We know that many of you will be facing uncertainty around your financial situation. Many of you are forced business closures and are under significant stress. Here we have summarised the government measures to support businesses in response to COVID-19 in clear, simple language to make it as easy as possible for you. We have a similar summary for individuals and households that can be accessed here.
Please share this information with family and friends who are business owners. Know that our team of financial planners and accountants are here to support you. We are open for business and are conducting meetings via video call, or in-person on request. You can contact us here.
Government measures to support businesses
- JobKeeper payment
- Boosting cash flow for employers
- Increasing the instant asset write-off
- Backing business investment
- Supporting apprentices and trainees
- Small business loans
- Payroll tax relief (NSW only)
Businesses that have been significantly affected by COVID-19 can access a wages subsidy to continue paying their employees.
Businesses that have had their turnover reduced by 30 percent or more due to the Coronavirus will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum of six months. This payment is also available to those who are self-employed.
Employers that have stood down employees before the package announcement will also be eligible.
Boosting cash flow for employers
Eligible small and medium sized businesses and not-for-profit organisations that employ staff are eligible to receive a payment up to $100,000, with a minimum payment of $20,000.
Businesses with aggregated annual turnover of less than $50m are eligible to receive the following payments:
- 100% of salary and wages withheld for tax, with a minimum payment of $10,000 and maximum payment of $50,000 in the current financial year ending June 30.
- The same payment will be made in the new financial year beginning July 1st, on the condition that the business is still in operation. Therefore, eligible entities will receive at least $20,000 up to a total of $100,000 tax free under both payments.
The payments are automatically calculated by the ATO.
Increasing the instant asset write-off
The instant asset write-off (IAWO) threshold has increased from $30,000 to $150,000. Eligibility has also expanded to include all businesses with aggregated annual turnover of less than $500 million (previously $50 million).
Businesses are able to immediately deduct purchases of eligible assets each costing less than $150,000. The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets.
This measure applies from 12 March 2020 to 30 June 2020 to new or second-hand assets first used, or installed to be ready for use in this time-frame.
Backing business investment
A 15-month investment incentive is available to accelerate 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 (or capital allowance) rules applying to the balance of the asset’s cost.
The measure applies from 12 March 2020 to 30 June 2021.
Supporting apprentices and trainees
Eligible employers of apprentices and trainees 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.
Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.
Small business loans
A government-backed guarantee loan of up to $250,000 will be available for eligible small businesses with turnover of up to $50 million.
Loans made to businesses with aggregated annual turnover less than $50m will receive the government guarantee under the following conditions:
- The loan is less than $250,000
- The loan is up to three years, with an initial six-month repayment holiday
- The loan is unsecured, meaning that the borrower does not have to provide an asset as collateral
Lending credit assessment applies.
Payroll tax relief (NSW only)
No payroll tax will be required for the months of March, April and May 2020 for businesses that lodge and pay monthly and whose total Australian wages will be no more than $10 million for the current financial year.
When lodging the annual reconciliation, businesses will still need to provide wage details paid in these months and will receive the benefit of a 25 per cent reduction in the amount of tax they would have had to pay for the 2019-20 financial year.
We have focussed this summary on the measures most relevant to our clients. Full details of the Government measures to support businesses can be found here.