The Victorian Government has launched a $500 million Business Support Fund to help small businesses due to the impacts of COVID-19. Funding of $10,000 per business is available to eligible businesses.

Business Support Fund

Small businesses are eligible if they:

  • Have employees.
  • Have been subject to closure or are highly impacted by Victoria’s Non-Essential Activity Directions.
  • Have a turnover of more than $75,000.
  • Have payroll of less than $650,000.

For more information on the $10,000 grant, click here.

The Federal Government has also announced a few business stimulus packages with a total worth of $189bn in response to the Coronavirus (COVID-19). The following concessions are updates as of 30th March 2020.

For small businesses:

1. Increasing the instant asset write-off 

  • Eligible businesses will be able to immediately deduct purchases of eligible assets costing less than $150,000.
  • The asset threshold applies on a per asset basis, this allows immediate write-off of multiple assets. The benefit will also apply to both new and second-hand assets first used or installed ready for use from 12 March 2020 to 30 June 2020.
  • Eligibilty: Applies to businesses with aggregated turnover of less than $50 million.

2. Backing Business Investment incentive 

  • An accelerated depreciation deduction of 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.
  • There is no limit to the cost of a depreciating asset that can qualify for this concession, and is relevant for assets acquired between 12 March 2020 and 30 June 2020 with a cost of AUD 150,000 or more which are not eligible for the instant asset write off.
  • Eligibility: Applies to businesses with aggregated turnover below $500 million.
  • Eligible assets are new assets that can be depreciated under Division 40 of the ITAA97 (i.e. equipment) acquired after 12 March 2020 and first used or installed by 30 June 2021.
  • Note: This measure does not apply to second-hand Division 40 assets or buildings and capital works under Division 43.

3. Boosting Cashflow for employers 

  • A tax-free payment to eligible businesses that have employees of up to $100,000 ($50,000 for each of the current and next financial years) with a minimum payment of $20,000.
  • The payment will equal to 100 percent of the amount tax withheld, up to a maximum payment of $50,000 for each year ended 30 June 2020 and 30 June 2021.
  • Eligible businesses that are not required to withhold tax will receive a minimum payment of $20,000. To be eligible for this measure small businesses need to have employees and an aggregated annual turnover under $50 million.
  • Eligibility: Applies to businesses with aggregated turnover below $50 million.
  • The ATO will deliver the payment as a credit to the business activity system, beginning with business activity statements due on 28 April 2020:
  • Quarterly lodgers will be eligible to receive 100 per cent of the tax withheld on salary and wages for the quarters ending March 2020 and June 2020, subject to the maximum cap of $50,000.
  • Monthly lodgers will receive payment that is calculated at three times the rate (300 per cent) in the March 2020 activity statement, to align with quarterly lodgers.

4.  Supporting apprentices and trainees 

  • Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage paid during the nine months from 1 January 2020 to 30 September 2020( and this subsidy will be available to a new employer where the business is unable to retain an apprentice) up to a maximum of $21,000 per eligible apprentice or trainee (i.e. $7,000 per quarter).
  • Eligibility: Small businesses employing less than 20 full-time employees who retain an apprentice or trainee (with the apprentice or trainee being in training with a small business as at 1 March 2020).
  • Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network provider.

5. ATO administrative relief available

  • Deferring by up to six months the payment date of amounts due through the business activity statement (BAS, including PAYG instalments, income tax assessments, and FBT assessments.
  • Allowing businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to gain quicker access to net GST refunds to which they may be entitled.
  • Allowing businesses to vary PAYG instalment amounts to zero for the March 2020 quarter; businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters. No penalties or interest will be charged for variations to PAYG instalments for the 2019-20 year.
  • Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities.
  • Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low-interest payment plans.

6. 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.
  • The Government is temporarily increasing the current minimum threshold for creditors issuing a statutory demand on a company under the Corporations Act 2001 from $2,000 to $20,000. This will apply for six months.
  • 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 for six months.
  • 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.

 7.Wage subsidy: Jobkeeper Scheme

  • Businesses impacted by the COVID-19 will be able to access a subsidy from the Government to continue paying their employees. Affected employers will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020 to 27 September 2020.

Eligibility:

  • 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).
  • 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).
  • Business is not subject to the Major Bank Levy.
  • The employer must have been in an employment relationship with eligible employees as at 1 March 2020 and confirm that each eligible employee is currently engaged.
  • Not-for-profit entities and self-employed individuals (businesses without employees) that meet the turnover tests that apply for businesses are eligible to apply for JobKeeper Payments.

 8. Banks

  • The Australian Banking Association (ABA) advised that financial lenders will offer deferred loan repayments for small businesses affected by COVID-19 for six months.
  • Contact your bank or check their website to see if they offer loans under the Coronavirus SME Guarantee Scheme (available from April until 30 September 2020).

 9. Coronavirus SME Guarantee Scheme

  • Under the Scheme, the Government will provide a guarantee of 50 per cent to SME lenders for new unsecured loans to be used for working capital.
  • SMEs with a turnover of up to $50 million will be eligible to receive these loans. The Government will provide eligible lenders with a guarantee for loans with the following terms:
  1. Maximum total size of loans of $250,000 per borrower.
  2. The loans will be up to three years, with an initial six month repayment holiday.
  3. 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.
  • The Scheme will commence by early April 2020 and be available for new loans made by participating lenders until 30 September 2020.

For individuals:

1. Stimulus payments to households

  • The Government will provide a one-off $750 payment (with one payment per recipient).
  • The payment will be tax-exempt and will not count as income or Social Security, Farm Household Allowance and Veteran Payments.
  • Eligible recipients are those residing in Australia and be receiving a payment specified by the Government (such as the Age Pension, Carer Payment, Newstart Allowance, etc) or hold a concession card on 12 March 2020.
  • The one-off payment will be paid automatically from 31 March 2020 by Services Australia or Veterans’ Affairs.

2. Tax-free superannuation withdrawals

  • Affected individuals will be able to withdraw up to $20,000 from their superannuation funds. Withdrawals will be available from April of up to $10,000 in financial year ending 30 June 2020 and up to $10,000 in the financial year ending 30 June 2021.

We will continue to share updates as they are announced. To learn more about the stimulus package benefits, please contact Garber & Associates Pty Ltd at 0398320690 or email us at boris@garberassociates.com.au