// Startup News has analysed the Federal Government’s latest stimulus package announcements, in particular measures that may help support the startup and small to medium business (SME) sectors…
With the current COVID-19 pandemic taking a grip in Australia, the federal government has announced various packages for assistance to business. There’s also a summary here from the ATO.
While we have looked over these, and provide some summaries below, Startup News urges everyone to do their own research, gather the latest information (which is being updated almost daily) and consult with their own advisors, accountants and other experts in this regard.
Federal Government Announcements
1. Increased Instant Asset Write-Off
The instant asset write-off has been increased from $30,000 to $150,000. The number of businesses eligible has also increased. This applies for any new or second-hand assets both purchased and first used between 12th March 2020 and 30th June 2020.
2. Apprentices and Trainees
A 50% wage subsidy on wages for eligible businesses that employ an apprentice or trainee has been announced.
To be eligible, small businesses must be employing fewer than 20 employees in order to receive up to $7,000 per quarter (currently only for the three quarters from 1 January 2020 and 30 September 2020) for the retained apprentice or trainee.
3. Dipping into your Super
From mid-April 2020, individuals under financial distress will be allowed to access up to $10,000 of their superannuation tax-free for both the 2019-20 and 2020-21 financial years, so $20K in total (across the 2 financial years).
Perhaps a last resort (we’re talking about your super here), but it’s an option. Definitely consult with your accountant/adviser on this one.
4. Increased cash flow for employers
Small and medium businesses, along with not-for-profits, that have an aggregated annual turnover of $50 million or less and continue to employ staff during the Covid 19 crisis can receive cash flow boosts between $20,000 and $100,000.
These will be delivered via credits on their activity account statements and will be tax-free. This measure is expected to affect potentially 690,000 businesses and 7.8 million employees. 1
5. Guaranteeing loans
The Federal Government is guaranteeing 50% of new unsecured loans of up to $250,000 per eligible borrower. An ‘unsecured loan’ usually means borrowers don’t have to sign up an asset as a security for the loan.
The loans will be for up to three years, with an initial six-month repayment holiday (so, nothing to pay for the first 6 months). 2
6. Tax relief
The Australian Tax Office (ATO) has announced that eligible businesses will be able to defer payments, vary Pay as You Go (PAYG) installments and adjust payment plans including the opportunity to change GST reporting cycles.
This will allow businesses with a GST turnover below $20 million to change their reporting cycle from quarterly to monthly, meaning GST credits can be received on a monthly basis, therefore, improving cash flow for many startups and SMEs.
On a case-by-case basis, the ATO is willing to remit interest and waive penalties incurred after 23 January 2020 for businesses directly affected by the Coronavirus. 3
PLEASE CONSULT WITH YOUR ADVISOR, AND GET UP TO DATE INFORMATION.
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Featured Photo: Melissa Walker-Horn
References:
- https://business.gov.au/Risk-management/Emergency-management/Coronavirus-information-and-support-for-business/Boosting-cash-flow-for-employers
- https://business.gov.au/Risk-management/Emergency-management/Coronavirus-information-and-support-for-business/Coronavirus-SME-Guarantee-Scheme
- https://www.ato.gov.au/Individuals/Dealing-with-disasters/In-detail/Specific-disasters/COVID-19/?anchor=COVID19supportavailable#ChangingyourGSTreportingcycle
