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Covid-19 Australian Government Stimulus Explained - Bean Ninjas

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Covid-19 Australian Government Stimulus Explained - Bean Ninjas

  1. 1. COVID-19 Government Stimulus Explained How this affects your business & household
  2. 2. Quick Message.. “We cannot control the wind, but we CAN direct the sail.”
  3. 3. About us.. -  Bean Ninjas helps small businesses with: Bookkeeping Financial Reporting Xero education Profit First Consulting Business Coaching Disclaimer: We are accountants providing general advice, please speak to your tax accountant for specific advice for your personal circumstances.
  4. 4. About me.. -  Financial Coach & Profit First Consultant -  Chartered Accountant -  Passionate about helping small business survive & thrive -  Part of Bean Ninjas team for 3 years and counting..
  5. 5. What are we covering? >17.6B Stimulus Package #1 (12 March) >66B Stimulus Package #2 (22nd March) NOT COVERED > State specific relief e.g payroll tax concessions > Government has set aside another 40B to be spent from 1 July as needed
  6. 6. A.  Australian Federal Government Initiatives B.  Australian Tax Office Initiatives C.  Households & Individuals D.  BONUS: Cash flow tips for turbulent times Agenda
  7. 7. The Fed Governments “Big Six” ●  1. Tax-free cash payments to entities that employ staff to help with wages ●  2. Increasing Instant Asset Write off ●  3. Depreciation Deductions Accelerated A)  Federal Government
  8. 8. ●  4. Cash support for trainees & apprentices ●  5. Insolvency Laws temporarily loosened for 6 months ●  6. Government helping small businesses access unsecured loans from banks A)  Federal Government
  9. 9. A)  Federal Government Item 1)  Tax-free cash payments to entities that employ staff Who Any small biz + NFP with annual rev <$50m Had to be registered for PAYGW before 12th March 2020. When From 28th April. Govt payments made 14 days after BAS/IAS submission Notes Payment 1: You will get 100% of the PAYGW you paid from 1 Jan- 30 June 2020 back (capped to 50k) Payment 2: Get exactly same amount as first payment, will receive this during June-October BAS period (capped to 50k). Still need to be employing up until September. Minimum payment for eligible entities: TWO lots of 10k = $20k total. Automatically credited in activity statement system once you lodge - no extra forms needed! First payment made after March BAS submitted.
  10. 10. EXAMPLE #1
  11. 11. EXAMPLE #2
  12. 12. Q: Why is everyone so interested in the PAYGW payment? People who currently operate a company or trust and have been taking a trust distribution, company dividend, or owners drawings from business.. Will be considering now paying themselves on a wage (via payroll) People will be looking to max out their PAYGW balance from 1 January to 30 June 2020 to get this paid back and DOUBLED if they continue to employ through to September Note - when making switch consider the additional considerations such as superannuation & personal income tax etc. The Opportunity
  13. 13. Q: Can a sole trader access this payment? A: Whilst sole traders and partnerships that employ others can access the PAYGW rebate, you cannot employ yourself. Q: Should I switch to a company in order to access this? A: This is for “active eligible employers established prior to 12 March 2020” i.e registered for PAYGW and paying staff on this date. There is some debate around if you have an ABN, whether you can backdate this PAYGW to access grant. Q: How do I predict the 2nd PAYG payment amount from Government? A: Cashflow Boost Stimulus#2 is equal to amount you have already received for Stimulus #1, paid in stages. E.g quarterly BAS cycle, 50% is paid in June BAS, other 50% paid September BAS Common FAQ’s
  14. 14. Q: How does this affect my GST debt or current payment plan or tax debts? A:.This benefit will offset any existing debt with the ATO Q: If this deposit takes my account into credit, can I take this cash out? A: You should be entitled cash refund, if your account is in credit. Q: How do I access Stimulus #2 for June-September? Your business will need to continue to employ into the June and Sept quarters in order to receive Stimulus #2. Common FAQ’s
  15. 15. A)  Federal Government Item 2) Increasing Instant Asset Write off Who Expanded to businesses with aggregate annual turnover of <$500m (was <$50m) When Assets used or installed between 12 March 2020 and 30 June 2020 Notes The immediate tax deduction threshold has been increased from $30,000 to $150,000 for assets purchased between 12 March 2020 and 30 June 2020 Processed in June tax return. Be careful: you need to spend this money & pay tax to obtain this benefit. Decide whether you need the asset first as this expense eats into your profit margins.
