6one5 Retail Consulting Group CEO Bill Rooney details how the stimulus package helps retailers.
The Federal and State Governments are providing several levels of assistance for small and medium retailers their employees and suppliers designed to support business survival, manage cashflow and helping retain employees.
The highlights are as follows.
Retail and Supplier Businesses
- Cashflow assistance
For retailers and suppliers with aggregated turnover of less than $50m that employ workers, they are eligible for cashflow assistance of between $20,000 and $100,000 paid over two quarters: quarter one: April 2020 to June 2020 and quarter two: July 2020 to September 2020.
Some key points to note:
⦁ Turnover will be based on prior years revenue
⦁ Employees that withhold tax on their employee’s salaries and wages will receive a payment equal to 100% of this amount up to $50,000 per quarter
⦁ Eligibility will be triggered by lodging activity statements for the March 2020 month or quarter
⦁ Payments will start from 28th April 2020 so get your activity statement in as soon as possible after 31st March 2020
⦁ You will receive payment via a credit. The cashflow boosts will be applied to reduce liabilities arising from the same activity statement. This will result in eligible entities being required to pay less to the ATO. Generally, where a credit exceeds your other tax liabilities, the ATO will refund the excess amount within 14 days.
⦁ For apprentices and trainees, eligible employees can apply for a wage subsidy of 50% of the apprentice or trainees wage for 9 months to 30th September 2020
Examples for cashflow calculation on three scenarios.
- Coronavirus SME Guarantee Scheme – Loan Guarantee
For retailers with turnover of less than $50m the Federal Government will be offering 50% loan guarantee for SME’s to encourage lenders (banks and other financial institutions) to help business get through this period.
The Government will provide eligible lenders with a guarantee for loans with the following terms:
⦁ Maximum total size of loans of $250,000 per borrower
⦁ The loans will be up to 3 years, with an initial 6-month repayment holiday
⦁ The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan
Loans will be subject to lenders’ credit assessment processes with the expectation that lenders will look through the cycle to sensibly take into account the uncertainty of the current economic conditions.
To apply you must arrange via your bank.
- Other incentives
Instant asset write-off increased from $30,000 to $150,000 and applies from 12 March 2020 until 30 June 2020, for new or second‑hand assets first used or installed ready for use in this timeframe.
- State Government Payroll Tax Relief
Various states are providing payroll tax relief.
For example, in NSW there is a reduction of 25% on the full payroll tax liability on Annual Reconciliation for retailers with less than $10m payroll.
- Rental Leases
Government and our National Retail Bodies as well as larger retailers are negotiating with landlords for rental relief.
In what form this will take is still to be announced.
Retail Employees including Sales & Service People
We are seeing many of our retailers let go of full-time, part-time and casual workers. For the ones lucky enough to keep their jobs, they are working on reduced hours.
This is causing immense stress and strain on the workforce who in the majority of cases have never been without a job yet are now faced with applying to Centrelink for support to feed themselves and their families.
For retail staff that are now unemployed, they will need to register with Centrelink for Jobseeker Payment and will receive this for six months.
The temporarily expanded eligibility to income support payments is to be paid at a rate of $550 per fortnight. This supplement will be paid to both existing and new recipients of the eligible payment categories.
Current Jobseeker base payments per fortnight are detailed in the following chart to which you would add $550 supplement.
Centrelink can also advise of other assistance available, when you register.
For employees with mortgages, banks are providing payment relief so contact your lender for details.
One final note if you are having trouble with cashflows, banks, landlords, the tax office and creditors; don’t be afraid to negotiate for relief or deferment.
We are all in this together and if we compromise, we will get through this.
The author would like to thank Wayne Ralph a Partner with Tinworth & Co Chartered Accountants for technical advice.