On 12 March 2020 the Australian Government announced a package of measures to help the economy withstand and recover from the economic impact of coronavirus, with additional measures announced on 22 March 2020.
These measures focus on supporting small businesses through cash payments, wage subsidies for apprentices and trainees and a significant expansion of the instant asset write-off is key to keeping people in work and helping the Australian economy bounce back.
What is available to small businesses?
Instant asset write-off - time is ticking
The Government pledged to significantly extend the instant asset write-off for small and medium businesses and is a huge plus for businesses looking to purchases of more big-ticket items.
The Government 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) .1
There is a time limit - the extension will apply until June 30 2020, making now a good time for businesses to get the ball rolling and start putting the plans in place.
If your business has been affected by the Coronavirus pandemic, you may be able to benefit from the government’s support package - The Small Business Cash flow Boost. The Government is providing up to $100,000 to eligible small and medium sized businesses, and not-for-profits (including charities) that employ people, with a minimum total payment of $20,000 as a cash flow boost to support businesses impacted by COVID-19. This will be done through two sets of cash flow boosts delivered from 28 April 2020. Read more.
Relief for financially distressed businesses
To assist businesses who are facing significant challenges due to disrupted cash flow to meet existing obligations, the Government will establish the Coronavirus SME Guarantee Scheme. The scheme will support small and medium enterprises (SMEs) to get access to working capital to help them get them through the impact of the coronavirus. Under the Scheme, the Government will guarantee 50 per cent of new loans issued by eligible lenders to SMEs.
The Government’s support will enhance lenders’ willingness and ability to provide credit to SMEs with the Scheme able to support $40 billion of lending to SMEs.1
Support for apprentices
The Government has pledged $1.3 billion to keep 117,000 apprentices and trainees employed at small businesses. There will be a wage subsidy of 50% for apprentice’s or trainee’s wage in small businesses from 1 January to 30 September 2020. Where a small business cannot afford to hold on to an apprentice, the subsidy will be available to a new employer1.
This support will hopefully assist small business employers to do what is necessary, depending upon the impact of the virus on their operations, and keep the business open. Whether it’s to run at a skeleton staff level or if there is a need to close for a short time, staff could potentially return when things improve.
Don’t forget to talk with your tax adviser
To assist businesses experiencing financial difficulty as a result of COVID-19, the Australian Tax Office has been implementing a series of relief options4. It’s a good time to talk to your tax adviser on how it will impact your business affairs over the coming months as relief options will not be automatically applied.
During these unprecedented times, there can be a fair bit of stress and uncertainty and it's sensible to tap into every source of help and support that’s available. Plan for recovery now, not later
Your local Mortgage Choice broker can be an important link in the chain to help your business.
They can assist you in navigating through the lending and asset finance options suitable for your unique business needs - which will hopefully help get you back on track to recover and rebuild.