Government - Second Set of Stimulus
Contents:
Cash Flow Assistance for Business
Delivering Support for Business Investment
Temporary Relief for Financially Distressed Businesses
Supporting the Flow of Credit
Government Loan Subsidy – SME Guarantee Scheme
Cash Flow Assistance for Business - Supporting Apprentices & Trainees
Increasing the Instant Asset Write-Off
The Australian Government is supporting Australian businesses to manage cash flow challenges and retain employees. Assistance includes cash flow support to businesses and temporary measures to provide relief for financially distressed businesses.
Boosting cash flow for employers
Temporary relief for financially distressed businesses
Increasing the instant asset write-off
Backing business investment
Supporting apprentices and trainees
Cash Flow Assistance for Business
The Government will enhance the cash flow assistance measures for small to medium sized (SME) businesses, which includes not for profits and charities. Businesses (including not for profits and charities) with turnover of under $50 million that employ staff may now be eligible for up to $100,000 (increased from $25,000) in tax-free payments, with a minimum payment of $20,000 (up from $2,000).The mechanism for implementing this has now changed – with ‘initial payments’ and ‘additional payments’.
The initial payments will be 100% (increased from 50%) of PAYG withholding from salary and wages (up to $50,000). This will be based on the PAYG withholding for the March quarter (or month of March if a monthly withholder) up to 30 June 2020. The payment will be credited by the ATO on lodgement of relevant Activity Statements from 28 April 2020 (for the March month/March quarter). The additional payment will be equal to the ‘initial payment’ (up to $50,000) and the payment will be credited over the Activity Statements for June to September. Even if a business is not required to withhold tax but pays salary and wages, the business may still be eligible for a minimum credit of $20,000 (in total).
Delivering Support for Business Investment
Increase of the instant asset write-off threshold from $30,000 to $150,000. This is now be available for businesses with an aggregated turnover of less than $500 million (from $50 million). This is intended to apply immediately to all purchases to 30 June 2020.Businesses with an aggregated turnover of less than $500 million are now 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. This is intended to apply immediately and to all purchases to 30 June 2021.
Temporary Relief for Financially Distressed Businesses
The Government is to introduce a number of temporary measures as a safety net to lessen the threat of actions that could unnecessarily push companies into insolvency and force the winding up of a business. This includes a temporary increase in the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive and temporary relief for directors from any personal liability for trading while insolvent.
The economic impacts of the Coronavirus and health measures to prevent its spread could see many otherwise profitable and viable businesses temporarily face financial distress. It is important that these businesses have a safety net to make sure that when the crisis has passed they can resume normal business operations. One element of that safety net is to lessen the threat of actions that could unnecessarily push them into insolvency and force the winding up of the business.
The elements of the package are:
A temporary increase in the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive
A temporary increase in the threshold for a creditor to initiate bankruptcy proceedings, an increase in the time period for debtors to respond to a bankruptcy notice, and extending the period of protection a debtor receives after making a declaration of intention to present a debtor’s petition
Temporary relief for directors from any personal liability for trading while insolvent
Providing temporary flexibility in the Corporations Act 2001 to provide targeted relief for companies from provisions of the Act to deal with unforeseen events that arise as a result of the Coronavirus health crisis. For owners or directors of a business that are currently struggling due to the Coronavirus, the ATO will tailor solutions for their circumstances, including temporary reduction of payments or deferrals, or withholding enforcement actions including Director Penalty Notices and wind-ups
Fact Sheet: Temporary Relief for Financially Distressed Businesses
Supporting the Flow of Credit
The Government, Reserve Bank of Australia and the Australian Prudential Regulation Authority have taken coordinated action to support the flow of credit in the Australian economy, in particular for small and medium enterprises (SMEs). Timely access to credit is vital to help SMEs get through the impact of the Coronavirus.
Government Loan Subsidy – SME Guarantee Scheme
The Government has announced a number of measures to support the flow of credit in the Australian economy, in particular for SME’s. This includes the Government providing a guarantee of 50% to SME lenders for new unsecured loans provided to SMEs (turnover up to $50 million) to be used for working capital. It will apply to new loans from early April to 30 September 2020. Loans will be up to three years, with an initial six-month loan repayment holiday and with a limit of $250,000 per borrower.
The Coronavirus SME Guarantee Scheme will provide small and medium sized business with timely access to working capital to help them get through the impact of the Coronavirus.
The Government will provide eligible lenders with a guarantee for loans with the following terms:
SMEs, including sole traders, with a turnover of up to $50 million.
Maximum total size of loans of $250,000 per borrower.
Loans will be up to three years, with an initial six month repayment holiday.
Unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.
Apply/More Info:
See further SME information on the Gov Website.
If you are a lender interested in participating in the scheme, please email SMElenderguarantee@treasury.gov.au now.
Cash Flow Assistance for Business - Supporting Apprentices & Trainees
Business that employ apprentices and trainees will be offered a subsidy of 50% of an apprentice or trainee’s wage for nine months (1 January 2020 to 30 September 2020). To be eligible, the business must employ fewer than 20 full-time staff and retain an apprentice or trainee. Where a small business is not able to retain an apprentice, the subsidy will be available to the new employer.
Apply:
Employers can register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020.
Further information is available at the:
For further information on how to apply for the subsidy, including information on eligibility, contact an Australian Apprenticeship Support Network (AASN) provider.
Increasing the Instant Asset Write-Off
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. In 2017-18 there were more than 360,000 businesses that benefited from the current instant asset write-off, claiming deductions to the value of over $4 billion. This measure will support over 3.5 million businesses (over 99 per cent of businesses) employing more than 9.7 million employees.