- JobKeeper Payment
- Boosting Cashflow for Employers
- Supporting Apprentices and Trainee package
- Coronavirus SME Guarantee Scheme
- Instant asset write-off
- Accelerating depreciation deductions
- Temporary relief for financially distressed businesses
- Details of the temporary relief for financially distressed businesses
- How to apply for temporary relief measures
- Is your business in an industry or region severely affected by the virus?
- ATO administrative relief
- State-Based Government Stimulus Packages
- NSW Government COVID-19 Economic Stimulus Measures
- Other NSW Government COVID-19 economic packages
- Victorian Government economic packages
- Queensland Government economic packages
- Other support for Queensland businesses
- South Australian Government economic packages
- Northern Territory Government economic packages
- Western Australian Government economic packages
- Penguin Management’s recommendations
Pandemic, toilet paper hoarding and self-isolation – these were words and phrases we hadn’t heard before COVID-19 hit our shores.
With stock market speculation and the health system under enormous pressure, and changing conditions every day, COVID-19 is going to require you and your business to be responsive.
In uncertain times, we tell our clients to be diligent on risk management, put plans into place (even if they keep changing), stay focused and call us if you need help or a little boost.
The Federal and State & Territory governments have put several actions into place to shore up the economy. Its main aim is to keep employees in jobs, encourage and assist business investment as well as supporting industries and communities that are severely affected.
We will continue to update this article of any changes or additions to the economic stimulus packages as they occur.
The COVID-19 business stimulus plan
Mr Scott Morrison, the Australian prime minister, told a news conference, “This plan is about keeping Australians in jobs. This plan is about keeping a business in business, particularly small and medium-sized businesses and this plan is about ensuring the Australian economy bounces back stronger on the other side of this and, with that, the budget bounces back with it,”
Mr Josh Frydenberg, the Australian Treasurer, said the stimulus plan has three out of every four dollars being spent on small and medium business. The $6.7 billion is to boost cash flow for small and medium business operators, so they can pay wages, put on extra staff, invest or prepare for the downturn.
The Government will introduce the package of Bills to Parliament for these measures to come into effect.
These measures may not be applicable or suitable for your business, but we will go through the details of each one of them, and how they may benefit your business in general. You should seek independent advice.
Let’s take a look at what’s in the economic stimulus package for your business.
The JobKeeper payment is probably the most sought after of all the measures as employing staff during these tough times is hard. This relieves the pressure businesses have to retain their staff during this downturn and uncertainty.
This subsidy will allow businesses impacted by coronavirus to continue paying their employees during the downturn.
What is the JobKeeper payment?
The Government will provide $1,500 per fortnight per employee for up to 6 months.
What businesses are eligible for the payment?
Employers will be eligible for the subsidy if:
- their business has a turnover of less than $1 billion and their turnover has fallen by more than 30 per cent (of at least a month); or
- their business has a turnover of $1 billion or more and their turnover has fallen by more than 50 per cent (of at least a month); and
- the business is not subject to the Major Bank Levy.
To establish that a business has faced either a 30 (or 50) per cent fall in their turnover, most businesses would be expected to establish that their turnover has fallen in the relevant month or three months (depending on the natural activity statement reporting period of that business) relative to their turnover a year earlier.
Which employees are eligible?
Eligible employees are employees who:
are currently employed by the eligible employer (including those stood down or re-hired)
- were employed by the employer on 1 March 2020
- are full-time, part-time, or long-term casuals (a casual employed on a regular basis for longer than 12 months as at 1 March 2020)
- are at least 16 years of age
- are an Australian citizen, the holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder
- are not in receipt of a JobKeeper Payment from another employer
How do I apply for the JobKeeper Payment?
Register your business here from 30 March 2020. You will be notified by the ATO regarding the next steps.
What do you need to do now?
After you have registered for the subsidy, notify your eligible employees that they will receive at minimum, $1500 per fortnight, before tax.
Your business will need to provide monthly updates to the ATO during the 6 months of the subsidy.
