COVID-19 economic response measures and how they will assist SGEs

If you are operating a significant global entity (SGE) which is being impacted negatively by the implications of COVID-19, you may be eligible to receive State or Federal Government assistance.

Below is a comprehensive list of Government response measures with commentary on whether they are available to SGEs and if so, information on eligibility and access.

$150,000 instant asset write off

This is not available to SGEs as the $500M turnover threshold is calculated based on the turnover of the global group.

50% accelerated deduction for new assets

This is not available to SGEs as the $500M turnover threshold is calculated based on the turnover of the global group.

$100,000 PAYG Withholding rebate

This is not available to SGEs as the $50M turnover threshold is calculated based on the turnover of the global group.

JobKeeper Payment

Whilst legalisation has not yet been released, Treasury has now indicated the turnover threshold will be based on the GST turnover of the Australian entity, or tax consolidated group if applicable (it is not clear if this includes MEC groups).

To be eligible for the JobKeeper payment, business will need to show a reduction of revenue of more than 30 per cent (or 50 per cent if they are over the $1bn threshold) relative to a comparable period (of at least one month) in order to access the JobKeeper Payment.

The threshold for a reduction in turnover will be assessed on a stand-alone basis for each employer. Thus, for example, if a holding company owns two Australian subsidiaries and each subsidiary is an employer, the reduction in turnover will be measured for each legal entity. If ‘Subsidiary #1’ has a sufficient reduction in turnover, then it may be eligible for the JobKeeper Payments notwithstanding that the turnover of Subsidiary #2 may have increased by a greater amount. However, if one employer has two divisions and one division has a decrease in turnover and the other an increase in turnover, then it seems the ‘net position’ must be determined. However, these issues still need to be confirmed by Government.

We also need to wait to see how the rules will apply to ‘service entities’ – i.e. where the employees are employed by a different entity to the one that conducts the business.

There is currently limited information on the JobKeeper Payment.  We will share more detailed information as it becomes available.

State Government measures

The State based measures are based around wages rather than turnover.  For most States the threshold is based on total grouped Australian wages, however for Victoria it is based only on the Victorian wages.

The measures are mostly aimed at smaller businesses, but may be available to some SGEs, in particular:

  • NSW: deferral of payroll tax
  • Victoria: deferral of payroll tax, and potentially the waiver of payroll tax where the Victoria wages are below $3m
  • Queensland: deferral of payroll tax where the business has been adversely affected
  • South Australia: deferral of payroll tax

Depending on the measures being accessed, an application is required to access the concession.

More detail on the various measures is set out below.

NSW payroll tax

  • Businesses with total grouped Australian wages for 2019/20 of more than $10M can defer payment of their March, April, May and June payroll tax for six months.
  • Businesses with total grouped Australian wages for 2019/20 of less than $10M will have their annual payroll tax liability reduced by 25%.  This will be calculated when the annual reconciliation is lodged (due 28 July).  These businesses are not required to pay their March, April, May and June payroll tax, as this should enable them to obtain a more immediate cash flow benefit from the 25% reduction.
  • The tax-free threshold will increase from $900,000 to $1 million from 1 July 2020.

https://www.revenue.nsw.gov.au/taxes-duties-levies-royalties/payroll-tax

NSW Parking Space Levy

  • Parking space levy payments will be deferred until 30 September 2020.

Victoria payroll tax

  • Businesses with annual Victorian taxable wages up to $3 million will have their payroll tax for the 2019-20 financial year waived.  Payroll tax already paid this year will be reimbursed.
  • Businesses with annual Victorian taxable wages up to $3 million can also defer paying payroll tax for the first quarter of the 2020-21 financial year until January 2021.
  • The eligibility threshold applies to each employer, so any member of a group that pays Victorian taxable wages of less than $3 million per annum will be eligible for the relief.

https://www.sro.vic.gov.au/coronavirus

Queensland payroll tax

  • Business with total grouped Australian wages for 2019/20 of less than $6.5 million are eligible to apply for a refund of payroll tax for 2 months, a payroll tax holiday for 3 months, and a deferral of payroll tax for the remainder of the 2020 calendar year.
  • Business with total grouped Australian wages for 2019/20 of more than $6.5 million and have been negatively affected by COVID-19 can apply for a refund of payroll tax for 2 months, and a deferral of payroll tax for the remainder of the 2020 calendar year.
  • The application for a refund or payroll tax holiday needs to be made by 31 May 2020.

https://www.business.qld.gov.au/running-business/employing/payroll-tax/lodging/coronavirus-tax-relief

South Australia payroll tax

  • Businesses with total grouped Australian wages for 2019/20 of more than $4M are eligible for a 6-month deferral of payroll tax.  An online application is being developed to apply for the deferral.
  • Businesses with total grouped Australian wages for 2019/20 of less than $4M are eligible for a waiver of payroll tax for 6 months (March 2020 – August 2020)

https://revenuesa.sa.gov.au/grants-and-concessions/covid19-relief

Western Australian payroll tax

  • Businesses with total grouped Australian wages for 2019/20 of less than $7.5M who have been negatively affected by COVID-19 can apply for a deferral of their payroll tax until 21 July 2020.
  • A one-off grant of $17,500 will be available for employers, or groups of employers, whose annual Australian taxable wages are more than $1 million and up to $4 million.
  • The payroll tax threshold will increase from $950,000 to $1 million from 1 July 2020.

https://www.wa.gov.au/government/multi-step-guides/payroll-tax-employer-guide/covid-19-relief-payroll-tax-employer-guide

Tasmania payroll tax

  • Businesses with total grouped Australian wages for 2019/20 of less than $5M who have been negatively affected by COVID-19 can apply for a waiver of their 2019/20 payroll tax.
  • Tasmanian hospitality, tourism and seafood industry employers will receive a waiver of their 2019/20 payroll tax.
  • A payroll tax rebate is available to approved employers for new youth employees (aged 24 or under) employed between 1 April and 31 December 2020.

https://www.sro.tas.gov.au/about-us/covid-19

ACT payroll tax

  • Payroll tax due to be paid for six months from April to September 2020 is being waived for employers operating in the categories that have been announced as prohibited business activity in the ACT.
  • Businesses with total grouped Australian wages for 2019/20 of less than $10M can apply to defer their 2020-21 payroll tax, interest free until 1 July 2022.

https://www.revenue.act.gov.au/payroll-tax/waiver

https://apps.treasury.act.gov.au/budget/covid-19-economic-survival-package2/local-business-and-industry

North Territory payroll tax

  • The NT Government has announced a range of measures but these are targeted at small businesses.

https://nt.gov.au/industry/support-for-business/programs-and-initiatives

For more information on any of the above response measures or to speak to a tax specialist

Please call your local William Buck office.