Support for Businesses
The following government website is a great resource for accurate government correspondence and information: australia.gov.au
The Australian Government is supporting Australian businesses in the following ways:
- Boosting cash flow for Employers
- Temporary relief for financially distressed businesses
- Increasing the instant asset write-off for depreciation
- Backing business investment
- Supporting apprentices and trainees
- Tax Payment Deferrals
Important notes for employers regarding various employee situations:
- Section 524 of the Fair Work Act states that:
“An employer may stand down an employee during a period in which the employee cannot usefully be employed because of a stoppage of work for any cause for which the employer cannot reasonably be held responsible.”
- If an employee contracts the Coronavirus or needs to care for a member of their immediate family who have contracted the virus, they will be entitled to take personal leave (if available). Personal leave is not available where an employee has returned from travel and but not yet sick themselves, but required to “self quarantine”
- Casual Employees are not entitled to sick leave. Where shifts to casual employees are reduced, employees will not be entitled to payment during this period. (See support for workers and households)
- An employee can request to work from home (if possible) as a precaution or request to take a form of paid or unpaid leave in order to stay home or ‘self-isolate’
- If you believe that you may need to make permanent or part-time employees redundant due to difficult circumstances or current downtime please give us a call to discuss your options here.
- More information on employee measures here: https://www.fairwork.gov.au/about-us/news-and-media-releases/website-news/coronavirus-and-australian-workplace-laws#stand-down
Boosting Cash Flow For Employers
Small Business (SBE) Loan Measures
The Coronavirus SME Guarantee Scheme will provide support for these businesses. Under the Scheme, the Government will provide a guarantee of 50 per cent to SME lenders for new unsecured loans to be used for working capital. This will enhance these lenders’ willingness and ability to provide credit, which will result in SMEs being able to access additional funding to help support them through the upcoming months.
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.
- 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.
- The Scheme will commence by early April 2020 and be available for new loans made by participating lenders until 30 September 2020.
- Specific COVID-19 concessions have been announced by the majority of banks but we would like to stress that each bank’s concessions are different. Please speak to your bank or lender directly or refer to their online materials for more information
Business Activity Statement Measures
Initial Payment (Boosting Cash Flow Payment):
- Providing up to $50,000 to small businesses and not-for-profits that employ people, minimum payment of $10,000;
- Employers receive a credit equal to 100% of their PAYG Withholding up to a maximum of $50,000 on their activity statements for March 2020 and June 2020 quarters ($25,000 per quarter), with the minimum being $10,000 for Nil PAYG Withholding ($5,000 per quarter);
- This is the same for monthly activity statement lodgers, the credit applied will be equal to your March 2020 amount multiplied by 3
- An additional payment is also being introduced in the July – October 2020 period. Eligible entities will receive an additional payment equal to the total of the prior quarter Boosting Cash Flow for Employers payments they have received. This means that eligible entities will receive at least $20,000 up to a total of $100,000 under both payments.
- As an example, for monthly activity statement lodgers, you could receive $5,000 up to $25,000 in March 2020, from $10,000 up to $50,000 across April, May, June 2020, and lastly from $5,000 up to $25,000 across July, August, September 2020 based on your previous credits received.
- As an example, for quarterly activity statement lodgers, you could receive $5,000 up to $25,000 in March 2020, from $10,000 up to $50,000 in June 2020, and lastly from $5,000 up to $25,000 in September 2020 based on your previous credits received.
- To be eligible for this additional payment, your business must continue to be active through to October 2020;
- The cash flow boosts above provide a tax free payment to employers and is automatically calculated by the Australian Taxation Office (ATO) upon lodgement of your monthly or quarterly activity statements. There are no new forms required in order to claim.
Temporary Relief for Financially Distressed Businesses
The main elements of this package are:
- A temporary increase in the threshold at which creditors can issue a statutory demand on a company from $2,000 to $20,000
- The time companies have to respond to statutory demands they receive from 21 days to 6 months;
- A temporary increase in the threshold for a creditor to initiate bankruptcy proceedings from $5,000 to $20,000 for 6 months
- An increase in the time period for debtors to respond to a bankruptcy notice from 21 days to 6 months
- Extending the period of protection a debtor receives after making a declaration of intention to present a debtor’s petition from 21 days to 6 months;
- Temporary relief for directors from any personal liability for trading while insolvent; and
- Providing temporary flexibility in the Corporations Act 2001 to provide targeted relief for companies from provisions of the Act to deal with unforeseen events that arise as a result of the Coronavirus health crisis.
Increasing Instant Asset Write-Off for Depreciation
The instant asset write-off (IAWO) threshold is increasing from $30,000 to $150,000 and expanding access to include all businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020;
- The above measure will also apply to Small Business General Pools, meaning that if your pool balance is less than $150,000 before depreciation then you will be able to write-off the entire balance;
- The IAWO is due to revert to $1,000 for small businesses (turnover less than $10 million) from 1 July 2020.
Backing Business Investment
The Government is introducing a time limited 15 month investment incentive by accelerating depreciation deductions. The key features of the incentive are:
- 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;
- Eligibility – Businesses with aggregated turnover below $500 million; and
- 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.
- There is no asset value threshold for this 50% investment incentive and the existing depreciation rules will continue to apply to the remaining balance of the asset’s cost over its effective life. Therefore, an eligible asset will generate the immediate deduction of 50%, plus in the same year will generate a Division 40 depreciation deduction calculated in accordance with the normal depreciation rules.
- Businesses with aggregated turnover below $500 million, purchasing certain new depreciable assets.
- Timing Applies to eligible assets acquired after announcement and first used or installed by 30 June 2021.
Supporting Apprentinces and Trainees
- Eligible employers can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage paid during the 9 months from 1 January 2020 to 30 September 2020;
- Available to small businesses employing fewer than 20 full-time employees who retain an apprentice or trainee. The apprentice or trainee must have been in training with a small business as at 1 March 2020;
- Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer;
- Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter for March 2020, June 2020 and September 2020).
- Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network (AASN) provider.
- Employers can register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020. More information at:
Tax Office Payment Deferrals
- Deferring by up to 4 months the payment date of amounts due through the business activity statement (including PAYG instalments), income tax assessments, fringe benefits tax assessments and excise duty.
- Allowing businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get faster access to GST refunds they may be entitled to.
- Allowing businesses to vary Pay As You Go (PAYG) instalment amounts to zero for the March 2020 quarter. Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters.
- Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities; and
- Allowing affected businesses to enter into low‐interest payment plans for their existing and ongoing tax liabilities