  16. 16. A)  Federal Government Item 3) Depreciation Deductions Accelerated Who Businesses with aggregated turnover of <$500m When Assets acquired after Mid March and installed by 30 June 2021 Notes This allows businesses to accelerate deductions on eligible assets, incentivising investment. Deduct 50% of the eligible asset cost on installation in the first year, then normal rates after this Processed in year end tax return. Be careful: you need to spend this money & pay tax to obtain this benefit. Decide whether you need the asset first as this expense eats into your profit margins.
  17. 17. A)  Federal Government Item 4) Cash support for trainees and apprentices Who Any small biz with annual rev <$50m <20 Full-time employees When 9 months from 1 January 2020 to 30 September 2020 Employer can register from early April 2020 Deadline to lodge by 31 December 2020 Notes ●  Wage subsidy of 50% of apprentice’s or trainee’s wage for 9 months from 1 January 2020 ●  Maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter). Can access subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support network (AASN) provider. Websites:
  18. 18. A)  Federal Government Item 5) Changed Insolvency Laws for 6 months Who Company Directors When 6-month period Notes Company directors a duty to prevent insolvent trading by their company - I.e are PERSONALLY LIABLE for insolvent trading. E,g if company incurs debt when it was insolvent AND the director knew it was insolvent For 6 months: Directors will be temporarily relieved from their obligations to prevent their companies trading while insolvent if the debts are incurred in the company's ordinary course of business. NB: Fraud charges are still criminal company-directors/company-director-liabilities-when-things-go-wrong/
  19. 19. A)  Federal Government Item 5) Changed Insolvency Laws for 6 months Who All businesses under the Corporations Act 2001 When 6-month period Notes Insolvency laws are being temporarily loosened to lessen threat of actions that could push a struggling company into insolvency & force it to close. >Increasing the statutory demand threshold creditors can issue from $2,000 to $20,000 for 6 months >Increasing the demand response time from 21 days to 6 months
  20. 20. A)  Federal Government Item 6) Small Biz Guarantee Scheme for unsecured loans Who Small businesses turnover <$50m borrowing up to $250k When Early April 2020 until 30 September 2020 Notes NEW LOANS: Govt has guaranteed 50% of new unsecured loans to small business that Banks lend, to help with working capital. I.e banks are more likely to lend you cash as Government is guaranteeing 50% of this debt. CURRENT LOANS: Aus Big 4 banks will defer repayments for eligible small businesses for 6 months - speak direct to your bank
  21. 21. Australian Taxation Office Assistance 1.  Payment deferrals (Income tax, PAYGI, FBT) by up to 4 months 2.  GST Credits: change from quarterly to monthly to access refunds quicker 3.  Remove interest & penalties charged 4.  Low interest payment plans B) ATO
  22. 22. Direct Helpline available 1800 806 218 Ask them what help you can get: > Change installments to NIL > Shift your due dates & pause payment plans >Remove interest & penalties >Enter into low interest payment plans Speak to ATO!
  23. 23. What about households or sole traders who don’t employ staff?
