While economists predict a huge number of small businesses to suffer irreversibly throughout a COVID-19 lockdown, the government has released details of a series of stimulus packages, while banks have vowed to assist small business owners.
Second stimulus cash boost due with June activity statements
Businesses currently receiving the COVID-19 PAYG withholding credits are eligible for an additional cash flow boost after filing their June activity statements. Businesses with turnover below $50 million were handed credits based on tax they withheld for employee salaries, with varying amounts from $10,000 to $50,000 handed to eligible employers based on the number of staff they had in March. Businesses which received the initial cashflow boost are now eligible for additional support, worth as much as the initial payment, but split evenly across lodgements between June and September.
The cash flow boosts will be processed automatically upon business activity statement (BAS) lodgements, but how much is paid for each period will depend on whether a participant lodges monthly or quarterly.
Government allows businesses to claim ridesharing services as tax exemption
The federal government has deemed that employers using ridesharing services, such as Uber, will be eligible for fringe benefits tax (FBT) exemptions, after the ATO claimed otherwise last year. Previously, exemptions applied to taxi travel only, and did not include ridesharing.
The ATO said in July last year that even though ridesharing drivers pay GST, the service is not a ‘taxi’ for the purposes of the FBT exemption.
Queensland government announces grants for small businesses
Following lobbying from the Chamber of Commerce and Industry Queensland, the State Government also announced a second round of small business grants. Eligible small businesses will receive up to $10,000 from a $100 million fund. When the first round of small business grants was announced last month, they were snapped up in just four days.
“In travelling across the regions last week, I heard the message loud and clear that small businesses are hurting and need more support,” Ms Palaszczuk said.
Energy providers to be held accountable
Energy companies will be held to account for misconduct, with penalties handed down for anti-competitive behaviour or moves to manipulate electricity prices.
The so-called “big stick” legislation is hoped to provide some relief to families and small businesses doing it tough during the coronavirus pandemic.
In announcing the new measures, Treasurer Josh Frydenberg quoted the Australian Competition and Consumer Commission (ACCC), noting that, for too long, electricity companies have “played a major role in poor outcomes for consumers”.
“The ‘Big Stick’ legislation will ensure reductions in wholesale costs are passed on to customers, while penalties will apply for anti-competitive behaviour or moves to manipulate electricity prices,” Mr Frydenberg said.
ACCC issues rent relief ruling
The Australian Competition and Consumer Commission (ACCC) has ruled that small-business tenants may collectively bargain with landlords if they’ve been adversely affected by the COVID-19 pandemic in a bid to gain some form of relief from rental payments.
“Small businesses have been hit hard by COVID-19 and although restrictions are starting to be eased, the impacts of COVID-19 on individual businesses and the economy nationally will be felt for some time”, Mary Aldred, CEO of Franchising Council of Australia (FCA) said.
COVID-19 (coronavirus) and payroll tax
The NSW Government has announced payroll tax relief measures as part of its economic stimulus package to help businesses impacted by COVID-19. The 2020 Payroll Tax annual reconciliation will be available from Monday 22 June 2020.
The due date for lodgement and payment of the 2020 annual reconciliation has been extended to 30 October 2020. This extension is only available for the 2020 annual reconciliation. Employers must pay their eligible employees a minimum of $1500 per fortnight to receive the JobKeeper payments. The government will exempt from payroll tax any additional wages paid to employees to meet the requirements of the JobKeeper scheme. This means, where an employee is stood down, the full $1500 payment would be exempt from payroll tax. In the case of employees whose earned wage is less than the amount of the JobKeeper payment, the amount between the $1500 payment and the earned wage will be exempt from payroll tax.
Business Continuity Plan
The National COVID-19 Coordination Commission has created a planning tool that can help you develop a plan to keep your workers, customers and the community safe as you reopen or increase your business activities. In a bid to assist businesses emerging from lockdown, the templates are downloadable, come with step-by-step interactions, and can be tailored to your business.
Business Concierge Service
NSW Service and the NSW Government have launched the Business Concierge Service, which can help business owners with regulation requirements, help with permits, deal with councils and provide support and advice for all pandemic-related concerns. Call 13 77 88.
The Small Business Relief Fund
The Small Business Relief Fund aims to help small businesses adapt and innovate in order to emerge from this challenging period in a strong position. The grants will be offered as a one off payment of $10,000 (including GST) to 67 businesses across Australia that:
- are a for-profit business with an Australian Business Number (ABN)
- have between 2 and 50 employees
- have been in business since 1 March 2018
- have an annual revenue between $150,000 and $2 millionApplications close on June 1 and successful recipients will be announced on June 29.
JobKeeper and annual leave
While the JobKeeper provisions in the Fair Work Act enable employers to request employees receiving wage subsidies draw down on their annual leave, there are conditions.
