As small-to-medium businesses continue to feel the impact of the COVID-19 pandemic, the Australian Government has unveiled assistance – including a second-stage $66 billion economic lifeline plus a third package with a $130 billion wage subsidy scheme.
Whether you’re a sole trader or an employer, there’s a range of support measures available to assist you. Taking into account the three stimulus packages announced so far, wage support, temporary tax relief and a variety of subsidies will be provided.
At a glance, some of these measures include:
- A $130 billion wage subsidy scheme, where eligible employers will receive $1,500 per fortnight per eligible employee for six months
- Eligible small and medium businesses receiving a tax-free cash payment of up to $100,000, with a minimum payment of $20,000
- Guaranteeing unsecured small business loans up to $250,000
- Increasing the instant asset write-off threshold from $30,000 to $150,000 and expanding it to include more businesses
- Fast-tracking depreciation deductions
- Wage subsidies for eligible employers of apprentices and trainees
- Doubling the Jobseeker Payment temporarily
- Allowing eligible people to access $10,000 from their super, and another $10,000 later
- Support for affected regions and communities significantly affected by the coronavirus.
The Australian Banking Association has also announced that Australian banks will defer loan repayments for small businesses affected by COVID-19 for six months.
A SME guarantee scheme has also been announced, where the government will provide a guarantee of 50% for new unsecured loans of up to $250,000 for up to three years.
Helping with cash flow
One of the biggest levers in the package is the expansion of the instant asset write-off threshold, which has been increased from $30,000 to $150,000. It has also been expanded to include businesses with aggregated annual turnover of less than $500 million for assets that are either installed or will be ready to use by 30 June 2020.
The higher threshold means you’ll l be able to direct cash flow back into your business sooner by immediately deducting the purchase cost of eligible assets, such as computer and home office equipment, machinery and vehicles. As it is applied on a per asset basis, you can immediately write‑off multiple assets.
The Jobseeker Payment (formerly known as Newstart) has also been effectively doubled by $550 per fortnight to approximately $1,100 from 27 April and is available to sole traders and casual workers who have lost their jobs, or whose income has fallen below $1,075 a fortnight. The good news is the government has suspended the liquid assets waiting period for this, so you don’t need to use up your savings before applying for the payment.
Additionally, people can now access $10,000 from their superannuation in 2019-20 and again in 2020-21.
Depreciation deductions have also been fast tracked. Businesses with a turnover of less than $500 million can deduct 50% of the cost of an eligible asset straight away, instead of depreciating it over several years.
An additional $1 billion has also been allocated to regions and communities that have been disproportionately affected by the economic impacts of COVID-19, including those heavily reliant on industries such as tourism, agriculture and education. These funds will be available through existing and newly established government programs.
Support paying wages
The government has also announced a $130 billion wage subsidy scheme to support businesses that have been impacted by the coronavirus pandemic to keep people in their jobs.
Through the JobKeeper program, eligible businesses will be able to claim a payment of $1,500 a fortnight per employee, for up to six months. It’ll also be available to the self-employed. Eligibility includes assessing a 30% or more drop in revenue for businesses with a turnover of less than $1 billion, and a 50% or more drop in revenue for businesses with a turnover of $1 billion or more. There’s also eligibility criteria for employees.
The support aims to help businesses keep and pay staff they were forced to stand down or retrench due to the downturn. Eligibility criteria includes employees that were stood down or re-hired, and those that were employed on March 1 – so if you were forced to make a worker redundant due to the downturn, they could be eligible for the payment when re-hired.
Payments are expected from May 1, but will be backdated to March 30. For now, you’ll need to register your interest in the scheme with the ATO. You’ll then be able to apply via an online application.
Support for employers
If you employ people, your business may also be eligible for temporary cash-flow support and assistance to help pay the wages of apprentices or trainees.
If your business has a turnover of less than $50 million and you employ staff, you may be eligible to receive a tax-free cash payment of up to $100,000, with a minimum payment of $20,000, to help you pay wages, rent, electricity and other bills.
Eligible employers with apprentices can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage paid between 1 January 2020 to 30 September 2020, equalling a maximum of $21,000.
The Australian Government is also reminding employers of their obligations to ensure the health and safety of workers. You should provide information and procedures to all employees and contract staff and, if your staff are sick, they must seek medical clearance from a doctor, work from home or not work during the risk period.
For more information about the available support and how it can help your business face the economic challenges of the COVID-19 virus, go to business.gov.au
The above information was last updated 01.04.20
Information provided in this article is general only and it does not constitute legal advice and should not be relied upon as such. SEEK provides no warranty as to its accuracy, reliability or completeness. Before taking any course of action related to this article you should make your own inquiries and seek independent advice (including the appropriate legal advice) on whether it is suitable for your circumstances.