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As you’re probably aware, the Federal Government has released details of a stimulus package for small to medium-sized businesses in response to COVID-19 to help manage your cash flow and retain your employees. We know that these are challenging times for many business owners, with a lot of uncertainty and even more information to wade through. So let's take a look at the immediate benefits and key takeaways of this package for you as a business owner or employer.
- This assistance package is for small to medium-sized businesses and not-for-profits with an annual turnover of up to $50 million.
- The cash boost will be linked to your company’s wages bill through the taxes an employer withholds during the year. But to encourage retention, it will be cut or cancelled if you terminate staff
- The assistance will be paid through the current ATO system direct to your company’s bank account, once you’ve lodged your March BAS
- For businesses and not-for-profits to be eligible for the JobKeeper payment, you must have a turnover of less than $1 billion and your turnover will be reduced by more than 30 per cent relative to a comparable period a year ago. Or a turnover of $1 billion or more and your turnover will be reduced by more than 50 per cent relative to a comparable period a year ago. You must not subject to the Major Bank Levy
What are the key benefits of the stimulus package?
- JobKeeper payment
- Boosting cash flow for employers
- Temporary relief for financially distressed businesses
- Increasing the instant asset write-off
- Backing business investment
- Supporting apprentices and trainees
In a big push to help people keep their jobs, the Government will provide a subsidy to businesses significantly impacted by the Coronavirus outbreak. For employees, this means they can keep their job and earn an income – even if their hours have been cut. The Government will provide $1,500 per fortnight per employee for up to 6 months, helping you to re-start your business quickly without needing to rehire staff when things return to normal.
A boost to your cash flow
The Government is providing up to $100,000 to eligible small and medium-sized businesses and not-for-profits (NFPs). This includes a minimum payment of $20,000 to help pay wages or to invest in protection against a downturn. These payments will help businesses and NFPs with cash flow so you can keep operating, and pay your rent, electricity and other bills. And importantly, keep your staff.
Providing temporary relief for struggling businesses
The ATO will tailor solutions for businesses that are currently struggling due to the Coronavirus. This includes temporarily reducing payments or payment deferrals, and withholding enforcement actions, including Director Penalty Notices and wind-ups.
An increase to instant asset write-off
An instant asset write-off allows small businesses (with an annual turnover of less than $10 million) to claim immediate deductions (up to a limited amount) for new or second-hand plant and equipment asset purchases. Things like vehicles, tools and office equipment.
If this applies to you, the Government is also increasing your instant asset write-off threshold from $30,000 to $150,000. And they're expanding access to include businesses with an aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.
Backing business investment
If your business turnover is less than $500 million, you’ll be able to deduct 50 per cent of the cost of an eligible asset on installation - existing depreciation rules apply to the balance of the asset’s cost. This measure will not only support business investment but can potentially lower the taxes your business will need to pay as well.
A helping hand for apprentices and trainees
A lot of small and medium businesses have apprentices and or trainees. And this is a particularly worrying time for people in this position. The good news is that the government will support you to retain them. 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. You’ll be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
KPMG Australia suggests following these steps immediately:
- Keep your accounts and cash flow forecasts up to date
- Lodge your March 2020 BAS quickly
- Ensure that the ATO has your business bank account details to make payments easier
For more information, speak with your accountant or join us for our next webinar to hear more about these programs and subsidies – we’ll share the details soon.
Want to know more?
For more about the stimulus package for SMBs you can find details and a fact sheet on the Australian Government Treasury website.
You can register your interest In the JobKeeper payment at the Australian Taxation Office website.
There may also be additional support available for small businesses from your State Government. For the most up to date information for small business owners, these links might be useful:
If there’s anything we can help with, please reach out to the team at firstname.lastname@example.org. We wish you, your teams, and your families all the best in this current climate. Stay fit, healthy and positive. We’re all in this together.
The Wiise Team