  24. 24. NB: After this ‘mortgage holiday’ loan balance will be bigger, as the interest is added to your outstanding balance. Defer your Home Loan Bank Response for those affected by COVID-19 ANZ Defer loan repayments by up to six months, interest capitalised CBA Defer loan repayments by up to six months, interest is capitalised, register digitally NAB Defer loan repayments by up to six months, NAB will check in after initial three months & interest capitalised Westpac Defer loan repayments for three months, with another three available after review, interest is capitalised Other lenders Speak direct, they are also offering support
  25. 25. Access your Super Item Access up to $20k of your superannuation Who Employees or sole traders who have had working hours/turnover reduced by 20% or more + unemployed & jobseekers. When Apply via MyGov before 30 June 2020 for first 10k, access second 10k between 1 July - 30 Sept 2020. Notes Individuals in financial distress can access 10k from their super up to 30 June, and a second 10k from 1 July onwards No tax on these amounts, won’t affect other welfare payments
  26. 26. Jobseeker/ Newtart Payments Item Jobseekers get $550 boost to fortnightly welfare payments Who If on or after 1 Jan 2020, you: -  were made redundant -  working hours reduced by 20% or more -  sole trader & business suspended or turnover reduced 20% or more When -  From 1 Jan to 30 June 2020 (6 months) Notes -  DON’T GO INTO CENTRELINK - can now do this via MyGov -  Maximum base rate is now $1115.70 -  Just dependant on income test above (asset test waived)
  27. 27. Pensioners & Veterans Payment Item Two separate $750 cash payments Who Pensioners, veterans, newstart, concession card holders registered from 12th March Onwards When First payment on 31st March for those eligible Second $750 pmt from 13 July 2020 Notes These are processed automatically, no need to apply No tax on these amounts, won’t affect other welfare payments
  28. 28. Retiree Support Item Reduced Pension Drawdown rates Who People drawing a pension from their superannuation When 2019/20 and 2020/21 Financial Years Notes Government is temporarily reducing superannuation minimum drawdown requirements for account based pensions and similar products by 50% This measure will benefit retirees holding these products by reducing the need to sell investment assets to fund minimum drawdown requirements.
  29. 29. Cashflow tips!
  30. 30. ●  CASH IS KING - preserve at all costs and ACT QUICKLY. Stop bleeding cash and this might involve tough decisions around staffing, suppliers. ●  Revenue is vanity, profit is sanity, CASH is reality. Before you launch your new online services, pivot your business or plan your new brand strategy - PRESERVE YOUR CASH - reduce your cash burn rate. ●  Chase up your Outstanding Accounts Receivable - need cash in bank. Set Up payment plans, progress billing, discount for early payment, get paid upfront, implement late payment penalty, automate your invoicing, or invoice every week instead of monthly. ●  Delay Accounts Payable - negotiate suppliers payment terms - can they extend your invoice to 60 days due? D) Managing Cashflow
  31. 31. ●  Delay or eliminate unnecessary capital spending ●  Minimizing inventory replenishment and look at the impact of reducing stock levels ●  Understand the effectiveness of your marketing campaigns (know your ROI’S), only invest in those with continued positive returns ●  Cut all unnecessary expenses (see next tab) D) Managing Cashflow
  32. 32. Review your expenses Is spending this money - moving you towards your ultimate goal? ACTION PLAN Take Action and drop unnecessary expenses, and seek out better prices where identified. 1. Call vendors and negotiate - e.g Rent free period or reduction 2. Explore other options - price check your most expensive technology, review competitors 3. Eliminate overlap - multiple resources with the same capabilities - cut one! 4. Create systems to track and verify expense success D) Managing Cashflow
  33. 33. Review your expenses FREE Worksheet available here: edit?usp=sharing D) Managing Cashflow
  34. 34. "The greatest glory in living lies not in never falling… ..but in rising every time we fall." Nelson
  35. 35. A.  Australian Federal Government Initiatives B.  Australian Tax Office Initiatives C.  Households & Individuals D.  BONUS: Cash flow tips for turbulent times What we covered
  36. 36. Treasury summary of Govt Stimulus: ATO Breakdown: Coronavirus/ Info for sole traders: for-business/Support-available-for-sole-traders Info for business Info for households: Jobseeker Info: KEY WEBSITES
  37. 37. Your BONUS Gift! >Book a 15 min Cash Flow call >PDF of slide deck >Financial Foundations DIY Course (RRP 199 USD) Free until 17th April >Links to other resources
  38. 38. Thank you!