Federal support for businesses
The federal government first announced a stimulus plan to curb the economic impact of the coronavirus and keep “Australians in jobs and businesses in business” on 12 March 2020.
Termed the government’s first stimulus plan, the package is worth $17.6 billion and includes tax relief for small businesses and wage assistance to keep apprentices in work.
Specific to business are the following measures:
- Increases to the instant asset write-off from $30,000 to $150,000, and accelerating depreciation deductions.
- Payments of between $2,000 and $25,000 for small- to medium-sized businesses making less than $50 million in turnover.
- Assistance for small business employing trainees and apprentices by supporting 50 per cent of apprentice/trainee wages for nine months from 1 January 2020 to 30 September 2020.
A second $66 billion package from the government was announced on 22 March 2020 that amended the previously announced measure to include the following:
- A boost to cash flow of up to $100,000 to eligible small and medium-sized businesses, and not-for-profits (including charities) that employ people, with a minimum payment of $20,000, to keep them operating; pay rent, electricity and other bills; and retain staff. This measure is estimated to benefit around 690,000 businesses employing around 7.8 million people, and around 30,000 NFPs (including charities).
- Under the enhanced scheme, employers will receive a payment equal to 100 per cent of their salary and wages withheld (up from 50 per cent), with the maximum payment being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000.
- An increase to the instant asset write-off threshold from $30,000 to $150,000 and expanding access to include all businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.
- Temporary increase in the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive.
- The introduction of a time-limited, 15-month investment incentive to support business investment and economic growth over the short term, by accelerating depreciation deductions.
- Further support for 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 paid during the nine 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.
- $1 billion support for regions, communities and industries that have been disproportionately affected by the economic impacts of the coronavirus, including those heavily reliant on industries such as tourism, agriculture and education.
- Coronavirus SME Guarantee Scheme, under which the government will provide a guarantee of 50 per cent to SME lenders for new unsecured loans to be used for working capital.
State government support
State governments have also answered the challenge and drafted their own small-business relief packages.
To date, the states have done the following:
- New South Wales has waived payroll tax for businesses with payrolls of up to $10 million for three months, and a range of fees and charges for small businesses including bars, cafés, restaurants and tradies; brought forward the next round of payroll tax cuts by raising the threshold limit to $1 million in 2020–21; enacted changes to long service leave; set up a non-health-related COVID-19 contact centre, 13 77 88.
- Queensland has made $500 million available in loans to support workers in businesses affected by the coronavirus; offered payroll tax deferral for six months and grants of up to $7,500 (excl. GST) to support new equipment purchases.
- Victoria has pledged full payroll tax refunds for the 2019–20 financial year to small and medium-sized businesses with payroll below $3 million; has promised to pay to all outstanding supplier invoices within five business days, while offering rent relief for commercial tenants in government buildings; and has waived liquor licensing fees for 2020 for affected venues and small businesses.
- Western Australia has committed to a one-off grant of $17,000 to small businesses; it has invited applications to defer payment of 2019–20 payroll tax; and has brought forward the $1 million payroll tax threshold by six months to 1 July 2020.
- Tasmania has provided $20 million for the provision of interest-free loans to businesses in the hospitality, tourism, seafood and exports sectors that have a turnover of less than $5 million; waived payroll tax for the last four months of this financial year for hospitality, tourism and seafood industry businesses; reduced the normal terms of trade for payments by government agencies from 30 days to 14 days; and pledged one-off $5,000 grants for businesses that hire an apprentice or trainee.
- The ACT has implemented a 12-month waiver on food business registration and on-licence liquor licensing fees from 1 April 2020; a one-off. six-month payroll tax waiver for hospitality, creative arts and entertainment industries from April to September 2020; deferral of 2020–21 payroll tax for all ACT business with nationwide wages of up to $10 million.
- The NT has offered eligible businesses a grant of $10,000 for upgrades and a further $10,000 if they contribute $10,000 of their own funds; has extended the payroll tax exemption for hiring territory employees to 30 June 2021.
As the coronavirus crisis unfolds, the government is expected to release further measures, with reports surfacing on Thursday that tax breaks for landlords who grant rent relief are on the cards, with a potential announcement expected on Friday.