As government measures change daily amid the COVID-19 pandemic, a second stimulus package was released. This update focuses on what this means for small business, as well as other questions small business owners may have. It is current as at 23 March 2020.
As part of the second stimulus package, sole traders have the following options:
1) Access to super if their income has stopped with up to $10,000 provided before 1 July 2020, and $10,000 next financial year. You can download the fact sheet by clicking this link. If you are eligible for this new ground of early release, you can apply directly to the ATO through the myGov website: www.my.gov.au. You will need to certify that you meet the above eligibility criteria.
2) Access to jobseeker payment through Services Australia (Centrelink). See link to the specific coronavirus page.
Here is what is currently available to small businesses (turnover of less than $50m)
- Stimulus & Wage Subsidy
- Apprenticeship assistance
- Instant Asset Write-off threshold $150,000
- Temporary relief from creditors & insolvency
- ATO Administrative relief
- NSW Payroll Tax reduction
Stimulus & Wage Subsidy:
The Government is providing up to $100,000 to eligible small and medium-sized businesses, and not for-profits (NFPs) that employ people, with a minimum payment of $20,000. These payments will help businesses and NFPs with their cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff. The payment is a tax-free payment, and is worth 100% of the tax that small and medium-sized businesses withhold from their employees’ salary and wages up to a maximum amount of $100,000. The amount will be paid automatically by the Australian Taxation Office based on the business’s monthly or quarterly business activity statements. This means it will be directly linked to keeping someone employed as the tax is calculated and withheld based on a worker’s wage. You can download the fact sheet & timetable by clicking this link.
Where to apply: Business & Instalment Activity Statements
The government has also announced a new “coronavirus SME guarantee scheme”, which will provide a guarantee of 50 per cent to small and medium enterprise (SME) lenders for new unsecured loans to be used for working capital. The loans will be made through participating banks and non-bank lenders to businesses disrupted by the coronavirus. Loans will be used for working capital purposes and be unsecured and it will be for loans granted within six months starting 1 April 2020. Lenders will not be charged a fee for accessing the guarantee scheme. Loans will be repayment-free for six months. The maximum that can be borrowed under the guarantee facility will be $250,000 on terms up to three years. For more information on this, click on this link.
Where to apply: Banks & lending institutions
The Government is supporting small business to retain their apprentices and trainees. Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for 9 months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter). You can download the fact sheet by clicking this link.
Where to apply: Employers can register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020. For further information on how to apply for the subsidy, including information on eligibility, contact an Australian Apprenticeship Support Network (AASN)provider.
Instant Asset Write-off:
The instant asset write off has increased from $30,000 to $150,000 until 30 June 2020, to encourage businesses to purchase assets during this period. This applies to new and second hand assets. For more information, click on this link.
Where to apply: 2020 Tax Return Form
Temporary relief from creditors & insolvency:
There will be temporary relief from creditors issuing statutory demands by increasing the threshold where one can be issued. There is also some measures regarding bankruptcy and directors liability for insolvent trading. More information on this is found on this link.
ATO Administrative Relief:
As part of the government’s coronavirus response package, it has provided for the ATO to give administrative relief for some tax obligations for people affected by the coronavirus outbreak, on a case-by-case basis (see more here). Business operatives affected by the coronavirus should contact the ATO to discuss relief options. Options include:
- deferring by up to four months the payment date of amounts due through BAS (including PAYG instalments), income tax and FBT assessments and excise
- allowing businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get quicker access to GST refunds they may be entitled to
- allowing businesses to vary PAYG instalment amounts to zero for the April 2020 quarter; businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters
- remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities, and
- working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low-interest payment plans.
Employers will still need to meet their ongoing Superannuation Guarantee obligations for their employees.
Fairwork & Employee queries regarding coronavirus
There have been a number of queries regarding employee payments. Fair Work has released some information specifically to the impact of coronavirus to employees. Please see this link for examples and further information on this.
NSW Payroll Tax
Payroll tax employers whose total grouped Australian wages for the 2019/20 financial year are no more than $10 million will have their annual tax liability reduced by 25% when they lodge their annual reconciliation, which is due on 28 July. For those employers who lodge and pay monthly and whose total Australian wages will be no more than $10 million for the current financial year, no payment for the months of March, April or May 2020 will be required.
The ATO will also continue to work with the tax profession, other government agencies and local organisations to make sure other impacted communities are also supported. Outside of business, the ATO will also work with individuals experiencing financial hardship, and their tax agents, and will apply appropriate tax relief measures for serious and exceptional circumstances, such as where people cannot pay for food or accommodation. Unlike the ATO bushfire relief measures, which applied automatically to particular geographic areas, assistance measures for those impacted by COVID-19 will not be automatically implemented.
Anyone affected by COVID-19 should contact the ATO to request assistance on its emergency support number 1800 806 218.