Small businesses have been hit hard by mandatory closures and safety measures required to slow the spread of the coronavirus, but businesses have a growing number of resources and relief programs to turn to, including emergency funding from the government.
If you need cash flow to offset lost revenue, we’ve compiled a comprehensive list for your business including payments for business, wage subsidies for apprentices and trainees, supporting the cashflow or credit and expanded income support.
Tax-free cashflow boost for employers
Small to medium businesses and not for-profits (NFPs) with aggregated annual turnover under $50 million that pay salary and wages will automatically receive a minimum payment of $10,000, or payment equalling 100% of the amount withheld in tax on employee salary and wages, up to maximum of $50,000. An additional payment equal to the total of all the previous payments will be made in the July – October 2020 period, meaning eligible entities will receive at least $20,000 up to a total of $100,000. Payments will be delivered by the Australian Taxation Office (ATO) upon lodgement of business activity statements.
Sole traders and small businesses are reeling as a result of coronavirus have been offered some relief in the government’s latest $66 billion stimulus package.
Prime Minister Scott Morrison announced on Sunday job seekers Newstart allowance would be doubled and made available to casuals and sole traders with both the assets test and waiting period waived.
Sole traders would also be able to access $10,000 of their superannuation this financial year and another $10,000 next financial year tax free if their turnover decreased by a minimum of 20 per cent. Small businesses that employ people will be provided with up to $100,000 with a minimum payment of $20,000.
The government has also created a coronavirus SME Guarantee Scheme to help businesses gain access to the working capital they need and will guarantee 50 per cent of new loans issued by approved lenders.
Sole traders and small business owners who met the requirements could access Newstart without having to seek a job, get payments from the government and continue to run a business.
Sole traders and independent contractors can still pick up contracts and gigs without jeopardising these payments as long as they, or their partners, are not bringing in over $1000 a fortnight.
Boosted instant asset write-off
Businesses with a turnover of less than $500 million are eligible for an expanded instant asset write-off for asset investments of up to $150,000. The threshold applies on per asset basis, so businesses can immediately write-off multiple assets.
Supporting the flow of credit
The Government will provide a guarantee of 50% to SME lenders to support new short-term unsecured loans, providing businesses with funding to meet cash flow needs. Temporary exemption from responsible lending obligations for lenders providing credit to existing small business customers is also in place to help small businesses get access to credit quickly and efficiently.
Apprentice wage subsidy
Small businesses with fewer than 20 full-time workers will receive 50% of an apprentice or trainee’s wage. For each apprentice or trainee, the Government will provide up to $7,000 in wage assistance per quarter up to a maximum of $21,000. The wage subsidy will be open to businesses with fewer than 20 full-time workers and employers of any size that re-employ someone who loses their position as a result of the coronavirus downturn.
Temporary relief for financially distressed businesses
The Government is lessening the threat of actions that could unnecessarily push otherwise profitable and viable businesses into insolvency to help ensure businesses can resume normal operations when the crisis has passed. This includes temporarily:
- increasing the threshold at which creditors can issue a statutory demand and the time companies have to respond
- relieving directors from personal liability for trading while insolvent providing flexibility in the Corporations Act 2001 to deal with unforeseen events that arise as a result of the Coronavirus health crisis.
Help from the ATO
The ATO will tailor solutions for owners or directors of business that are currently struggling due to the Coronavirus, including deferring payments, varying pay as you go instalment amounts and refunding past instalments, withholding enforcement actions including Director Penalty Notices and wind-ups.
People unable to attend work because of coronavirus or whose income has been impacted by the economic downturn may be eligible for income support payments. The Government has temporarily expanded eligibility, establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight and making it quicker to access by waiving the usual waiting period.
Temporary early release of superannuation
The Government is allowing individuals affected by the Coronavirus to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21. Individuals will not need to pay tax on amounts released and the money they withdraw will not affect income support payments.
For further information to guide you through these unprecedented times visit treasury.gov.au.