Date updated: 6th April 2020
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.
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
JobKeeper Stimulus Package: Wage subsidies to pay employees and combat unemployment
The Government has just announced today a third Stimulus Package to help support Australian businesses over the next 6 months.
This $130 billion package will include a $1,500 fortnightly wage subsidy per eligible employee.
Key inclusions of the package:
- The $130 billion package will support the wages of up to 6 million Australians throughout the Coronavirus crisis.
- Employers and sole traders will be able to apply for $1500 “job keeper” flat payment per employee to keep on their staff
- To be eligible, employers will need to have lost 30 per cent of income or 50 per cent of income if the company has a annual revenue of more than $1 billion
- Workers who have already been stood down will be able to access the payment if they lost their job after March 1. This applies to full time, part time and casual workers who have been employed for more than 12 months.
- Those who work for non-for-profits and New Zealanders will also be eligible to the “job keeper” payment
- Payments will be made through payroll and monitored through Single Touch Payroll.
- It will be processed via the ATO, not MyGov.
- Eligible employees will receive a minimum of $1,500 per fortnight, before tax. It will be up to the employer if they want to pay superannuation on any additional wage paid because of JobKeeper Payments.
- Full time and part time employees, including stood down employees, would be eligible for the JobKeeper Payment. Where a casual employee has been with their employer for at least the previous 12 months they will also be eligible for the Payment.
- Employers must notify employees that they will be claiming the JobKeeper Payment on their behalf.
- Majority of employees will not need to do anything further, however employees in the following circumstances will have additional obligations:
- Employees with multiple employers must notify the employer that is their primary employer.
- Employees that are not Australian citizens must notify their employer of their Visa status, to allow their employer to determine if they are an eligible employee.
- Employees that are currently in receipt of an income support payment must notify Services Australia of their new income.