The government has announced a range of initiatives to assist small to medium size businesses to deal with the sudden and far-reaching pressures generated by COVID-19.These include:
Eligible businesses can access a wages subsidy of up to $1,500 per fortnight per eligible employee. This is to help employers to keep their staff so they can restart when the crisis is over.
Up to $100,000 is being granted to eligible small and medium-sized businesses, and not for-profits (NFPs) that employ people (with a minimum payment of $20,000). These payments will help businesses and NFPs with their cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff.
The threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands are being temporarily increased. The package also includes temporary relief for directors from any personal liability for trading while insolvent, and providing temporary flexibility in the Corporations Act 2001 to provide temporary and targeted relief from provisions of the Act to deal with unforeseen events that arise as a result of the Coronavirus health crisis.
The Government is increasing the instant asset write-off threshold from $30,000 to $150,000 and expanding access to include businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.
A time limited 15 month investment incentive (through to 30 June 2021) is being introduced to support business investment and economic growth over the short term, by accelerating depreciation deductions.
Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for 9 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 employs that apprentice. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).For further details on the above, please refer to the Treasury website.Tax liabilities for business ownersIf a business owner is not making enough income from their business this year to have a tax liability, they can vary the instalment amount. This will generate a refundable credit for the amount already paid.If a business owner needs cash flow relief now, we can apply to the ATO to withdraw their instalment notice. [This service is available to business owner clients of 5 Accounting & Tax (5AT)]. We can do this for Q3 and Q4 of the current financial year, meaning no more instalments need to be paid during this financial year. We can also backdate the withdrawal to the start of this financial year so the taxpayer can get a refundable credit for payments already made. Please note however, that the taxpayer will still need to pay the full tax liability when they lodge the tax return at the end of this financial year, without the benefit of credits from pre-paid instalments.If you have any questions regarding anything raised here, or on any other aspect of your financial situation, please don’t hesitate to contact us.Note, the above does not constitute financial advice as it does not take into account your personal circumstances, timeframe or goals. Do not act on any information contained here, on our website or social media without first obtaining an opinion or guidance from your professional financial adviser.