The Australian Government has recently implemented changes to legislation in response to COVID-19 and to help the economy withstand and recover from the economic impact of Coronavirus. While the new restrictions affect our day-to-day lives, the available relief attempts to alleviate strain caused to businesses and individuals.
New social distancing laws
On Sunday 29 March, Prime Minister Scott Morrison announced a tightening of the rules on social gatherings, limiting them to just two people. This applies both indoors and outdoors, extending even to private homes.
The two-person limit does not apply to people within your household – so if you want to go for a walk with your children who live with you, that would be permitted. But you cannot have more than one friend over to your house or meet up with more than one friend outdoors. It’s not clear whether an individual can visit another person’s house, if there is more than one person living there.
People breaking social distancing restrictions will be given fines and possibly jail time, with States moving quickly to enforce hefty penalties for those ignoring the new rules. NSW individuals will be given fines of $1,000 and corporations will be hit with fines of $5,000 for breaches.
New arrivals to Australia will also be in compulsory lockdown for 14 days, in hotels secured by Australian Defence Force personnel.
Remote signing and witnessing of documents
Last week, the NSW Government passed emergency legislation to allow changes to a number of other laws in response to the coronavirus pandemic. This emergency legislation provides for new regulations to change the signing and witnessing requirements for certain documents, including:
- Powers of attorney
- Contracts for the sale of land
Although the regulations are yet to be created, we expect that they will provide for these documents to be signed in counterparts (that is, two or more originals signed at the same time by different people). This will allow wills and powers of attorney to be drafted and signed, without lawyers and clients needing to meet face-to-face.
Lending, debt collection and bankruptcy changes
Major changes have been announced in lending and bankruptcy, in an attempt by state and federal governments to minimise the economic impact of coronavirus. These changes include:
- An increase in the debt threshold required for creditors to apply for a bankruptcy notice against a debtor, from $5,000 to $20,000
- An extension of the timeframe for a debtor to respond to a bankruptcy notice from 21 days to 6 months
- An extension of the temporary debt protection period (during which time debtors can prevent recovery action by unsecured creditors) from 21 days to 6 months
Australia’s major banks have also committed not to chase loan repayments from commercial property landlords for the next six months. However, that is conditional on landlords not terminating leases or evicting tenants struggling to make payments due to the coronavirus pandemic.
NSW Stimulus Package
The Australian Commonwealth Government announced a stimulus package of fiscal and balance sheet support worth $189 billion to support businesses and individuals.
In addition to this, The New South Wales Government has announced a $2.3 billion coronavirus stimulus package which includes extra payroll tax exemptions for businesses with $1.6 billion dedicated to keeping people in jobs throughout the crisis. Specifically, $450 million has been allocated to waive payroll tax for businesses with payrolls of up to $10 million for three months.
Payroll Tax Waver
Any NSW business will have payroll tax waived for the next three months (April-June). This will be available for all businesses with payroll up to $10m.
Payroll Tax Threshold Increase
From July, the payroll tax threshold will be increased to $1m, up from the current $850,000.
NSW fees for bars, cafes, and tradespeople will be waived.
Boosting cashflow for employers
If you are a small, medium or not-for-profit organisation that employ staff during the economic downturn associated with COVID-19, you may be eligible for a cash flow boost. The Government will provide grants through two sets of cash flow boosts delivered from 28 April 2020 to support employers to retain employees.
The tax-free cash flow boosts will be between $20,000 and $100,000 and will be delivered through credits in the activity statement system, when eligible businesses lodge their activity statements.
ATO Tax Relief Options
The ATO is also offering meaningful assistance to businesses and is implementing a series of relief options to assist those impacted by Coronavirus. However, the relief will not be automatically applied, and businesses will need to contact the ATO to make requests for assistance.
Relief that is available to assist businesses impacted by COVID-19 includes:
- Individuals and businesses can request deferral of some payments (by up to 4 months) and vary instalments.
- Businesses can elect to report and pay their GST monthly instead of quarterly to accelerate access to GST refunds, but only from 1 April 2020, and must remain monthly for 12 months.
- Businesses can defer payment date of amounts due through the business activity statement (including PAYG instalments), income tax assessments, fringe benefits tax assessments and excise for up to four months.
- Businesses can vary PAYG instalment amounts to zero for the March 2020 quarter. Businesses that do vary their PAYG instalment to zero, can also claim a refund for any instalments made for the September 2019 and December 2019 quarters.
- Businesses can request remittance of interest and penalties applied to tax liabilities incurred after 23 January 2020.
- Businesses can request a low interest payment plan.
Businesses can call the ATO’s Emergency Support Infoline (1800 806 218) to discuss various relief options based on their needs and circumstances.
The Government is allowing individuals affected by COVID-19 to access their superannuation early. Those who apply can access up to $10,000 in 2019-20 and a further $10,000 in 2020-21. MyGov will accept applications from 20 April 2020.
To apply for early release, you must satisfy one or more of the following requirements:
- You are unemployed.
- You are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance.
- On or after 1 January 2020, either
- you were made redundant
- your working hours were reduced by 20% or more
- if you are a sole trader, your business was suspended or there was a reduction in your turnover of 20% or more
Loan & Lease Repayments
The Australian Banking Association has announced that Australian banks will defer loan repayments for small businesses affected by COVID-19 for 6 months. Most banks have hardship teams offering a range of services that may be of support. For more information, or to find the number for your bank’s hardship team please see here.
The NSW Government (along with other State and Territory Governments) has introduced legislation to place a moratorium on evictions from rental properties for the next 6 months.
Rent during this six-month period will be postponed, rather than forgiven. Landlords will be prevented from evicting tenants, but can sue tenants for any unpaid rent at the end of the period. The laws are designed to prevent a spike in homelessness during the coronavirus pandemic.
We expect this area to develop further and will provide updates as the situation evolves. If you would like advice on any of the above, please contact a member of the Cheney Suthers team.