Employers with an aggregated annual turnover of under $50 million (based on prior year turnover) will receive payments of between $20,000 to $100,000 from the government to help with cash flow.
There will be two components to the payment. The first stage will be for the March and June quarters. Employers will receive a payment equal to 100 per cent of the taxes withheld on salary and wages, with the maximum
payment being $50,000. Where an employer (both for profit businesses and not-for-profits) is not required to withhold any tax on salary and wages, the minimum payment at this stage will be $10,000.
The second component will be for the July to September quarter. Eligible entities will receive an additional payment equal to the total payment received under the first stage. This means that eligible entities will receive anywhere between $20,000 to $100,000 in payments from the government
The payment will be delivered as a credit in the activity statement system from 28 April 2020 upon businesses
lodging their activity statements. Where this puts the business in a refund position, the ATO will deliver the refund
within 14 days. The payments will only be available to active eligible employers established prior to 12 March 2020.
However,charities which are registered with the Australian Charities and Not-for-profits Commission (ACNC) will be eligible
regardless of when they were registered. To qualify for the additional payment, the entity must continue to be
active.
NB. This package replaces the cash flow boost for employers announced on 12 March 2020 where payments of up
to $25,000 were announced.
Temporary relief for financially distressed businesses
The Government is proposing several temporary measures to lessen the risk of a surge in insolvencies and allow
more businesses to trade through this difficult period.
These measures include:
• a temporary six-month increase to the threshold at which creditors can issue a statutory demand on a company
under the Corporations Act 2001 from $2000 to $20,000
• a temporary extension to the statutory timeframe for a company to respond to a statutory demand from 21 days
to six months. This extension will apply for six months.
• a temporary increase to the threshold at which creditors can initiate bankruptcy proceedings against a debtor
who is not incorporated from $5,000 to $20,000. This will apply for six months
• a temporary extension to the period that a debtor has to respond to a bankruptcy notice from 21 days to six
months. This will apply for six months
• a temporary extension to the period under which an unsecured creditor cannot take further action to recover
debts when a debtor declares an intention to enter voluntary bankruptcy from 21 days to six months. This will
apply for six months
• giving directors temporary relief from personal liability for insolvent trading with respect to any debts incurred in
the ordinary course of the company’s business. This relief will apply for six months but will not apply to
egregious cases of dishonesty and fraud.
Increasing the instant asset write off
The government is proposing to increase the threshold for the instant asset write off from $30,000 to $150,000 and
expand access to businesses with an aggregated annual turnover of up to $500 million (up from $50 million). The
increase will only be available from 12 March to 30 June 2020 for new or second-hand assets first used or installed
ready for use by 30 June 2020.
Accelerated deprecation
The government is proposing an accelerated deprecation deduction for eligible assets acquired from 12 March
2020 and first used or installed by 30 June 2021. Eligible taxpayers will receive a deduction of 50 per cent of the
cost of the eligible asset on installation, with existing depreciation rules applying to the balance.
Eligible businesses are those with an aggregated turnover up to $500 million. Eligible assets are those that can
depreciated under Division 40 of the Income Tax Assessment Act 1997 (that is plant, equipment and specified
intangible assets, such as patents), but does not apply to second-hand Division 40 assets, or buildings and other
capital works depreciable under Division 43.
Apprentice and trainee wage subsidy
The government will offer employers a wage subsidy of 50 per cent of an apprentice’s or trainee’s wage from 1
January to 30 September 2020, capped at $7,000 each quarter per each eligible apprentice or trainee.
Businesses with less than 20 full-time staff will be eligible, however employers of any size and Group Training
Organisations that re-engage an eligible out-of-trade apprentice or trainee will be eligible for the subsidy
The apprentice or trainee must have been in training with the small business as at 1 March 2020. Employers can
register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020.
Government credit guarantee for unsecured SME borrowing
The Government has announced the Coronavirus SME Guarantee Scheme, whereby it will provide a guarantee to
SME lenders of 50 per cent for new unsecured loans to be used for working capital. SMEs with a turnover of up to
$50 million will be eligible to receive these loans.
The Government will provide eligible lenders with a guarantee for loans with the following terms:
• the maximum total size of loans of $250,000 per borrower
• the loans will be up to three years, with an initial six-month repayment holiday
• the loans will be in the form of unsecured finance.
Loans will be subject to lenders’ credit assessment processes. The Government states that they expect lenders will
look through the cycle to sensibly consider the uncertainty of the current economic conditions.
The Government will encourage lenders to provide facilities to SMEs that only have to be drawn if needed by the
SME. If offered, this will mean that the SME will only incur interest on the amount they draw down.
The Scheme will commence by early April 2020 and be available for new loans made by participating lenders until
30 September 2020.
Making it easier for small businesses to access new credit, credit limit increases, and
credit variations and restructures
The Government will exempt lenders from the responsible lending obligations for a period of six months in relation
to the credit they extend to their existing small business customers, provided there is an existing borrowing
relationship and some proportion of that credit is used for business purposes.
The exemption will apply to new credit, credit limit increases and credit variations and restructures. The
government anticipates that this reform should help small businesses get access to credit quickly and efficiently. It
may however depend on the lender and the small business.
Contact your lender for further information.
Assistance to small business from banks
Businesses with total business loan facilities of up to $10 million can defer repayments for loans attached to their
business for six months. During this period banks have agreed to not enforce business loans for non-financial
breaches of the loan contract (such as changes in valuations)
