The federal and state governments have announced several stimulus measures to help individuals and businesses deal with the economic repercussions of the coronavirus crisis. Below we take a look at the different measures currently on offer for small businesses seeking support.
1. JOBKEEPER PAYMENT
Under the government's $70 billion JobKeeper payment, businesses significantly impacted by the coronavirus outbreak will be able to access a subsidy to continue paying their employees. This assistance will help businesses to keep people in their jobs and restart when the crisis is over.
These businesses will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020.
Eligibility:
Employers (including not-for-profit) will be eligible for the subsidy if, at the time of applying:
- Their business has an aggregated turnover of less than 1 billion (for income tax purposes) and they estimate their turnover has fallen or will likely fall by 30 per cent or more, or
- Their business has an annual turnover of $1 billion or more (for income tax purposes) and they estimate their turnover has fallen or will likely fall by 50 per cen or more, and
- Their business is not subject to the Major Bank Levy
Self-employed individuals will be eligible to receive the JobKeeper payment where they meet the relevant turnover test outlined above, and are not a permanent employee of another employer.
For charities registered with the Australian Charities and Not-for-profits Commission (ACNC), they will be eligible for the subsidy if they estimate their turnover has or will likely fall by 15 per cent or more relative to a comparable period.
The Tax Commissioner will also have discretion to set out alternative tests that would establish eligibility in specific circumstances-for example, eligibility may be established as soon as a business ceases or significantly curtails its operations.
2. CASH FLOW SUPPORT
Eligible businesses and not- for-profit (NFP) organisations will receive between $20,000 to $100,000 in cash flow boost amounts by lodging their activity statements up to the month or quarter of September 2020.
The cash flow boosts are being delivered as credits in the activity statement system from 28 April 2020.
The amounts will generally be equivalent to the amount withheld from wages paid to employees in the March to June 2020 period. In practice, this means businesses keep the amounts they have withheld from payments for these periods.
An additional cash flow boost will be applied when activity statements are lodged for June to September 2020. These credits are equal to the total boosts credited for March to June 2020. They will be paid out in either two or four instalments depending on the business’ reporting cycle.
3. TEMPORARY RELIEF FOR FINANCIALLY DISTRESSED BUSINESSES
Recognising that the economic impacts of the coronavirus and health measures to prevent its spread could see many otherwise profitable and viable businesses temporarily face financial distress, the government has temporarily increased the threshold at which creditors can issue a statutory demand on a company.
It has also increased the time companies have to respond to statutory demands they receive.
The package also includes temporary relief for directors from any personal liability for trading while insolvent, and temporary flexibility in the Corporations Act 2001 to deal with unforeseen events that arise as a result of the coronavirus health crisis.
The ATO is tailoring solutions for owners or directors of business that are currently struggling due to the coronavirus, including temporary reduction of payments or deferrals, or withholding enforcement actions including Director Penalty Notices and wind-ups.
4. INCREASING THE INSTANT ASSET WRITE-OFF
The government is increasing the instant asset write-off threshold from $30,000 to $150,000 and expanding access to include businesses with aggregated annual turnover of less than $500 million (up to $50 million) until 30 June 2020.
In 2017-18, there were more than 36,000 businesses that benefited from the current instant asset write-off claiming deductions to the value of over $4 billion. This measure is expected to support over 3.5 million businesses (over 99 per cent of businesses) employing more than 9.7 million emloyees.
5. BACKING BUSINESS INVESTMENT
The government is providing a time limited 15-month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating depreciation deductions.
Business with a turnover of less than $500 million will be able to deduct 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.
This measure is sighted to support business investment and is estimated to lower taxes paid by Australian businesses by $6.7 billion over the next two years.
6. SUPPORTING APPENTICES AND TRAINEES
To support small businesses to retain their apprentices and trainees, eligible businesses can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage paid during the nine months from 1 January 2020 to 30 September 2020.
Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter). Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer.
7. SUPPORT FOR CORONAVIRUS-AFFECTED REGIONS AND COMMUNITIES
The government has set aside $1 billion to support regions most significantly affected by the coronavirus outbreak.
These funds will be available to assist during the outbreak and the recovery.
8. SUPPORT FOR SOLE TRADERS
The government is providing vital support to sole traders to withstand the economic impacts of the coronavirus. Sole traders may be eligible to receive the JobKeeper payment if their turnover has fallen or will likely fall by 30 per cent or more, assuming they have a turnover of less than $1 billion.
The government has also temporarily expanded the eligibility criteria for the JobSeeker payment to support sole traders if their income is negatively affected by the economic impact of the coronavirus.
For example, as a member of a couple a sole trader could receive up to $1,060.80 per fortnight through the JobSeeker payment and coronavirus supplement, although the precise amount will depend on the amount of income each individual continues to earn.
Access to superannuation for sole traders:
Sole traders who have suffered a decrease in income of at least 20 per cent as a result of COVID-19 can apply to access their superannuation, to a total value of $10,000 this financial year, and another $10,000 next financial year. Withdrawals are tax free.
9. CORONAVIRUS SME GUARANTEE SCHEME
Under this scheme, the government will provide a guarantee of 50 per cent to SME lenders for new unsecured loans to be used for working capital.
SMEs with a turnover of up to $50 million will be eligible to receive these loans.
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 three years, with an initial six-month repayment holiday; and
- 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.
10. ELECTRICITY AND GAS NETWORK RELIEF PACKAGE
Small businesses that are temporarily closed due to COVID-19 may be eligible for full electricity and gas tariff relief under a financial support package organised by Energy Networks Australia. Eligibility criteria apply, including usage figures and time limited.
11. INSOLVENCY RELIEF
The federal government enacted temporary measures to avoid unnecessary insolvencies and bankruptcies in light of the challenges COVID-19 poses, by providing a safety net for directors and businesses to help them operate during a temporary period of illiquidity. Intended to run for six months, the changes grant directors temporary relief from the risk of personal liability for insolvent trading with respect to any debts incurred in the ordinary course of the company’s business.
Source: IPA