During these unprecedented times, many businesses are feeling overwhelmed and shocked by the COVID-19 crisis. The Reserve Bank, Federal Government, State Governments and banks have deployed stimulus measures to help soften the impact the virus has on households, businesses and the wider economy. For business owners who are overwhelmed by the announcements made and what is available to you, we have summarised everything below.
Federal Government – 1st Stimulus Package
On March 12, the Federal Government announced a $17.6 billion stimulus package to support the economy in order to counteract the impact of the coronavirus. Support was mostly geared towards businesses, including investment incentives and handouts for small and medium-sized businesses and some cash payments to households. Key features for business owners from the 1st stimulus package include:
- Business investment instant asset write-off for expenditure until 30 June 2020. The government has expanded the existing scheme by lifting the threshold from $30k to $150k and expanding the coverage to firms with turnover of up to $500 million (previously was $50 million)
- Business investment accelerated depreciation is available as an incentive for the 15 months to 30 June 2021 for businesses with a turnover up to $500 million
- Boosting cash flows for small and medium sized businesses that employ staff for the period to 30 June 2020. The aim is to encourage firms to continue employing staff. The payment, up to $25k for business, is in effect a partial refund on tax withheld by the ATO on income tax paid by first for their employees. Businesses must have an aggregate annual turnover of under $50 million. Is measure was enhanced in the second stimulus package announced on March 22
- Boosting cash flows for small businesses via a wage subsidy for retaining apprentices and trainees
Federal Government – 2nd Stimulus Package
On March 22, the Federal Government announced further stimulus, adding $66 billion in new measures in an effort to help businesses survive the crisis. This is on top of the initial $17.6 billion package announced on 12 March. Support for small businesses has been ramped up. Prime Minister Morrison flagged more stimulus will be needed over the next 6 months, but these first 2 packages are focussed on those who are going to feel the first blows.
- Boosting cash flows for small and medium sized businesses that employ staff
- Up to $100k to eligible small and medium sized businesses and not for profits
- The minimum payment is $20k
- This measure was announced on 12 March but initially provided $25k with a minimum payment of $2k
- This second stimulus package is an enhancement of this measure – ie. Now giving up to $100k and including the not-for-profit sector
- Under the enhanced scheme, employers will receive a payment equal to 100% of their salary and wages withheld (up from 50%) with the maximum payment being raised from $25k to $50k. The minimum payment is also being raised from $2k to $10k.
- An additional payment is also being introduced in the July-October 2020 period. Eligible entities will receive an additional payment equal to the total of all of the “Boosting Cash Flow for Employers” payments they have received.
- This means that eligible entities will receive at least $20k up to a total of $100k under both payments
- This cash flow boost is a tax-free payment to employers and is automatically calculated by the ATO. No new forms are needed.
- Supporting apprentices and trainees
- Eligible employers can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage paid during the 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
- Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7k per quarter).
- Support will also be provided to the National Apprentice Employment Network, the peak national body representing Group Training Organisations, to co-ordinate re-employment of displaced workers.
- The subsidy will be available to small businesses employing fewer than 20 full-time employees who retain an apprentice or trainee. The apprentice or trainee must have been training with a small business as at 1 March 2020.
- Employers of any size and Group Training Organisations that re-engage an eligible out-of-trade apprentice or trainee will be eligible for the subsidy
- Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network (AASN) provider
- Employers can register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020
- New coronavirus small and medium-sized business (SME) guarantee scheme
- The Federal Government has established a $20 billion Coronavirus SME Guarantee Scheme
- The scheme will provide a 50% government guarantee on new loans issued by eligible lenders to SMEs.
- $40 billion of additional liquidity could be added if SMEs take up these loans
- It will be available to all businesses with a turnover of less than $50 million
- The Federal Government will guarantee 50% of an eligible loan through participating banks and non-bank lenders to businesses disrupted by the coronavirus
- Loans will be used to working capital purposes and be unsecured and it will be for loans granted within 6 months starting 1 April 2020
- Lenders will not be charged a fee for accessing the guarantee scheme
- Loans will be repayment free for 6 months
- The maximum that can be borrowed under the guarantee facility will be $250k on terms of up to three years
- These measures are on top of the $90 billion capacity term funding arrangement set up for certain lenders designed to reduce the cost of lending on March 20. On the same day, the Australian Office of Financial Management (AOFM) was provided with $15 billion to support lending by smaller lenders
If you are a business owner and need further information about accessing any of the above, speak to your financial advisor as soon as possible.