Covid-19 Stimulus Packages for Business

On 12th March 2020, the Australian Government announced a package of measures in their first response to help the economy withstand and recover from the economic impact of coronavirus. A second economic package was announced on 22nd March 2020, which ramps up support for small business. Following are the main temporary measures announced for small to medium businesses.

An increase to the instant asset write-off

Eligible businesses (those that turnover under $50 million) will be able to immediately deduct purchases of eligible assets costing less than $150,000. This measure is on a per asset basis and applies to both new and second-hand assets first used or installed ready for use by 30 June 2020.

Business investment incentive

This measure will allow a 50% accelerated depreciation deduction for certain new depreciable assets acquired after 12 March 2020, and first used or installed by 30 June 2021. The is no cap on the purchase cost of an eligible asset. The measure does not apply to second-hand Division 40 assets, buildings and other capital works depreciable under Division 43.

A boost to Cash Flow for Employers

The temporary Boosting Cash Flow for Employers measure will provide a tax-free payment to eligible businesses (those that turnover under $50 million and employ) equal to the lessor of 50% of PAYG withheld on employees’ salary and wages, or $25,000. A minimum payment of $2,000 will be available.

The ATO will deliver this payment as a credit in the business activity statement system:

• Quarterly lodgers will be eligible to receive the payment for the quarters ending March 2020 and June 2020.
• Monthly lodgers will be eligible to receive the payment for the lodgment months of March 2020, April 2020, May 2020 and June 2020.

Note, the second stimulus package has increased the measure to 100% of the PAYG withheld, up to a maximum payment of $100,000. Eligible businesses will receive a minimum payment of $20,000.

Supporting apprentices and trainees

Eligible small business employers will be able to apply for a wage subsidy of 50% of the apprentice’s or trainee’s (in training as at 1 March 2020) wage for up to 9 months from 1 January to 30 September 2020, up to $21,000 per apprentice. Employers can register for the subsidy from early April 2020 with final claims for payment due by 31 December 2020.

Income support for sole traders

The Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight. This supplement will be paid to both existing and new recipients of the eligible payment categories. These changes will apply for the next six months.

Loan guarantees

As part of the second stimulus package, the government has announced a “coronavirus SME guarantee scheme”, which will be available to businesses with a turnover of less than $50m.
Under the proposal, the government will guarantee 50% of eligible unsecured loans, up to a maximum of $250,000, through participating banks and non-bank lenders to businesses disrupted by the coronavirus. Loans, which will be for working capital, will be repayment-free for six months, with a maximum loan term of three years.

Tax support

The Australian Tax Office (ATO) is providing relief for some tax obligations for businesses affected by the outbreak, on a case-by-case basis.

Legislation has been introduced into Parliament today to implement these measures and for them to take effect.