Financial Support for Businesses affected by the Coronavirus: What am I eligible for?

25 Mar Financial Support for Businesses affected by the Coronavirus: What am I eligible for?

I’ve had a number of clients recently contacting me somewhat confused about the governments financial support available to assist their business during this time. A number of measures have been introduced and for a more comprehensive list of all the support that is available to you and your business, I strongly encourage you to visit the Business Victoria website. It’s really important that businesses are proactive in ensuring they know what support is available and in actively seeking that support as soon as possible to see them through this difficult time. Below is a summary of some of these measures with a particular focus on the ‘Boosting Cashflow for Employers’ measure.

Boosting Cashflow for Employers: The government will cover PAYG withholding tax your business pays employees over the next six months up to a $100,000 cap. The minimum in total payments eligible businesses will receive is $20,000, irrespective of the PAYG withholding they pay. To be eligible businesses must have been a ‘small or medium business entity’ , or a charity or not for profit of equivalent size, for the most recent income year for which they have received an assessment of tax, or the Commissioner must be satisfied that there is a reasonable possibility that they were a ‘small or medium business entity’ (in the absence of a previously lodged and assessed tax return). The payments will only be available to active eligible employers established prior to 12 March 2020. At this stage, there is no separate approved form that you will need to fill out to apply for this, rather it will be dealt with when you lodge your March BAS and your subsequent June and September BAS’s. It is important for businesses to know this is not a cash payment that will hit your bank now, but rather a credit by the ATO that will only be refunded directly to you if this places all accounts you hold with the ATO into a refund position. This means that if you have other debts owing to the ATO at the time of lodging your BAS (including any GST), then the credit will first be applied to these obligations and if anything is left it will be refunded directly to you within 14 days.

Supporting Apprentices and Employees: Available to small businesses employing 20 employees or less who retain an apprentice or employee. This is a wage subsidy of 50% of apprentice or trainees wages paid from 1 January 2020 to 30 September 2020, up to a cap of $21,000 per eligible apprentice or trainee. Employers can register for the subsidy from early April through an Australian Apprenticeship Support Network Provider.

Terminating employment or temporarily closing your business: I strongly encourage all businesses who are experiencing a significant downturn in their business operations and are considering temporarily or permanently ceasing their business operations to visit the Fairwork website to check their employee obligations. Generally, the legislation is a lot simpler for those employing casuals as opposed to full-time or part-time employees. Unless an enforceable government direction has been issued making it mandatory for your business to close (which in most cases will mean employers will be able to stand down employees without pay), then it is most likely that you will still need to abide by Fairwork legislation in paying your employees their various entitlements if you chose to close your doors or if you need to terminate staff. This can be quite complex depending on your personal circumstances so I advise all businesses seek their own advice on these matters by visiting the Fairwork website or contacting Fairwork directly.

Increased and Accelerated Income Support: The government has expanded eligibility to income support payments as well as establishing a new time-limited Coronavirus supplement to be paid at $550 per fortnight. These changes will apply for the next six months and wont be income tested. Those receiving the following income support payments will be eligible for the Coronavirus supplement: Jobseeker payment, Youth Allowance Jobseeker, Parenting Payments, Farm Household Allowance, Special Benefits recipients. The government has also expanded access to payments for the Jobseeker Allowance and Youth Allowance Jobseeker payments so that from 27 April permanent employees who are stood down or lose their employment will be able to access these payments, this includes sole-traders, the self employed, casual workers, and contract workers who meet the income test as a result of the economic downturn due to the Coronavirus. Asset testing and the one week ordinary waiting period will also be waived for these payments. There are also a number of other waivers in place during this period. Anyone applying for these payments will still need to declare that they are not accessing employer entitlements (like annual leave or sick leave) or Income Protection Insurance at the same time as receiving these payments. Individuals are encouraged to apply for these payments online during this busy time with the Department of Human Services. Please refer to the Business Victoria website for more information.

Assistance with lending: To help businesses manage cashflow during this time a number of measures have been implemented by government to assist them in acquiring finance. This includes the SME guarantee scheme; a government guarantee for eligible business loans up to $250,000 per borrower with a maximum 3 year term and an initial 6 month repayment holiday. Loans will still be subject to the lenders’ credit assessment processes. The government is also providing a temporary exemption from responsible lending obligations for lenders. These obligations don’t currently apply to businesses, however, it can take time for lenders to satisfy that money borrowed meets this test so this reform aims to help businesses get access to credit quickly and effectively. Please refer to the Business Victoria website for more information on other measures offered in relation to lending.

Temporary Relief for financially distressed businesses: This measure provides support for businesses facing insolvency and bankruptcy, with the government temporarily increasing the threshold at which creditors can issue a statutory demand on a company and also increasing the time companies have to respond to a statutory demand notice they receive.  Time has also been extended for businesses to respond to a bankruptcy notice. There is also temporary relief for directors for any personal liability for trading while insolvent. For a list of the full measures available please refer to the Business Victoria website.

Increased Instant Asset Write-Off and Accelerated Depreciation: Other Tax Concessions available to businesses include a temporary increase of the instant asset write off for small businesses eligible assets from $30,000 to $150,000 and a temporary accelerated depreciation measure for eligible small businesses.

Early access to superannuation: You can access up to $10,000 of your superannuation in 2019-20 and a further $10,000 in 2020-21. You will be able to apply from mid April 2020.

Tax Support: The ATO is providing relief for some tax obligations for businesses affected by the outbreak on a case by case basis. Contact the ATO emergency support line on 1800 216 218 for more information or requests for help.

For more information concerning any of the topics presented above please visit the Business Victoria website or contact Ashwood Accounting today for a complimentary initial appointment. Please be advised that all appointments will be managed by phone or Skype at this time.

Please note that all the advice provided above is general in nature only and should not be relied upon without first seeking the advice of your accountant or trusted advisor as everyone’s circumstances are different.