To our valued clients,

As Covid-19 continues to develop globally, we recognise it’s a critical time for our clients with the full economic effects remaining uncertain. While businesses such as pubs, hotels (excluding accommodation), gyms, indoor sporting venues, cinemas, casinos and night clubs have been forced to close, restaurants and cafes are restricted to takeaway and/or home delivery. The economic impacts of the Coronavirus and health measures to prevent its spread could see many otherwise profitable and viable businesses temporarily face financial distress.

In addition to our email sent to you last week on 17 March 2020, the Government has announced a second stimulus package in an attempt to keep businesses afloat and workers employed.

New measures include:

Income Support for Individuals

Over the next six months, the Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight. This will be paid to both existing and new recipients of the JobSeeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.

There will be:

- Expanded Access: The JobSeeker Payment and Youth Allowance Jobseeker criteria will provide payment access for permanent employees who are stood down or lose their employment; sole traders; the self-employed; casual workers; and contract workers who meet the income tests as a result of the economic downturn due to the Coronavirus.

- Reduced Means Testing: Asset testing for the JobSeeker Payment, Youth Allowance Jobseeker and Parenting Payment will be waived for the period of the Coronavirus supplement. Income testing will still apply to the person’s other payments, consistent with current arrangements.

People will not be permitted, and will need to declare that they are not, accessing employer entitlements, such as annual leave and/or sick leave, or Income Protection Insurance, at the same time as receiving the Jobseeker Payment and Youth Allowance Jobseeker under these arrangements.

Payments to Support Households

In our previous email, we stated that there would be a one-off payment of $750 to social security, veteran and other income support recipients and eligible concession card holders.

The Government is now providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders and the payments will be exempt from tax.

The first payment will be available to people who are eligible payment recipients and concession card holders at any time from 12 March 2020 to 13 April 2020 and will paid automatically from 31 March 2020. The second payment will be available to people who are eligible payment recipients and concession card holders on 10 July 2020 and will be paid automatically from 13 July 2020.

Cash Flow Assistances for Businesses

The Government were to implement the Boosting Cash Flow for Employers measure which would have provided up to $25,000 back to small and medium-sized businesses with a turnover of less than $50 million calculated based on 50% of your PAYG Withholding Tax obligations.

This has now changed. As announced on 22 March 2020, the Government is now providing up to $100,000 to eligible small and medium-sized businesses and not-for-profits that employ people, with a minimum payment of $20,000.

Under the enhanced scheme, employers will receive a payment equal to 100% of their PAYG Withholding Tax (up from 50%) on salary and wages with a minimum payment of $10,000 (up from $2,000) and a maximum payment of $50,000 (up from $25,000) relating to the period of 01 January 2020 to 30 June 2020. An additional payment is also being introduced to be paid from 28 July 2020 to 28 October 2020. Eligible entities will receive an additional payment equal to the total of all the Boosting Cash for Employers payments they have received provided that eligible entities continue to be employing. This means that eligible entities will receive at least $20,000 and up to a total of $100,000 under both payments.

These payments remain tax-free.

The payments will be available to active eligible employers established before 12 March 2020. The payment will be delivered by the Australian Taxation Office (ATO) as a credit in the activity statement system. Quarterly lodgers will be eligible to receive the payment for the quarters ending 31 March 2020 and 30 June 2020. Monthly lodgers will be eligible to receive the payment for lodgements for the months ended 31 March 2020, 30 April 2020, 31 May 2020 and 30 June 2020. To provide a similar treatment for monthly lodgers, the payment for monthly lodgers will be calculated at three times the rate (150%) in the Activity Statement for the quarter ended 31 March 2020. Cash flow assistance in the way of wage subsidies to help small businesses retain their apprentices and trainees. Employers with less than 20 full-time employees may be entitled to apply for Government funded wage subsidies amounting to 50% of an apprentice’s or trainee’s wage for up to nine months from 01 January 2020 to 30 September 2020. The maximum subsidy for each apprentice or trainee is $21,000.

