The Australian Tax Office (‘ATO’) is also implementing administrative measures to assist those affected by COVID-19. The below guide highlights the key measures that have been announced so far.
Federal Government Stimulus Package
On 12 March 2020, the Federal Government announced a $17.6 billion economic plan to help individuals, businesses and the Australian economy as it deals with the challenges faced by the spread of COVID-19. The stimulus package has four parts to it:
Household Stimulus Payments - More than 6 million welfare recipients, including pensioners, carers, veterans, families, young people and jobseekers will get a one-off $750 payment from 31 March 2020 and it will be paid through the social security system. The payments are restricted to one payment per eligible recipient (even where a recipient may be eligible for the payment under multiple systems) and will be tax free.
Cash Flow Assistance for Businesses - Nearly 700,000 small and medium sized businesses will receive cash payments of between $2,000 and $25,000 to help pay wages or hire extra staff. Only businesses with a turnover of less than $50 million and employs staff between 1 January 2020 and 30 June 2020 are eligible for the payment. Sole traders are not eligible for this payment.
The payments will be based on 50 per cent of PAYG withheld over the period 1 January 2020 to 30 June 2020. The payments will be delivered by the ATO as a credit in the activity statement system from 28 April 2020 as eligible businesses lodge their activity statements. Where the credit places a business in a refund position, the ATO will deliver the refund within 14 days.
The package also includes $1.3 billion in support payments to keep apprentices in their jobs amid fears the spread of the COVID-19 could have a crippling effect on employment. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.
Supporting Business Investment - In an effort to encourage businesses to continue with current investments or bring forward planned investments, the Government has allocated $3.9 billion to increase the instant asset write off and provide a 15-month investment incentive.
Assistance for Severely Affected Regions - The stimulus package also includes a $1 billion fund to support regions that have been disproportionately affected by the economic impacts of COVID-19, including those heavily reliant on industries such as tourism, agriculture and education.
State Government Stimulus Package
In addition to the Federal Government stimulus package, various states across Australia have also announced packages to support local businesses, some are outline below:
Western Australia
On 16 March 2020, the WA State Government announced an economic response to COVID-19 aimed at providing relief for businesses and households. The key measures for local business were targeted at payroll tax relief and assistance:
- $114 million in measures to support Western Australian small and medium businesses
- Payroll tax paying businesses with a payroll between $1 million and $4 million will receive a one-off grant of $17,500
- Small and medium sized businesses that have total payrolls of under $7.5 million can now apply to defer payment of their 2019-20 payroll tax until 21 July 2020
- The Government will bring forward the payroll tax threshold increase to $1 million. This was planned to commence from 1 January 2021, however, will be brought forward to 1 July 2020
New South Wales
The NSW State Government announced a $2.3 billion stimulus package to boost health services and economic stimulus. The stimulus package will help to protect communities and jobs in the face of the COVID-19 outbreak over the next six months. The key measures for local business were targeted at payroll tax relief and assistance:
- Businesses with payrolls of $10 million or less will have their payroll tax waived for 3 months from April 2020 to June 2020
- Bring forward the payroll tax threshold increase to $1 million. This increase will be brought forward to 1 July 2020
Queensland
The QLD State Government has announced a package to support workers and businesses affected by COVID-19. The Government announced two key measures to support local business:
- Extending the payroll tax deferral (originally for businesses affected by natural disasters). This will enable all COVID-19 affected businesses with a payroll of $6.5 million or less to extend the due date for the lodgement and payment of 2020 payroll tax returns to 31 July 2020. As with the initial payroll tax deferral offer, the Office of State Revenue will also work with affected businesses to create repayment plans for the deferred tax liabilities
- The creation of a new $500 million loan facility, interest free for the first 12 months, to support businesses to keep Queenslanders in work. The $500 million concessional loan facility is available to facilitate loans of up to $250,000 with an initial 12-month interest free period for businesses to retain staff.
The Australian Taxation Office (‘ATO’) Support Measures
As part of the Federal economic stimulus, the Australian Taxation Office (‘ATO’) has implemented a series of administrative measures to assist Australian individuals and businesses experiencing financial difficulty as a result of COVID-19. Some of the administrative measures being offered:
Payment Deferrals - Deferring by up to six months the payment date of amounts due through the business activity statement (including PAYG instalments), income tax assessments, fringe benefits tax assessments and excise.
Remitting Interest and Penalties - Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities.
Low Interest Payment Plans - Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low interest payment plans.
Find out more about Australian payroll rules and regulations in our Australia Global Insight Guide, which also contains information and insight on the country’s tax and social security landscape, global economic profile, and common business practices.