On 22 March 2020 the Government announced the second of their stimulus packages to support Australia through the economic consequences of the Covid-19.
Stimulus relief package and what this could mean for small business
Small business loans – relief package
Australian banks will provide support to eligible small businesses by deferring loan payments for up to six months, where assistance is required as a result of COVID-19. The intention is for banks to implement this as soon as possible.
Coronavirus Guarantee Scheme
The Coronavirus Guarantee Scheme will provide a Government guarantee of 50% of the value of new loans issued by eligible lenders to small and medium-sized businesses. The intention of this measure is to increase access to loans by businesses impacted by the Coronavirus.
Additional lump-sum payments to employers
Small and medium-sized businesses and not-for-profit organisations that employ people will receive a payment of between $20,000 and $100,000 to assist with operating expenses.
The Government had previously announced payments to businesses linked to withholding tax for employees. This measure has been amended to double the amounts that eligible employers can receive. The amount of payment depends on whether the business is required to withhold tax on salary and wages for employees.
Where the employer is required to withhold tax on salary and wages, the employer will be entitled to an amount equal to 100% of the amount withheld (up to a maximum of $50,000). Those employers who are not required to withhold tax will receive a minimum payment of $10,000.
The payment will be tax-free and received as a credit on the business’ activity statements by the ATO from 28 April 2020. The timing of the credit will vary depending on the required frequency of lodgement of activity statements (eg monthly or quarterly).
Instant asset write-off
From 12 March 2020, the instant write-off threshold will increase from $30,000 to $150,000. It has also been broadened and will be available to businesses with an annual turnover of up to $500 million for the current financial year (an increase from $50 million). This applies to new or second-hand assets used or installed ready for use by 30 June 2020. The increased write-off threshold will apply on a per asset basis until 30 June 2020.
Accelerated depreciation of 50% will apply to eligible assets until 30 June 2021. Eligible assets are those acquired after the announcement and are used or installed ready for use by 30 June 2020. However, it does not apply to second-hand assets, building or other capital works deductible under separate tax provisions. This concession will be available to business with an aggregated turnover of less than $500 million.
Employers with apprentices and trainees
Eligible employers who employ apprentices or trainees can apply for a subsidy of 50% of the employee’s wage. This applies for the period of 1 January – 30 September 2020. The maximum payment is $21,000 per apprentice or trainee.
If an employer is unable to retain an apprentice, the subsidy will be available to the new employer.
An eligible employer must have less than 20 full-time employees. The apprentice or trainee must be in employment with the business as at 1 March 2020. Other employers, regardless of size, and Group Training Organisations that re-engage eligible out-of-trade apprentices or trainees are also eligible for the subsidy.
Eligible employers can register for the subsidy from early April 2020 and final claims for payments lodged by 31 December 2020.