Like a bear hunkering down for a season-long snooze, businesses are being urged to retreat and sit out the storm ahead. When the pandemic is over and we emerge from the crisis, the COVID-19 hibernation plan will hopefully have safeguarded jobs, livelihoods and businesses.
The Australian Small Business and Family Enterprise Ombudsman Kate Carnell welcomed the hibernation concept, saying: “the only way for small business to survive the coming months is if they can effectively hit pause for the time being.”
When announcing the business hibernation plan, Prime Minister Scott Morrison said: “Australia can ensure we can bounce back better on the other side and more strongly by following these sorts of strategies that enable businesses to re-emerge very, very quickly with their employees, with their capital, with their equipment, with their shop.”
The plan isn’t complete yet, and there’s a lot more to be considered, but here’s what’s on the table so far.
If your business has been significantly impacted by the coronavirus you can claim a wages subsidy to continue paying your employees. It’s a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum of six months. Find out more here.
Boosting cash flow for employers
The government is providing up to $100,000 to eligible small and medium-sized businesses, and not for profits that employ people, with a minimum payment of $20,000. These payments will help businesses with their cash flow so they can continue operating, paying their rent, electricity and other bills and retain employees.
This will be done through two sets of cash flow boosts delivered from 28 April 2020, to be delivered through credits in the activity statement system.
About 690,000 businesses employing around 7.8 million people, and roughly 30,000 not for profits, including charities will benefit. Read the Australian Governments fact sheet on the payments here.
Increasing the instant asset write-off
The Federal Government has increased the instant asset write-off threshold from $30,000 to $150,000 and expanded access to include businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.
More than 3.5 million businesses (over 99% of businesses) employing more than 9.7 million employees will benefit. Read this fact sheet for more information.
Backing business investment
A time-limited 15-month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term by accelerating depreciation deductions has also been introduced. Businesses with a turnover of less than $500 million will be able to deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.
More than 3.5 million businesses (over 99% of businesses) employing more than 9.7 million employees will benefit. This measure is estimated to lower taxes paid by Australian businesses by $6.7 billion over the next two years. Find out more here.