The COVID-19 pandemic has necessitated substantial stimulus and assistance packages and measures across all levels of the economy. This article highlights some of the measures that may be of interest to not-for-profit entities and local government entities based on information available as at 31 March 2020.
The ongoing COVID-19 pandemic has impacted every facet of our lives. Recognising this, the State and Federal Governments have announced (and in some cases, legislated) a number of stimulus and assistance measures aimed at helping us through this unsettled and unsettling period.
Whilst the majority of the measures are aimed at households and at businesses, there are a number of measures that relate to not-for-profit entities, with some of the key ones outlined in this article. In relation to the Payroll Tax measures announced, please refer to the separate Payroll Tax COVID-19 measures article.
Note, the rapidly changing nature of the pandemic means the associated relief measures are also constantly and rapidly changing. The measures outlined below are based on information available as at 31 March 2020.
Cash flow boost
The Federal Government’s stimulus package has largely been focused on individuals and businesses. However, the tax-free cash flow boost payments measure available to certain employers based on their Pay-As-You-Go withholding (‘PAYGW’) amounts is also available for certain not-for-profit entities (‘NFP entities’).
Under this measure, eligible entities can receive two rounds of cash flow boosts of up to a total of $100,000. The boosts will generally be applied as credits against otherwise required payments.
The first round of cash flow boost payments are payable by the Commissioner for the periods March 2020 to June 2020, with all eligible entities receiving a minimum payment of $10,000 in the first period for which they are eligible, with any further payments based on the amount withheld, up to a maximum total of $50,000. For monthly withholders the March 2020 payment will be calculated based on three times the amount withheld.
The second round of payments are payable for the periods June to September 2020 and will be equal to the amount of the first cash flow boost payments to which the entity is entitled.
In order to access the tax-free payments under this measure, a NFP entity must meet all the relevant criteria, as follows:
- the entity makes a payment from which an amount is required to be withheld under the PAYGW provisions relating payments for work and services, payments for retirement or because of termination of employment, and benefit and compensation payments in relation to the periods ending from March 2020 to June 2020 (‘the period’);
- the entity was a small or medium business entity (i.e. aggregated turnover of no more than $50 million), or a charity or other not-for-profit entity of equivalent size, for the most recent income year for which an assessment of income tax has been made by the Commissioner (or the Commissioner is satisfied the entity is such an entity for the income year that includes the period);
- the entity is an ACNC registered charity (regardless of when in the year the entity is so registered) or is an entity that held an ABN on 12 March 2020 and either has reported business income in its 2019 income tax return (must have been lodged by 12 March 2020) or made one or more taxable, GST-free or input taxed supplies between 1 July 2018 to 12 March 2020 which have been reported to the Commissioner by 12 March 2020; and
- the entity has not engaged in a scheme for the sole or dominant purpose of accessing or increasing the cash flow boost.
Note: when determining whether an entity is a small or medium business entity, the entity is deemed to be carrying on a business if it is a non-profit body during the year.
Employers (including NFP entities and charities) will be able to access a wage subsidy up to $1,500 per eligible employee per fortnight for a maximum of six months, to assist entities to retain staff.
Employers will be eligible for the subsidy in relation to eligible employees if:
- their business has a turnover of less than $1 billion and their turnover will be reduced by more than 30 per cent relative to a comparable period a year ago of at least one month; or
- their business has a turnover of more than $1 billion and their turnover will be reduced by more than 50 per cent relative to a comparable period a year ago of at least one month;
and also meets both of the following further conditions –
- the business is not subject to the Major Bank Levy; and
- the eligible employee is currently still employed.
‘Eligible employees’ refers to employees over 16 years of age who meet all the following criteria:
- are currently employed by the eligible employer, or were recently stood down or re-hired;
- were employed by the employer as at 1 March 2020;
- are full-time, part-time, permanent or certain casual employees (i.e. those who have been employed in the business for 12 months or more by 1 March 2020);
- are Australian citizens, permanent residents or hold certain Special Category visas (including for New Zealanders on Subclass 444 Visas); and
- are not receiving the JobKeeper payment from another employer.
Interested employers can register with the ATO now. An online application form will be made available for with eligible employers who will need to provide details to the ATO on eligible employees, provide support that they have suffered the requisite downturn in turnover, and notify all eligible employees that they are receiving the JobKeeper payment.
The fortnightly payments will start to be issued from May 1 and backdated to 30 March 2020.
Australian Taxation Office
In relation to the Federal Government’s stimulus package, the Australian Taxation Office (‘ATO’) has issued fact sheets tailored to NFPs that provide additional information.
In addition, the ATO has stated that NFP entities experiencing difficulties in meeting their tax obligations may be able to defer certain payments, including income tax, activity statement, pay-as-you-go instalments, Fringe Benefits Tax and excise payments, for up to six months. However, affected entities must apply directly to the ATO for these deferrals – they are not automatic.
