20 Mar CoronaVirus Business Stimulus
The Prime Minister has now announced a third stimulus package within 17 days of each other and Prime Minister Morrison has reinforced that if more is required, there will be more. We’ll be keeping this page continually updated with the latest news, as it comes to light. Below is a summary of what these announcements mean for SMEs.
Third Stimulus Package (JobKeeper)
Third Stimulus Package:
- Job Keeper Payment
A pre-tax $1,500 per fortnight, per employee (including Part-Time and Casuals*) payment (in the form of a Wage Subsidy per employee for 6 months) and begins from the 30th of March. If an employer has retrenched an employee on or after the 1st of March they’re able to re-employ them and still be eligible for this scheme.
In order to be eligible, a business (sole trader and non for profits) with turnover of less than $1 billion must have lost at least 30% of their revenues as a result of the downturn. For companies of turnover of over $1 billion (like Airlines), their turnover must have fallen by at least 50%. Payments to the employer will begin to flow by the first week of May, so Cashflow will be important in these initial months.
*Casual Employees must have worked for your organisation for a period of greater than 12 months.
Download the Fact Sheet here: Fact Sheet for Job Keeper Package
To register for the scheme: Visit your ATO portal and register your interest or for updates register here: https://www.ato.gov.au/general/gen/JobKeeper-payment/?=redirected_JobKeeper
Second Stimulus Package ($50K PAYG Offset, Unsecured Loans and more..)
Second Stimulus Package:
- Relief for Insolvent Businesses and the associated Directors
The insolvency threshold will be moved from $2,000 to $20,000 and has removed personal liability for directors if a company trades while insolvent.
- $100,000 for SMEs – Download our Calculator above!
A tax free cash payment of up to $100,000 will be available to businesses with turnovers below $50 million and for not-for-profit charities. This payment will be equal to 100% of the tax it withhold from its workers’ wages. Eligible business will be able to get a minimum of $20,000 even if they are not required to withhold tax.
- Government Guarantee’s Unsecured Loans for Small Business
The Federal Government will guarantee 50% through the participating bank of an eligible loan to a small-to-medium business. Loans will be used for working capital and be unsecured. The guarantee will cover loans granted within six months from April 1. The loan will also be repayment-free for the initial six months and will be capped at $250,000 for a term of no more than three years. It will not apply to re-financing present customers.
Initial Stimulus Package
Initial Stimulus Package:
Initiatives Targeted at Businesses with Turnovers up to $500 Million:
- New instant asset write off and depreciation
What this means: The government will expand the instant asset write off scheme from 12 March 2020 until 1 July 2020 for businesses with turnovers up to $500 million which will be able to instantly write-off assets valued at up to $150,000. There will also be a 50% accelerator depreciation deduction over and above what these businesses can already deduct in the first year and this will be available for 15 months to 30 June
- Super-seeded in Second Package: Businesses with turnovers up to $50 million will receive a tax free cashflow boost worth up to $25,000, designed to help pay employees
What this means: To ensure integrity, businesses which pay the Australian Taxation Office income tax on their employee’s salary and wages either quarterly or monthly, will receive a payment equal to 50% of the amount withheld, up to a maximum of $25,000 over the 4 month period. The money will be available over the 4 months of March, April, May and June and the maximum that a business will be entitled to access in that period is $25,000. Eligible businesses that pay salary and wages but are not required to withhold tax will receive a minimum payment of $2,000. What this means
The government is providing assistance to businesses with less than 20 full-time employees to keep apprentices employed at 1 March 2020 in work by paying up to 50% of their salaries with a maximum of $7,000 each quarter in wage assistance for each apprentice so small businesses can retain existing apprentices and trainees, or re-employ apprentices and trainees who lose their positions from a small business because of the coronavirus. Where a business can’t afford to hold onto an apprentice, the subsidy will be available to a new employer.
If you have any questions on any aspects of these initiatives from the Federal government, please do not hesitate to contact our team.