Coronavirus Support: Is your Business Eligible?

The Australian Government has announced various business subsidies and benefits in an effort to support businesses impacted by the novel coronavirus (COVID-19). We are breaking down this economic response to explain what this actually means for businesses.

Temporary Cash Flow:

Small and medium business entities with a combined annual turnover under $50 million, who employ workers will be eligible for the ‘Boosting Cash Flow Benefit’. This measure provides employers with a temporary cash flow to mitigate the expected economic turndown of business and retain staff by providing employers with up to $25,000.

The payment is delivered by the Australian Tax Office (ATO), will be tax free and is available from 28 April 2020 when businesses lodge their upcoming activity statements. Although the benefit will be applicable for a limited number of activity statement lodgements, the minimum payment of $2,000 will be applied to the business’ first lodgement. Businesses who withhold tax on employees’ salaries and wages will receive a payment equal to 50% of the amount withheld.

Increased Instant Write-Off Threshold:

From 12 March 2020 and until 30 June 2020, the instant asset write-off threshold has been increased from $30,000 to $150,000 for new or second-hand assets first used or installed within this time frame. Essentially, this means businesses will be able to write-off purchases of eligible assets that cost less than $150,000. This benefit applies on a per asset basis, so businesses can write-off multiple assets.

Backing Business Investment

This benefit aims to reduce business costs for those who have a combined turnover below $500 million, by deducting the costs of eligible business assets. The Backing Business Investment introduces a deduction of 50 per cent of the cost of an eligible asset on installation. Assets that can be depreciated under the Income Tax Assessment Act 1997 and have been acquired and first used or installed by 30 June 2021 will be eligible.

ATO Assistance:

For businesses struggling to meet tax and super guarantee obligations because of COVID-19, they may be eligible for:

  • Payment deferrals or variation of instalments due;
  • quicker access to GST refunds;
  • remittance of interest and penalties after 23 January 2020;
  • variation of pay as you go instalments to refund instalments made in the September 2019 and December 2019 quarters; and
  • low interest payment plans.

These measures are subject to the discretion of the ATO and introduction of legislation, which is expected in late March 2020.

Banking Assistance:

Small businesses are eligible for a deferral of loan repayments to banks for 6 months if they are affected by COVID-19. This announcement was accompanied by the possibility of waiving fees and charges, interest free periods or no interest rate increases and debt consolidation to small businesses in individual circumstances. The Australian Banking Association also promised to put in place a fast track approval process to ensure businesses receive support quickly.

Additional credit will be provided to businesses from early April 2020 which will include:

  • Loans of up to $250,000 per borrower
  • Loan terms off three years with no repayments in the initial six months
  • Unsecured loans meaning borrowers do not have to provide an asset as security
  • Interest will only be paid on the amount drawn down

Individual Support:

Individuals who are stood down or lose their employment due to the coronavirus are able to access Centrelink payments, which have been increased to $550 per fortnight in addition to other accessible payments. There are also two $750 payments available to social security, veteran, concession card holders and other income support recipients that will be issued from 31 March 2020 and from 13 July 2020.

Australians may also choose to defer their home loan payments, however, will still be accruing interest during this period. Beginning in early April 2020, individuals may also be eligible to access $10,000 from their superannuation accounts and a further $10,000 after 1 July 2020.

Other Related Benefits:

Businesses who employ apprentices or trainees may also be eligible for a 50 per cent wage subsidy of the apprentice or trainee’s wage paid from 1 January 2020 to 30 September 2020. This subsidy will be available up to a maximum of $21,000 per apprentice or trainee, for those businesses who employ fewer than 20 full-time employees. Employers must lodge their claim by 31 December 2020, with registrations opening early April 2020.

At this stage, $1 billion has also been set aside to support regions and communities most significantly affected by COVID-19, particularly being those reliant on the tourism, agriculture and education industries. This is expected to be available during the next few months.

For more information and updates on the information and business subsidies please click here.

If you need help accessing these benefits and want to talk to our experienced lawyers in Newcastle, Sydney or the Hunter, please do not hesitate to contact us. Call us on (02) 4929 7002, email us or complete an enquiry form.