Immediate Work Grant program
The Northern Territory has introduced a $5 million “Immediate Work Grant” program as part of its response to COVID-19. Under this program, not-for-profit and community organisations operating in the Northern Territory in either owned or leased premises will be given grants of up to $100,000 to engage listed local businesses to do repairs, renovations and upgrades to their property and facilities. Such repairs etc. must involve permanent physical improvements to land and/or buildings, although the work cannot include solar power installation projects.
The first $50,000 will be paid to eligible organisations as a grant (i.e. no co-contribution is required). However, for organisations entering into renovations that exceed $50,000, the Northern Territory Government will match dollar-for-dollar the costs in excess of $50,000 up to an additional $50,000. Accordingly, the maximum amount organisations can receive under the grant is $100,000.
Organisations seeking to access this grant will need to select from a list of specific contractors (to be released on Monday 30 April 2020) and obtain at least two quotes in relation to the repair/renovation etc. After meeting this requirement, the organisation will be able to apply online to receive the grant.
Further information regarding the terms and conditions and the application process is available on the NT Government’s Business Recovery website.
Note: School and local government bodies are not eligible to apply.
The Northern Territory Government has announced that where organisations have received grants or sponsorships from the Government and have already committed the funds to events that have now been cancelled or postponed, it will not be seeking to reclaim those funds from the organisations.
Planning and Development Fund
In 2019, the South Australian Government introduced the ‘Planning and Development Fund’ to provide grants to local governments to aid in the purchase, planning and enhancement of public spaces. The types of projects that local government organisations could propose include ones that revitalise reserves and parks, create trails and open space linkages, foreshore and riverfront precincts, civic plazas, town squares and main street redevelopments or upgrades, etc.
As part of its stimulus package, the South Australian Government has announced that the existing fund would be increased and that the current grant round, which was due to close on 31 March 2020 has now been extended to 5pm, Thursday 9 April 2020.
For further information on the grant guidelines and on the application process are set out on the South Australian Planning Portal.
Regional Growth Fund
The South Australian Government is bringing forward the third round of the Regional Growth Fund, which provides grants to certain projects that ‘deliver tangible benefits to regional South Australia’. Applications are restricted to local governments, incorporated associations and business clusters (group of two or more non-associated organisations, willing to share financial commitment to a project), and can be for grants from $50,000 up to $2 million. Projects can include new or improved capital works, infrastructure, facilities and similar investments (refer Guidelines). Grant applications are now open and will close at 12 noon on Monday 11 May 2020.
As part of the South Australian Government’s second stimulus package announcement, it flagged the creation of a $250 million ‘Community and Jobs Fund’ which is intended to ‘support community organisations, sporting, arts and recreational bodies, non-profit organisations as well as some other industry sectors facing potential collapse and the loss of jobs.
As at the date of publication, no further information has been provided regarding this fund or its associated eligibility requirements.
New South Wales
Local Government meetings
The New South Wales Government has passed legislation that removes the need for persons to attend Local Government council meetings for a minimum period of six months up to twelve months, with meetings able to be held remotely via audio visual link or in any other manner approved by the Minister for Local Government. Additionally, members of the public are to be given access to the meeting via webcast or any other manner approved by the Minister for Local Government.
Long service leave changes
The New South Wales Government has passed legislation that temporarily creates greater flexibility for employees to access long service leave. In particular, employees can currently take long service leave in blocks shorter than one-month (the usual limit) and allowing long service leave to be taken in advance of the leave becoming due to the worker, provided there is an agreement to do so between the employer and the employee.
Relief support payments to specific organisations
The Tasmanian Government has flagged that it will be provided $1 million over the next three months to organisations such as the Salvation Army, Red Cross and Rural Business Tasmania to help support Tasmanians self-isolated and/or impacted by the virus.
Assistance for local government
In its stimulus package, the Tasmanian Government also indicated that it will make available $150 million in interest-free loans over three years to local governments to encourage them to upgrade, renovate and undertaken maintenance to improve tourism and other assets. As at the date of publication, no further information regarding how local governments can access these loans has been made publicly available.
The Western Australian Government in conjunction with Lotterywest have announced a $159 million COVID-19 relief fund, with an initial $59 million being made available for:
- crisis and emergency relief support for eligible not-for-profit community organisations to assist with the increased demand for food, clothing, shelter and other critical needs;
- financial relief for not-for-profit sports, arts and community organisations experiencing hardship as a result of cancelled events.
For more information, refer to the media release from the Premier’s office.
This article provides a general summary of the subject covered and cannot be relied upon in relation to any specific instance. It is not intended to be, nor should it be relied upon as, a substitute for professional advice. TaxEd Pty Ltd and any person connected with its production disclaim any liability in connection with any use.