26 Mar COVID-19 – How can I get help for my business?
This update covers:
- How you can access the Federal Government COVID 19 Stimulus Package
- What to do if your business becomes financially distressed and the emergency measures that the Federal Government has put in place to protect business owners
- What relief the major banks are offering for business and home loans
How can I access the Federal Government COVID 19 Stimulus Package?
Whilst the Federal Government has released Fact Sheets and legislation to implement its stimulus package in response to COVID 19, it remains unclear how certain aspects of the stimulus program are to be administered.
Set out below is a summary of policy objectives the Federal Government is seeking to achieve.
SME criteria to be met
To access this relief you must qualify as a small to medium business which for this purpose is defined as having aggregate annual turnover of less than $50 million and employing workers.
The $50 million in turnover test is being calculated based on FY18/19 tax returns.
Your business must have been registered with the ATO for PAYG withholding prior to 12 March 2020, unless you are a registered charity.
Who is administering payments?
The ATO is responsible for administering the payments via your Integrated Client Account (ICA).
When will I receive payments?
From the Federal Government’s Fact Sheet it appears that cash payments will be made within 14 days of lodgement of your BAS. However, it also appears that businesses will only receive a cash payment to the extent to which their ICA is in credit – meaning if you owe debts to the ATO the stimulus payments will be credited to reduce those debts but you may not receive a cash refund unless your ICA is in a net credit position.
How much will I get?
During the period from April to July 2020 you will receive $10,000 – $50,000, depending on how much tax you withhold from your employees’ wages.
Eligible businesses that withhold tax to the ATO on their employees’ salary and wages will receive a payment equal to 100% of the amount withheld, up to a maximum payment of $50,000.
Eligible businesses that pay salary and wages will receive a minimum payment of $10,000, even if they are not required to withhold tax.
Quarterly lodgers will be eligible to receive the payment for the quarters ending March 2020 and June 2020.
Monthly lodgers will be eligible to receive the payment for the March 2020, April 2020, May 2020 and June 2020 lodgements. To provide a similar treatment to quarterly lodgers, the payment for monthly lodgers will be calculated at three times the rate (300%) in the March 2020 activity statement.
The payments (credits) are tax free.
When do I need to lodge by?
|Current BAS lodgements||Period||Lodgement due date|
|Quarterly||Jan, Feb, Mar 2020||28 Apr 2020|
|Apr, May, Jun 2020||28 Jul 2020|
|Monthly||Mar 2020||21 Apr 2020|
|April 2020||21 May 2020|
|May 2020||22 Jun 2020|
|June 2020||21 Jul 2020|
Eligible businesses that continue to employ staff will receive an additional payment of $10,000- $50,000 based on the amount of tax withheld from employees’ salary and wages for the July to October 2020 period.
SME business loans
The Federal Government is encouraging banks to write loans to SMEs to fund their working capital requirements by guaranteeing 50% of the amount borrowed.
To qualify for a loan, the SME must have turnover of less than $50 million.
The loans will be offered on the following terms:
- Maximum of $250,000 per SME;
- Loan term of 3 years with a six month repayment holiday;
- The loans will be unsecured, meaning that the SME will not have to put up security.
Note that the loan scheme will not commence until April 2020 but many banks have already opened the application process. All loan applications will remain subject to meeting the bank’s credit eligibility requirements.
Deferred payroll tax (Queensland)
You may be able to apply for a relief package to defer paying payroll tax returns until. The deferrals are as follows:
|Return period||Normal due date||Deferred due date|
|March||7 April 2020||3 August 2020|
|January-March quarter||7 April 2020||3 August 2020|
|April||7 May 2020||3 August 2020|
|May||8 June 2020||3 August 2020|
|2019-20 annual||21 July 2020||3 August 2020|
You can apply for this here: https://www.business.qld.gov.au/running-business/employing/payroll-tax/lodging/coronavirus-tax-relief
Loan facility (Queensland)
A new $500 million concessional loan facility will provide loans of up to $250,000, interest free for the first 12 months.
What are the banks offering for existing customers?
Small business banking
|Defer your loan repayments||Yes – up to six months (interest capitalized)||Yes – up to six months (interest capitalized)||Yes – up to six months (interest capitalized)||Yes (conditions apply)|
Up to $250,000 no establishment or account fees and no repayments for 6 months
Businesses with less than $50M turnover
Interest at 4.5% after 6 months.
|No – increased overdraft facilities||Yes (QuickBiz)||Unsecured 3 year term loan up to $250,000.00 for businesses with turnover of less than $50M|
|Reduction of interest rates||Reducing interest rates on BetterBusiness, Business Overdrafts and other porudcts by 25 basis points as at 24 March 2020.||Reduced small business loan rates by 0.25%
A reduction by 0.80%pa to a new two and three-year fixed rate of 2.59% p.a for secured small business loans up to $1 million, effective 3 April 2020.
|Receive a 200-basis point rate cut on QuickBiz loans and overdrafts, effective March 30.
Receive an additional 100-basis point reduction on variable rates for small business loans, effective March 30. This is on top of a 25-bps reduction earlier this month
|400 basis point reduction on unsecured lending term loan for new and existing customers, effective Monday 23 March 2020.
200 basis point reduction on overdrafts for new and existing customers, effective Monday 6 April 2020.
100 basis point interest rate reduction for small business cash-based loans, effective Monday 6 April 2020.
|Waiving merchant terminal fees||Yes – 90 days||Yes – up to 6 months||Yes||Yes – 90 days|
|Increased overdraft||No||Yes – for 12 months||No||No|
|Defer your home loan repayments||Yes – up to six months (interest capitalized)||Yes – up to six months (interest capitalized)||Yes – up to six months (interest capitalized)||Yes – 3 months with review at 3 months.|
|Access redraw facility||Yes||No||Only if your loan repayments are not paused.||No|
|Lower interest rates (fixed)||2.29%p.a. from 30 March 2020||New fixed interest home loan rate at 2.19% p.a.||Yes (rate dependent on term)||2.29%p.a|
|Lower interest rates (variable)||No||Reducing variable home loan rate by 0.15%p.a
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