Temporary Early Release of Superannuation

The Government is allowing individuals affected by Covid-19 to access up to $10,000 of their superannuation in the year ended 30 June 2020 and a further $10,000 in the year ended 30 June 2021. Individuals will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments. You will be able to apply for early release of your superannuation from mid-April 2020. To apply for early release, you must satisfy any one or more of the following requirements:

- You are unemployed

- You are are eligible to receive a job seeker payment, youth allowance for job seekers, parenting payment, special benefit or farm household allowance.

- On or after 01 January 2020, either:

o You were made redundant

o Your working hours were reduced by 20% or more

o If you are a sole trader, your business was suspended or there was a reduction in your turnover of 20% or more.

Temporarily Reducing Superannuation Minimum Drawdown Rates

The Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50% for the year ended 30 June 2020 and 30 June 2021. This measure will benefit retirees holding these products (such as self-managed superannuation funds) by reducing the need to sell investment assets to fund minimum drawdown requirements.

Age Default Minimum Drawdown Rates(%) Reduced Rates by 50% for 2019-20 & . 2020-21 income years(%)

Under 65 4 2

65 to 74 5 2.5

75 to 79 6 3

80 to 84 7 3.5

85 to 89 9 4.5

90 to 94 11 5.5

95 or more 14 7

Support from the Banking Sector

The Reserve Bank of Australia recently reduced the cash rate to 0.25% as an immediate response to the pandemic.

Australia’s major banks will start offering $250,000 loans to small and medium sized businesses where no repayments will be required for six months. The Government is offering to provide a 50% guarantee on new unsecured loans made by small and medium sized businesses with a turnover of less than $50 million for working capital purposes of up to $250,000 for a term of 3 years. The Government will encourage lenders to provide facilities that only have to be drawn if needed by the business so that interest is only paid on amounts drawn down.

A Small Business Relief Package has been released by Australian banks of which the Australian Competition & Consumer Commission (ACCC) has granted an interim authorisation. The package includes a deferral of principal and interest repayments for all term loans and retail loans of a small business customer for 6 months for small business customers with less than $3 million in total debt owed to credit providers. Please note that the interest will be capitalised. At the end of the deferral period businesses will not be required to pay the deferred interest in a lump sum. Either the term of the loan will be extended or the level of loan repayments will be increased.

Banks are also able to individually offer relief that extends beyond these minimum terms, such as temporarily increasing overdraft facilities for 12 months or reducing variable interest rates on small business loans.

Temporary Relief for Financially Distressed Businesses

A creditor issuing a statutory demand on a company is a common way for a company to enter liquidation and not responding to a demand within the specified time creates a presumption that the company is insolvent. There is a temporary increase to the current minimum threshold for creditors issuing a statutory demand on a company under the Corporations Act 2001 from $2,000 to $20,000 and the statutory time frame for a company to respond to a statutory demand will be extended temporarily from 21 days to 6 months. These will both apply for 6 months.

To assist individuals, the Government will make a number of changes to the personal insolvency system regulated by the Bankruptcy Act 1966. The threshold for the minimum amount of debt required for a creditor to initiate bankruptcy proceedings against a debtor will temporarily increase from its current level of $5,000 to $20,000 and the time a debtor has to respond to a bankruptcy notice will be temporarily increased from 21 days to 6 months. These will both apply for 6 months also.

To make sure that companies have confidence to continue to trade through the coronavirus health crisis with the aim of returning to viability when the crisis has passed, directors will be temporarily relieved of their duty to prevent insolvent trading with respect to any debts incurred in the ordinary course of the company’s business. This will relieve the director of personal liability that would otherwise be associated with the insolvent trading. This measure will also apply for 6 months.

Support for Business Investment

- The instant asset write-off threshold will be increased to $150,000 (increased from $30,000) and access will be expanded to include businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.

