The impact of COVID-19 on the Hospitality Industry.
There is no denying COVID-19 has provided an unprecedented challenge for the hospitality industry and we know our friends are hurting. With that, so are we.
Its been one hell of a year so we wanted to provide not only some useful information that could provide support and financial assistance in this time of social distancing, state lockdowns and takeaway only for restaurants and cafes but also some features and services that could help you adapt quickly.
We are keeping a close watch on our venues and have seen some venues forced to make the heartbreaking decision to close temporarily and postpone their openings, while most are looking at ways to adapt quickly and be nimble with pre-packaged food and takeaway options.
Our main message is one of genuine care and support for our customers. We are encouraged to see the industry band together and venues as they adapt and offer new food items for takeaway for the first time. It is ventures like this that highlight the Australian community spirit with the hope of coming through this stronger than ever if we weather the storm together.
The POSmate team.
Government Assistance for SME’s
Federal Stimulus.
Treasury announced various initiatives on 12th March 2020. These changes do not take effect until new laws are passed and it is expected to be passed this week.
Cash Flow Boost for employers.
All employers with an aggregated annual turnover of under $50 million (based on prior year turnover) will receive a payment of between $20,000 to $100,000 from the government to help with cash flow. Eligible businesses will receive a payment equal to 100 per cent of their PAYG withholding taxes withheld from employees’ salary and wages from January to June 2020 period. Eligible businesses that pay salary and wages will receive a minimum payment of $10,000, even if they are not required to withhold tax. First credit is likely to come in April 2020 by way of credit of the eligible amount to the taxpayer’s Integrated Account with the ATO thereby reducing amounts payable to the ATO by taxpayers. Where this results in a refund position, the ATO will deliver the refund within 14 days. Clients on quarterly PAYG Withholding lodgements will see the credits once March 2020 BAS has been lodged etc. This payment will be TAX-FREE. Those on the monthly reporting cycle should see the credit from April 2020 onwards.
Increasing the instant asset write off.
It is proposed that businesses with increasing the threshold for the instant asset write off from $30,000 to $150,000 for each asset and expand access to businesses with an aggregated annual turnover of up to $500 million (up from $50 million). The increase will only be available from 12 March to 30 June 2020 for new or second-hand assets first used or installed ready for use by 30 June 2020.
Accelerated deprecation.
Further, it is proposed that an accelerated deprecation deduction for eligible assets acquired from 12 March 2020 and first used or installed by 30 June 2021. Eligible taxpayers are those an aggregated turnover below $500 million. They will receive a deduction of 50 per cent of the cost of the eligible asset on installation, with existing depreciation rules applying to the balance 50 per cent value. Eligible assets are those that can be depreciated under Division 40 of the Income Tax Assessment Act 1997 (that is plant, equipment and specified intangible assets, such as patents), but does not apply to second-hand Division 40 assets, or buildings and other capital works depreciable under Division 43.
Apprentice and trainee wage subsidy.
The government will offer employers a wage subsidy of 50 per cent of an apprentice’s or trainee’s wage from 1 January to 30 September 2020, capped at $7000 each quarter per each eligible apprentice or trainee. Businesses with less than 20 full-time staff will be eligible, however, employers of any size and Group Training Organisations that re-engage an eligible out-of-trade apprentice or trainee will be eligible for the subsidy. Eligible businesses will need to register for this subsidy from April 2020 with final claims to be lodged by 31stl December 2020.
Direct payment to individuals.
The government will make two payments of $750 each to social security, veteran and other income support recipients and eligible concession card holders residing in Australia. These payments will be TAX-FREE and the first one will be paid from March 31st followed by the second in July 2020.
Temporary early release of superannuation.
Individual affected by Coronavirus will be able to access up to $10,000 in each financial year 2019/20 and 2020/11 and there would be no tax on these payments and will not impact their Centrelink related benefits.
Temporary reduction of superannuation minimum pension.
Minimal pension payments drawdown requirements are being changed to reduced account-based and similar products by 50% for the current financial year and year 2020-21.
ATO support measures for those affected by the coronavirus outbreak.
The ATO has announced a series of administrative measures to assist Australians experiencing financial difficulty as a result of the COVID-19 outbreak. Options available to assist impacted businesses include:
- deferring by up to six months the payment date of amounts due through the business activity statement (BAS, including PAYG instalments), income tax assessments, FBT assessments and excise
- allowing businesses on a quarterly reporting cycle to opt into monthly GST reporting to get quicker access to GST refunds they may be entitled to
- allowing businesses to vary Pay As You Go (PAYG) instalment amounts to zero in March 2020 quarter BAS and should they wish to claim a refund for any instalments made for the September 2019 and December 2019 quarters
- remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities
- working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low-interest payment plans. Employers will still need to meet their ongoing super guarantee obligations for their employees.
Sources: Australian Taxation Office, The Treasury, ATO release.