Small and medium businesses (SMEs) can harness a range of government support to weather the storm of COVID-19. We look at what’s available nationally – and in your state/territory.
Federal Government support
The Federal Government will pay eligible employers a wage subsidy of $1,500 per fortnight for up to six months from 30 March 2020 until 27 September 2020. The payment is worth around $400 more each fortnight than the $1,100 Jobseeker payment (with the Coronavirus Supplement) for those out of work.
Employers are expected to pass the payments on to staff, allowing them to continue to earn an income even if their work hours are cut back.
The subsidy will start on 30 March 2020, with the first payments to be received by employers via the Australian Tax Office (ATO) to the relevant nominated bank account of employer in the first week of May 2020.
Both employers and employees must meet eligibility criteria. Eligible employers include businesses in private enterprise (including sole traders) as well as not-for-profits and charities, with:
- Turnover below $1 billion that estimate their turnover has fallen or will likely fall by 30% or more when compared to the same period last year, or
- Turnover of $1 billion or more that estimate their turnover has fallen or will likely fall by 50% or more when compared to the same period last year.
Key considerations for employee eligibility are:
- Full-time, part-time or casual (the latter employed on a regular and systematic basis for longer than 12 months) as at 1 March 2020, noting:
- Fixed-term contractors are eligible if they are employed at 1 March 2020
- Employee must be an Australian citizen, the holder of a permanent visa, or a Special Category (subclass 444 – New Zealand citizen) Visa Holder as at 1 March 2020
- Eligible employees who have been stood down by their employers before the commencement of the scheme will be eligible, and employees that are re-engaged by a business that was their employer on 1 March 2020 will be eligible.
- Employees on paid parental leave will not be eligible
Read our JobKeeper Payment scheme guide for full details on the initiative including how employers may vary hours of work or duties, how annual leave fits in, secondary employment, impact on superannuation guarantee payments and ATO requirements.
Cash Flow Boost payment for employers
A payment of $20,000 rising to $100,000 is available for eligible SMEs that employ staff. The payment is designed to help businesses with their cash flow, so they can keep operating and retain staff. To be eligible, SMEs need to have with aggregated annual turnover below $50 million.
Under the scheme, employers will receive a payment equal to 100% of their salary and wages withheld, with the maximum payment being $50,000. The minimum payment is $20,000.
An additional payment will be introduced in the July-October 2020 period. Eligible SMEs will receive an additional payment equal to the total of all of Cash Flow Boost payments they have received. This means that eligible entities will receive at least $20,000 up to a total of $100,000 under both payments.
Increased instant asset write-off
The 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. Check out our infographic to see how you can benefit.
The Government has introduced a time-limited 15-month investment incentive (through to 30 June 2021) that accelerates depreciation deductions. Businesses with turnover below $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.
Support for SMEs with apprentices and trainees
Eligible employers can apply for a wage subsidy of 50% of an apprentice’s or trainee’s wage for nine months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that takes on the apprentice. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
Temporary relief for financially distressed businesses
The Government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond. Directors will have relief from any personal liability for trading while insolvent for six months, to provide temporary relief to deal with unforeseen events that arise as a result of the Coronavirus health crisis.
The Australian Tax Office (ATO) will tailor solutions for owners/directors of business that are currently struggling due to the Coronavirus, including temporary reduction of payments or deferrals, or withholding enforcement actions.
For more details: Jump onto Business.gov.au.
Rent relief package for commercial tenants
A mandatory commercial tenancies code was released on 7 April 2020 by the Federal Government. It will be legislated and regulated in each State and Territory. Here’s what you need to know about the Federal code:
- The Scheme applies to tenants with a turnover of $50 million or less and those who are eligible for assistance through the JobKeeper program.
- Landlords will have to reduce leases in proportion to the reduction in the tenant’s business.
- The waivers will have to account for at least 50 per cent of the reduction in business.
- Rent deferrals must be spread over the remaining time on a lease and the tenant will have at least 12 months to make deferred rent payments.
- There will be prohibitions on:
- Terminations of leases for non-payment
- Rent increases (i.e. a freeze – except for turnover leases)
- Penalties for tenants who stop trading or reduce opening hours
- Landlords passing land tax on to tenants
- Charging interest on unpaid rent
- Landlords making a claim to a bank guarantee for non-payment of rent
- For landlords and tenants that sign up to the code of conduct, States and Territories have agreed to look at providing the equivalent of at least a three-month land tax waiver and three-month land tax deferral on the application for eligible landowners, with jurisdictions to continue to monitor the situation.
- Appendix 1 of the Code gives examples of proportionate solutions that may be agreed under the Code e.g. a 60% loss in turnover would result in a guaranteed 60% cash flow relief.
For more details: Visit Business.gov.au.
NSW was the first State or Territory to make legislation giving effect to the Mandatory Code of Conduct, with the Retail and Other Commercial Leases (COVID-19) Regulation 2020 taking effect on Friday 24 April 2020, and applying for six months until 24 October 2020. Visit here to understand what the rent relief measures mean for NSW landlords and tenants.
Claiming running expenses while working from home
The Australian Tax Office (ATO) has introduced a new method whereby employees who are working from home as a result of COVID-19 can claim for running expenses. Here are the key points:
- Employees can now use the “shortcut method” to claim 80 cents per hour for all their running expenses, rather than needing to calculate costs for specific running expenses.
- Employees who choose to use the “shortcut method” just need to keep a record of the hours they worked from home as evidence of their claim.
- The change will apply from march 1 to June 30, after which the ATO will review the arrangement for the next financial year as the COVID-19 situation progresses.
