As restrictions begin to ease, businesses across Australia will need access to COVID-19 financial support measures to battle the economic downturn and bring themselves back into a profitable position.
This article outlines some of the economic measures available to businesses, including COVID-19 financial assistance announced by the Federal and Queensland State Governments.
Note for Individuals
This article outlines economic measures available to businesses. For individuals, please see our article “Available financial measures for individuals affected by COVID-19/Coronavirus economic downturn” available from our COVID-19 Resource Centre.
Federal Government Economic Measures & Incentives
The JobKeeper payment assists employers and employees by providing a wage supplement of a fixed $1,500 per employee per fortnight. JobKeeper is also available to sole traders and self-employed, who may nominate up to one principal to receive JobKeeper.
The JobKeeper payment is available to businesses (including not-for-profit entities and sole traders) that:
- carried on a business in Australia as at 1 March 2020; and
- have experienced a fall in turnover of:
- 30% for entities with an aggregated turnover of $1 billion or less;
- 50% for entities with an aggregated turnover of more than $1 billion; or
- 15% for ACNC-registered charities other than universities and schools.
For more information on the eligibility requirements (including turnover test rules), the pre-requisites for payment to employees and other important information about accessing JobKeeper, refer to the ATO website JobKeeper webpage.
Wage Subsidy for Apprentices & Trainees
If you are a small business (with fewer than 20 employees) who employs one or more apprentices or trainees, you can apply for a wage subsidy of 50 per cent of the apprentice or trainee’s wages (up to a maximum of $7,000 per quarter) for the nine months from 1 January 2020 to 30 September 2020. The apprentice or trainee must have been in an Australian Apprenticeship with a small business as of 1 March 2020.
More information on this measure can be obtained from the Department of Education Skills and Employment website, the Australian Apprenticeship website, or via the relevant Australian Apprenticeship Support Network provider.
SME Loan Guarantee
Under the Coronavirus SME Guarantee Scheme, the Federal Government will be providing a guarantee of 50% on SME business loans to businesses with a turnover of up to $50 million.
The loans will be:
- up to $250,000 credit;
- up to 3 years with no repayments for the first 6 months; and
The Scheme runs from April 2020 to 30 September 2020. A list of the participating lenders can be found on the Treasury’s dedicated webpage.
Cashflow Boosts to Employers
If you are a business that:
- held an ABN on 12 March 2020 and continues to operate;
- has an aggregated turnover of less than $50million (based on prior year turnover);
- made eligible payments the subject of withholding tax (wages, director fees, eligible retirement or termination payments, compensation payments, voluntary withholding from payments to contractors); and
- derived business income in the FY2018-2019 and lodged its 2019 tax return before 12 March 2020; or
- made GST taxable, GST-free or input taxed sales in the FY2018-2019 and lodged the relevant activity statement on or before 12 March 2020,
you should see cashflow boosts (in the form of tax-free credit) applied to your next business activity statement (BAS).
The Federal Government cashflow boosts will be applied to BAS lodged on or after 28 April 2020 as a credit generally based on the PAYG withholding reported by the business. The initial credit will be the higher of $10,000 or to the PAYG withholding up to a maximum of $50,000. Businesses will be eligible for further cashflow boosts when their PAYG withholding exceeds $10,000 over the relevant periods.
If your business does not need to lodge a BAS but would otherwise qualify, we recommend that you enquire with your accountant as the ATO is making alternative measures in these cases.
The credits are a grant and do not need to be repaid if your cashflow improves.
More information on the cashflow boosts is available on the ATO dedicated website.
Instant Asset Write-Off
For the period between 12 March 2020 until 30 June 2020, the instant asset write-off limit has been increased to $150,000 (up from $30,000) and is available to businesses with an aggregated turnover of less than $500 million (up from $50 million).
There is a wide range of expenses that may be written off as an instant asset write-off. We recommend that you speak to your accountant as soon as possible and before 30 June 2020. From 1 July 2020, the instant asset write-off will only be available for small businesses with a turnover of less than $10 million and the maximum write off will be $1,000.
Businesses with an aggregated turnover of less than $500 million are also eligible for accelerated depreciation on depreciable assets purchased between March 2020 and 30 June 2021. The business will be entitled to claim an initial deduction of 50% of the cost of the asset, with the existing depreciation rules applying to the balance of the asset cost.
Other ATO COVID-19 Financial Measures
In addition to the above measures, the ATO has also published the following relief measures:
- Consideration of remitting interest and penalties incurred after 23 January 2020 due to COVID-19 financial difficulties in payment.
- Consideration of low-interest payment plans for existing and ongoing tax liabilities.
- Payment deferrals of tax obligations such as income tax, Fringe benefits tax (FBT) and excise payment with due dates up to 12 September.
- Stopping interest accrual on tax liabilities and low-interest payment arrangements.