Payments will be paid to the business in arrears by the ATO.
Boosting Cashflow for Employers
Eligible businesses will receive a Boosting Cash Flow for Employers grant to cover the costs of employee wages and salaries equal to 50 per cent of PAYG withheld for businesses that withhold tax, with a minimum of $20,000 and a maximum of $100,000 over six months.
Businesses that pay salary and wages but are not required to withhold tax will also receive the minimum payment of $10,000.
This payment is designed to help business manage cash flow when revenues may be reduced and retain their employees.
Is your business eligible for the Boosting Cashflow Grant?
- Small and medium business entities with aggregated annual turnover under $50 million (based on prior year turnover) that employ workers will be eligible. This includes not-for-profit organisations, sole traders, partnerships, companies and trusts.
- Held an ABN on 12 March 2020 and continues to be active.
- Your business made the following payments: salary and wages, director fees, eligible retirement or termination payments, compensation payments, voluntary withholding from payments to contractors.
- Your business derived business income in the 2018-19 income year and lodged its 2019 tax return on or before 12 March 2020 OR your business had made GST taxable, GST-free or input taxed sales in a previous tax period (since 1 July 2018) and lodged the relevant activity statement on or before 12 March 2020.
Please note: If your business is a non-for-profit (including charities) organisation or has had a lodgement deferral approved by the ATO, please refer to the fact sheet.
How do I apply for this grant?
No need to apply for this grant. This is a tax-free grant and will be issued automatically, after your business lodges its business activity statement or instalment activity statement from April 28, 2020.
When does my business receive the grant?
The payment will be delivered by the Australian Taxation Office (ATO) as a credit in the activity system.
Businesses that lodge on a quarterly basis will be eligible to receive the credit for the quarters ending March 2020 and June 2020. Monthly lodgers will be eligible to receive the credit for the March 2020, April 2020, May 2020 and June 2020 lodgements.
How do I account for the cash flow boost in my accounts?
All cash flow boosts are tax-free (non-assessable non-exempt income) and are not required to be paid back when the business’ cash flow improves. The boost is not subject to GST as the business is not making or agreeing to make a supply for the payment.
However, if the business has been paid more cash flow boosts than it is entitled to, it will be required to repay the excess.
Should I hire more staff?
This may perhaps be an opportunity to hire that employee you were thinking about to increase sales or snap up that top talent to boost business profits and revenue. This could be the time to hire and train a new employee, so by the time the economy bounces back your business is set to take advantage. We recommend you assess your options carefully and complete a business case to calculate if this option is worthwhile.
More information can be found on the Boosting cashflow for employers fact sheet here.
Supporting Apprentices and Trainee package
Created to keep apprentices and trainees employed, a wage subsidy of 50 per cent is offered to businesses who hire apprentices or trainees for a period of nine months – 1 Jan 2020 to 30 September 2020.
The Supporting Apprentices and Trainee package consists of a wage subsidy of up to a maximum of $21,000 ($7,000 per quarter), will be available to businesses employing less than 20 full-time employees who retain an apprentice or trainee, or, where a small business is not able to retain an apprentice, the subsidy will be available to a new employer.
Is your business eligible for the apprentice and trainee package?
- Your small business employs fewer than 20 full-time employees and retain an apprentice or trainee.
- The apprentice or trainee must have been in training with your business as of 1 March 2020.
- Employers of any size and Group Training Organisations that re-engage an eligible out-of-trade apprentice or trainee will be eligible for the subsidy. The apprentice or trainee must have been in training with a small business as of 1 March 2020.
How do I apply for this subsidy?
Firstly, employers must complete an eligibility assessment with an Australian Apprenticeship Support Network (AASN) provider. Find an AASN here.
Once you have been approved as eligible, employers can register for the subsidy from early-April 2020. Final claims for payment must be lodged by 31 December 2020.
Can I apply for the JobKeeper payment as well?
Businesses that claim this subsidy for wages paid during the period 1 January 2020 to 31 March 2020 will not be precluded from applying for the JobKeeper Payment from 30 March 2020 – if you are eligible.