- Introducing a time limited 15 month investment incentive through to 30 June 2021 to support business investment and economic growth over the short term by accelerating depreciation deductions. This measure will be available to businesses with a turnover of less than $500 million and will allow businesses to immediately deduct 50% of the cost of eligible assets on installation, with existing depreciation rules applying to the balance of the assets cost.

Stimulus Payments

- One-off payment of $750 to social security, veteran and other income support recipients and eligible concession card holders. Centrelink access to sickness benefits with no waiting period for casual employees, or those with no sick leave entitlements.

Assistance for Severely Affected Regions

- The Government has set aside $1 billion to support those regions and communities that have been disproportionately affected by the economic impacts of the Coronavirus, including those heavily reliant on industries such as tourism, agriculture and education.

Australian Taxation Office (ATO) Business Assistance

- The ATO has signalled a flexible approach in the way it will handle tax affairs over the coming months. The ATO may provide administrative relief for some tax obligations for people affected by the Coronavirus outbreak, on a case-by-case basis, such as:

o Four-month deferral of the payment date of amounts due through Activity Statements, including PAYG instalments, income tax assessments, fringe benefits tax and excise.

o Businesses will be allowed to vary the PAYG instalment amounts to zero for the quarter ended 30 June 2020.

o Businesses that report GST quarterly can opt into monthly GST reporting in order to get quicker access to GST refunds if applicable.

If you need any assistance with this or feel that your business cashflow is affected please contact us so that we help prepare your case for the ATO’s consideration.

Working From Home

We understand that many of our clients are transitioning to increased work from home arrangements and this could be for an unknown and extended period of time. Working from home can impose additional costs to employees and therefore we suggest that those employees affected keep an accurate record of those additional costs incurred to be claimed as a tax deduction in your income tax return.

Typical expenses that you can claim include the following:

- Heating, cooling and lighting bills

- Cost of cleaning your home work areas

- Depreciation of home office furniture and fittings

- Depreciation of home computer and office equipment (work use percentage applies)

- Small capital items such as furniture and computer equipment under a cost of $300 each of which an immediate tax deduction can be claimed in in the year purchased

- Computer and printer consumables used for work

- Telephone, both mobile and landline (percentage of work use only)

You cannot claim any portion of rent or home loan interest as you are not conducting any business from there. You are working from home.

There are two methods to make your claim:

1. Diary Method and Actual Running Expenses (record-keeping requirements are more stringent)

Keep a diary to work out how much of your household running expenses relate to doing work in your home office. The diary needs to detail the time you spend in the home office compared with other users of the home office. Keep your diary for a representative four-week period, or the period you are home if less. The work-use proportion can then be applied to all your actual expenditure over the course of the year such as home internet costs, mobile phone costs, heating, cooling and lighting bills, costs of cleaning your home working area, costs of repairing or depreciating your home office furniture, fittings and equipment.

2. Rate per Hour Method (simple method)

Alternatively you can use a fixed rate of 52 cents per hour for home office expenses for heating, cooling, lighting and the depreciation of furniture. You just need to keep a record of the number of hours you use the home office and provide this information to us when we complete your income tax return. In addition to claiming 52 cents per hour, you can also make a separate claim for:

o Phone and internet expenses

o Computer consumables and stationery; and

o Depreciation of computers and other equipment

o Small capital item under $300 as above

As a final note, we encourage you to get in contact with us to discuss any of these key announcements and the support that this may provide for you and your business. We are conscious of the challenges that your business is currently facing or may face in the near future as a direct result of the pandemic.

We are committed to supporting our clients and endeavour to maintain operations at high levels of service to you. We will keep in contact with you to communicate any further key changes, particularly of any further help and support available to you. For those of you that have still to send in your information please do so at your earliest convenience. You can upload or email your information and we can organise a teleconference if you do not want to come in. Again, don’t hesitate to contact us if you have any problems or concerns in how to do this.

Keep well and Kindest Regards,

Con and all the team at TBM Accountants