On 12 March 2020 and 22 March 2020, the Government announced Economic Stimulus Packages in response to the coronavirus (COVID-19) pandemic to support small and medium-sized businesses through the difficult period. These stimulus packages are primarily targeted to support business investments and to provide cash flow assistance so that these businesses can stay in business and keep their employees in jobs. Another intention of these stimulus packages is to give temporary relief to financially distressed businesses.
We have summarised the key measures and the anticipated impact on business owners below. For any questions relating to how this affects your business specifically, we encourage you to contact our team at firstname.lastname@example.org or 03 8386 7410.
Supporting Business Investments
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 an aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020. The measure applies to all assets purchased between 12 March 2020 – 30 June 2020. The asset must be installed and/or ready for business use by 30 June 2020 to qualify.
Backing Business Investment with accelerated depreciation: The Government is introducing a time-limited 15-month investment incentive (through to 30 June 2021) for Businesses with an aggregated turnover of less than $500 million per annum, by accelerating depreciation deductions. Businesses will be able to deduct 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the remaining balance of the asset's cost over its effective life. Assets are eligible if acquired after 12 March 2020 and first used or installed by 30 June 2021.
Boosting Cash Flow for Employers: Under this measure, the Federal 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. To be eligible, Business and NFPs should have an aggregated turnover of less than $50 million per annum, employ staff and are established before 12 March 2020. The payment will be delivered by the ATO as an automatic credit in the activity statement system from 28 April 2020 upon employers lodging eligible upcoming activity statements for March 2020, June 2020 and September 2020 quarters.
Supporting apprentices and trainees: Businesses with less than 20 employees, who employ apprentices and trainees can apply for a wage subsidy of 50% of the apprentice's or trainee's wage paid. The maximum subsidy per apprentice or trainee is $21,000 and applies to wages paid to an apprentice or trainee during the period 1 January 2020 – 30 September 2020. Employers will need to register for the subsidy from early April 2020 with final claims due 31 December 2020. An Australian Apprenticeship Support Network provider will conduct an eligibility assessment of each application.
Temporary relief for financially distressed businesses: The Government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company and to initiate bankruptcy proceedings against an individual. The Government is also temporarily increasing the time companies and individuals have to respond to statutory demands they receive. The package also includes temporary relief for directors from any personal liability for trading while insolvent.
Support for immediate cash flow needs for SMEs: 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.
Measures by State Government and ATO
Measures announced by ATO: If Businesses can clearly show the ATO how they are being affected by COVID-19, the ATO can help them by providing additional cash flow relief through the following measures. Things such as income statements and current analysis of bank statements may be necessary:
deferral of tax payments for four months (income tax, BAS, FBT);
removal or reversal of any tax interest or penalties that occurred after 23 January 2020;
removal of the obligation to pay PAYG instalment for March quarter;
refund of prior PAYG instalments from September to December in extreme cases, and
fast-tracking GST refunds to a monthly cycle.
Measures announced by the Victorian Government: The Victorian Government will provide full payroll tax refunds for the 2019-20 financial year to small and medium-sized businesses with a payroll of less than $3 million. The same businesses will also be able to defer any payroll tax for the first three months of the 2020/21 financial year until 1 January 2021.
We are here to support your businesses, yourself and your families, so we encourage you to reach out and contact us to further discuss any queries, concerns or issues you may have.