25 Mar Government Stimulus Packages – Find Out What You May Be Eligible For
Here at Finestream Capital we are working tirelessly to provide financial assistance, and keep you updated. Our team will continue to provide great service, now more than ever.
It’s a rapidly changing environment but the new stimulus package and is intended to help small businesses stay afloat, and keep people employed, until the coronavirus-related economic downturn has passed. Last week, the major banks also revealed their disaster relief packages.
So far, the government claims it has allocated some $189 billion to economic stimulus, to stave off the economic downturn caused by the COVID-19 pandemic. This includes the two stimulus packages, a $90 billion debt facility from the Reserve Bank of Australia (RBA), and a $15 billion facility for non-bank lenders.
Here’s a roundup of everything on offer to small businesses so far.
The government’s first stimulus package, released on March 12, introduced grants of up to $25,000 for eligible small and medium businesses that have employees.
The latest stimulus package has increased the grants to up to $50,000. Businesses will now also receive the grants twice, meaning businesses could be eligible to receive up to $100,000.
- This booster will be available to businesses with an aggregated annual turnover of less than $50 million, and that have employees. It is also available to not-for-profits and charities.
- The size of the grant is based on tax withheld on employees’ wages, and calculated automatically from businesses’ business accounts statements.
- Previously, businesses would have been able to reclaim 50% of tax withheld. That has now been increased to 100%, to a maximum of $50,000 per payment.
- The minimum payment has also increased from $2,000 to $10,000 per payment.
- So, for example, if a business pays $2,000 in PAYG tax on employee wages, it will receive a grant of $10,000 twice, for a total of $20,000.
- If the business pays $50,000 or more in PAYG, it will receive the maximum grant of $50,000 for the current period, and again in October, for a total of $100,000.
The measure is intended to allow them to keep staff, and also continue to pay rent and bills. The first wave of payments are expected to start from April 28, and the second wave from June 21. Additional information can be found www.Business.gov.au
Instant asset write-off
As part of the first stimulus package, the government expanded the instant asset write-off scheme. This included increasing the threshold from $30,000 to $150,000, and including businesses with an aggregated annual turnover of less than $500 million (previously, this was limited to $50 million).
The expanded instant asset write-off scheme is valid now, until June 30, 2020, to be included in tax returns for the 2019-20 financial year.
The government is also accelerating depreciation deductions for new assets purchased, effective immediately. For the next 15 months, until June 30, 2021, businesses will be able to deduct 50% of the cost of an eligible asset on installation.
Existing depreciation rules will apply to the full cost of the asset. Businesses with annual turnover of less than $500 million will be eligible for this measure, intended to encourage businesses to invest.
SME guarantee scheme
Under a new SME coronavirus guarantee scheme, the government has pledged to guarantee 50% of new short-term, unsecured loans to small and medium businesses. The government will guarantee up to $40 billion in new lending, in a bid to further encourage new credit to SMEs.
In addition, for lenders providing credit to existing SME customers, the government is providing a temporary exemption from responsible lending obligations, meaning small business owners could access cash more quickly and efficiently.
Pause on small business loan repayments
There is also relief for small businesses already repaying loans. On Friday, the Australian Banking Association announced Aussie banks are pressing pause on repayments for small business loans.
This is expected to apply to more than $100 billion in existing loans, and could return up to $8 billion to Australian businesses.
The federal government has temporarily raised the threshold for creditors to issue a statutory demand on a company from $2,000 to $20,000, for six months.
It has also increased the time allowed for a company to respond to statutory demands from 21 days to six months. This also applies for six months.
For individuals, the threshold for initiating bankruptcy proceedings has increased from $5,000 to $20,000, and the time allowed for an individual to respond has increased from 21 days to six months. Again, this applies for six months.
The government is also offering temporary relief for directors from personal liability for trading while insolvent, for six months. It is also working on temporary changes to the Corporations Act 2001, allowing for more flexibility for businesses dealing with unforeseen events that may have arisen as a result of the COVID-19 outbreak.
The ATO has said it will offer tax relief to small businesses affected by the outbreak. Last week, commissioner of taxation Chris Jordan called on businesses to contact the ATO, in order to access a tailored support plan.
Options include deferrals of payments, income tax assessments, temporary reduction of payments, and withholding of enforcement actions such as director penalty notices and wind-ups.
Apprentices and trainees
The government has pledged to help small businesses retain apprentices and trainees, offering a wage subsidy of 50% of their wages for the nine months from January 1 to September 30, 2020.
Eligible businesses will be able to claim up to a maximum of $21,000 per apprentice, or $7,000 per quarter. This measure was announced in the first stimulus package, and has not been updated.
It is currently not clear which businesses will be eligible for this funding, but the government will be accepting applications for this funding from early-April.
Support for affected regions
The federal government has also set aside $1 billion to support businesses in regions that have been worst affected by the coronavirus crisis.
Funding will be available during the outbreak, and in the recovery period. However, it is unclear which businesses will be eligible for funding, or how they can apply for it. According to a government release, assistance for this measure will be available “as soon as practicable”.
Individual cash payments
Finally, the government has implemented a number of income support measures in a bid to get money into people’s pockets and encourage consumers to keep spending.
Notably, Treasurer Josh Frydenberg suggested these measures will apply to sole traders and casual workers who earn under a certain amount, fortnightly. However, it is currently unclear what the eligibility threshold is.
For six months from April 27, the government will expand eligibility for income support payments.
It is also issuing a new temporary coronavirus supplement to existing and new recipients of various jobseeker payments and other allowances. This will be paid at $550 per fortnight, for the next six months.
Recipients of social security, veteran support and income support, and various other concession card holders, will also receive a one-off cash payment of $750 each. Payments will start being made from March 31.
A second payment will also be made to these recipients, starting from July 13. However, the second payment will not be available to those eligible for the $550 coronavirus supplement.
Individuals affected by the coronavirus will be able to access up to $10,000 of their superannuation before the end of the financial year, and another $10,000 in the coming financial year.
Money withdrawn will not be taxed, and can be in addition to Centrelink or Veterans’ Affairs payments. Applications for early withdrawals are expected to open in mid-April.
Whilst the grants and relief packages have been announced, many don’t take effect until late April and as you may be aware, processing times are slower. Many of the assistance payments are automatic and based on your BAS lodgement. Therefore, your efforts are best focussed on finalising BAS with your book keeper/ Accountant in a timely manner.
As best we can we have provided direct resources. Whilst your accountant may be able to assist, we encourage you to apply, directly using the links provided or contacting us directly.
If you are experiencing financial hardship, rest assured you have options.