COVID-19 Business Support Measures

23 Mar 2020

Updated 17/4/2020

We are currently helping our clients work through the various support measures that are coming into place to assist with the effects of COVID-19, including:

Federal Government Stimulus Measures

JobKeeper

Click here for more information on the JobKeepers scheme

Business Investment

From Thursday 12 March 2020, the instant asset write-off threshold has been increased from $30,000 (for businesses with an aggregated turnover of less than $50 million) to $150,000 (for businesses with an aggregated turnover of less than $500 million) until 30 June 2020.
A time-limited 15-month investment incentive (through to 30 June 2021) which will operate to accelerate certain depreciation deductions. This measure will also be available to businesses with a turnover of less than $500 million, which will be able to immediately deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost. As announced, this measure is proposed to only apply to new depreciating assets first used, or installed ready for use, by 30 June 2021.

Click here for our downloadable PDF on the Instant Asset Write-Off and Accelerated Depreciation.

Cashflow Assistance – Enhanced

Tax-free payments of up to $50,000 for eligible small and medium businesses (i.e., with a turnover of less than $50 million that employ staff) and not-for-profits based on their PAYG withholding obligations. This is not a cash payment, but it is a credit equal to 100% of the PAYG amounts withheld from salary and wages paid to employees, up to the cap. Where this places the entity in a refund position, the ATO will deliver the refund within 14 days.Businesses that lodge activity statements on a quarterly basis will be eligible to receive the credit for the quarters ending March 2020 and June 2020. Businesses that lodge on a monthly basis will be eligible for the credit for the March 2020, April 2020, May 2020 and June 2020 lodgements.
If a business pays salary and wages to employees but is not required to withhold any tax, then a minimum payment of $10,000 will still be made. The minimum $10,000 payment will be applied to the first activity statement lodgement.

An additional payment is also being introduced in the July – October 2020 period. Eligible entities will receive an additional payment equal to the total of all Cashflow Assistance Employer payments they have received. This means that eligible entities will receive at least $20,000 up to a total of $100,000 under both payments.

Click here for our downloadable PDF on the Tax-Free Payments up to $100,000 for Employers.

Wage subsidies to support the retention of apprentices and trainees – Employers with less than 20 full-time employees may be entitled to apply for government-funded wage subsidies amounting to 50% of an apprentice’s or trainee’s wage for up to nine months from 1 January 2020 to 30 September 2020. The maximum subsidy for each apprentice/trainee is $21,000.

Click here for our downloadable PDF on the Wage Subsidy.

Supporting the Flow of Credit

Support for immediate cash flow needs for SME’s – 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.
Lenders are also deferring loan repayments for 6 months on these loans in addition to existing business and equipment loans.

Individual Assistance

Two tax-free payments of $750 to social security, veteran and other income support recipients and eligible concession cardholders. It is estimated that around half of those who will benefit will be pensioners. These payments will commence automatically from 31 March 2020 and a second payment will be made from 13 July 2020.
Income Support for Individuals – Over the next six months, the Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight. This will be paid to both existing and new recipients of JobSeeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.

Click here for our downloadable PDF on Support for Individuals.

Temporary early release of Superannuation – The government is allowing individuals affected by the Coronavirus to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21. Individuals will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.To apply for early release, you must satisfy any one or more of the following requirements:
- you are unemployed; or
- you are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or
- on or after 1 January 2020: you were made redundant, or your working hours were reduced by 20 per cent or more, or if you are a sole trader — your business was suspended or there was a reduction in your turnover of 20 per cent or more.

Click here for our downloadable PDF on the Temporary Early Release of Superannuation.

Temporarily Reducing Superannuation Minimum – The Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50 per cent for 2019-20 and 2020-21. This measure will benefit retirees holding these products by reducing the need to sell investment assets to fund minimum drawdown requirements.
Reducing Social Security Deeming Rates – On 12 March, the Government announced a 0.5 percentage point reduction in both the upper and lower social security deeming rates. The Government will now reduce these rates by another 0.25 percentage points.
As of 1 May 2020, the upper deeming rate will be 2.25 per cent and the lower deeming rate will be 0.25 per cent. The reductions reflect the low-interest-rate environment and its impact on the income from savings. The change will benefit around 900,000 income support recipients, including around 565,000 Age Pensioners who will, on average receive around $105 more of the Age Pension in the first full year the reduced rates apply.

Click here for our downloadable PDF on the Temporary Reduction of Pension Minimum Drawdown.

ATO Support Measures

Individuals and businesses can request a deferral of some payments (by up to 4 months) and vary instalments.
Businesses (under $20 million turnover) can elect to report and pay their GST monthly instead of quarterly to accelerate access to GST refunds, but only from 1 April 2020, and must remain monthly for 12 months.
Quarterly payers can vary their PAYG instalments for the March 2020 quarter and claim a refund of instalments paid for the Sep and Dec 2019 quarters.
Businesses can request remittance of interest and penalties applied to tax liabilities incurred after 23 January 2020.
Businesses can request a low-interest payment plan.
Employers still need to meet their Super Guarantee (SG) obligations. The ATO has no discretion under the Super Guarantee Charge (SGC) rules to vary the due date or waive the SGC where contributions are late/unpaid.

Business Loans up to $250,000 Supported by the Government

There’s been a lot of press about $250,000 loans for business, so how do they work:

Who lends the money? Loans will be provided by banks, not the government.
How much can you borrow? Up to $250,000. We are seeing business owners get access to funds quicker when borrowing < $100,000. However, you can apply for more if you need more.
What are the eligibility requirements? Be in business with a turnover of less than $50 million.
Do you need to put up security? No. The loans are to be unsecured, i.e. no bricks and mortar security required. The government is helping behind the scenes by guaranteeing 50% to the bank to make it easier for the latter to lend to businesses.
What term are the loans? 3-year terms, no repayments for the first 6 months.
What interest rate? Talk to your individual bank, however, we can see NAB is offering 4.5%.
What can you use the money for? Loans are to be used for meeting operational expenses, working capital. It’s not to be used to purchase assets or re-finance other debts.

Next steps:

Make contact with your existing bank manager to understand how your business may be eligible.
Work with your accountant to ensure ATO lodgements are up to date and ensure you have some cash flow projections. Like any other finance application, the better prepared you are as the borrower, the better placed you’ll be to get the funding you desire.

If you are considering taking out a loan, but are unsure what you need to do to secure one, and how you will repay this in the future, please contact us today so we can assist with some scenario planning.

Want to know more about what the major banks are offering?

Click here for our downloadable PDF on Access to Financial Support.