COVID-19 SUPPORT AVAILABLE – Businesses

Below you will find a summary of the support available during this unprecedented time of economic downturn and uncertainty.

 

Government’s Economic Response

The Australian Government has announced a second range of measures to address the significant economic impact of COVID-19.  This is no longer seen as a stimulus package but is now being referred to a safety net package.

Please be mindful that the legislation for the introduction of these measures will need to go before parliament.  It is expected this will occur in the coming days and are expected to be passed promptly.

The key areas addressed by the government are summarised below:

 

Business Cashflow Support

To clarify:

  • Applies to businesses employing staff / paying wages
  • Business must have been an active eligible employer established prior to 12 March 2020 (exemption for charities / not for profits)
  • NOT a direct cash payment but delivered via a credit on the business integrated client account upon lodgement of the relevant business activity statement
  • Must lodge activity statements in order to receive credit

Extended to Not-For-Profit entities (NFPs) and charities.

Amounts:

  • Increased – now minimum of $10,000 and maximum of $50,000 for the period 1 January to 30 June 2020.
  • Additional support of the above amounts provided again for the period 1 July 2020 to 30 September 2020
  • Therefore TOTAL minimum of $20,000 and maximum of $100,000.

To recap, this will be provided:

  • for businesses with an aggregate turnover of less than $50 million
  • as a tax-free amount
  • as a credit via the ATO integrated client account
  • if the business has existing tax debts it will provide a reduction of those debts first
  • otherwise any balance is expected to be refunded promptly

First round

  • based on 100% of the PAYG withheld amount up to a maximum of $50,000
  • upon lodgement of the relevant activity statements by the business
    • quarterly statements for Mar and Jun 2020
    • monthly statements from Mar to June 2020 – with the Mar monthly statements to be calculated at 300% of withholding to offer a catch up for the missed Jan and Feb months
  • Minimum credit of $10,000 will be applied to first above mentioned activity statement even if no PAYG withholding obligations

Second round

  • Business must continue to be active.
  • upon lodgement of the relevant activity statements by the business
    • quarterly statements for Jun and Sept 2020 – each activity statement eligible for an amount equal to 50% of total payments received under round 1 up to a maximum of $50,000
    • monthly statements from June to Sept 2020 – each activity statement eligible for an amount equal to 25% of total payments received under round 1 up to a maximum of $50,000
  • Minimum credit of $10,000 will be applied to first above mentioned activity statement even if no PAYG withholding obligations

For further information:

https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Cash_flow_assistance_for_businesses_0.pdf

 

Apprentice and Trainee Support

No change to details advised in previous newsletter.

 

Instant Asset Write Off / Accelerated Depreciation

No change to details advised in previous newsletter.

 

Temporary relief for financially distressed businesses

Designed to protect businesses that would have otherwise been viable.

  • Increase in threshold at which creditors can issue a statutory demand or commence bankruptcy proceedings
  • Increase in time to respond to statutory demands received.
  • Temporary relief for directors from any personal liability for trading while insolvent.
  • Temporary flexibility in the Corporations Act 2001 to provide targeted relief from provisions of the Act to deal with unforeseen events that arise as a result of the COVID-19 health crisis.
  • ATO will offer tailored solutions for owners or directors of business 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.

 

Loans

There are significant loan support measures on offer during this difficult time.  Please ensure you consider these carefully and be sure to assess:

  • The long-term viability of your business
  • The impact of deferrals on future repayments

Don’t hesitate to contact us to discuss the specifics of how these measures will impact your business.

 

Coronavirus SME Guarantee Scheme

Government to provide a guarantee of 50 per cent to SME lenders to support new short-term loans to small and medium sized businesses.

  • For businesses with an aggregate turnover of less than $50 million.
  • Maximum total size of loans of $250,000 per borrower
  • The loans will be up to three years, with an initial six-month repayment holiday
  • The loans will be in the form of unsecured finance, meaning that borrowers will NOT have to provide an asset as security for the loan.
  • Loans will be subject to lenders’ credit assessment processes with the expectation that lenders will look through the cycle to sensibly consider the uncertainty of the current economic conditions.

 

Exemption from Responsible Lending Obligations

Exemption is for six months, and applies to any credit for business purposes, including new credit, credit limit increases and credit variations and restructures.

This reform will help small businesses get access to credit quickly and efficiently.

For further information:

https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Supporting_the_flow_of_credit_1.pdf

 

Loan Payment Deferrals

Australian banks will defer loan repayments for small business affected by COVID-19 for six months.

Businesses need to apply to their bank to gain access to this concession.

 

QRIDA COVID-19 Business Support Loans

QRIDA will administer a loan scheme for businesses affected by COVID-19:

  • Will assist Queensland businesses to retain staff
  • Low interest loans up to $250k over 10 years
  • For carry on finance.
  • First year interest free
  • QRIDA currently taking expressions of interest in the lead up to rolling out these loans ASAP

For further information:

http://www.qrida.qld.gov.au/current-programs/covid-19-business-support

 

Relief for ATO Obligations

The ATO will offer relief for individuals and businesses regarding debts and lodgement obligations.

You will need to contact the ATO to seek relief.  Ensure you explain to the ATO specifically how COVID-19 is affecting yourself and/or your business.

Importantly, employers need to continue to meet their compulsory superannuation obligations. The ATO does not have the power to defer or vary any superannuation contribution dates and cannot waive the superannuation guarantee charge.

For further information:

https://www.ato.gov.au/Individuals/Dealing-with-disasters/In-detail/Specific-disasters/COVID-19/

 

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