What the Government has offered SMEs

by Caragh Welford 1st of April, 2020

If you’re a business in Australia, chances are you’re feeling a little overwhelmed and confused about the stimulus packages the Government has offered in response to the COVID-19 crisis. Things are moving very quickly so we wanted to share what is currently available. Its is a good idea for all business owners to speak with their accountants so they can assist you with applications and assessing your eligibility.

Stimulus Package #1 - 12th March 2020

The Government shared their first Economic Response to the Coronavirus outlining a $17.6 billion stimulus package aimed at protecting the economy by maintaining confidence, supporting investment and keeping people in jobs. In this press release, the Australian Government states they are “acting decisively in the national interest to address the potentially significant economic consequences of the virus, without a permanent or structural impact on the budget balance.”

The below is derived from the Treasury

1. Delivering support for business investment

There are two business investment measures in this package aimed to

1- Assist businesses and economic growth in the short term

2- Encourage a stronger economic recovery post the Coronavirus outbreak.

Increasing the instant asset write-off

- 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.

Backing business investment

- 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 percent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.

These two measures will support over 3.5 million businesses (over 99 percent of businesses) employing more than 9.7 million employees.

You can access the Delivering Support for Business Investment Factsheet here.

2. Cash flow assistance for businesses

This assistance will support businesses to

1- Manage cash flow challenges resulting from the economic impacts of the Coronavirus

2- Help businesses retain their employees.

Boosting cash flow for employers

The Boosting Cash Flow for Employers measure will provide up to $25,000 back to small and medium-sized businesses, with a minimum payment of $2,000 for eligible businesses. The payment will provide cash flow support to businesses with a turnover of less than $50 million that employ staff. The payment will be tax-free. These eligible businesses will receive a payment equal to 50% of their PAYG withheld, delivered as a credit in their BAS from March to June 2020.

This measure will benefit around 690,000 businesses employing around 7.8 million people.

Supporting apprentices and trainees

The Government is supporting small businesses to retain their apprentices and trainees. Eligible employers can apply for a wage subsidy of 50 percent of the apprentice’s or trainee’s wage for up to 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.

This measure will support up to 70,000 small businesses, employing around 117,000 apprentices.

You can access the Cash Flow Factsheet here.

3. Temporary relief for financially distressed businesses

The elements of the package are:

A temporary increase in the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive;
A temporary increase in the threshold for a creditor to initiate bankruptcy proceedings, an increase in the time period for debtors to respond to a bankruptcy notice, and extending the period of protection a debtor receives after making a declaration of intention to present a debtor’s petition;
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.

You can access the Temporary relief for financially distressed businesses Factsheet here.

Stimulus Package #2 - 22nd March 2020

A second stimulus package worth an estimated $66.1 billion was announced on 22nd March 2020. This package is designed to provide support to households including casuals, sole-traders, retirees and those on income support, as well as assistance for businesses to keep people in a job. “We want to help businesses keep going as best they can and for as long as they can, or to pause instead of winding up their business. We want to ensure that when this crisis has passed Australian businesses can bounce back,” the Prime Minister said.

“Our focus is on cushioning the blow and providing hope to every Australian that we will get through this and come out the other side together… We know Australia’s more than 3 million small and medium businesses are the engine room of our economy. When they hurt, we all hurt.”

Assistance to business to keep people in a job

Boosting Cash Flow for Employers

The Government is providing:

Up to $100,000 to eligible small and medium-sized businesses, and not?for-profits (including charities) that employ people, with a minimum payment of $20,000
Employers will receive a payment equal to 100 percent of their salary and wages withheld (up from 50 percent), with the maximum payment being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000. The payment will be available from 28 April 2020.

The payments are tax free, there will be no new forms and payments will flow automatically through the ATO.

This measure will benefit around 690,000 businesses employing around 7.8 million people, and around 30,000 NFPs (including charities).

Regulatory protection and financial support for businesses to stay in business

Coronavirus SME Guarantee Scheme

The Coronavirus SME Guarantee Scheme will support small and medium enterprises (SMEs) to get access to working capital to help them get them through the impact of the coronavirus. Under the Scheme, the Government will guarantee 50 per cent of new loans issued by eligible lenders to SMEs.

The measures the Government is announcing today, along with the previous announcements, will deliver a total of $125 billion to support Australians get through the impact of the coronavirus.
The Government will guarantee up to $20 billion to support $40 billion in SME loans.

Providing temporary relief for financially distressed business

The Government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive.

The package also includes temporary relief for directors from any personal liability for trading while insolvent.

Early release for superannuation

The Government will allow individuals in financial stress as a result of the Coronavirus to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21.

Eligible individuals will be able to apply online through myGov for access of up to $10,000 of their superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020 for another three months.

See the full Press Release here.

For more information about small business grants, stimulus packages and what it means for your business, visit https://treasury.gov.au/coronavirus/businesses.

Stimulus Package #3 - 30th March 2020

On 30 March, the Government announced the $130 billion JobKeeper Payment to help keep Australians in jobs as we deal with the significant economic impact from the Coronavirus. This brings the Government’s total support for the economy to $320 billion across the forward estimates, representing 16.4 percent of annual GDP.

JobKeeper Payment

Eligibility

Employers (including non-for-profits) will be eligible for the subsidy if:

Their business has a turnover of less than $1 billion and their turnover will be reduced by more than 30 per cent relative to a comparable period a year ago (of at least a month);
Their business has a turnover of $1 billion or more and their turnover will be reduced by more than 50 per cent relative to a comparable period a year ago (of at least a month); and
The business is not subject to the Major Bank Levy
Self-employed individuals will be eligible to receive the JobKeeper Payment where they have suffered or expect to suffer a 30 per cent decline in turnover

Payment Process

Eligible employers will be paid $1,500 per fortnight per eligible employee. Eligible employees will receive, at a minimum, $1,500 per fortnight, before tax, and employers are able to top-up the payment.

For more information, you can access the Supporting Businesses to Retain Jobs Factsheet here.

Tags: small business government covid-19