After this time, you will need to choose which payment best supports your circumstances.
Should I hire an apprentice?
Hiring an apprentice is a great way to help fill in any skills gap your organisation may have, as well as any technical skills your business may need in the future. With other government incentives offered to businesses, hiring apprentices, maybe the time to introduce new skills, cost-effectively.
Please note that the apprentice or trainee must have been employed as at 1 March 2020 and we highly recommend you assess your options carefully and complete a business case to understand if this option is worthwhile.
For more information, here is the government fact sheet on these stimulus measures including examples.
Under the Scheme, the Government will provide a guarantee of 50 per cent to small and medium enterprise (SME) lenders for new unsecured loans to be used for working capital. This will enhance lenders’ willingness and ability to provide credit, which will result in SMEs being able to access additional funding to help support them through the upcoming months.
Is your business eligible for the SME Guarantee Scheme?
SMEs with a turnover of up to $50 million will be eligible to receive these loans.
Loans under the SME Guarantee Scheme
Loans will be subject to lenders’ credit assessment processes with the expectation that lenders will look through the cycle to sensibly take into account the uncertainty of the current economic conditions.
The Government will provide eligible lenders with a guarantee for loans with the following terms:
- The maximum total size of loans of $250,000 per borrower.
- The loans will be up to 3 years, with an initial 6-month repayment holiday.
- The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.
How to apply
If you’re interested in the Coronavirus SME Guarantee Scheme you should approach your financial institution for more information. The Government is working with banks and other lenders to ensure loans are available as soon as possible.
More information about these loans can be found here.
Instant asset write-off
For small and medium-sized businesses, the instant asset write-off threshold (rather than depreciating them over several years) has been increased to $150,000 per asset basis, until 30 June 2020.
This new threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets.
Who is eligible for the instant asset write-off of $150,000?
Any Australian business with a turnover of $500 million.
How do I claim the instant asset write-off?
The instant asset write-off concession is a tax deduction, dependent on your current tax rate. It applies to new or second-hand assets first used or installed ready for use from 12 March to 30 June 2020.
You can claim this concession when completing your annual business tax return.
Should my business take advantage of the asset write-off incentive?
If your business was planning to undertake a business investment expenditure in the near future, this may be the time to bring it forward. You may also look at other investments that your business could purchase to increase its productivity, lower its running costs or enter a new market.
As you will read below, there are incentives for faster depreciation as well, so this may make the investment even more appealing and beneficial for your business. Double-check your asset purchase business case to see if the benefits to your business warrant the expense over the capital purchase.
Learn more about the Instant Asset Write-off here
Accelerating depreciation deductions
To encourage business investment, a 15-month accelerated depreciation deduction has been introduced. The asset purchase can be initially depreciated at 50% of its cost, with existing depreciation applying to the balance of the asset’s cost. It is in place until 30 June 2021.
Who is eligible for the accelerated depreciation schedule?
It is available to businesses with an aggregated turnover below $500 million, who are purchasing certain new depreciable assets.
What are the eligible depreciating assets?
The eligible assets that can be included in the accelerated depreciation schedule must –
- be new and not previously held by another entity (other than as trading stock)
- not be an asset to which an entity has applied depreciation deductions or the instant asset write-off rules
- be first held on or after 12 March 2020
- first used or first installed ready for use for a taxable purpose on or after 12 March 2020 until 30 June 2021.
How does my business claim the accelerated depreciation?
You can claim the 50% depreciation in the year your business starts to use the new asset or when they have been installed ready for use. The accelerated depreciation is a tax deduction, claimed through your annual business tax return.
Should my business take advantage of the accelerated depreciation?
Accelerated depreciation allows your business to claim a higher deduction immediately. The higher depreciation today, lets you bring forward the deduction of a portion of the depreciation of the assets to reduce your current tax bill.
Accelerated depreciation can be beneficial for businesses with short term cashflow problems.
