With the coronavirus (COVID-19) outbreak across the world, Australia are implementing restrictions which are having a heavy impact on our local businesses.
The World Health Organization has announced that COVID-19 is a pandemic. In response to this the Australian Government has just unveiled their economic response to the Coronavirus.
We are here to support local businesses and provide you with up to date information about coronavirus business relief assistance being provided to businesses, this page will be updated as changes are made to existing information and new information becomes available.
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Federal Support Measures
The Australian Government announced their economic response to the coronavirus with two areas directly impacting businesses.
This package is designed to support business and assist businesses with short term cash flow challenges.
Cash Flow Assistance for Business
Boosting Cash Flow for employers
This measure will provide up to $100,000 back to businesses and not for profits that employ staff, with a minimum payment of $20,000 to eligible businesses.
- Eligible to business and not for profits with an aggregated annual turnover <$50 million
- Must employ workers
- Payment will be equal to 100% of the amount withheld from employee’s salary and wages, up to a maximum payment of $50,000
- Eligible businesses that pay salary and wages will receive a minimum payment of $10,000 even if they are not required to withhold tax
- An additional payment is being introduced in the July-Oct 2020 period, where eligible entities will receive an additional payment equal to the total of the previous payments they have received. This means eligible entities will receive at least $20,000 up to a total of $100,000 for both payments.
- The payment will be tax free
Businesses will not need to apply for this credit, it will be automatically applied upon lodgement of activity statement from 28th April 2020. If this measure places your account in credit with the ATO the refund will be received within 14days.
Supporting apprentices and trainees
Eligible employers can apply for a wage subsidy of 50% of the apprentice or trainees wage for 9 months from 1 January 2020 to 30 September 2020. Where a business is not able to retain an apprentice, the subsidy will be available to a new employer.
- Eligible to businesses employing fewer than 20 full-time employees who retain an apprentice or trainee
- The apprentice or trainee must have been in training with a small business as at 1 Mar 2020
- Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network (AASN) provider
- Employers can register for the subsidy from early April 2020, and final claims for payment must be lodged by 31 Dec 2020
Delivering Support for business investment
Increasing the instant asset write-off
The Government is increasing the instant asset write-off threshold from $30,000 to $150,000 and expanding access to include businesses with aggregated annual turnover of less than $500 million (previously $50 million) until 30 June 2020.
- This applies from 12th March 2020 – 30 June 2020
- Includes new and second assets first used or installed during this period.
- The threshold in on per asset basis, meaning businesses can write off multiple assets at a time.
Keep in mind that that the increase to the instant asset write off does mean that you will receive a tax refund, your taxable position as at 30 Jun 2020 will be reduced due to the expense being 100% recognised this financial year.
Backing business investment
The Government is introducing a time limited 15-month investment incentive to support business investment and economic growth over the short term, by accelerating depreciation deductions.
- Eligible Businesses with a turnover of less than $500 million
- 50% deduction of the cost of an eligible asset on installation with existing depreciation rules applying to the balance of the asset’s cost.
- Eligible assets are new assets that can be depreciated under Division 40 of the Income Tax Assessment Act 1997, acquired after the announcement (12 March 2020) and first used or installed by 30 Jun 2020.
- Does not apply to second hand Division 40 assets, or buildings and other capital works depreciable under Division 43.
We recommend that you speak with your accountant prior to purchasing assets that may be deductible under this measure.
For more information visit: https://treasury.gov.au/coronavirus
Temporary Relief for Financially Distressed Businesses
- Temporary increase to the threshold at which creditors can issue a statutory demand on a company and initiate bankrupt proceedings on and individual, and an increase to the time companies and individuals must respond to statutory demands that have been received.
- Threshold increases from $2,000 to $20,000
- Timeframe increases from 21 days to 6 months.
- Temporary relieve for directions from any personal liability for trading while insolvent
- Temporary flexibility in the Corporations Act 2001 and to provide targeted relief from provisions of the act to deal with unforeseen events that arise because of the Coronavirus health crisis
- Tailored solutions for owners and directors of business currently struggling, including temporary reduction of payments or deferrals, or withholding enforcement action including DPNs and windups.
ATO Support Measures
The ATO are offering support to those that have been affected by coronavirus (COVID-19).
- 6-month Payment date deferrals for business activity statement, income tax assessments, fringe benefits tax assessments and excise
- Option to report activity statements monthly instead if quarterly to access GST refund quicker.
- Option to adjust PAYG to nil for the March 2020 quarter and claim a refund for any instalments made for the September 2019 and December 2019 quarters
- Remission of interest and penalties, incurred after 23 January 2020, that have been applied to tax liabilities
- Low interest payment plans.
Employers will still be required to meet super guarantee obligations.
For more information visit: ATO
Coronavirus and Australian Workplace Laws
Bank and Financial Institutions
Here is a comprehensive list of links to your banks financial hardship teams, from the Australian Banking Association
Businesses impacted by the coronavirus 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
- Payments will be backed dated to 30 March 2020, for a maximum period of 6 months.
- Eligible business that have less than 1 billion turnover and business has reduced by 30%
- Eligible business that have over 1 billion turnover and business has reduced by 50%
- Not subject to major bank levy.
- Employees must be employed as of March 1 and still engaged with employer
- Not for profits and Sole trader individuals that meet income turnover tests are eligible to apply
- Eligible employees are full-time, part-time, or long-term casuals (which have been employed regularly for longer than 12 months as at 1 March 2020)
- Employers will be required to pay eligible employees $1,500 per fortnight, employers may top up wages.
- Employers are not required to pay superannuation on top of subsidy.
Employers will need to register their interest with the ATO, payments will begin the first week of May 2020.