Bridge to Recovery

Early in the new year we discussed with many of you the “Road to Recovery” as you had been impacted by the bushfires or wanted to know what you could do to help those impacted.

Unfortunately, today I am writing to you to discuss the now current economic environment and our new “Bridge to Recovery” that we are trying to build to see out this current scenario impacting on all of us.

Many of you are small businesses and potentially also have employees. You are now rapidly trying to work out if you have a business going forward and what you should be doing with your employees if there are any. First and foremost, don’t make knee jerk reactions. The government has released 2 stimulus packages now and we have provided you with details of the first already. This outlines what we know about the second one and we will continue to update you as information is released. We are also trying to work our way through discussing this with each of you personally and what the impacts are going forward.

This package just released shows that the government is definitely on your side in these uncertain times, they and the banks need you to survive so we will all do our best to ensure that this happens.  Don’t be scared to ask for help and to access what you are being offered.

If you are a business, let your customers know you are out there and ready for business, even if that is going to be in a different format.

To summarise, the measures are as follows:

Businesses

PAYG Withholding Credits

You will receive potentially up to $100,000 credit on your quarterly BAS starting with the March 2020 BAS due by 28th April. This is worked out by looking at what monies have been withheld on behalf of your employees and giving this amount to you as a credit on your BAS. If this results in a refund this will be processed and paid to you within 14 days of lodgement. To be eligible for this your turnover needs to be below $50 million and you employ people i.e. you are registered for PAYG withholding.  If you haven’t had to remit any PAYG withholding you will receive the minimum payment which previously was $2,000 but has now been increased to $10,000. Those who are on monthly payments will receive the benefit of January and February, already paid, when lodging the March BAS also.

This assistance comes in 2 stages, the first with the March BAS up to a maximum of $50,000. To qualify for the second stage of this you must continue to be active. The government needs you to keep your employees on if possible. You will receive a quarter of what you received in the first stage when lodging each of the June, July, August and September activity statements if you are a monthly payer.  If quarterly you will receive this as half in the June BAS and the balance in the September BAS.

Cash Flow Loans

This is a scheme where the government guarantees 50% of the loan to be used for working capital, maximum loan is $250,000 per borrower. The loans are for up to 3 years with the initial 6-month period having no repayments due.  It is an unsecured loan which means no assets are required to be provided as security. It will be subject to the normal assessment criteria by the banks but the expectation is that lenders will be sensible re this.  It will commence early April 2020 and be available on new loans made until September, 2020. Your bank manager should be aware of this and be able to assist you.

Banking Assistance

In addition, your bank is offering up to 6 months of no repayments i.e. a holiday from these and waiving of various charges so ensure that you register for these by talking to your bank manager or accessing their helplines. Ring us with details of your bank and we can provide details of the number you need for this.

Rent Relief

There is discussion regarding landlords providing rent relief to businesses going forward. Currently there is little data on this but we recommend that you make contact with your landlord to begin the discussions if they haven’t already approached you. We are sure they would prefer to have a tenant on some rent rather than none at all.

Individuals and Households/Sole Traders

Income Support payments

Eligibility for income support payments is to be extended, assets excluded and waiting periods waived for those who are now experiencing job loss or reduced hours. This will also apply to those in business who are operating as a sole trader. This supplement will be paid at the rate of $550 per fortnight for the next 6 months. If you are not already registered with Centrelink and are experiencing changes in your working conditions or business, we recommend that you register as soon as possible.

Those already on Centrelink will also receive 2 separate $750 payments at the end of March and in July 2020.

Early Release of Super

Individuals will be able to access up to $10,00 of their superannuation in the 2019-20 financial year and another $10,000 in the year following. To be eligible for these payments you have to be unemployed, made redundant, on Centrelink benefits or your hours reduced by 20% or more. If accessed the payments will be tax free and won’t impact on your eligibility for Centrelink benefits. This can apply for sole traders if their turnover has decreased by more than 20%. This can be applied for via the MyGov website www.my.gov.au from mid-April onwards. If your monies are in a SMSF there are separate arrangements required that you will need to discuss with us.

Retirees and Pensioners

The deeming rates for pensioners will be reduced by 0.75% now with the upper deeming rate now being 2.25% and the lower 0.25%.

Age pensioners will also receive 2 separate $750 payments at the end of March and in July 2020.  If you are a couple and both receiving the Age Pension you will each receive the payment.

Those required to withdraw a pension from their SMSF will have their minimum percentage halved for the 2019-20 and 2020-21 financial years. For example, if you are under 65 your current drawdown rate was 4%, it is now to be 2%.

If you need to discuss any of the above, or require our assistance to assess your viability going forward, please do not hesitate to call us if we haven’t yet made contact. We are all here to help and to get through this together.

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