Would you like more information on the accelerated depreciation or the instant asset write-off? Here is Treasury’s fact sheet.
Temporary relief for financially distressed businesses
The government have declared a temporary increase to thresholds and time frames for statutory demands, bankruptcy proceedings and voluntary bankruptcy, as well as temporary relief for directors from any personal liability for trading while insolvent.
This includes temporary relief for directors from any personal liability for trading while insolvent and providing temporary flexibility in the Corporations Act 2001 to provide temporary and targeted relief from provisions of the Act.
Details of the temporary relief for financially distressed businesses
The current minimum threshold for creditors issuing a statutory demand on a company under the Corporations Act 2001 has been temporarily increased from $2,000 to $20,000. This will apply for 6 months.
The statutory time frame for a company to respond to a statutory demand will be extended temporarily from 21 days to 6 months. This will apply for 6 months.
The threshold for the minimum amount of debt required for a creditor to initiate bankruptcy proceedings against a debtor will temporarily increase from its current level of $5,000 to $20,000. This will apply for 6 months.
The time a debtor has to respond to a bankruptcy notice will be temporarily increased from 21 days to 6 months. The extension will give a debtor more time to consider repayment arrangements before they could be forced into bankruptcy. This will apply for 6 months.
When a debtor declares an intention to enter voluntary bankruptcy by making a declaration of intention to present a debtor’s petition there is a period of protection when unsecured creditors cannot take further action to recover debts.
This period will be temporarily extended from 21 days to 6 months. This will give debtors more time to consider the options that are best for them. This will apply for 6 months.
Directors’ personal liability for trading while insolvent
This includes temporary relief for directors from any personal liability for trading while insolvent and providing temporary flexibility in the Corporations Act 2001 to provide temporary and targeted relief from provisions of the Act. It will apply for six months.
How to apply for temporary relief measures
You don’t need to apply, these relief measures will automatically apply for 6 months.
To find out more, have a look here.
Is your business in an industry or region severely affected by the virus?
The government has also announced a $1 billion fund to support and target regions significantly affected by the coronavirus outbreak.
Businesses in these affected areas may be able to access grants similar to those provided to businesses in bushfire-affected regions.
Businesses extremely affected by the COVID-19 include those heavily reliant on industries such as tourism (in particular domestic tourism), agriculture and education.
These measures haven’t been fully itemised at time of writing but will include waiving fees for commonwealth national parks, and the Great Barrier Reef Marine Park.
There will also be additional assistance to help businesses identify alternative export markets or supply chains.
The Federal Government has committed an extra $100 million for aged care as part of its $2.4 billion coronavirus health care plan. It will include money for aged care centres to employ extra nurses and reduce the risk of the virus within homes.
ATO administrative relief
The Australian Taxation Office is providing administrative relief for some tax obligations for people affected by the coronavirus outbreak, on a case-by-case basis.
In addition, the ATO will consider ways to enhance its presence in other significantly affected regions, making it easier for people to apply for relief, such as setting up temporary shopfronts and face-to-face options.
State-Based Government Stimulus Packages
As well as federal government packages, state governments across Australia have also announced their own stimulus initiatives.
NSW Government COVID-19 Economic Stimulus Measures
Small Business Support Fund
This is a $10,000 grant to businesses who have been highly impacted by the CoVID-19 restrictions on Gathering and Movement. It is
Eligible businesses for the Small Business Support Fund
- Your business employs between 1-19 employees and you have a turnover of over $75,000 per annum.
- A payroll below the NSW Government threshold for payroll tax of $900,000.
- Have an ABN number as at 1 March 2020, be based in NSW and employed staff as at 1 March 2020.
- Be highly impacted by the COVID-19 Restrictions on Gathering and Movement issued on 30 March 2020.
- Use the funds for unavoidable business costs such as utilities, overheads, legal costs and financial advice.
- Provide appropriate documentation upon application.
How to apply
Apply through Service NSW from around mid-April and up until 1 June 2020.
