Update on Federal Government Stimulus Measures for SMEs

Update on Federal Government Stimulus Measures for SMEs

Below is a table which outlines the stimulus measures available to SMEs. The table compares the stimulus measures announced at the beginning of the economic shutdown with measures announced over the last month.

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Stimulus measure Initial announcement Further announcements
Income support and JobKeeper Businesses impacted by the coronavirus (their turnover has been reduced by more than 30 per cent relative to a comparable period a year ago (of at least a month) are able to access a subsidy from the Government to continue paying their employees. For each eligible employee, affected employers will be able to claim a fortnightly payments of $1,500 per fortnight (until 27 September 2020). JobKeeper has been extended with a revised test to qualify and a reduction in payments depending on whether employees are full or part time:

  • Between 28 September and 3 January 2021: $1,200 per fortnight for full-time employees and $750 for employees who worked less than 20 hours in February
  • Between 4 January 2021 28 March 2021: $1,000 per fortnight for full-time employees and $650 for employees who worked less than 20 hours in February
PAYGW Cashflow Boost A minimum of $10,000 and a maximum of $50,000 before 30 June 2020 with a further $10,000 to $50,000 due after 1 July 2020 to 30 September 2020. No further announcements to extend
Instant asset write off A 100% write off for plant & equipment purchased and installed ready for use before 30 June 2020.

Applies to acquisitions after 12 March 2020 for businesses with a turnover of less than $500 million.

 

Now extended to 31 December 2020. The same provisions apply
Accelerated deprecation regime for assets greater than $150,000 A 50% write off of the asset cost in the year of purchase via a time limited 15 month investment incentive through to 30 June 2021.

Applies to assets with a purchase price of more than $150,000 or purchased after 30 June 2020 (when instant asset write off ends).

Applies to acquisitions after 12 March 2020 for businesses with a turnover of less than $500 million.

No further announcements in respect of this. Assets acquired after 31 December 2020 will have access to this concession if the cost is less than $150,000.
Temporary relief for financially distressed businesses These changes are designed to give businesses time to assess their solvency, implement restructuring plans where needed and take advantage of the safe harbour provisions under the Corporations Act 2001.”

The Most Notable Changes Are:

  • A temporary increase in the statutory demand threshold to $20,000;
  • An increase in the time to comply with a statutory demand from 21 days to 6 months;
  • A temporary increase in the size of the of the debt required to issue a creditor’s petition to $20,000;
  • An increase in the time to comply with a bankruptcy notice from 21 days to 6 months;
  • The moratorium on action against a debtor following the presentation of a declaration of intent to present a debtor’s petition is increased to 6 months; and
  • A six-month moratorium on directors’ insolvent trading liability, for debts incurred in the ordinary course of business.
Not intended to be extended. Note the interaction with JobKeeper eligibility
Tax payment deferral options
  • Deferring by up to six months the payment date for BAS amounts due (including PAYG instalments, income tax assessments, FBT assessments and excise.
  • Allowing businesses to vary PAYG instalment amounts to zero for the March 2020 quarter; businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters.
  • Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to outstanding tax liabilities.
  • Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low-interest payment plans, and
  • Allowing businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get quicker access to GST refunds they may be entitled to.
Watch this space in terms of interaction with the ATO
SME Government Guaranteed loans
  • This Scheme is designed to provide working capital support to SME’s (businesses with turnover of less than $50 million) to get through the impact of the corona virus.
  • Under the Scheme, the Federal government will guarantee 50 per cent of new SME unsecured loans issued by eligible lenders up to the value of $250,000.  This effectively represents a guarantee of $125,000.
  • The government will encourage lenders to provide facilities to SMEs that only have to be drawn if needed by the SME, and will remain available into the future, with interest only on the funds that are drawn down.
There are a raft of other changes to the government-backed loan program that will begin on October 1:

  • Loans will be provided for purposes other than working capital;
  • Secured loans (i.e. where collateral is presented) will be permitted in addition to unsecured loans;
  • The maximum loan size will increase four-fold to $1 million, up from $250,000 per borrower;
  • The maximum loan term will increase to five years, up from three years; and
  • Lenders will have additional discretion to offer repayment holidays.
Early release of super To be eligible for early release of superannuation you must either have:

  • Been unemployed, or
  • Been eligible to receive Jobseeker payment, Youth Allowance for job seekers, Parenting Payment, Special Benefit or Farm Household Allowance, or
  • Been made redundant on or after 1 January 2020, or
  • Had your working hours reduced by 20 percent or more, or if you were a sole trader had your business suspended or experienced a reduction in your turnover of 20 percent or more.
The second tranche of $10,000 is available to 24 September 2020.
Apprentice relief For businesses with fewer than 20 employees, eligible businesses may be eligible to receive 50 per cent of their apprentice’s wages, capping at $21,000 ($7,000 per quarter), per apprentice, for the nine months from 1 January 2020 to 30 September 2020 provided the apprentice was employed at 1 March 2020.

Many businesses replaced apprentice relief with JobKeeper payments.

The Government is extending and expanding the Supporting Apprentices and Trainees wage subsidy. From 1 July 2020, the subsidy will be available to support small and medium businesses with fewer than 200 employees, including those using a Group Training Organisation, who retain an Australian Apprentice engaged as at 1 July 2020. Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage paid during the 9 months from 1 July 2020 to 31 March 2021, up to a cap of $7,000 per quarter. Employers of any size including Group Training Organisations that re engage an eligible out of trade apprentice or trainee will also be eligible for the subsidy.

Employers that employ apprentices ought to consider this if they do not meet the extended requirements for JobKeeper.