06 April 2020

COVID-19 NFP Guidance – Relief for Not-for-Profits

This article was written by Amanda Kazacos, Darren McClafferty and Rahul Arora.

The following is an overview of the relevant guidance surrounding COVID-19 measures to-date that may be useful for not-for-profit (NFP) entities and social enterprises.

Additionally, there may be useful state and territory concessions surrounding certain other expenditure, including rental payments of certain premises. To the extent that you have any questions about this, we would encourage you to reach out for further information.

It should also be noted that the capacity for NFPs to distribute funds to those in financial hardship will likely increase by virtue of the number of Australians who will now be experiencing financial hardship.

As these measures, on the whole are either administrative or have not been legislated, there may be further details regarding eligibility of organisations to access these exemptions, concessions or benefits over the coming months. The references below to “businesses” reflect the language used in the respective announcements.

 

Measure

Details

Eligibility Criteria

Further Details

“JobKeeper” Payments

The Federal Government will pay wage subsidies to businesses over the next 6 months, in order for those businesses to keep their staff employed. The payment will be a flat rate of $1500 per fortnight for each employee that is retained by the business, and will be available to full-time and part-time workers, sole traders, casual workers who have been with their employer for 12 months or more, as well as New Zealanders on 444 visas.

Employers will be eligible for the subsidy if:

  • they are a charity registered with the ACNC and the see a turnover decline of 15% or more; or

  • their business has a turnover of less than $1 billion and their turnover will be reduced by more than 30% relative to a comparable period a year ago (of at least a month); or

  • their business has a turnover of $1 billion or more and their turnover will be reduced by more than 50% relative to a comparable period a year ago (of at least a month); and

  • the business is not subject to the Major Bank Levy.

The employer must have been in an employment relationship with eligible employees as at 1 March 2020 and confirm that each eligible employee is currently engaged in order to receive JobKeeper Payments.  Participating employers will also be required to ensure eligible employees will receive, at a minimum, $1500 per fortnight, before tax.

Employers and sole traders can register their interest to receive the payment from 30 March with the ATO, with an online application to follow.

Payments will commence from 1 May 2020 but will be backdated to 30 March 2020.

Boosting cash flow for employers

This measure provides temporary cash flow support to NFP organisations of up to $100,000, with a minimum payment of $20,000.

Under the scheme, eligible NFPs that withhold tax on certain payments to employees, such as salary and wages, will receive a credit equal to 100% of the amount withheld, up to a maximum of $50,000. The minimum credit will be $10,000, even if the amount required to be withheld is zero.

Eligible NFP organisations who received initial cash flow boosts will receive additional cash flow boosts for the periods June to September 2020, equal to the total amount of initial cash flow boosts received. This will be delivered in either two or four instalments, depending on your reporting period.

  1. To be eligible, NFPs must employ staff, and their aggregated annual turnover cannot exceed $50 million and have made eligible payments required to withhold from (even if amount withheld is zero)
  2. In addition, NFPs (excluding charities) must have held an active ABN prior to 12 March 2020. However, charities which are registered with the Australian Charities and Not-for-profits Commission will be eligible regardless of when they were registered, subject to meeting the other eligibility requirements.

 

There is no need to apply for the cash flow boost.

The only requirement is to lodge an activity statement (and cash flow boost is automatically credited into your account, but no earlier than 28 April 2020).

Hardship Relief

Where a not-for-profit (NFP) organisation is experiencing difficulties meeting tax and super obligations (to the extent relevant), the ATO can defer payments by up to six months (e.g. income tax, activity statements, PAYG instalments or FBT payments)

There does not seem to be any specific eligibility criteria for this relief. However, the ATO may ask questions when the relief is requested.

The hardship relief is not applied automatically, to receive relief an entity must contact the Emergency Support Infoline on 1800 806 218

The ACNC has extended the time for charities to submit their 2019 Annual Information Statement.

The Charity has to have an Annual Information Statement due between 12 March 2020 and 30 August 2020, and extension will be granted to 31 August 2020.

The Annual Information Statement due date on the ACNC Charity Register will be automatically updated.

Payroll Tax Relief

New South Wales

Payroll tax-paying businesses are not required to make payroll tax payments for months of March, April or May 2020. All wages should still be disclosed (however, a 25% reduction in amount business would have had to pay for year ended 30 June 2020 will be applied).