For more information about this grant, click here
Other NSW Government COVID-19 economic packages
- deferral of payroll tax for business with payrolls over $10 million for six months (up to $4 billion deferred). Businesses with payrolls of $10 million or less received a three-month waiver on payroll tax in the first package. These businesses will now get an additional three-month deferral as well
- deferral of gaming tax for clubs, pubs and hotels, and lotteries tax for six months, conditional on these funds being used to retain staff. This improves liquidity and helps these businesses stay afloat
- deferral of the parking space levy for six months
- deferral of rents for six months for commercial tenants with less than 20 employees in all Government-owned properties.
Victorian Government economic packages
Business Support Fund
Similar to the NSW Business Support Fund, a $10,000 business grant to be used by business to pay for overhead costs such as utilities, rent and salaries, and activities to support business continuity planning.
Small businesses are eligible if they –
- employ staff
- have been subject to closure or are highly impacted by Victoria’s Non-Essential Activity Directions issued by the Deputy Chief Health Officer to-date
- have a turnover of more than $75,000
- have a payroll of less than $650,000.
How to apply
Applications are open between now and end June 2020.
Click here to start your application.
Payroll Tax Refund
Businesses with annual taxable wages up to $3 million will have their payroll tax for the 2019-20 financial year waived. These businesses can also defer paying payroll tax for the first quarter of the 2020-21 financial year.
How to apply
The State Revenue Office will directly contact eligible businesses to reimburse them for payroll tax already paid in the financial year. More information about the administration of these relief measures will be sent directly to eligible businesses.
All eligible businesses MUST continue to lodge returns but do not need to make further payments for this financial year.
For more information, visit www.sro.vic.gov.au
Liquor licence fees waived
Renewable liquor licence fees for 2020 will be waived. Businesses that have already paid will be reimbursed. The State Revenue Office will administer the reimbursement, regardless of whether the licence fee was paid to it or the Victorian Commission for Gaming and Liquor Regulation.
For more information, visit www.sro.vic.gov.au
Fast-tracking outstanding supplier invoices
The Victorian Government will pay all outstanding supplier invoices within five business days – releasing up to $750 million into the economy earlier. The private sector is urged to do the same where possible.
Queensland Government economic packages
Payroll Tax Relief
All businesses in Queensland will not have to pay payroll tax for the 2020 year.
Small businesses with a payroll of up to $6.5 million are eligible for a two-month refund of payroll tax and a three-month payroll tax holiday. They will also be eligible to defer all payroll tax payments for the rest of 2020.
Larger companies, with a payroll over $6.5 million, will also be eligible for a two-month refund of payroll tax and three-month payroll tax holiday. They will also be eligible to defer all payroll tax payments for the rest of 2020.
Other support for Queensland businesses
- A two-month refund of payroll tax, giving an average of nearly $9,000 cash
- A three-month payroll tax holiday, saving an average of $13,360
- Relief for businesses renting government premises.
- $500 rebate on electricity bills for all Queensland small and medium-sized businesses that consume less than 100,000-kilowatt-hours. This will be automatically applied to electricity bills.
- Liquor licensing fees waived for business impacted by enforced safety industry shutdowns.
Further information can be found here in the fact sheet.
South Australian Government economic packages
Payroll tax relief
Business groups with annual Australian wages of up to $4 million will receive a six-month payroll tax waiver. Eligible business groups will not be required to pay any payroll tax in the months of April to September 2020.
Business groups with annual Australian wages above $4 million that can demonstrate they have been significantly impacted by COVID‑19 will, upon application, be able to defer payroll tax payments for the six months from April to September 2020. For these eligible business groups, payroll tax payments that were due to be paid from April to September will now be due from October 2020.
Land tax deferral – 2019-20 third and fourth instalments
Businesses and individuals paying land tax quarterly in 2019-20 will be able to defer payment of their third and fourth quarter instalments for up to six months.
More information for South Australian businesses, click here.
Northern Territory Government economic packages
Business Improvement Scheme
All eligible businesses will receive $10,000. If the recipient also wants to put in their own $10,000, they will then get an additional $10,000 from the Government. This creates a $30,000 grant (with business pitching in $10,000 of their own money).
