Surviving an economic downturn
The Coronavirus, otherwise known as COVID-19, has hit and spread across the world at an alarming rate. It doesn't discriminate, affecting the old, the young, the rich and the poor and the number of infections is rising by the day.
And, due to the spread of the virus, a range of industries are being limited, altered or shutdown altogether. So, how do you survive an economic downturn? Continue reading to find out more about how a range of people, including small businesses and individuals can survive as well as possible, as our accounting team offers pragmatic advice so you can continue after the COVID-19 pandemic.
Please note: Due to the ever-changing nature of COVID-19, this information is current as at 31 March 2020 and may change following this date. For a full overview of the Australian Government's COVID-19 economic response, go to Economic Response to the Coronavirus.
Individuals and Households
There are a range of options being made available to individuals due to the effects of the Coronavirus. These include:
- Expansion of Government payment eligibility: The Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement of $550.00 a 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. Read more here.
- Reduction of superannuation minimum drawdown rates: To assist retirees in this difficult and volatile time, the Government is temporarily reducing superannuation minimum drawdown requirements, as well as reducing social security deeming rates. Find out more here.
- Early access to superannuation: In an effort to assist those in difficult times due. to COVID-19, the Government is allowing early access of up to $10,000 from their superannuation in 2019-20 and an additional $10,000 in 2020-21. Eligibility includes unemployment, eligibility for certain Centrelink payments or a minimum of 20% decrease in work hours, among other requirements. Please read the Treasury Factsheet for more information.undefined
- Reduction of social security deeming rates: The Government has announced a reduction in both the upper and lower social security deeming rates to reflect the low interest rate environment and its impact on the income from savings. Read more here.
- Increased household payments: The Government is providing two separate $750.00 payments to various low-income Australians, including those receiving social security, veteran and other income support recipients and eligible concession card holders. The payments are designed to support households to manage the economic impact of COVID-19 and more information can be found here.
- Mortgage repayments: A variety of institutions are commencing the halt or decrease of mortgage repayments for a period of time, so head to your bank's website to find out what they are offering to their customers. Head to Aus Banking to see what your bank has to offer.
- Administration concessions: The ATO has provided some tax concessions for existing ATO debts accrued on or after 23 January 2020. They may allow affected businesses to enter into low-interest payment plans for their existing and ongoing tax liabilities, however this does not occur automatically. Call the ATO Emergency Support Infoline on 1800 806 218 when you require these measures to commence and they can provide the appropriate assistance.
Additionally, the JobKeeper payments that are being offered to businesses are to assist individuals to keep their jobs for as long as possible. More information can be found below and here.
If you need further assistance when it comes to individual payments during the current economic downturn, head to one of the following:
- Services Australia: servicesaustralia.gov.au.
- Australian Taxation Office: ato.gov.au.
- Department of Veterans Affairs: dva.gov.au.
- Department of Social Services: dss.gov.au.
The Coronavirus pandemic is very tough on businesses, big and small, so there are a range of benefits available to. try and assist those in need:
- JobKeeper payments: If the Coronavirus has significantly impacted your business, you will be able to access a wages subsidy known as a JobKeeper payment to continue paying your employees. Under the JobKeeper program, you will be able to claim $1,500 a fortnight per eligible employee from 30 March 2020, for a maximum term of six months. The aim of this payment is to keep your staff employed and will assist in restarting when the COVID-19 crisis is over. For more information in relation to JobKeeper payments for employers, head to the Employers Factsheet and the Supporting Businesses Factsheet.
- Subsidies for apprentices and trainees: If you are a business that employs apprentices and/or trainees, contact your AASN (Australian Apprenticeship Support Network) provider as you maybe eligible for some kind of subsidy arrangement. Eligible employers can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage for 9 months, commencing 1 January 2020 to 30 September 2020. Where you are not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter). Learn more here.
- Loan repayments: A variety of institutions are commencing the halt or decrease of loan repayments for a period of time, usually around 6 months, so head to your bank's website to find out what they are offering to their business customers.
- Investment incentive: To assist with business investment and economic growth both during the COVID-19 crisis and following it, a time limited 15 month investment incentive, valid through to 30 June 2021, is being introduced by accelerating depreciation deductions. Businesses with a turnover of less than $500 million will be able to deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost. More information can be found here.
- Boosting cash flow for employers: The Government is providing up to $100,000 to eligible small and medium-sized businesses with a minimum payment of $20,000. Any small and medium-sized business entities with aggregated annual turnover under $50 million and that employ workers are eligible. Head here for further information.
- Temporary relief for financially distressed businesses: To assist those businesses that face financial distress due to COVID-19, the Government is temporarily increasing the threshold for the issuing of statutory demands on a company, as well as the time that companies have to respond to any statutory demands they receive. Also included is temporary relief for directors from any personal liability for trading while insolvent, and providing temporary flexibility in the Corporations Act 2001 to provide temporary and targeted relief from provisions of the Act to deal with unforeseen events that arise as a result of the Coronavirus health crisis. Find out more here.
- Instant asset write-off increase: The Government has announced an increase of the instant asset write-off threshold from $30,000 to $150,000. Access to this will be expanded to include businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020. Read more here.
The Treasure has created a Coronavirus Business Liaison Unit to 'build on existing efforts to support confidence, employment and business continuity.' Find out more about how they may be able to assist you here.
For more business information, head to visit Business.gov.au.
If you area sole trader that is unable to work or you have suffered loss of business due to Coronavirus, you may be able to access some kind of Government assistance such as the Job Seeker Payment. There is a Payment and Service Finder on the Services Australia website that assists those trying to find more information regarding the assistance they can receive - centrelink.gov.au - and there is examples of sole traders applying for payments here.
Charities and Non-For-Profits
Finally, some charities and not-for-profits (NFPs) may be eligible for assistance too:
- Boosting cash flow: The Government is providing up to $100,000 to eligible small and medium-sized businesses, and NFPs that employ people, with a minimum payment of $20,000. More information can be found here.
The Government has also set aside $1 billion to assist severely affected regions and sectors both during the pandemic and during the recovery period - learn more here.
If you would like some further information and assistance, give our Sunshine Coast accounting team a call on 5471 7077 or complete our accountant consultation booking form today. We are here to help you through the tough times, so contact us now.
The Treasury (Supporting Individuals and Households): https://treasury.gov.au/coronavirus/households
The Treasury (Support for Businesses): https://treasury.gov.au/coronavirus/businesses