COVID-19 RESOURCE HUB

COVID-19 Government Assistance for Small Businesses

Government support for small businesses: How is the government supporting you?
5 min read

We live in unprecedented times. Isolation rules and pandemic related business restrictions keep rolling out and there’s a growing list of Australian businesses, large and small, who are unable to trade normally, if at all.

Fortunately, there’s an evolving rollout of Australian Federal Government assistance available for businesses across the country doing it tough.

Let’s track the most recent developments for businesses and ascertain what government benefits and assistance you could receive to keep your business afloat.

JobKeeper Payment

The government announced on 3/30/2020 a new wage subsidy to help business’ pay employees. Dubbed the ‘JobKeeper Payment’, the primary details include:

  • $130 Billion dollar package to help businesses’ pay staff wages.
  • $1500 dollars flat rate per employee, per fortnight for six months.
  • Business must have suffered 30% COVID-19 related business losses to qualify.
  • Job losses are ‘backdated’ to March 1st 2020

Register your interest with the ATO here: JobKeeker Payment

Tax relief

Fortunately, some tax relief will be available for your small business.

The Australian Tax Office (ATO) is now providing relief for some tax obligations for businesses affected by the outbreak, on a case-by-case basis.

Contact the ATO’s Emergency Support Infoline for businesses on 1800 806 218 for more detailed and personalised information or to request this tax assistance.

Cashflow boost for employers

Legislation is being constantly formed in order to grant businesses who employ workers cash assistance to retain employees.

The initial ‘Boosting Cash Flow for Employers’ measure released on March 12 allowed for up to $25,000. This has increased four-fold to $100,000 following the second stimulus package.

“We will provide tax-free cash flow boosts of between $20,000 and $100,000 to eligible businesses, delivered through credits in the activity statement system” – ATO

This will come in two stages starting on the 28th of April 2020.

All assistance will be subject to case-by-case review and will only be available for those businesses who lodge their business activity statements (BAS) to the ATO.

Payroll tax changes

To assist businesses who have payroll tax obligations, the government has announced the following changes:

  • The tax-free threshold has increased from $900,000 to $1 million.
  • There will be a six month deferral of payroll tax for business with payrolls over $10 million.

 

Bank loan assistance

Are you struggling to repay your business’ bank loan? Your small business may be eligible to defer its bank loan repayments.

The Australian Banking Association has announced that Australian banks will defer loan repayments for small businesses affected by COVID-19 for six months.

Contact your bank to discuss your options and find official information from the Australian Banking Association here.

Rent deferral

The Australian Federal Government has announced that there’ll be a deferral of rents for six months for commercial tenants with less than 20 employees in all government-owned properties. Please note this is just for government owned properties.

Regional, community and industry assistance

Some areas, communities and industries will be affected worse than others. There’s now an allocation of funds to be filtered through these communities.

The government has now set aside an initial $1 billion (watch this space) allocation to support those regions and communities that have been disproportionately affected by the economic impacts of COVID-19, including those heavily reliant on industries such as:

  • Tourism
  • Agriculture
  • Education

The $1 billion will be provided through existing or newly established federal government programs. Details forthcoming.

Instant asset write-off increased substantially

As we touched on our last post, there’ll be enhanced measures to incentivise capital investment through a revamped and notably boosted instant asset write-ff (IAWO) scheme:

  • The current threshold of $30,000 has now been boosted to $150,000.
  • The turnover cap (which was $50 million a year) has also ballooned to include business’ turning over up to $500 million.

The increased IAWO threshold provides cash flow benefits for businesses that will be able to immediately deduct purchases of eligible assets.

Such assets must of course be central to your business operations to be eligible.

Backing Business Investment (BBI) incentives

Further to the IAOW expansion, there has also been announced a further depreciation benefit to small businesses.

If you purchase business related assets between 12 March 2020 and 30 June 2021, you may be eligible for further accelerated depreciation benefits.

Within this timeframe, 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 rules applying to the balance of the asset cost.

Credit assistance: Coronavirus SME Guarantee Scheme

If you require extra cash through unsecured loans, the government will incentivise the process.

The Coronavirus SME Guarantee Scheme has come about through the co-operation of the federal government, the Reserve Bank of Australia and the Australian Prudential Regulation Authority.

Under the scheme, the government will provide a guarantee of 50 percent to small and medium enterprise (SME) lenders for new unsecured loans to be used for working capital.

This will enhance these lenders’ willingness and ability to provide you credit, which will result in SMEs like yourself being able to access additional funding through the upcoming months.

Businesses with a turnover of up to $50 million will be eligible.

The Government has set the following terms:

  • The maximum total size of the loans per borrower will be $250,000.
  • The loans will be up to three years, with an initial six 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.

 

Creditor restrictions and liability relief

If you owe money to creditors and suppliers, there’ll be some reprieve from statutory demands.

The federal government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company. You’ll also receive more time to respond to such payment demands.

Furthermore, directors of companies will receive temporary relief from any personal liability for trading while insolvent.

Australian businesses affected by forced closure

Due to strict isolation measures designed to reduce the spread of COVID-19, the following businesses will face forced closure or restrictions on trade.

These businesses are closed to members of the public:

Pubs and registered clubs

Except to:

  • sell food or beverages for customers to consume off the premises
  • provide hotel or motel accommodation, as well as food or beverages to guests to consume in their rooms.

Food and drink premises

Except to:

  • sell food or beverages for customers to consume off the premises
  • provide food or beverages to guests to consume in their hotel or motel rooms.

Casinos

Except to:

  • provide food or beverages to guests to consume in their hotel or motel rooms.

Micro-breweries, small distilleries or cellar door premises

Except to:

  • sell food or beverages for customers to consume off the premises.

Places of public worship

Except to:

  • conduct wedding or funeral services.

Recreation facilities (indoor) 

Entertainment facilities 

Amusement centres

This is clearly a huge blow to many Australian businesses. As we already know, almost all businesses in Australia, even if not directly affected by closures or restrictions, will be in need of the above assistance.

For State and territory financial assistance packages click here.

Resources

For official up-to-date information and contacts:

  • Businesses impacted by COVID-19 can call 13 28 46 (business.gov)
  • ATO’s Emergency Support Infoline for businesses: 1800 806 218
  • The ATO COVID-19 page
  • The gov COVID-19 page
  • Australian Government: gov.au
  • Australian Treasury: gov.au

Suggested for you

7 step guide on how to start a business in Australia. Read more >

Starting an online business is easier than ever. Read more >

Understand the 4 business structures. Read more >

Take your business online with Reckon Ecommerce