COVID-19 is having a monumental impact on our economy and on Australian businesses. Given the constantly updating situation, it is easy to be confused about what the government is doing to assist through mechanisms such as tax relief and economic stimulus measures. Rumours and misinformation are rife.

In this article we break down what the Federal and NSW governments are doing to protect jobs and support Australians via different tax relief measures. The most notable relief measures are set out below.

New South Wales

The NSW government has introduced a series of economic stimulus actions including $1.6 billion in tax cuts:

  • Reduction in payroll tax liability by 25% for businesses with wages of no more than $10million.
  • For businesses who lodge and pay payroll tax monthly, there is no payment required for March, April and May 2020 –for businesses with wages of no more than $10million.
  • The payroll tax-free threshold will increase from $900,000 to $1million for the 2020/21 financial year.

(See Revenue NSW: https://www.revenue.nsw.gov.au/taxes-duties-levies-royalties/payroll-tax for more information).

  • A waiver of a range of charges for small businesses including bars, cafes, restaurants and tradies.

Federal

The first package announced on 12 March 2020 by Prime Minister Scott Morrison detailed a $17.6 billion stimulus package. See below a quick outline of some of the stimulus measures:

  • Asset write off scheme: The instant asset write off scheme threshold has been increased to $150,000. The turnover threshold has also been increased to $500 million. This scheme is set to operate until July 2020.
  • Investment incentive: Introduction of a 15 month investment incentive to encourage and support business investment and growth (See https://treasury.gov.au/coronavirus/business-investment for more information).

The second stimulus package announced on 22 March 2020 worth $66 billion brought the total economic support from the federal government to a figure of 10% of GDP. This package includes:

  • Amendments to the Corporations Act 2001 and to the insolvency law to provide assistance for businesses to deal with unforeseen happenings that arise as a result of the coronavirus. (See our article on COVID-19: Temporary changes to Insolvency Law).
  • Cash flow assistance for employers: The Government is providing up to $100,000 to eligible small and medium sized businesses and not-for-profits that employ people. Small and medium-sized business entities with aggregated annual turnover under $50 million and that employ workers are eligible. (See https://treasury.gov.au/coronavirus/businesses for more information).
  • Apprentices and trainees: Eligible employers can apply for a wage subsidy of 50% of their apprentice’s or trainee’s wage for 9 months from 1 January 2020 to 30 September 2020. (See https://treasury.gov.au/coronavirus/businesses for more information).

The third stimulus package announced on 30 March 2020 provides cash assistance to employers. This package includes:

  • JobKeeper payment: whilst not yet law, the Government has announced its intention to provide wage subsidies of $1,500 a fortnight per employee to businesses whose revenue has decreased by more than 30% as a result of COVID-19. The intention of this payment is to help employers keep their skilled employees and thus ensure a quick return to business. (See https://www.ato.gov.au/general/gen/JobKeeper-payment/ for more information).

Land Tax:

The Federal Government is collaborating with the states to potentially offer tax cuts for landlords who grant rent relief to their tenants. The Morrison government is considering providing investment property owners income tax relief in return for reducing rent or waiving it for a period of time.

Further information

If you would like further information, please do not hesitate to contact one of our experienced solicitors on 9963 9800 or via email at law@etheringtons.com.au.

Etheringtons Solicitors extends our deepest sympathies to those experiencing hardship or health concerns during this difficult time. Further information about COVID-19 can be found at: www.health.gov.au.