The Federal Government passed new legislation to support businesses who are affected by the outbreak. There are five key measures from the Australian Government supporting Australian businesses to manage cash flow challenges and retain employees. Assistance includes cash flow support to businesses and temporary measures to provide relief for financially distressed businesses. Please see below for further details and fact sheets provided by treasury.gov.au.
1. Boosting cash flow for employers
The Government is enhancing the Boosting Cash Flow for Employers measure it announced on 12 March 2020. The Government is providing up to $100,000 to eligible small and medium-sized businesses, and not for-profits (NFPs) that employ people, with a minimum payment of $20,000. These payments will help businesses and NFPs with their cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff.
Small and medium-sized business entities with aggregated annual turnover under $50 million and that employ workers are eligible. NFPs, including charities, with aggregated annual turnover under $50 million and that employ workers will now also be eligible. This will support employment at a time where NFPs are facing increasing demand for services.
The payments will only be available to active eligible employers established prior to 12 March 2020.
Furthermore , eligibility for the above payments is subject to a specific integrity rule that is designed to stamp out artificial or contrived arrangements that are implemented to obtain access to this measure.
This stimulus announcement will produce the best cash-flow benefit for most small businesses, and will be delivered via the lodgement of your Activity Statements. In order to ensure you receive your entitlements, we ask that you contact us to assist in completing your Activity Statements.
Fact sheet: https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Cash_flow_assistance_for_businesses_0.pdf
2. Temporary relief for financially distressed businesses
The ATO will tailor 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.
Feel free to contact us if you need assistance in this area.
3. 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 from $50 million) until 30 June 2020. In 2017-18 there were more than 360,000 businesses that benefited from the current instant asset write-off, claiming deductions to the value of over $4 billion. This measure will support over 3.5 million businesses (over 99 per cent of businesses) employing more than 9.7 million employees.
This stimulus announcement won’t improve your immediate cashflow. Rather, this will give increased tax deductions for the current financial year. To access this stimulus package, you need to spend money in the form of buying an asset, up to $150,000.
4. Backing Business Investment
The Government is introducing 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. Businesses 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 will support business investment and is estimated to lower taxes paid by Australian businesses by $6.7 billion over the next two years. This measure will support over 3.5 million businesses (over 99 per cent of businesses) employing more than 9.7 million employees.
Similar to the instant asset write-off noted above, this stimulus announcement won’t improve your immediate cashflow.
5. Supporting apprentices and trainees
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). Employers can register for the subsidy from early April 2020.
For those employers that have apprentices or trainees, this will be a significant cashflow boost.
Fact sheet: https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Cash_flow_assistance_for_businesses_0.pdf
In addition to the five above, the Federal Government have coordinated action to ensure the flow of credit in the Australian economy
1. Support for immediate cash flow needs for SMEs
Under the Coronavirus SME Guarantee Scheme, the Government will provide a guarantee of 50 per cent to SME lenders to support new short-term unsecured loans to SMEs. The Scheme will guarantee up to $40 billion of new lending. This will provide businesses with funding to meet cash flow needs, by further enhancing lenders’ willingness and ability to provide credit. This will assist otherwise viable businesses across the economy who are facing significant challenges due to disrupted cash flow to meet existing obligations.
Fact sheet: https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Supporting_the_flow_of_credit_1.pdf
2. Quick and efficient access to credit for small business
The Government is cutting red tape by providing a temporary exemption from responsible lending obligations for lenders providing credit to existing small business customers. This reform will help small businesses get access to credit quickly and efficiently.
Fact sheet: https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Supporting_the_flow_of_credit_1.pdf
State Government Stimulus Announcements
The State Governments have also announced various concessions regarding Payroll Tax. As most of our clients are located in Victoria, we provide some commentary regarding their Payroll tax relief.
Payroll Tax
Victoria
For those clients of ours that are required to pay Payroll Tax there is some great news from the State Government. Businesses with annual taxable wages up to $3 million will have their payroll tax for the 2019-20 financial year waived! SRO Victoria will contact eligible businesses with further information, alternatively you can call the Business hotline on 13 22 15.
See frequently asked questions here: https://www.sro.vic.gov.au/frequently-asked-questions-response-covid-19
Other States
NSW State Revenue Office Stimulus Package can be found here: https://www.revenue.nsw.gov.au/taxes-duties-levies-royalties/payroll-tax
QLD Payroll tax information can be found here: https://www.business.qld.gov.au/running-business/employing/payroll-tax/lodging/coronavirus-tax-relief
For the time being, our office is running as usual. However, if the Government dictates that we must close, we are ready to work remotely form home to continue advising you as need be. These unprecedented stimulus measures are designed to help your business, so it is important that you access them in the right manner. Please contact us if you have any questions, or require assistance accessing these benefits.