Payroll tax threshold will also be increased from $900,000 to $1 million from 1 July 2020.

Payroll tax-paying businesses with grouped payroll of no more than $10 million

Payroll tax customers whose total grouped Australian wages for the 2019/20 financial year are over $10 million, will have the option of deferring the payment of payroll tax for up to six months.

Further details should be released with respect to the process for claiming the waiver (if required).

Victoria

The Government will provide:

  • Full payroll tax refunds for the 2019-20 financial year to certain businesses;
  • Deferral ability for any payroll tax for the first three months of the 2020/21 financial year until 1 January 2021.

Small and medium sized businesses with payroll of less than $3 million.

Eligible businesses must continue to lodge returns but do not need to make further payments for this financial year.

The State Revenue Office will directly contact eligible businesses in relation to reimbursement for payroll tax already paid in the financial year.

Queensland

Payroll tax-paying businesses will receive an email about a refund of payroll tax for two months and a payroll tax holiday for three months. 

These businesses can also apply for a deferral of payroll tax for the rest of the 2020 calendar year (deferral requests already applied for will be automatically extended).

Payroll tax-paying businesses with a payroll of up to $6.5 million are eligible.

In addition, payroll tax-paying businesses with a payroll above $6.5 million, who are negatively affected by COVID-19 can also apply for a deferral of payroll tax for the 2020 calendar year and a refund of payroll tax for two months.

The deferral and refund are granted by a separate application. 

The refund must be applied for before 31 May 2020.

Western Australia

Payroll tax-paying businesses will receive a grant of $17,500 to assist them with managing the impacts of COVID-19.

Additional payroll tax relief will also apply for small businesses as a result of the payroll tax threshold increasing to $1 million from 1 July 2020.

There is also a payroll tax payment deferral available for businesses impacted by COVID-19.

Payroll tax-paying businesses with a payroll of between $1 million and $4 million are eligible for the grant.

Payroll tax-paying businesses with a payroll of $7.5 million or less are eligible for the tax payment deferral.

The grants will be issued by cheque in July 2020 (with no application necessary).

The deferral is granted by application and applies to the period between 1 March and 30 June 2020 (and payroll tax returns are still required to be lodged where deferral granted).

Tasmania

A payroll tax waiver is also being provided for with a payroll of up to $5 million during 2020 for the March, April and May 2020 months.  These organisations will still be required to lodge their annual payroll tax reconciliations by 21 July 2020 and a waiver of payroll tax will be granted for March, April, and May.

To encourage businesses to employ young people, the government will introduce a youth employment payroll tax rebate scheme for young people from 1 April 2020.  The scheme provides a payroll tax rebate for one year, to businesses that employ a young person aged 24 and under

 

Additional details (including the application process) are expected shortly

 

South Australia        

The Government has announced a 6-month payroll tax waiver or deferral for certain businesses.

The 6-month payroll tax waiver is for businesses with Australian grouped wages up to $4 million. Where businesses meet the criteria of Australian grouped wages below $4 million for 2018-19 no application will be required – RevenueSA will notify these businesses through RevenueSA Online. An online application form will be made available for businesses that were not liable for payroll tax in 2018-19.

The 6-month payroll tax deferral is for businesses with Australian grouped wages over $4 million. An online application will be developed to apply for the payroll tax deferral.

Eligible business groups will not be required to pay any payroll tax for the months of April to September 2020 (for the return periods of March 2020 to August 2020). However, monthly payroll tax returns must still be lodged.

GST Refunds

Businesses can move to monthly reporting in order to get quicker access to GST refunds. Importantly, reporting cycles can only be changed from the start of a quarter, so a change now will take effect from 1 April 2020.

Businesses that are reporting GST on a quarterly basis.

You can change your GST reporting cycle through your tax or BAS agent, in the business portal, or by phoning the ATO on 13 28 66.

Once a business chooses to report and pay GST monthly, it must keep reporting monthly for 12 months before it can elect to revert back to the quarterly cycle.

 

How can we help?

Please get in touch if you have any questions about eligibility for applicable Federal, State and Territory measures and concessions. 

COVID-19: Implications for Business

The spread of Coronavirus (COVID-19) has forced us to think and act differently. Beyond the human response, now is the time to think about what the consequences may be on your business, and how best you can prepare for those.

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