacted By The Coronavirus

From April 2020, eligible individuals will be able to access part of their superannuation, capped at $10,000 this financial year and a further $10,000 next financial year. The withdrawals will be tax-free. The eligibility requirements for individuals are:-

People accessing their superannuation will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.

We applaud this change, as it will have a direct cashflow injection to those that have been impacted by the Coronavirus. It is the first real benefit for sole-traders who do not employ staff. As withdrawing money from your superannuation will reduce your retirement nest egg, if this option is used, a plan to rebuild your superannuation balance should be put into place once we are past this pandemic.

With the myriad of information being announced, we hope that we have been able to provide concise and meaningful information that is likely to inform you and hopefully provide a positive impact to your business and life during this horrible time.

If you need a chat or would like to discuss any of the above measures, please do not hesitate to reach out and call us. We are here to support you during this once in a lifetime event.

 

Your Suntax Team

 

 

Examples of How The $100,000 Government Stimulus Package May Impact you (Also know as “Boosting Cash Flow for Employers”)

Example 1:
Sean’s Sunbury Hairdressing Salon

Sean owns a hairdresser’s salon in Sunbury. He employs 12 hairdressers, with average salary of $50,000 per year. Sean reports withholding of $8,788 for his employees in each of his monthly BAS’s.

Under the Government’s changes, Sean will be eligible to receive the payments on lodgment of his relevant BAS. Sean’s business will receive:

These credits will be applied to Sean’s BAS account

Sean will also receive:

Under the Government’s enhanced Boosting Cash Flow for Employers measure, Sean’s business will receive $100,000 (note: the first announced stimulus only provided for a $25,000 benefit)

Example 2:
Tara’s “Essendon Courier Business”

Tara owns and runs a small delivery business in Essendon, and employs two casual employees who each earn $10,000 per year. In her quarterly BAS, Tara reports withholding of $0 for her employees as they are under the tax-free threshold.

Under the Government’s changes, Tara will be eligible to receive the following credits on lodgment of her BAS.

Tara’s business will receive:

Tara’s business will receive $20,000 under this new stimulus package to keep her business moving.