SME lender OnDeck applauds Stimulus Package for small businesses
- The Morrison Government’s Stimulus Package offers a range of support for SMEs including an instant asset write-off enlarged from $30,000 to $150,000
- Taking advantage of the instant asset write-off can see an incorporated small business save up to $41, 250 in income tax
- A number of state governments have announced separate packages to support SMEs
- SMEs need to be aware that the stimulus initiatives apply immediately but are a temporary measure only.
Sydney 20 March 2020: Leading online SME lender OnDeck Australia says the Morrison Government’s Stimulus Plan offers valuable support for the nation’s small business community at a time of economic uncertainty.
In response to the economic impact of the Coronavirus (Covid-19), the Federal Government has announced a range of support measures for small to medium businesses (SMEs). These include:
- An uplift in the instant asset write-off from $30,000 to $150,000 effective immediately. The availability of the instant asset write-off has been expanded to include businesses with annual turnover below $500 million, up from $50 million previously. This measure applies until 30 June 2020.
- SMEs 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. This will extend to 30 June 2021.
- Over 700,000 SMEs will receive a payment between $2,000 and $25,000 to help pay wages or hire staff.
- Small businesses with apprentices will receive wage subsidies of up to $21,000.
The Stimulus Package also includes $1 billion to support sectors, regions and communities that have been heavily impacted by the economic fallout of the Coronavirus, including tourism, agriculture and education.
State governments have also chipped in with various initiatives. In NSW, the $2.3 billion stimulus package includes payroll tax waivers and various fee waivers for bars, cafes, restaurants and tradies[i]. In Qld, measures include deferring monthly payroll tax lodgements and payments until 31 July 2020. The Tasmanian State Government is providing targeted support to small businesses in hospitality, tourism, seafood production, and export sectors.[ii].
Mr Cameron Poolman, CEO of OnDeck Australia, says, “The health of the small business sector is critical to the well-being of the Australian economy. Nine out of ten business operating in Australia are small business, and two out of five workers are employed by a small business. So we welcome the Stimulus Package initiatives – both Federal and State that support the SME community through the current market volatility.
“OnDeck has been lobbying for some time to have the value of the instant asset write-off raised to make it more meaningful for Australia’s SMEs. The decision to lift the write-off from $30,000 to $150,000 is a positive step.
An incorporated business taking advantage of the newly enlarged $150,000 instant asset write-off can potentially save up to $41, 250 in tax for the current financial year – a significant plus for cashflow.
Mr Poolman added, “Small business owners should be aware that the stimulus measures are temporary. In particular, the enlarged instant asset write-off only applies until 30 June 2020, giving SMEs just three months to take advantage of this tax break. Moreover, the asset needs to be onsite in the business premises and ready for use by 30 June 2020 for a business to claim the deduction.”
“We believe the instant write-off should remain permanently at $150,000 for it to have meaningful value for Australia’s small business. But right now, it is critical for SMEs to make timely decisions around their ability to take advantage of the stimulus while the measures are available. concluded Mr Poolman.
In response to Covid-19, the entire team at OnDeck Australia is now working remotely. This measure is designed to support the health and wellbeing of our employees and the broader community. OnDeck has the systems and technology in place to ensure this will not result in any drop in efficiency or impact the high level of customer service provided to SMEs and brokers.
Editors please note: Due to the evolving situation, the above information is current as of the time of publication.
This information is general only and does not constitute tax advice. Please consult your tax adviser or accountant or contact the ATO to check if your business and purchases are eligible.
OnDeck (NYSE: ONDK) is the proven leader in transparent and responsible online lending to small business. Founded in 2006, the company pioneered the use of data analytics and digital technology to make real-time lending decisions and deliver capital rapidly to small businesses online. Today, OnDeck offers a wide range of term loans and lines of credit customized for the needs of small business owners. OnDeck has provided over $13 billion in loans to customers in 700 different industries across the United States, Canada and Australia. In Australia, OnDeck is backed by leading accounting software provider MYOB and has a 5-star rating from Trust Pilot. For more information, visit www.ondeck.com.au
About the research
AltFi research was conducted online in April 2019 by Honeycomb Strategy across 430 SME owners Australia-wide. The survey included SMEs with less than 50 employees, annual turnover of $50,000-$5 million, and in operation for at least 12 months.
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 Company tax rate is 27.5% https://www.ato.gov.au/Rates/Changes-to-company-tax-rates/ 27.5% of $150000 is $41,250