The upgrades and purchases have to be from another Territory business. This could include buying new equipment, new shop fit-outs and physical changes to attract customers.
Business Structural Adjustment package
This package will assist businesses who need to physically adjust to the 100 person rule or to establish or upgrade their online presence to adjust to changing behaviours of consumers.
All businesses can apply, but the Department will be focusing on the hospitality sector first (such as restaurants). Terms and conditions and a hotline will be released soon.
Immediate Works Grants Package
This package reintroduces the Immediate Works Grant for incorporated not-for-profit and community organisations – including clubs – to undertake repairs, renovations and upgrades to their premises/facilities.
Applicants can apply for grants of up to $50,000, which will then be matched dollar-for-dollar if the organisation also puts in their own $50,000. Up to $200,000 on a dollar-for-dollar matching basis for amounts above $100,000.
Freezing Government Fees and Charges and Electricity Prices
All Government fees and charges – including electricity, water and car registration will be frozen (no increase due to indexation) until July 1, 2021.
Electricity prices for small and medium businesses (those paying regulated tariffs) will be frozen from July 1, 2020 (no increase due to indexation) until July 1, 2021.
For more information, click here
Western Australian Government economic packages
The Western Australian government has introduced some assistance for small and medium-sized business. These include –
- Electricity bills for around 95,000 small businesses will be reduced, with a one-off $2,500 credit available for Synergy and Horizon Power customers that consume less than 50-megawatt hours (MWh) per annum.
The credit is available for current customers (as of March 31, 2020) and will be allocated from May 1, 2020, to reduce current and future electricity bills.
- Payroll tax will be waived for a four-month period between March 1, 2020, to June 30, 2020, for small-to-medium sized businesses with Australia-wide annual wages of less than $7.5 million in 2019-20.
This payroll tax waiver replaces the payroll tax deferral already announced for particular small-to-medium sized businesses.
- A range of licence fees for small and medium-sized business will be waived for the next 12 months.
This includes licences for building services, plumbers and electricians; tourism businesses operating in national and marine parks; boat registration and mooring fees for tourism operators and commercial fishers; commercial fisheries licences; taxi booking service authorisation fees; settlement agent licence fees; and other statutory planning fees. Liquor licence renewal fees for 2020 will be waived and refunds provided for businesses that have already paid.
- Businesses can also apply for an interest-free payment arrangement and for late payment penalties to be waived for payroll tax, transfer duty, landholder duty, vehicle licence duty or land tax.
- No small businesses will face power or water disconnections due to late payments. In addition, no interest will be charged on deferred bill payments. For electricity, this will apply to Synergy and Horizon Power customers who consume 50MWh or less.
- To support the taxi and on-demand transport industry, regional taxi assistance payments, a cash payment of $2500 to over 600 authorised on-demand booking services and waiving of renewal fees for passenger transport vehicles and on-demand booking services.
- Small and medium businesses whose annual Australian Taxable Wages are between $1 million and $4 million will receive a one-off grant of $17,500 to assist them to manage the impacts of COVID-19.
Up to date information on W.A. business assistance can be found here.
Penguin Management’s recommendations
Over the coming months, we envisage the Government will be introducing more economic stimulus plans. We will keep you up to date on all measures applicable for business.
Register for all government payments, grants and incentives regardless if you think your business will qualify or not. Your business’ status over time may change and the details for each of the stimulus measures are constantly changing.
Keep filing your Business Activity Statements on time to ensure your business is eligible for any payments.
This is a time when your business may start evolving with the changing business environment. You may reimagine or reinvent parts of your business as a new normal sets in. We encourage you to investigate these subsidies and investment opportunities to see if they are appropriate for your business.
If you need a business advisor to go through the pros and cons, we are happy to help you analyse their implications. This may be a great opportunity to invest in your business, talk to a Penguin Management accountant today on 1300 319 870 or contact us here to make an appointment.