- No penalties or interest charged for varying PAYG instalments. In some instances, businesses may be able to claim a refund for any instalments made during the 2019-2020 financial year.
- Superannuation obligations will not be deferred or waived.
We recommend you speak to your accountant with respect to all tax measures and subsidies. You may also visit the ATO’s website.
Queensland State Government
Coronavirus Land Tax Relief
If you operate a leasehold enterprise you may be eligible for one or more of the following land tax relief measures:
- a land tax rebate reducing land tax liabilities by 25% for eligible properties for the 2019-20 assessment year;
- a waiver of the 2% land tax foreign surcharge for foreign entities for the 2019-20 assessment year; and
- a 3-month deferral of land tax liabilities for the 2020-21 assessment year.
Businesses will not need to apply for the foreign surcharge waiver or the 3-month deferral. The Office of State Revenue will reassess land tax accounts and provide a refund where applicable. However, you will need to apply for the land tax rebate.
Eligibility for the land tax rebate may be granted if you meet the following criteria:
- You are a landowner who leases all or part of a property to one or more tenants and all the following apply:
- The ability of one or more tenants to pay their normal rent is affected by the coronavirus (COVID-19) pandemic.
- You will provide rent relief to the affected tenant(s) of an amount at least commensurate with the land tax rebate.
- You will comply with the leasing principles even if the relevant lease is not regulated.
- You are a landowner, and all the following apply:
- All or part of your property is available for lease.
- Your ability to secure tenants has been affected by the COVID-19 pandemic.
- You require relief to meet your financial obligations.
- You will comply with the leasing principles even if the relevant lease is not regulated.
The Qld Government requires you to apply the rebate firstly to provide rent relief to your residential or commercial tenants and then to your own financial obligations (e.g. property mortgage and bills).
The land tax rebate is determined in respect of each property individually. Where there are multiple tenancies in a single property, including mixed-use developments, the eligibility requirements must be met for at least one tenancy.
More information on the land tax rebate can be found at the Qld Government dedicated Coronavirus land tax relief webpage.
Grants & Financial Support Measures
Unfortunately, the Small Business Adaptation Grant and Jobs Support Loan Scheme have both been exhausted, and applications for these financial measures are now closed. However, the Queensland Government has several grants and COVID-19 financial support measures available from time to time to eligible business and industries, and these can be found at the dedicated Qld Government grants website
Tax Relief for Pubs & Clubs
The Attorney-General and Minister for Justice announced $50 million extra tax relief for Queensland pubs and clubs affected by the COVID-19 restrictions.
More information on these measures can be found at the dedicated Qld Government webpage for hospitality tourism and sport
Other COVID-19 Financial Measures
Mortgage & SME Loan Payment Pause
The Australian Bankers Association (ABA) announced some time ago a relief package which will provide a payments pause on SME loan repayments for six months.
The ABA announced that to be eligible for the payment pause relief package your business must have less than $10 million total debt to all credit providers and the subject facility will need to be current, and not in arrears, as of 1 January 2020. However, some banks are applying these criteria more flexibly so even if you don’t immediately qualify, still contact your bank to see what they can offer.
Note that while you won’t need to make any repayment during the payment pause, interest will still accrue and your repayments may be increased from the date you recommence payment or the facility period extended (subject to the bank’s policy).
During the COVID-19 period, banks have also agreed not to enforce any business loans for non-financial breaches of the loan contract.
A list of the ABA member banks and credit institutions, as well as more information on the ABA relief package, can be found at the ABA dedicated COVID-19 page.
Commercial Tenancies Relief
If you are a business leasing premises, you may be entitled to rent relief by application of the principles in the National Cabinet’s Commercial Tenancy Code of Conduct.
The Code applies to commercial tenants who:
- have a turnover of less than $50 million; and
- have suffered a 30% or greater loss in revenue.
The Code lists some principles to be applied during the COVID-19 period, which include a moratorium on evictions, and a reduction in rent proportionate to the decrease in turnover in the form of a combined waiver and deferral of rent. The waiver component must comprise at least 50% of the total rent reduction.
To find out more on your rights as a commercial tenant under the Code, refer to our in-depth analysis article, “Commercial Leasing Principles for SME During COVID-19 – Analysis” available from our COVID-19 resource centre.
Many industry bodies have adopted measures to alleviate the strain on businesses such as extending reporting deadlines, discounted fees and flexibility on other obligations. We recommend that you consult with your industry association or authority to see what financial assistance is available to your business.
Get In Touch!
In these uncertain times, businesses of all sizes will face serious questions on the road to economic recovery. Please remember to seek legal and financial advice when making important decisions for your business.
Don’t forget to consider the opportunity available during this down-time to implement those changes and improvements you’ve been putting off, like obtaining advice on business structuring, templates, policies and procedures to recommence trading from a stronger position.
Contact Nadia Sabaini today to discuss your situation and options.
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