- Multiple people living in the same house will be able to claim the same 80 cent rate per person.
- The usual conditions apply to claiming deductions:
- Taxpayers must have spent the money themselves and not have been reimbursed
- The claim must be directly related to earning income
- There must be a record to substantiate the claim.
- The new arrangement does not prohibit people from making a working-from-home claim under existing arrangements, where you calculate all of your running expenses. Under the old method, claims can be made under the 52 cents per hour rate, but the taxpayer would need to work out the decline in value of any office equipment or furniture purchased, additional gas, electricity, phone and internet costs, etc.
For more details: Visit ato.gov.au.
Also read our blog post: Tips to maximise tax breaks while working from home
State by state stimulus
- SMEs with payroll up to $6.5million will be eligible for a 2-month refund of payroll tax, plus a 3-month payroll tax holiday, saving an average of $13,360. SMEs will be eligible to defer all payroll tax payments for the rest of 2020.
- Relief for businesses renting government premises.
- $500 rebate on electricity bills for all Queensland SMEs that consume less than 100,000 kilowatt hours. This will be automatically applied to electricity bills.
- Liquor licensing fees waived for business impacted by enforced shutdowns.
For more details: Contact the Small Business Hotline on 1300 654 687.
New South Wales
- Waiver of payroll tax for businesses with payrolls of up to $10 million for three months (the rest of 2019-20). This means these businesses will save a quarter of their annual payroll tax bill in 2019-20.
- Waiver of a range of fees and charges for small businesses including bars, cafes, restaurants and tradies.
- NSW was the first State or Territory to make legislation giving effect to the Mandatory Code of Conduct, with the Retail and Other Commercial Leases (COVID-19) Regulation 2020 taking effect on Friday 24 April 2020, and applying for six months until 24 October 2020. Visit here to understand what the rent relief measures mean for NSW landlords and tenants.
For more details: Call 13 28 46.
You can also sign up to free small business advisory webinars being run by Business Connect, in partnership with the NSW Government here.
Australian Capital Territory
- Hospitality (cafes, pubs, hotels, clubs and restaurants), creative arts and entertainment industries will receive a six-month waiver of payroll tax from March to August 2020.
- Businesses with payroll of up to $10 million can defer their 2020-2021 payroll tax payments, interest free, until 1 July 2022.
- 12-month waiver of all food business registration and on-licence liquor licensing fees, from 1 April 2020.
- Electricity rebates of $750 for businesses with electricity usage below 100 megawatts annually.
For more details: Head to revenue.act.gov.au
- Full payroll tax refunds for the 2019-20 financial year for SMEs with payroll below $3 million. This will save eligible business up to $113,975 a year, with the average business saving $23,000.
- Businesses will also be able to defer any payroll tax for the first three months of the 2020/21 financial year until 1 January 2021.
- Commercial tenants in government buildings can apply for rent relief.
- $500 million Business Support Fund, which will support businesses in hospitality, tourism, accommodation, arts and entertainment, and retail.
- $500 million rental relief package including a six-month ban on evictions and rent increases and tax relief for landlords. As part of this, small businesses with an annual turnover of under $50 million that have been hit with 30% or more in revenue reduction because of coronavirus can also be granted rental waivers or deferrals.
For more details: Call the Business Victoria hotline on 13 22 15.
- $20 million in interest-free loans to small businesses in the hospitality, tourism, seafood production, and exports sectors. The loans are available to businesses with turnover below $5 million to purchase equipment or restructure business operations and will be interest-free for three years.
- Payroll tax liabilities will be waived for hospitality, tourism and seafood industry businesses for the last four months of 2019-20. Other businesses with payrolls of up to $5 million will be able to apply, based on the impact of virus, to have their payroll tax waived for April to June 2020.
- Small Business Grants Program provides a $5,000 grant for businesses that hire an apprentice or trainee in the tourism, hospitality, building and construction, and manufacturing industries.
- A 50% discount on liquor licencing fees and a waiver of all application fees for the calendar year 2020, back-dated to 1 January 2020.
- Annual fees and levies for the rock lobster, giant crab, fin fishers and for abalone divers, will be waived for 12 months.
For more details:
- $20 million Small Business Loans – contact Business Tasmania on 1800 440 026
- Payroll tax waiver – contact the State Revenue Office on (03) 6166 4400
- Targeted Small Business Grants Scheme – contact Skills Tasmania on 1800 655 846
- The State-based $12 million skills package will see small businesses receive up to $5,000 for every new apprentice or trainee hired on a paid training contract as part of the Skills for Business scheme.
For more details: Visit skills.sa.gov.au/support
- One-off grant of $17,000 for small businesses with payroll between $1-4 million.
- Businesses with payroll below $1 million will be exempt from payroll tax from 1 July 2020.
- Businesses affected by the coronavirus outbreak may also be eligible to defer their payroll tax payments until 21 July 2020. This option is available to employers that pay up to $7.5 million in taxable wages, which have been affected by the COVID-19 outbreak.
For more details: Head to wa.gov.au/organisation/department-of-finance
- $50 million Small Business Survival Fund, offering grants to small businesses to adapt to changed trading conditions. Details yet to be announced.
- All Territory businesses will be able to access a $10,000 Business Improvement grant, followed by an additional $10,000 grant if they contribute $10,000 of their own.
- The payroll tax exemption for hiring Territory employees has been extended to 30 June 2021.
For more details:
- On payroll tax visit treasury.nt.gov.au/territory-revenue-office/payroll-tax
- On Business Improvement grant contact the Department of Trade, Business and Innovation on 1800 193 111.
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