Foremost, employers aren’t allowed to run down an employee’s leave balance below two weeks. Employers must seek agreement from workers about taking their annual leave, but there must not be an unreasonable refusal of any requests.
Banks to offer ‘Bridging Finance’
Australia’s major banks will fast-track “bridging finance” for small businesses struggling to pay their workers ahead of receiving JobKeeper payments under an agreement struck between the federal government, lenders and the tax office. Treasurer Josh Frydenberg announced that Australia’s four largest banks will establish “dedicated hotlines” for SMEs to apply for wage loans, following widespread criticism many businesses can’t front up the cash to keep workers on before wage subsidy payments start flowing in early-May.
Unpaid pandemic leave
Employees who are employed under one of the affected awards can access up to 2 weeks’ unpaid pandemic leave (or more by agreement with their employer) if they’re prevented from working by measures taken by government or medical authorities in response to the pandemic (for example, an enforceable government direction restricting non-essential businesses). The leave is available in full immediately to full-time, part-time and casual employees – they don’t have to accrue it. Employees don’t have to use all their paid leave before accessing unpaid pandemic leave. The leave needs to start before 30 June 2020, but can finish after that date. All eligible employees can take the 2 weeks’ leave. It is not pro-rated for employees who don’t work full-time.
Tax cuts for landlords that slash rent
The New South Wales government has announced $220 million in tax concessions for commercial landlords that cut rent for small business tenants. Treasurer Dominic Perrottet unveiled the funding this week, saying landlords will be offered concessions — as either rebates or waivers — on up to 25 per cent of their 2020 land tax liability for delivering rent relief to small businesses in the state. Landlords that have yet to pay their land tax bill in NSW this year will be offered a three-month deferral, provided they extend rent relief to their commercial tenants.
Income support for individuals
Over the next six months, 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 on top of their existing income support payment. This will be paid to both existing and new recipients of Jobseeker Payment, Youth Allowance, Parenting Payment, Austudy, ABSTUDY Living Allowance, and Special Benefit. The Government is also temporarily expanding access for the JobSeeker Payment by relaxing the partner income test.
$30 billion job-rescue plan
On Monday (March 30), Scott Morrison announced an unprecedented move, when he unveiled the job-rescue plan.The package will see the government pay wage subsidies of $1,500 every two weeks per employee, to help struggling businesses keep people in work. The payments will begin from May 1, and will be back0-dated to March 1, allowing salons to effectively re-employ staff while they wait out the pandemic.
Temporary relief for financially distressed businesses
There is a temporary increase to 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. This includes temporary relief for directors from any personal liability for trading while insolvent, and providing temporary flexibility in the Corporations Act 2001 to provide temporary and targeted relief from provisions of the Act.
The elements of the package are:
- A 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
- A temporary increase in the threshold for a creditor to initiate bankruptcy proceedings, an increase in the time period for debtors to respond to a bankruptcy notice, and extending the period of protection a debtor receives after making a declaration of intention to present a debtor’s petition
- Temporary relief for directors from any personal liability for trading while insolvent
- Providing temporary flexibility in the Corporations Act 2001 to provide targeted relief for companies from provisions of the Act to deal with unforeseen events that arise as a result of the coronavirus health crisis.
The Australian Taxation Office (ATO) will tailor solutions for owners or directors of businesses that are currently struggling due to the coronavirus, including temporary reduction of payments or deferrals, or withholding enforcement actions including Director Penalty Notices and wind-ups.
Backing Business Investment (BBI)
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. Businesses with a turnover of less than $500 million will be able to deduct 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.
Increased and accelerated income support
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.
SME Guarantee Scheme
This will provide businesses with funding to meet immediate cash flow needs, by further enhancing lenders’ willingness and ability to provide credit. Businesses with a turnover of up to $50 million will be eligible to receive these loans.
$66 billion stimulus package
An economic lifeline is being thrown to business owners, with the announcement of a second-stage stimulus package. Small businesses will receive cash payments of up to $100,000, with a minimum payment of $20,000 for eligible companies. The payments will be delivered by the ATO as a credit on activity statements in late April. The Government will also allow people to access up to $10,000 from their superannuation this financial year and in 2020-21.
The Australian Banking Association (ABA) has announced it would suspend principal and interest loan repayments for six months, for small business owners who have been negatively affected by COVID-19.
The Big Four (ANZ, Commonwealth Bank, Westpac and ANZ) have each outlined how they will be supporting those affected by Coronavirus and what are expected to be long-lasting effects.
“This is a multi-billion dollar shot in the arm for businesses that need it the most,” said Anna Bligh, CEO of ABA. “It will pour $8 billion back into small business’s pockets. Businesses are doing it tough, but rest assured, banks have got your back,” she said.
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