This has been some of toughest few weeks small business owners have had to face in over 100 years. We understand how confusing and stressful the announcements have been, so we’ve compiled a simple and easy to read summary of the economic and financial support measures that have been put in place for small businesses during these uncertain times.
Please note, at this time of release, the following has not gone through legislation and we strongly recommend that once it does, you contact us or Tax Accountant for the best advice for your business.
Last edited: 24th March, 2020
If you currently pay payroll tax, you will receive a once-off grant of $17,500 and the payroll threshold to pay payroll tax has been lifted to $1 million:
- payroll tax threshold being raised to $1 million, starting from July 1, 2020
- businesses with a payroll between $1 million and $4 million will receive a one-off grant of $17,500 – automatically paid by cheque from July 2020
- businesses with less than $7.5 million in wages can apply to defer payment of their 19-20 payroll tax until July 21, 2020
If you have employees, you can access a tax-free payment to cover the costs of employee wages and salaries:
- for businesses with a turnover under $50 million
- 100% of the PAYG withholding applied as a credit to the ATO Integrated Client Account (ICA)
- a minimum of $10K and a maximum of $50K
- for quarterly BAS – this means all of the PAYG is credited on BAS lodgement
- for monthly IAS – this means 300% of the March PAYG credited on BAS lodgement
- the minimum payment will be applied to the first lodgement
- there will be an additional payment equal to the total of all payments received to date in the July – October period
- the additional payment makes the total package at least $20K and up to $100K
The Government is supporting small business to retain their apprentices and trainees.
- Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for 9 months from 1 January 2020 to 30 September 2020.
- Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.
- Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
Over the next six months, the Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight.
- This will be paid to both existing and new recipients of JobSeeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
- The expanded eligibility applies to:
- sole traders
- casual workers
- contract workers who meet the income tests as a result of the economic downturn due to the Coronavirus
The Government is allowing individuals affected by the Coronavirus to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21.
- Individuals will not need to pay tax on amounts released
- and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.
It is now easier for businesses to get finance. So, if you are looking to take out a short-term loan to meet cash flow needs over the coming months, here’s some important information to consider:
- 50% of any new unsecured short-term loan for SMEs is guaranteed by the government
- maximum total loan size of $250K per borrower
- loans of up to 3 years, with an initial 6-month repayment holiday
- government will encourage lenders to provide draw down style facilities (like overdraft) where interest is only paid on what you use
- commences early April 2020 and be available for new loans until Sep 30, 2020
To help businesses that may be faced with temporary financial distress, the government has put in place a safety net to lessen the threats of actions that could lead to insolvency or wind up of business:
- increase to the minimum amount for which creditors can issues a statutory demand
- increase to the time given to you to reply to a statutory demand
- increase to the threshold for a creditor to initiate bankruptcy proceedings, the time to respond, and the period of protection
- relief for directors from personal liability when trading insolvent
- for owners and directors: the ATO will tailor solutions for their circumstances, including temporary reduction of payments or deferrals, or withholding enforcement actions including Director Penalty Notices and wind-ups
If you were planning on buying assets for the business, you can accelerate their depreciation to reduce your taxable income:
- applies to assets costing less than $150,000
- the threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets
- available to businesses with annual turnover under $500 million
- applies from Mar 12, 2020 to Jun 30, 2020
- for new or second-hand assets first used or installed for use between those dates
To support business investment and economic growth over the short term, a 15-month investment incentive has been put in place. This applies to eligible assets acquired from 12 March 2020 and first used or installed by 30 June 2021:
- benefit — deduction of 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
- eligible businesses — businesses with aggregated turnover below $500 million
- eligible assets — new assets that can be depreciated under Division 40 of the Income Tax Assessment Act 1997 (i.e. plant, equipment and specified intangible assets, such as patents) acquired after announcement and first used or installed by 30 June 2021. Does not apply to second‑hand Division 40 assets, or buildings and other capital works depreciable under Division 43
Assistance packages and support from the banks
The banks are acknowledging the hardships that small businesses are facing and are starting to provide support including:
- deferring loan payments
- waiving fees and charges
- helping with debt consolidation
- waiving penalties for early withdrawal of a term deposit, or
- deferring upcoming credit card payments and increasing emergency limits