This article was first published on 8 April 2020 and was current as at that date. The enactment of legislation relating to the matters referred to in this article since the date of publication means that this article is no longer current.
The Federal Government has passed a flurry of legislation over the last month aimed at keeping the economy afloat during the coronavirus crisis. These measures include those targeted at helping businesses to remain in operation and employees in jobs during these difficult times.
While it can be easy to feel overwhelmed by the Government’s seemingly constant recalibration of its fiscal response to the crisis, it is important for business owners to remain engaged and aware of what relief may be available to them at any one time.
On 12 March this year, the Federal Government announced its first support package in response to the growing threat of coronavirus on Australia’s economy. This was followed by a second support package announced on 22 March. Finally, and most recently, on 30 March, the Government announced its third support package: the JobKeeper payment.
While the three support packages together bring the Federal Government’s economic support to an estimated total of $319 billion, the Government no doubt has more fiscal firepower on reserve that it may choose to deploy over the next few months as circumstances change.
Some of the key features of the Government’s support packages for businesses to date are:
- the cash flow boost;
- relief for financially distressed businesses;
- the small and medium enterprise (‘SME’) guarantee scheme;
- increasing the instant asset write-off;
- allowing a 50% accelerated depreciation deduction on acquisitions of eligible assets;
- apprentice and trainee support; and
- the JobKeeper payment (as yet unlegislated).
The table overleaf contains a brief summary of each of the above measures.
The devil is in the detail for each of the Government’s support measures and it is important to carefully examine the legislative criteria for accessing the relevant support and quantifying the benefits that it offers. It is also important to consider how the measures could potentially interact with one another (e.g. whether pay-as-you-go withholding amounts from JobKeeper payments count towards the calculations for the cash flow boost), the implications on other tax obligations (e.g. whether payments are taxable / deductible / attract the superannuation guarantee) and to be mindful of relevant integrity provisions.
Summary of Key Federal Government Support Measures for Businesses
|Nature of support||Brief description||Eligibility|
|Cash flow boost||Scheme to provide tax-free payments to eligible businesses (including not-for-profits, sole traders, partnerships, companies and trusts) of between $20,000 to $100,000 through the activity statement system to help employers retain employees and the self-employed through the crisis. Payments will be in the form of two sets of cash flow boosts to be delivered from 28 April 2020 on either a monthly or quarterly basis corresponding with the lodgment period for the relevant business.||
A business will be eligible to receive the cash flow boost if it:
Note: Different eligibility requirements apply to not-for-profits and charities registered with the Australian Charities and Not-for-profits Commission.
|Relief for financially distressed businesses||
Measures to temporarily ease insolvency laws in favour of debtors and provision of administrative concessions by the ATO to assist those affected by the crisis.
The measures include:
|Available to all debtors.|
|SME guarantee scheme||
Scheme under which the Government will guarantee 50% of new loans by eligible lenders to SMEs to where the loans have the following terms:
Businesses (including sole traders and not-for-profits) with an annual turnover of up to $50m.
Loans will remain subject to lenders’ credit assessment process.
|Increasing the instant asset write-off||Measures to temporarily enhance the ability to immediately deduct the purchase price of assets (until 30 June 2020).||An asset purchased by a business will be eligible for the instant asset write off if: the purchase price of the asset is $150,000 or less; and the business has an aggregated annual turnover of less than $500m (up from $50m).|
|Accelerated depreciation deductions||Measures to provide a 15-month investment incentive (until 30 June 2021) by allowing a 50% accelerated depreciation deduction for eligible assets.||
An asset purchased by a business will be eligible for the 50% accelerated depreciation if:
|Apprentice and trainee support||Wage subsidy of up to 50% of the wages of an apprentice or trainee over a 9-month period from 1 January 2020 to 30 September 2020, subject to a cap of $21,000 per eligible apprentice or trainee.||
A business will be eligible for the subsidy if either:
Wage subsidy available to employers (including not-for-profits), self-employed individuals (businesses without employees) and charities significantly impacted by the crisis.
Under the scheme, the Government will provide $1,500 per fortnight per employee or self-employed individual for up to 6 months.
An employer (including a not-for-profit) or self-employed individual will be eligible for the subsidy if:
Note: Charities registered with the Australian Charities and Not-for-profits Commission will be eligible for the subsidy if they estimate their turnover has fallen or will likely fall by 15% or more relative to a comparable period.